UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly
period ended
For the transition period from ____ to ____
Commission File Number:
| (Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of | (I.R.S. Employer | |
| Incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒
Indicate by check mark whether the registrant
has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | |
| Smaller Reporting Company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of April 11, 2023, there were
TSR, INC. AND SUBSIDIARIES
INDEX
i
Part I. Financial Information
Item 1. Financial Statements
TSR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
February 28, 2023 and May 31, 2022
| February 28, | May 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (see Note 1) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Certificates of deposit and marketable securities | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $ | ||||||||
| Other receivables | ||||||||
| Prepaid expenses | ||||||||
| Prepaid and recoverable income taxes | ||||||||
| Total Current Assets | ||||||||
| Equipment and leasehold improvements, net of accumulated depreciation and amortization of $ | ||||||||
| Other assets | ||||||||
| Right-of-use assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Deferred income taxes | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and other payables | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Advances from customers | ||||||||
| Credit facility | ||||||||
| Operating lease liabilities - current | ||||||||
| Legal settlement payable - current | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| TSR, Inc.: | ||||||||
| Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Less: Treasury stock, | ||||||||
| Total TSR, Inc. Equity | ||||||||
| Noncontrolling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
TSR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended February 28, 2023 and 2022
(UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| February 28, | February 28, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Income (loss) from operations | ( | ) | ||||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on PPP Loan and interest forgiveness | ||||||||||||||||
| Unrealized loss on marketable securities, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||
| Provision for (benefit from) income taxes | ( | ) | ( | ) | ||||||||||||
| Consolidated net income (loss) | ( | ) | ||||||||||||||
| Less: Net income attributable to noncontrolling interest | ||||||||||||||||
| Net income (loss) attributable to TSR, Inc. | $ | $ | ( | ) | $ | $ | ||||||||||
| Basic net income (loss) per TSR, Inc. common share | $ | $ | ( | ) | $ | $ | ||||||||||
| Diluted net income (loss) per TSR, Inc. common share | $ | $ | ( | ) | $ | $ | ||||||||||
| Basic weighted average number of common shares outstanding | ||||||||||||||||
| Diluted weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
TSR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months and Nine Months Ended February 28, 2022
(UNAUDITED)
| Shares of | Additional | Non- | ||||||||||||||||||||||||||||||
| common | Common | paid-in | Retained | Treasury | TSR, Inc. | controlling | Total | |||||||||||||||||||||||||
| stock | stock | capital | earnings | stock | equity | interest | Equity | |||||||||||||||||||||||||
| Balance at May 31, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Non-cash stock compensation | - | - | - | - | - | |||||||||||||||||||||||||||
| Net income attributable to TSR, Inc. | - | |||||||||||||||||||||||||||||||
| Balance at August 31, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Non-cash stock compensation | - | |||||||||||||||||||||||||||||||
| Net income attributable to TSR, Inc. | - | |||||||||||||||||||||||||||||||
| Balance at November 30, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Proceeds of sales of stock through ATM | - | - | - | |||||||||||||||||||||||||||||
| Non-cash stock compensation | - | - | - | - | - | |||||||||||||||||||||||||||
| Vested stock awards and taxes paid | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||
| Net loss attributable to TSR, Inc. | - | - | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Balance at February 28, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
TSR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months and Nine Months Ended February 28, 2023
(UNAUDITED)
| Shares of | Additional | Non- | ||||||||||||||||||||||||||||||
| common | Common | paid-in | Retained | Treasury | TSR, Inc. | controlling | Total | |||||||||||||||||||||||||
| stock | stock | capital | earnings | stock | equity | interest | equity | |||||||||||||||||||||||||
| Balance at May 31, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Non-cash stock compensation | - | - | - | - | - | |||||||||||||||||||||||||||
| Net income attributable to TSR, Inc. | - | |||||||||||||||||||||||||||||||
| Balance at August 31, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Non-cash stock compensation | - | |||||||||||||||||||||||||||||||
| Purchases of treasury stock | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net income attributable to TSR, Inc. | - | |||||||||||||||||||||||||||||||
| Balance at November 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | - | |||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Non-cash stock compensation | - | |||||||||||||||||||||||||||||||
| Purchases of treasury stock | - | - | - | - | ( | ) | ( | ) | - | ( | ) | |||||||||||||||||||||
| Vested stock awards | ( | ) | - | - | - | - | - | |||||||||||||||||||||||||
| Net income attributable to TSR, Inc. | - | - | - | - | - | |||||||||||||||||||||||||||
| Balance at February 28, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
TSR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Nine Months Ended February 28, 2023 and 2022
(UNAUDITED)
| Nine Months Ended | ||||||||
| February 28, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Consolidated net income | $ | $ | ||||||
| Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Unrealized loss on marketable securities, net | ||||||||
| Deferred income taxes | ||||||||
| Non-cash lease recovery | ( | ) | ( | ) | ||||
| Forgiveness of principal and accrued interest on SBA PPP Loan | ( | ) | ||||||
| Non-cash stock-based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables | ( | ) | ||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Prepaid and recoverable income taxes | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable, other payables, accrued expenses and other current liabilities | ( | ) | ||||||
| Advances from customers | ( | ) | ||||||
| Legal settlement payable | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of certificates of deposit and marketable securities | ( | ) | ||||||
| Purchases of equipment and leasehold improvements | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net repayments on credit facility | ( | ) | ( | ) | ||||
| Purchases of treasury stock | ( | ) | ||||||
| Net proceeds of ATM stock sales | ||||||||
| Tax withholding from vested stock awards | ( | ) | ||||||
| Distribution to noncontrolling interest | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow data: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 1. | Basis of Presentation |
The accompanying condensed consolidated interim financial statements include the accounts of TSR, Inc. and its subsidiaries. Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” “our,” “TSR,” and the “Company” refer to TSR, Inc. and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of May 31, 2022, which has been derived from audited financial statements, and the unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applying to interim financial information and with the instructions to Form 10-Q of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures required by accounting principles generally accepted in the United States of America and normally included in the Company’s annual financial statements have been condensed or omitted. These condensed consolidated interim financial statements as of and for the three months and nine months ended February 28, 2023 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending May 31, 2023. These condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2022.
| 2. | Net Income Per Common Share |
Basic net income per common share is
computed by dividing net income available to common stockholders of TSR by the weighted average number of common shares outstanding during
the reporting period, excluding the effects of any potentially dilutive securities. During the quarter ended February 28, 2021, the Company
granted time and performance vesting restricted stock awards under its 2020 Equity Incentive Plan (see Note 16 for further information).
Diluted earnings per share gives effect to all potentially dilutive common shares outstanding during the reporting period. The common
stock equivalents associated with these restricted stock awards of
| 3. | Cash and Cash Equivalents |
The Company considers short-term highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents were comprised of the following as of February 28, 2023 and May 31, 2022:
| February 28, 2023 | May 31, 2022 | |||||||
| Cash in banks | $ | $ | ||||||
| Certificates of deposit | ||||||||
| Money market funds | ||||||||
| $ | $ | |||||||
| 4. | Fair Value of Financial Instruments |
Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments, requires disclosure of the fair value of certain financial instruments. For cash and cash equivalents, accounts receivable, accounts and other payables, accrued liabilities and advances from customers, the amounts presented in the condensed consolidated financial statements approximate fair value because of the short-term maturities of these instruments.
6
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 5. | Certificates of Deposit and Marketable Securities |
The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Investments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows:
| ● | Level 1 - These are investments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access. | |
| ● | Level 2 - These are investments where values are based on quoted market prices that are not active or model derived valuations in which all significant inputs are observable in active markets. | |
| ● | Level 3 - These are investments where values are derived from techniques in which one or more significant inputs are unobservable. |
The following are the major categories of assets measured at fair value on a recurring basis as of February 28, 2023 and May 31, 2022 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):
| February 28, 2023 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Certificates of Deposit | $ | $ | $ | $ | ||||||||||||
| Equity Securities | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| May 31, 2022 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Equity Securities | $ | $ | $ | $ | ||||||||||||
Based upon the Company’s intent and ability to hold its certificates of deposit to maturity (which range up to 12 months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates market value. The Company’s equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings. The Company’s marketable securities at February 28, 2023 and May 31, 2022 are summarized as follows:
7
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| February 28, 2023 | Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Recorded Value | ||||||||||||
| Certificates of Deposit | $ | $ | $ | $ | ||||||||||||
| Equity Securities | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| May 31, 2022 | Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Recorded Value | ||||||||||||
| Equity Securities | $ | $ | $ | $ | ||||||||||||
The Company’s investments in marketable securities consist primarily of investments in equity securities. Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery in market values.
| 6. | Other Matters |
From time to time, the Company is party to various lawsuits, some involving material amounts. Management is not aware of any lawsuits that would have a material adverse impact on the consolidated financial position of the Company except for the litigation disclosed elsewhere in this report, including in Notes 9, 10 and 13 to the condensed consolidated financial statements and in the section titled “Item 1, Legal Proceedings” in Part II of this report.
| 7. | Leases |
The Company leases the space for its offices in Hauppauge and New Jersey. The lease for the New York City office expired on August 31, 2022 and was not replaced. Under ASC 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or finance lease. Operating leases are in right-of-use assets and operating lease liabilities are in our condensed consolidated balance sheets.
The Company’s leases for its offices are classified as operating leases.
The lease agreements for Hauppauge and New Jersey expire on December 31, 2023 and May 31, 2027, respectively, and do not include any renewal options. During the fiscal year ended May 31, 2021, the Company extended its lease in Hauppauge, entered into a lease in a new location for its New Jersey office expiring May 31, 2027 and entered into an agreement to sublease the space in New York City, which expired August 31, 2022 at the end of the underlying office lease.
In addition to the monthly base amounts in the lease agreements, the Company is required to pay real estate taxes and operating expenses during the lease terms.
For the three months ended February
28, 2023 and 2022, the Company’s operating lease expense for these leases was $
As there are no explicit rates provided in our leases, the Company’s incremental borrowing rate was used based on the information available as of the commencement date in determining the present value of the future lease payments. Future minimum lease payments under non-cancellable operating leases as of February 28, 2023 are as follows:
8
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| Twelve Months Ending February 28, | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total undiscounted operating lease payments | ||||
| Less imputed interest | ||||
| Present value of operating lease payments | $ | |||
The following table sets forth the right-of-use assets and operating lease liabilities as of February 28, 2023:
| Assets | ||||
| Right-of-use assets, net | $ | |||
| Liabilities | ||||
| Current operating lease liabilities | $ | |||
| Long-term operating lease liabilities | ||||
| Total operating lease liabilities | $ | |||
The weighted average remaining lease
term for the Company’s operating leases is
| 8. | Credit Facility |
On November 27, 2019, TSR closed on a revolving credit facility (the “Credit Facility”) pursuant to a Loan and Security Agreement with Access Capital, Inc. (the “Lender”) which provides funding to TSR and its direct and indirect subsidiaries, TSR Consulting Services, Inc., Logixtech Solutions, LLC and Eurologix, S.A.R.L., each of which, together with TSR, is a borrower under the Credit Facility. Each of the borrowers has provided a security interest to the Lender in all of their respective assets to secure amounts borrowed under the Credit Facility.
TSR expects to
utilize the Credit Facility for working capital and general corporate purposes. The maximum amount that may be advanced under the Credit
Facility at any time shall not exceed $
Advances under
the Credit Facility accrue interest at a rate per annum equal to (x)
TSR is obliged to satisfy certain financial covenants and minimum borrowing requirements under the Credit Facility, and to pay certain fees, including prepayment fees, and provide certain financial information to the Lender. The Company was in compliance with all covenants at February 28, 2023.
As of February 28, 2023, the net payments
exceeded borrowings outstanding against this Credit Facility resulting in a receivable from the Lender of $
9
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 9. | Termination of Former CEO |
The Company terminated
Christopher Hughes, the former Chief Executive Officer of the Company (“Hughes”), effective February 29, 2020. Hughes filed
a complaint against the Company in the Supreme Court of the State of New York in March 2020 alleging two causes of action:
In October 2021,
the Company and Hughes agreed through mediation to settle this matter. In order to avoid lengthy and costly litigation and discovery expenses,
the Company has paid Hughes $
| 10. | Legal Settlement with Investor |
On April 1, 2020,
the Company entered into a binding term sheet (“Term Sheet”) with Zeff Capital, L.P. (“Zeff”) pursuant to which
it agreed, among other things, to pay Zeff an amount of $
| 11. | Paycheck Protection Program Loan |
On April 15, 2020, the Company received
loan proceeds of $
In March 2021, the Company submitted
a PPP Loan Forgiveness application to the SBA through the PPP Lender. On July 7, 2021, the Company received notification from the PPP
Lender that the SBA approved the Company’s application for forgiveness of the entire principal amount of the PPP Loan plus accrued
interest. The PPP Lender has applied the forgiveness amount to satisfy the PPP Loan. The Company has no further obligations with respect
to the PPP Loan. The Company recognized “Other Income” of $
10
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 12. | Intangible Assets |
The Company amortizes its intangible assets over their estimated useful lives and will review these assets for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If intangible assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value.
Intangible assets are as follows:
| May 31, | February 28, | |||||||||||
| 2022 | Amortization | 2023 | ||||||||||
| Database (estimated life | $ | $ | $ | |||||||||
| Non-compete agreement (estimated life | ||||||||||||
| Trademark (estimated life | ||||||||||||
| Customer relationships (estimated life | ||||||||||||
| Total | $ | $ | $ | |||||||||
No instances of triggering events or impairment indicators were identified as of February 28, 2023.
| 13. | Related Party Transactions |
On January 5, 2021, the members of
the Board of Directors of the Company other than Robert Fitzgerald approved providing a waiver to QAR Industries, Inc. for its contemplated
acquisition of shares owned by Fintech Consulting LLC under the Company’s then existing rights agreement (which covered a now non-existent
class of Class A preferred stock) so that a distribution date would not occur under such agreement as a result of the acquisition. QAR
Industries, Inc. and Fintech Consulting LLC were both principal stockholders of the Company, each owning more than
On February 3, 2021,
the transaction was completed and QAR Industries, Inc. purchased
The Company has
provided placement services for an entity in which a Board of Director of the Company is the CEO. Revenues for such services in fiscal
2022 were approximately $
11
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 14. | Common Stock |
Our certificate
of incorporation, as amended, authorizes the issuance of up to
On October 8, 2021,
During the quarter
ended February 28, 2022, we sold an aggregate of
The 2021 TSRI Shelf is currently our only active shelf-registration statement. We may offer TSR common stock registered under the 2021 TSRI Shelf from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. We believe that the 2021 TSRI Shelf provides us with the flexibility to raise additional capital to finance our operations as needed. However, there is no assurance we will be successful in doing so.
| 15. | Stock-based Compensation Expense |
On January 28, 2021, the Company granted
The time and performance vesting shares
also vest in tranches at or after the two- and three-year anniversaries of the grants. The performance condition is defined in the grant
agreements and relates to the market price of the Company’s common stock over a stated period of time (“market condition”).
These shares had a grant date value of $
12
TSR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2023
(Unaudited)
| 16. | Stock Repurchase Program |
On September 12, 2022, the Board of
Directors authorized a stock repurchase program of up to $
The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by the Board of Directors at its discretion and will depend on a number of factors, including the market price of Company’s stock, general market and economic conditions, and applicable legal and contractual requirements. The Company has no obligation or commitment to repurchase all or any portion of the shares covered by this authorization.
During the three months and nine months
ended February 28, 2023,
13
TSR, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes to such financial statements.
Forward-Looking Statements
Certain statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations, including statements concerning the Company’s plans, future prospects and the Company’s future cash flow requirements are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projections in the forward-looking statements due to known and unknown risks and uncertainties, including but not limited to the following: the statements concerning the success of the Company’s plan for growth, both internally and through the previously announced pursuit of suitable acquisition candidates; the successful integration of announced and completed acquisitions and any anticipated benefits therefrom; the impact of adverse economic conditions on client spending which has a negative impact on the Company’s business; risks relating to the competitive nature of the markets for contract computer programming services; the extent to which market conditions for the Company’s contract computer programming services will continue to adversely affect the Company’s business; the concentration of the Company’s business with certain customers; uncertainty as to the Company’s ability to maintain its relations with existing customers and expand its business; the impact of changes in the industry, such as the use of vendor management companies in connection with the consultant procurement process; the increase in customers moving IT operations offshore; the Company’s ability to adapt to changing market conditions; the risks, uncertainties and expense of the legal proceedings to which the Company is a party; and other risks and uncertainties set forth in the Company’s filings with the Securities and Exchange Commission. The Company is under no obligation to publicly update or revise forward-looking statements.
Results of Operations
The following table sets forth, for the periods indicated, certain financial information derived from the Company’s condensed consolidated statements of operations. There can be no assurance that trends in operating results will continue in the future.
Three months ended February 28, 2023 compared with three months ended February 28, 2022:
| (Dollar
amounts in thousands) Three Months Ended | ||||||||||||||||
| February
28, 2023 | February
28, 2022 | |||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | |||||||||||||
| Revenue, net | $ | 24,257 | 100.0 | % | $ | 24,383 | 100.0 | % | ||||||||
| Cost of sales | 20,267 | 83.6 | % | 20,590 | 84.4 | % | ||||||||||
| Gross profit | 3,990 | 16.4 | % | 3,793 | 15.6 | % | ||||||||||
| Selling, general and administrative expenses | 3,769 | 15.5 | % | 3,830 | 15.7 | % | ||||||||||
| Income (loss) from operations | 221 | 0.9 | % | (37 | ) | (0.1 | )% | |||||||||
| Other expense, net | (13 | ) | (0.0 | )% | (21 | ) | (0.1 | )% | ||||||||
| Income (loss) before income taxes | 208 | 0.9 | % | (58 | ) | (0.2 | )% | |||||||||
| Provision for (benefit from) income taxes | 110 | 0.5 | % | (14 | ) | 0.0 | % | |||||||||
| Consolidated net income (loss) | 98 | 0.4 | % | (44 | ) | (0.2 | )% | |||||||||
| Less: Net income attributable to noncontrolling interest | 18 | 0.1 | % | 3 | 0.0 | % | ||||||||||
| Net income (loss) attributable to TSR, Inc. | $ | 80 | 0.3 | % | $ | (47 | ) | (0.2 | )% | |||||||
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TSR, INC. AND SUBSIDIARIES
Revenue
Revenue consists primarily of revenue from computer programming consulting services. Revenue for the quarter ended February 28, 2023 decreased approximately $126,000 or 0.5% from the quarter ended February 28, 2022, primarily due to decreased activity with clients for clerical and administrative contractors. The average number of consultants on billing with customers decreased from 721 for the quarter ended February 28, 2022 to 640 for the quarter ended February 28, 2023. However, IT contractors increased from 443 to 467 IT contractors at February 28, 2023; while clerical and administrative contractors decreased from 278 to 173 at February 28, 2023. The change in the business mix toward the higher revenue IT contractors mitigated much of the decrease in revenue.
Cost of Sales
Cost of sales for the quarter ended February 28, 2023 decreased approximately $323,000 or 1.6% to $20,267,000 from $20,590,000 in the prior year period. The decrease in cost of sales resulted primarily from a decrease in consultants placed with customers, primarily clerical and administrative contractors. Cost of sales as a percentage of revenue decreased from 84.4% in the quarter ended February 28, 2022 to 83.6% in the quarter ended February 28, 2023. Revenue decreased at a lower rate than cost of sales when comparing the quarter ended February 28, 2023 to the prior year quarter, causing an increase in gross margins. The IT contractors added have a higher gross margin than the clerical and administrative staff that decreased.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of expenses relating to account executives, technical recruiters, facilities costs, management and corporate overhead. These expenses decreased approximately $61,000 or 1.6% from $3,830,000 in the quarter ended February 28, 2022 to $3,769,000 in the quarter ended February 28, 2023. The decrease in these expenses primarily resulted from non-cash compensation expenses of $55,000 in the quarter ended February 28, 2023 compared with $141,000 in the quarter ended February 28, 2022 related to the Plan and from a decrease in legal fees of $55,000, offset by an accrual for a legal settlement of $75,000 in the current quarter. Selling, general and administrative expenses, as a percentage of revenue decreased from 15.7% in the quarter ended February 28, 2022 to 15.5% in the quarter ended February 28, 2023.
Other Expense
Other expense for the quarter ended February 28, 2023 resulted primarily from net interest expense of $9,000 and a mark-to-market loss of approximately $4,000 on the Company’s marketable equity securities. Other income for the quarter ended February 28, 2022 resulted primarily from net interest expense of approximately $20,000 and a mark-to-market loss of approximately $1,000 on the Company’s marketable equity securities.
Income Tax Provision
The income tax provision (benefit) included in the Company’s results of operations for the quarters ended February 28, 2023 and 2022 reflect the Company’s estimated effective tax rate for the fiscal years ending May 31, 2023 and 2022, respectively. These rates resulted in a provision of 52.9% for the quarter ended February 28, 2023 and a benefit of 24.1% for the quarter ended February 28, 2022.
Net Income Attributable to TSR
Net income attributable to TSR was approximately $80,000 in the quarter ended February 28, 2023 compared to a net loss of $47,000 in the quarter ended February 28, 2022. The increase in net income over the prior year quarter was primarily attributable to the increase in gross margin and a decrease in selling, general and administrative expenses.
Impact of Inflation and Changing Prices
For the quarters ended February 28, 2023 and 2022, inflation and changing prices did not have a material effect on the Company’s revenue or income from continuing operations.
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TSR, INC. AND SUBSIDIARIES
Nine months ended February 28, 2023 compared with nine months ended February 28, 2022:
| (Dollar
amounts in thousands) Nine Months Ended | ||||||||||||||||
| February
28, 2023 | February
28, 2022 | |||||||||||||||
| Amount | %
of Revenue | Amount | %
of Revenue | |||||||||||||
| Revenue, net | $ | 76,487 | 100.0 | % | $ | 71,113 | 100.0 | % | ||||||||
| Cost of sales | 63,434 | 82.9 | % | 59,462 | 83.6 | % | ||||||||||
| Gross profit | 13,053 | 17.1 | % | 11,651 | 16.4 | % | ||||||||||
| Selling, general and administrative expenses | 11,072 | 14.5 | % | 11,628 | 16.3 | % | ||||||||||
| Income from operations | 1,981 | 2.6 | % | 23 | 0.1 | % | ||||||||||
| Other income (expense), net | (60 | ) | (0.1 | )% | 6,646 | 9.3 | % | |||||||||
| Income before income taxes | 1,921 | 2.5 | % | 6,669 | 9.4 | % | ||||||||||
| Provision for (benefit from) income taxes | 629 | 0.8 | % | (1 | ) | 0.0 | % | |||||||||
| Consolidated net income | 1,292 | 1.7 | % | 6,670 | 9.4 | % | ||||||||||
| Less: Net income attributable to noncontrolling interest | 44 | 0.1 | % | 72 | 0.1 | % | ||||||||||
| Net income attributable to TSR, Inc. | $ | 1,248 | 1.6 | % | $ | 6,598 | 9.3 | % | ||||||||
Revenue
Revenue consists primarily of revenue from computer programming consulting services. Revenue for the nine months ended February 28, 2023 increased approximately $5,374,000 or 7.6% from the nine months ended February 28, 2022, primarily due to growth in higher priced IT contractors offsetting decreases in clerical and administrative contractors. The average number of consultants on billing with customers decreased from 698 for the nine months ended February 28, 2022 to 671 for the nine months ended February 28, 2023. However, the average number of IT consultants increased from 424 to 467 for the nine months ended February 28, 2023, while the average number of clerical and administrative contractors decreased from 274 to 203 for the nine months ended February 28, 2023. The change in the business mix toward the higher revenue IT contractors yielded the net increase in revenue.
Cost of Sales
Cost of sales for the nine months ended February 28, 2023 increased approximately $3,972,000 or 6.7% to $63,434,000 from $59,462,000 in the prior year period. The increase in cost of sales resulted primarily from an increase in higher cost IT consultants placed with customers, primarily from organic growth. Cost of sales as a percentage of revenue decreased from 83.6% in the nine months ended February 28, 2022 to 82.9% in the nine months ended February 28, 2023. Revenue grew at a higher rate than cost of sales when comparing the nine months ended February 28, 2023 to the prior year period, causing an increase in gross margins. The IT contractors added have a higher gross margin than the clerical and administrative staff that decreased.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of expenses relating to account executives, technical recruiters, facilities costs, management and corporate overhead. These expenses decreased approximately $556,000 or 4.8% from $11,628,000 in the nine months ended February 22, 2022 to $11,072,000 in the nine months ended February 28, 2023. The decrease in these expenses primarily resulted from a charge of $580,000 for the legal settlement with the former Chief Executive Officer in the prior year period. Additionally, the Company incurred non-cash compensation expenses of $193,000 in the nine months ended February 28, 2023 and $496,000 in the nine months ended February 28, 2022 related to the Plan. These reductions were offset by an increase in recruiting costs of approximately $251,000. Selling, general and administrative expenses, as a percentage of revenue, decreased from 16.3% in the nine months ended February 28, 2022 to 14.4% in the nine months ended February 28, 2023.
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TSR, INC. AND SUBSIDIARIES
Other Income (Expense)
Other expense for the nine months ended February 28, 2023 resulted primarily from net interest expense of $45,000 and a mark-to-market loss of approximately $15,000 on the Company’s marketable equity securities. Other income for the nine months ended February 28, 2022 resulted primarily from income of $6,735,000 from the forgiveness of principal and interest on the PPP Loan offset by net interest expense of approximately $81,000 and a mark-to-market loss of approximately $2,000 on the Company’s marketable equity securities.
Income Tax Provision
The income tax provision (benefit) included in the Company’s results of operations for the nine months ended February 28, 2023 and 2022 reflect the Company’s estimated effective tax rate for the fiscal years ending May 31, 2023 and 2022, respectively. These rates resulted in a provision of 32.7% for the nine months ended February 28, 2023 and a benefit of less than 1% for the nine months ended February 28, 2022. The effective rate for the nine months ended February 28, 2022 is low because of the non-taxable gain on the forgiveness of the PPP Loan principal and interest, combined with low taxable income.
Net Income Attributable to TSR
Net income attributable to TSR was approximately $1,248,000 in the nine months ended February 28, 2023 compared to $6,598,000 in the nine months ended February 28, 2022. The net income in the prior year period was primarily attributable to the forgiveness of principal and interest on the PPP Loan.
Impact of Inflation and Changing Prices
For the nine months ended February 28, 2023 and 2022, inflation and changing prices did not have a material effect on the Company’s revenue or income from continuing operations.
Liquidity and Capital Resources
The Company’s cash was sufficient to enable it to meet its liquidity requirements during the quarter ended February 28, 2023. The Company expects that its cash and cash equivalents and the Company’s Credit Facility pursuant to a Loan and Security Agreement with the Lender will be sufficient to provide the Company with adequate resources to meet its liquidity requirements for the 12-month period following the issuance of these condensed consolidated financial statements. Utilizing its accounts receivable as collateral, the Company has secured this Credit Facility to increase its liquidity as necessary. As of February 28, 2023, the Company had no net borrowings outstanding against this Credit Facility. The amount the Company has borrowed fluctuates and, at times, it has utilized the maximum amount of $2,000,000 available under this facility to fund its payroll and other obligations. The Company was in compliance with all covenants under the Credit Facility as of February 28, 2023 and through the date of this filing. Additionally, in April 2020, the Company secured a PPP Loan in the amount of $6,659,000 to meet its obligations in the face of potential disruptions in its business operations and the potential inability of its customers to pay their accounts when due. As of August 31, 2020, the Company had used 100% of the PPP Loan funds to fund its payroll and for other allowable expenses under the PPP Loan. The use of these funds allowed the Company to avoid certain salary reductions, furloughs and layoffs of employees during the period. The Company applied for PPP Loan forgiveness and its application for forgiveness was accepted and approved; the PPP Loan and accrued interest were fully forgiven in July 2021.
At February 28, 2023, the Company had working capital (total current assets in excess of total current liabilities) of approximately $12,848,000, including cash and cash equivalents and marketable securities of $8,580,000 as compared to working capital of $10,912,000, including cash and cash equivalents and marketable securities of $6,526,000 at May 31, 2022.
Net cash flow of approximately $2,393,000 was provided by operations during the nine months ended February 28, 2023 as compared to $2,472,000 of net cash used in operations in the prior year period. The cash provided by operations for the nine months ended February 28, 2023 primarily resulted from consolidated net income of $1,292,000, a decrease in accounts receivable of $1,848,000 offset by a decrease in accounts payable and accrued expenses of $926,000, a decrease in legal settlement payable of $598,000 and a decrease in deferred income taxes of $493,000. The cash used in operations for the nine months ended February 28, 2022 primarily resulted from consolidated net income of $6,670,000, offset by the forgiveness of the PPP Loan principal and accrued interest of $6,735,000, an increase in accounts receivable of $2,758,000 and a decrease in legal settlement payable of $277,000.
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TSR, INC. AND SUBSIDIARIES
Net cash used in investing activities of approximately $996,000 for the nine months ended February 28, 2023 primarily resulted from purchases of certificates of deposit of $990,000 and purchases of fixed assets of $6,000. Net cash used in investing activities of $81,000 for the nine months ended February 28, 2022 primarily resulted from purchases of fixed assets.
Net cash used in financing activities during the nine months ended February 28, 2023 of $318,000 primarily resulted from purchases of treasury stock of $180,000, distributions of the minority interest of $75,000 and from net repayments under the Company’s Credit Facility of $62,000. Net cash provided by financing activities of approximately $1,669,000 during the nine months ended February 28, 2022 resulted from net proceeds from sales of the Company’s common stock in our ATM program of $1,821,000 offset by payments made for taxes related to vested stock awards of $92,000, net payments on the Company’s Credit Facility of $33,000 and distributions of the minority interest of $27,000.
The Company’s capital resource commitments at February 28, 2023 consisted of lease obligations on its branch and corporate facilities. The net present value of its future lease payments was approximately $538,000 as of February 28, 2023. The Company intends to finance these commitments primarily from the Company’s available cash and Credit Facility.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Estimates
The Securities Act regulations define “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. These estimates require the application of management’s most difficult subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
The Company’s significant accounting policies are described in Note 1 to the Company’s consolidated financial statements, contained in its May 31, 2022 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. The Company believes that those accounting policies require the application of management’s most difficult, subjective or complex judgments and are thus considered critical accounting estimates under the Securities Act. There have been no changes in the Company’s significant accounting policies as of February 28, 2023.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information called for by this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures. The Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal accounting officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934). Based on this evaluation, the principal executive officer and principal accounting officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
Internal Control Over Financial Reporting. There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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TSR, INC. AND SUBSIDIARIES
Part II. Other Information
Item 1. Legal Proceedings
Fintech Consulting LLC v. TSR, Inc., et al., case number 2:21-cv-20181(KSH)(AME) (U.S. Dist. Ct., Dist. of New Jersey); Fintech Consulting LLC DBA APTASK v. TSR, Inc., et al., civil action no. 2023-0030-MTZ (Del. Ch.); and Fintech Consulting, LLC v. TSR, Inc., et al, Case Number: 1:23-cv-00074-MN (U.S. Dist. Ct. Dist. of Delaware).
On December 1, 2021, Fintech Consulting LLC filed a complaint against the Company in the United States District Court for the District of New Jersey (“the New Jersey Action”). The named Defendants in the complaint are the Company, QAR Industries, Inc., a shareholder of TSR (“QAR”), Robert E. Fitzgerald, a director and shareholder of TSR and the President, director and a shareholder of QAR (“Fitzgerald”), and Bradley Tirpak, a shareholder and the chairman of the board of directors of TSR (“Tirpak”). The complaint purported to assert claims against the Defendants under state law and Section 10(b) of the Exchange Act in connection with a Share Purchase Agreement, dated January 31, 2021, by and between the Plaintiff, as the seller of shares of TSR’s common stock, and QAR and Tirpak, as the purchasers of such shares (the “SPA”). The Plaintiff sought (i) judgment declaring the transactions represented by the SPA null and void and for the return of the shares; (ii) judgment cancelling the SPA and returning the shares in exchange for return of the purchase price; (iii) judgment unwinding the transaction; (iv) compensatory damages; (v) punitive damages; (vi) pre-judgment interest; (vii) costs of lawsuit including attorneys’ fees; and (viii) such other relief as the Court may find appropriate. Fintech filed its first amended complaint on March 2, 2022 which Defendants moved to dismiss on April 19, 2022. On December 7, 2022, the court granted Defendants’ motion and dismissed the New Jersey Action on jurisdictional grounds.
Following the dismissal of the original lawsuit, the Plaintiff filed another complaint relating to the SPA against the Defendants on January 12, 2023 in the Court of Chancery of the State of Delaware (the “Delaware Chancery Action”), asserting claims and seeking relief substantially similar to that which was asserted and sought in the preceding lawsuit. Plaintiff filed in the Delaware Chancery Court pursuant to the forum selection clause in the SPA, whereby the parties thereto irrevocably and unconditionally consented to the exclusive general jurisdiction of the Delaware Chancery Court over any action, suit or proceeding arising out of or relating to the SPA. Also on January 12, 2023, the Plaintiff filed a motion to dismiss its own complaint for lack of subject matter jurisdiction, requesting that the court dismiss the suit so that Plaintiff could re-file in federal court, along with a motion to expedite. On January 18, 2023, the court issued a letter decision denying Plaintiff’s motion to expedite and stating that the court would address Plaintiff’s motion to dismiss in the ordinary course. On January 23, 2023, the Delaware Chancery Action was dismissed without prejudice.
On January 22, 2023, Fintech Consulting LLC filed a complaint against the Company in the United States District Court for the District of Delaware (the “Delaware Federal Action’). The Delaware Federal Action, in sum and substance, asserts claims and seeks relief substantially similar to that contained in both the New Jersey Action and the Delaware Chancery Action. The Delaware Federal Action remains pending.
The Company believes the Delaware Chancery Action described above to be without merit and intends to zealously defend its interests. However, the Company may incur significant additional legal expenses as it pursues a defense against this action. Therefore, to avoid the time and expense of litigation, the Company has commenced negotiations with Fintech to settle this matter. An amount of $75,000 has been accrued to selling, general and administrative expenses in the quarter ending February 28, 2023 as an estimate of a possible settlement payment. Further, while the Company believes the action to be without merit, no assurances can be given as to: (i) the outcome of this or other legal proceedings and (ii) the related impact of an unanticipated adverse outcome of these proceedings on the Company’s financial condition, results of operations or near-term liquidity.
See Note 6 to the condensed consolidated financial statements elsewhere in this report and the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2021 for more information.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022, as filed with the Securities and Exchange Commission. We are not aware of any material updates to the risk factors described in our previously filed Annual Report on Form 10-K.
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TSR, INC. AND SUBSIDIARIES
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The table below sets forth the information required by Item 703(b) of Regulation S-K with respect to any purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in § 240 10b-18(a)(3) of the Exchange Act, of shares of our common stock.
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
| Sept. 1-30, 2022 | 4,388 | $ | 8.04 | 4,388 | $ | 464,702 | ||||||||||
| Oct. 1-31, 2022 | 4,949 | $ | 7.65 | 4,949 | $ | 426,846 | ||||||||||
| Nov. 1-30, 2022 | 5,480 | $ | 7.89 | 5,480 | $ | 383,754 | ||||||||||
| Dec. 1-31, 2022 | 4,128 | $ | 7.46 | 4,128 | $ | 352,791 | ||||||||||
| Jan. 1-31, 2023 | 2,858 | $ | 8.56 | 2,858 | $ | 328,309 | ||||||||||
| Feb. 1-28, 2023 | 1,031 | $ | 8.51 | 1,031 | $ | 319,531 | ||||||||||
| Total | 22,834 | $ | 7.90 | 22,834 | $ | 319,531 | ||||||||||
| (1) | On September 12, 2022, the Board of Directors authorized a stock repurchase program of up to $500,000 of the Company’s outstanding common stock, par value $0.01 per share. The stock repurchase program was announced on Form 8-K by the Company on September 13, 2022. The program commenced on September 15, 2022 and is authorized for the following 12 months until September 13, 2023. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the program will be determined by the Board of Directors at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market and economic conditions and applicable legal and contractual requirements. The Company has no obligation or commitment to repurchase all or any portion of the shares authorized by the program. |
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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TSR, INC. AND SUBSIDIARIES
Item 6. Exhibits
| Exhibit | Document | |
| Exhibit 31.1 | Rule 13a-14(a)/15d-14(a) Certification by Thomas Salerno as principal executive officer | |
| Exhibit 31.2 | Rule 13a-14(a)/15d-14(a) Certification by John G. Sharkey as principal financial officer | |
| Exhibit 32.1 | Section 1350 Certification by Thomas Salerno as principal executive officer | |
| Exhibit 32.2 | Section 1350 Certification by John G. Sharkey as principal financial officer | |
| Exhibit 101 | Interactive Data File containing the following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2023, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements. | |
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
| TSR, Inc. | |
| (Registrant) |
| Date: April 11, 2023 | /s/ Thomas Salerno |
| Thomas Salerno, Chief Executive Officer, President, Treasurer and Principal Executive Officer | |
| Date: April 11, 2023 | /s/ John G. Sharkey |
| John G. Sharkey, Sr. Vice President, Chief Financial Officer, Secretary, Principal Financial Officer and Principal Accounting Officer |
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