ENGlobal Corporation Announces Transaction with Cleveland Inspection Services Inc.

HOUSTON -- ENGlobal Corporation (AMEX:ENG), a leading provider of engineering services, today announced that it has signed an agreement for the purchase of selected assets from Cleveland Inspection Services Inc. ("CIS"), a privately held inspection firm with approximately 200 employees nationwide. The agreement, which is subject to customary closing conditions, is expected to close within the next 30 days.

Under the agreement, ENGlobal will purchase certain assets from CIS, including fixed assets and certain contract rights. In addition, ENGlobal will assume certain limited contract obligations of CIS under specific agreements, such as customer contracts and leases. However, ENGlobal will not assume any CIS debt, nor will ENGlobal be required to issue any of its common stock as consideration for the acquired assets.

ENGlobal plans to acquire the assets through one of its subsidiaries, ENGlobal Construction Resources Inc. ("ECR"). The Company intends to operate its newly purchased assets as a division of ECR, and will market its services using the Cleveland Inspection Services name. CIS will continue under a different name but will be subject to a Non-Competition Agreement with ECR. The Company considers this transaction to be consistent with its strategic plan, as described in its "Message to Stockholders" included in ENGlobal Corporation's 2003 Annual Report.

Based in Cleveland, Okla., CIS provides inspection and construction management services in support of the oil and gas, utility, pipeline and telecommunication industries. Since 1989, CIS has supplied inspection services for onshore and offshore pipelines, process plants, pump and compressor stations, liquids handling and pigging facilities, terminals, tanks and smart pigging rehab programs. CIS employs personnel nationwide and has recently operated in as many as 44 states. Based on CIS revenues for the last several years, ENGlobal expects that its operation of the acquired assets could generate as much as $20 million in additional annual revenue.

"We're excited about this transaction with ENGlobal, a firm that has built its reputation for delivering quality work in a highly professional, cost efficient manner," said Mr. F.D. Curtis, founder and chief executive officer of CIS. "I am confident that ENGlobal will provide the same high level of service that our clients and employees have come to expect."

Michael L. Burrow, P.E., chairman and chief executive officer of ENGlobal Corporation, said, "The addition of Cleveland Inspection will expand our team of dedicated employees. We expect this transaction to significantly improve our position in the pipeline integrity marketplace, a marketplace that has an increased need for inspection services as a result of newly enacted government regulations and compliance obligations."

About ENGlobal Corporation

ENGlobal Corporation provides engineering services and systems principally to the petroleum refining, petrochemical, pipeline, production, and process industries throughout the United States and internationally. ENGlobal's multi-disciplinary engineering services group develops projects from the initial planning stage through detailed design, procurement, and construction management. The systems group develops, manufactures, installs, and services control and instrumentation systems utilized in various energy and process-related industries, and provides services and products that support the advanced automation and environmental technology fields. The Company, with its subsidiaries, now employs over 1,100 employees and occupies over 250,000 square feet of office and manufacturing space. Further information about the Company and its subsidiaries is available at www.ENGlobal.com.

Safe Harbor for Forward-Looking Statements 

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties including, but not limited to, the Company's ability to achieve its business strategy while effectively managing costs and expenses. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors detailed from time to time in ENGlobal's filings with the Securities and Exchange Commission. Reference is hereby made to cautionary statements set forth in the Company's Form 10-K for the year ended Dec. 31, 2003, Form 10-Q's for the quarters ended June 30, 2004, June 30, 2003 and Sept. 30, 2003, current Forms 8-K, and other SEC filings. Among other matters, there can be no assurance that the proposed acquisition will be finalized, that, if finalized, it will generate the revenues anticipated, or that, if those revenues are generated, they will result in profits. In addition, there can be no assurance that the Company's operations will continue to be profitable. In addition, the information contained in this press release is also subject to the risk factors identified in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2003.