March
11, 2021
Via
EDGAR
U.S.
Securities and Exchange Commission
Division of
Corporate Finance
100 F
Street, N.E., Mail Stop 7010
Washington, D.C.
20549
Attention:
Cara Wirth, Mara Ransom
|
Re:
|
ENGLOBAL
CORP
Registration
Statement on Form S-3
Filed
January 29, 2021
File
No. 333-252572
|
This
letter is in response to your letter, dated February 12, 2021, to
ENGlobal Corporation (the “Company”), transmitting the
comments of the staff (the “Staff”) of the Division of
Corporate Finance of the U.S. Securities and Exchange Commission
(the “Commission”) relating to the above referenced
Form S-3 (the “Registration Statement”). For your
convenience, each response is preceded by the Staff’s comment
(which is reflected in bold text) to which the response relates. In
addition, the Company has revised the Registration Statement in
response to the Staff’s comments and is filing an amendment
to the Registration Statement (the “Amended Registration
Statement” and, together with the Initial Registration
Statement, the “Registration Statement”) concurrently
with this letter, which reflects the revisions and clarifies
certain other information. Unless otherwise indicated, capitalized
terms used herein have the meanings assigned to them in the
Registration Statement.
Registration Statement on Form S-3 filed January 29,
2021
Sales Agreement Prospectus
Cover Page, page i
1.
Describe the recent price volatility in your common stock and
briefly disclose any known risks of investing in your common stock
under these circumstances.
RESPONSE:
In response to the Staff’s comment, the Company has added
disclosure on the cover page and in the risk factors section of the
sales agreement prospectus included in the Amended Registration
Statement to provide a description of the recent price volatility
in our common stock and the known risks of investing in our common
stock under these circumstances.
U.S.
Securities and Exchange Commission
March
11, 2021
Page
2
2.
Please add, for comparison purposes, disclosure of the sale price
of your common stock prior to the recent price volatility in your
stock. For example, please disclose the price at which your stock
was trading 30 days prior to your filing.
RESPONSE:
In response to the Staff’s comment, the Company has added
disclosure on the cover page and in the summary offering section of
the sales agreement prospectus included in the Amended Registration
Statement of the sales price of our common stock 30 days prior to
our initial filing.
3.
Describe any recent change in your financial condition or results
of operations, such as your earnings, revenues or other measure of
company value that is consistent with the recent change in your
stock price. If no such change to your financial condition or
results of operations exists, disclose that fact.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the disclosure on the cover page and in the risk factors section of
the sales agreement prospectus included in the Amended Registration
Statement to disclose there has been no recent change to our
financial condition or results of operation that is consistent with
the recent change in our stock price.
Prospectus Summary
The Offering, page 3
4.
We note that the number of “Common Stock to be outstanding
after this offering” reflects the number of shares to be
issued in this offering based on the market price of your common
stock at $7.44 per share (which significantly exceeds your
historical average price per share). Please revise to disclose the
price at which your common stock was trading 30 days prior to your
filing and the corresponding number of shares of common stock that
would be issued in this offering based on that historical
price.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the disclosure in the summary offering section of the sales
agreement prospectus included in the Amended Registration Statement
to also disclose the price at which our common stock was trading 30
days prior to our filing of the Initial Registration Statement and
the corresponding number of shares of common stock that would be
issued in this offering based on that historical
price.
U.S.
Securities and Exchange Commission
March
11, 2021
Page
3
Risk Factors, page 4
5.
We note your registration statement for $100,000,000, which
includes up to $25,000,000 of common stock in your sales agreement
prospectus, as well as an additional $75,000,000 of common stock
and/or preferred stock. To the extent you expect to conduct
additional offerings in the future to fund your operations or
provide liquidity, include risk factor disclosure that addresses
the dilutive impact of those offerings on investors that may
purchase shares in this offering at a significantly higher
price.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the disclosure in the Amended Registration Statement to include a
risk factor that addresses the dilutive impact of additional
offerings in the future on investors that may purchase shares in
this offering at a significantly higher price.
Risks Related to our Common Stock and the Offering
“There may be future dilution of our common stock ...”,
page 4
6.
We note your disclosure on the cover page of your sales agreement
prospectus that you intend to sell up to $25,000,000 of common
stock. Please revise this risk factor to state that the sale of
shares in this offering will increase the supply of available
shares, which may result in a decrease in your stock
price.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the risk factor in the Amended Registration Statement to state that
the sale of shares in this offering will increase the supply of
available shares, which may result in a decrease in our stock
price.
“Our Stock price could be volatile ...”, page
5
7.
We note your disclosure that “[t]he stock market has from
time to time experienced significant price and volume fluctuations
that may be unrelated to the operating performance of particular
companies” and your disclosure that “[d]uring the past
twelve months, the sales price of our stock ranged from a low of
$0.46 per share in March 2020, to a high of $9.40 per share in
January 2021.” Your disclosure should also address the
potential for rapid and substantial decreases in your stock price,
including decreases unrelated to your operating performance or
prospects. To the extent recent increases in your stock price are
significantly inconsistent with improvements in actual or expected
operating performance, financial condition or other indicators of
value, discuss the inconsistencies and where relevant, quantify
them. If you lack information to do, explain why.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the risk factor disclosure in the Amended Registration Statement to
address the potential for rapid and substantial decreases in our
stock price, including decreases unrelated to our operating
performance or prospects.
U.S.
Securities and Exchange Commission
March
11, 2021
Page
4
8.
Please consider whether your recent increase in price volatility
exposes your common stock to short sale risk. If so, please
consider disclosing the risks associated with your common stock
being “shorted” and the ultimate effects that such
actions could have on this at-the-market offering. Please also
include a risk factor addressing the effects of a potential
“short squeeze” due to a sudden increase in demand for
your common stock. Among other things, your disclosure should
describe what typically happens following a short squeeze and
address the impact on investors that purchase shares during that
time.
RESPONSE:
In response to the Staff’s comment, the Company has revised
the disclosure in the Amended Registration Statement to add a risk
factor addressing risks associated with our common stock being
“shorted” and the effects of potential “short
squeeze” due to a sudden demand for our common
stock.
Please
call the undersigned at (281) 878-4584 with any additional comments
or questions you may have.
Very
truly yours,
/s/ Mark
Hess
Mark
Hess
Chief
Financial Officer