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ENGlobal Reports Second Quarter Results

We continue to manage our billing and client collection processes to reduce past due receivables to the extent practicable. We believe that our allowance for bad debt is adequate to cover any potential non-payment by our customers. We are focusing our efforts to collect accounts receivable from clients whose payment practices are slower or whose payment terms are longer compared to the Company's average payment terms.

At August 15, 2012, the Company had unrestricted cash on hand totaling approximately $0.7 million, and availability under the PNC Credit Facility totaled approximately $1.3 million, subject to certain restrictions. In addition, at that date, one $9.1 million letter of credit was outstanding under the Ex-Im Bank Facility and collateralized by $2.3 million in cash. As a result of the defaults under the PNC Credit Facility and the Ex-Im Bank Facility described in our quarterly report on Form 10-Q for the second quarter ended June 30, 2012 filed with the SEC, additional borrowings under these facilities may be limited or restricted. As a result, the Company's liquidity requirements currently depends primarily on cash flow from operations and timely collection of outstanding invoices.

As of the date of this press release, the Company was in active discussions with its banks regarding the terms under which the defaults under the PNC Credit Facility and the Ex-Im Bank Facility may be cured or waived. However, we cannot assure you that we will be successful in obtaining the cure or waiver of such defaults. If we fail to obtain the cure or waiver of such defaults, the lenders may exercise any and all rights and remedies available to them under their respective agreements.

ENGlobal's employee count remained steady at approximately 1,900 for the quarter ended June 30, 2012. ENGlobal averaged 134,000 billable hours per two-week period during the second quarter 2012, a 14% decrease, when compared to 156,000 billable hours in the same period in 2011. The second quarter 2012 average represents a 4% decrease over 140,000 billable hours in the first quarter 2012 and ENGlobal reached a maximum of approximately 153,000 billable hours per two-week period during the second quarter. The Company's overall utilization percentage was approximately 88% for the second quarter 2012, compared with approximately 91% for the comparable period of 2011.

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