YES [   ]   NO [X]

Certain statements included herein and in other reports and public filings made by RCM Technologies, Inc. ("RCM"(“RCM” or the "Company"“Company”) are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, without limitation, statements regarding the adoption by businesses of new technology solutions; the use by businesses of outsourced solutions, such as those offered by the Company, in connection with such adoption; the Company'sCompany’s strategic and business initiatives and growth strategies; and the outcome of litigation (at both the trial and appellate levels) and arbitrations, or other business disputes, involving the Company.  Readers are cautioned that such forward-looking statements, as well as others made by the Company, which may be identified by words such as "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," "believe,"“may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “believe,” and similar expressions, are only predictions and are subject to risks and uncertainties that could cause the Company'sCompany’s actual results and financial position to differ materially from such statements.  Such risks and uncertainties include, without limitation:  (i) unemployment and general economic conditions affecting the provision of information technology and engineering services and solutions and the placement of temporary staffing personnel; (ii) the Company'sCompany’s ability to continue to attract, train and retain personnel qualified to meet the requirements of its clients; (iii) the Company'sCompany’s ability to identify appropriate acquisition candidates, complete such acquisitions and successfully integrate acquired businesses; (iv) the Company'sCompany’s relationships with and reliance upon significant customers, and ability to collect accounts receivable from such customers; (v) risks associated with foreign currency fluctuations and changes in exchange rates, particularly with respect to the Canadian dollar; (vi) uncertainties regarding amounts of deferred consideration and earnout payments to become payable to former shareholders of acquired businesses; (vii) the adverse effect a potential decrease in the trading price of the Company'sCompany’s common stock would have upon the Company'sCompany’s ability to acquire businesses through the issuance of its securities; (viii) the Company'sCompany’s ability to obtain financing on satisfactory terms; (ix) the reliance of the Company upon the continued service of its executive officers; (x) the Company'sCompany’s ability to remain competitive in the markets that it serves; (xi) the Company'sCompany’s ability to maintain its unemployment insurance premiums and workers compensation premiums; (xii) the risk of claims being made against the Company associated with providing temporary staffing services; (xiii) the Company'sCompany’s ability to manage significant amounts of information and periodically expand and upgrade its information processing capabilities; (xiv) the Company'srisk of cyber attacks on our information technology systems or those of our third party vendors; (xv) the Company’s ability to remain in compliance with federal and state wage and hour laws and regulations; (xv)(xvi) uncertainties in predictions as to the future need for the Company'sCompany’s services; (xvi)(xvii) uncertainties relating to the allocation of costs and expenses to each of the Company'sCompany’s operating segments; (xvii)(xviii) the costs of conducting and the outcome of litigation, arbitrations and other business disputes involving the Company, and the applicability of insurance coverage with respect to any such litigation; (xviii)(ixx) the results of, and costs relating to, any interactions with shareholders of the Company who may pursue specific initiatives with respect to the Company'sCompany’s governance and strategic direction, including without limitation a contested proxy solicitation initiated by such shareholders, or any similar such interactions; and (ixx)(xx) other economic, competitive and governmental factors affecting the Company'sCompany’s operations, markets, products and services.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.  Except as required by law, the Company undertakes no obligation to publicly release the results of any revision of these forward-looking statements to reflect these trends or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

The Company services some of the largest national and international companies in North America as well as a lengthy roster of Fortune 1000 and mid-sized businesses in such industries as Aerospace/Defense, Educational Institutions, Energy, Financial Services, Health Care, Life Sciences, Manufacturing & Distribution, the Public Sector and Technology.  RCM believes it offers a range of solutions that foster long-term client relationships, affords cross-selling opportunities, and minimizes the Company'sCompany’s dependence on any single technology or industry sector.  RCM sells and delivers its services through a network of approximately 3029 offices in selected regions throughout North America and Serbia.

The Company is a Nevada corporation organized in 1971.  The address of its principal executive office is 2500 McClellan Avenue, Suite 350, Pennsauken, NJ  08109-4613.

During the fiscal year ended December 30, 2017,29, 2018, approximately 44.3%42.9% of RCM'sRCM’s total revenues were derived from Engineering services, 38.2%41.8 % from Specialty Health Care services, and the remaining 17.5%15.3 % from IT services.

Demand for the Company'sCompany’s services, and spending by its customers and pricing can be significantly impacted by changes in the general level of economic activity, particularly technology spending.  During periods of reduced economic activity, such as the environment in the United States and the world in general that followed the economic dislocations that commenced in mid-2007, the Company may also be subject to increased pricing pressure in its markets due to reduced spending by clients and potential clients of the Company.  Extended periods of weakness in the economy can have a material adverse impact on the Company'sCompany’s business and results of operations.

Businesses today face intense competition, the challenge of constant technological change and the ongoing need for business process optimization.  To address these issues and to compete more effectively, companies are continually evaluating the need for implementing innovative solutions to upgrade their systems, applications and processes.  As a result, the ability of an organization to integrate and align advanced technologies with new business objectives is critical.

Although most companies recognize the importance of optimizing their systems, applications and processes to compete in today'stoday’s challenging environment, the process of designing, developing and implementing business and technology solutions is becoming increasingly complex.  The Company believes that many businesses are focused on return on investment analysis in prioritizing their initiatives.

The Company'sCompany’s Engineering group continues to focus on areas of growth within the energy, aerospace and commercial building industries and has provided a new focus on the industrial and oil and gas industries.  In recent years, many businesses have been adversely impacted by oil prices and other energy-related costs and developments, and for that reason as well as the concern of climate change, there has been growing sentiment around the world for the development of alternative sources of energy.

In the health care services industry, a shortage of nurses and other medical personnel in the United States has led to increases in business activity for health care service companies, including the Company'sCompany’s Specialty Health Care Services group.  Due in part to an aging population and improved medical technology, the demand for selected health care professionals is expected to continue over the next several years.  In addition, public educational institutions are outsourcing their requirements for school nurses, therapists and paraprofessionals to lower their costs and it is expected that this will continue and grow.  Medical coding standards have become increasingly complex and this is driving increased demand for hospitals to require consulting services regarding hospital information managements system, which also is expected to continue into the future.

The current economic environment challenges many companies toCompanies must integrate and manage computing environments consisting of multiple computing platforms, operating systems, databases and networking protocols and off-the-shelf software applications to support business objectives.  Companies also need to keep pace with new technology developments, which often rapidly render existing equipment and internal skills obsolete.  At the same time, external economicvaried factors have caused many organizations to focus on core competencies and trim workforces in the IT management area.  Accordingly, these organizations often lack the quantity, quality and variety of IT skills necessary to design and support IT solutions.  IT managers are charged with supporting increasingly complex systems and applications of significant strategic value, while working under budgetary, personnel and expertise constraints within their own organizations.

The Company believes its target market for IT services is among middle-market companies, which typically lack the time and technical resources to satisfy all of their IT needs internally.  These companies commonly require sophisticated, experienced IT assistance to achieve their business objectives and often rely on IT service providers to help implement and manage their systems.  RCM is structured to provide middle-market companies a single source for their IT needs.

RCM is dedicated to providing solutions to meet its clients'clients’ business needs by delivering engineering, specialty health care and information technology services.  The Company'sCompany’s objective is to remain a recognized leader of specialized professional staffing, consulting services and solutions in major markets throughout North America.  The Company adapts operating strategies to achieve this objective.  The following is a discussion of the key elements of its growth and operating strategies:

The Company promotes a full life cycle solution capability to its customers.  The goal of the full life cycle solution strategy is to fully address a client'sclient’s project implementation cycle at each stage of its development and deployment.  This entails the Company working with its clients from the initial conceptualization of a project through its design and project execution, and extending into ongoing management and support of the delivered product.  RCM'sRCM’s strategy is to build projects and solutions offerings selectively, utilizing its extensive resource base.

The Company believes that the effective execution of this strategy will generate improved margins on its existing resources.  The completion of this service-offering continuum is intended to afford the Company the opportunity to strengthen long-term client relationships that will further contribute to a more predictable revenue stream.

In addition to a full life cycle solution offering, the Company continues to focus on transitioning into higher value oriented services in an effort to increase its margins on its various service lines and generate revenue that is more sustainable.  The Company believes this transition is accomplished by pursuing additional vertical market specific solutions in conjunction or combination with longer-term based solutions, through expansion of its client relationships and by pursuing strategic alliances and partnerships.

The Company continues to promote its internal growth strategies which it designed to better serve the Company'sCompany’s customers, generate higher revenue and achieve greater operating efficiencies.  Every division of the Company continuously focuses on services and client diversification.  Business units are collaborating on penetrating and servicing accounts as sales teams are increasing their activity levels.  This enables clients to be supported by specialists in their areas of need while RCM productivity increases.

RCM provides an orientation program in which sales managers and professionals receive relevant information about Company operations.

RCM has adopted an industry-centric approach to sales and marketing.  This initiative contemplates that clients within the same industry sectors tend to have common business challenges.  It therefore allows the Company to present and deliver enhanced value to those clients in the vertical markets in which RCM has assembled the greatest work experience. RCM'sRCM’s consultants continue to acquire project experience that offers differentiated awareness of the business challenges that clients in that industry are facing.  This alignment also facilitates and creates additional cross-selling opportunities.  The Company believes this strategy will lead to greater account penetration and enhanced client relationships.

Operational strategies contributing to RCM'sRCM’s internal productivity include the delineation of certain new solutions practice areas in markets where its clients had historically known the Company as a contract service provider.  The formation of these practice areas facilitates the flow of project opportunities and the delivery of project-based solutions.

The industries in which the Company operates continues to be highly fragmented, and the Company plans to continue to selectively assess opportunities to make strategic acquisitions as such opportunities are presented to the Company. The Company's acquisition strategy is designed to broaden the scope of services and technical competencies and grow its full life cycle solution capabilities.  In considering acquisition opportunities, the Company focuses principally on companies with (i) technologies or market segments RCM has targeted for strategic value enhancement, (ii) margins that are accretive to existing margins, (iii) experienced management personnel, (iv) substantial growth prospects and (v) sellers who desire to join the Company'sCompany’s management team.  To retain and provide incentives for management of its acquired companies, the Company has generally structured a significant portion of the acquisition price in the form of multi-tiered consideration based on growth of operating profitability of the acquired company over a two to four year period.

The Company seeks to develop and maintain strong interactive customer relationships by anticipating and focusing on its customers'customers’ needs.  The Company emphasizes a relationship-oriented approach to business, rather than the transaction or assignment-oriented approach that the Company believes is used by many of its competitors.  This industry-centric strategy is designed to allow RCM to expand further its relationships with clients in RCM'sRCM’s targeted sectors.

To develop close customer relationships, the Company'sCompany’s practice managers and/or sales people regularly meet with both existing and prospective clients to identify areas of need and help design solutions and identify the resources needed to execute their strategies.  The Company'sCompany’s managers also maintain close communications with their customers during each project and on an ongoing basis after its completion.  The Company believes that this relationship-oriented approach can result in greater customer satisfaction.  Additionally, the Company believes that by collaborating with its customers in designing business solutions, it can generate new opportunities to cross-sell additional services that the Company has to offer.  The Company focuses on providing customers with qualified individuals or teams of experts compatible with the business needs of its customers and makes a concerted effort to follow the progress of such relationships to ensure their continued success.

The Company believes it has been successful in attracting and retaining highly qualified consultants and contractors by (i) providing stimulating and challenging work assignments, (ii) offering competitive wages, (iii) effectively communicating with its candidates, (iv) providing selective training to maintain and upgrade skills and (v) aligning the needs of its customers with appropriately skilled personnel.  The Company believes it has been successful in retaining these personnel due in part to its use of practice managers who are dedicated to maintaining contact with, and monitoring the satisfaction levels of, the Company'sCompany’s consultants and contractors while they are on assignment.

The Company continues to improve its operational efficiencies by integrating general and administrative functions at the corporate or regional level, and reducing or eliminating redundant functions formerly performed at smaller branch offices.  This enables the Company to realize savings and synergies and to control and monitor its operations efficiently, as well as to quickly integrate new acquisitions.  It also allows local branches to focus more on growing their local operations.

To accomplish this, the Company'sCompany’s financial reporting and accounting systems are centralized in the Company'sCompany’s operational headquarters in Parsippany, NJ.  The systems have been configured to perform all back office functions, including payroll, project cost accounting, billing, human resource administration and financial reporting and consolidation.  The Company utilizes third-party software for its financial reporting and accounting system which was implemented in 1999 and has not undergone significant upgrades since its initial implementation.  The Company believes that it will become necessary to upgrade or replace its financial reporting and accounting system at some point in the future, and anticipates a comprehensive review of the system may take place during fiscal 2018.2019. The Company has not determined when this contemplated replacement may be necessary. The Company estimates this upgrade or replacement of their financial reporting and accounting system will cost somewhere between $1.0 million and $2.0 million.  These estimates are subject to change.

The Company'sCompany’s Engineering segment consists of twothree business units – Energy Services, Aerospace Services and AerospaceProcess and Industrial Services. Energy Services provides solutions to the utility industry, both power generation and transmission and distribution as well asdistribution.  Aerospace Services provides engineering and technical services to the aircraft industry.  Process and Industrial Services provides engineering services to the industrial, chemical, commercial and oil and gas industries in the USUnited States, Europe and Canada. Aerospace Services provides engineering and technical services to the aircraft industry.

RCM provides a full range of Engineering services including Project Management Engineering & Design, Engineering Analysis, Engineer-Procure-Construct, Configuration Management, Hardware/Software Validation & Verification, Quality Assurance, Technical Writing & Publications, Manufacturing Process Planning & Improvement and 3D/BIM Integrated Design.  Engineering services are provided at the site of the client or at the Company'sCompany’s own facilities.

The Company believes that the deregulation of the utilities industry and the aging of nuclear power plants offer the Company an opportunity to capture a greater share of professional services and project management requirements of the utilities industry both in engineering services and through cross-selling of its information technology services.  Heightened competition, deregulation and rapid technological advances are forcing the utilities industry to make fundamental changes in its business process.  These pressures have compelled the utilities industry to focus on internal operations and maintenance activities and to increasingly outsource their design and engineering modification requirements.  Additionally, the Company believes that competitive performance demands from deregulation should increase the importance of information technology to this industry.  The Company believes that its expertise and strong relationships with certain customers within the utilities industry position the Company to be a leading provider of professional services to the utilities industry.

RCM provides a wide array of turnkey energy management services offering clients/customers opportunities for demand side management from concept to turnover.

The Company'sCompany’s IT segment is an integrated group of business units providing staff supplementation services and project solutions with physical locations in the U.S.,United States, Canada and Puerto Rico primarily supporting Financial, Technical, Manufacturing, Life Sciences and Distribution applications.  Areas of specialization in project solutions include:

The RCM Enterprise Business Solutions Group'sGroup’s core business mission is to continue its strategic transformation designed to focus the Company on developing proprietary customized solutions and methodologies by bundling software, systems, tools and services into integrated business and technology solutions.  Invoices on projects whereby the Company sold its own proprietary software were not material for the fiscal year ended December 30, 2017.29, 2018.

RCM'sRCM’s sector knowledge coupled with technical and business process experience enable the Company to provide strategic planning, project execution and management and support services throughout the entire project life cycle.  RCM has successfully completed multimillion-dollar projects in a variety of industry verticals using time-tested methodologies that manage strict budgets, timelines and quality metrics.

Among those IT services provided by RCM to its clients are:

The Company believes that its ability to deliver information technology solutions across a wide range of technical platforms provides an important competitive advantage.  RCM ensures that its consultants have the expertise and skills needed to keep pace with rapidly evolving information technologies.  The Company'sCompany’s strategy is to maintain expertise and acquire knowledge in multiple technologies so it can offer its clients non-biased technology solutions best suited to their business needs.

The Company provides its IT services through a number of flexible delivery methods.  These include management consulting engagements, project management of client efforts, project implementation of client initiatives, outsourcing, both on and off site, and a full complement of resourcing alternatives.

The Company'sCompany’s organization consists of 29 branch offices located in the United States, Canada, Puerto Rico and Serbia.  The locations and services of each of the branch offices are set forth in the table below.

Branch offices are primarily located in markets that the Company believes have strong growth prospects for the Company'sCompany’s services.  The Company'sCompany’s branches are operated in a decentralized, entrepreneurial manner with most branch offices operating as independent profit centers.  The Company'sCompany’s branch managers are given significant autonomy in the daily operations of their respective offices and, with respect to such offices, are responsible for overall guidance and supervision, budgeting and forecasting, sales and marketing strategies, pricing, hiring and training.  Branch managers are paid on a performance-based compensation system designed to motivate the managers to maximize growth and profitability.

The Company is domiciled in the United States and its segments operate in the United States, Canada, Puerto Rico and Serbia.  Revenues for the fiscal year ended December 30, 2017 and total assets by geographic area as of December 30, 2017 are as follows ($ in thousands):

The Company believes that substantial portions of the buying decisions made by users of the Company'sCompany’s services are made on a local or regional basis and that the Company'sCompany’s branch offices most often compete with local and regional providers.  Since the Company'sCompany’s branch managers are in the best position to understand their local markets and customers often prefer local providers, the Company believes that a decentralized operating environment enhances operating performance and contributes to employee and customer satisfaction.

From its headquarters locations in New Jersey, the Company provides its branch offices with centralized administrative, marketing, finance, MIS, human resources and legal support.  Centralized administrative functions minimize the administrative burdens on branch office managers and allow them to spend more time focusing on sales and marketing and practice development activities.

The Company'sCompany’s principal sales offices typically have one general manager, one sales manager, three to six sales people, several technical delivery or practice managers and several recruiters.  The general managers report to regional vice presidents who are responsible for ensuring that performance goals are achieved.  The Company'sCompany’s regional vice presidents meet frequently to discuss "best practices"“best practices” and ways to increase the Company'sCompany’s cross selling of its professional services.  The Company'sCompany’s practice managers meet periodically to strategize, maintain continuity, and identify developmental needs and cross-selling opportunities.

Sales and marketing efforts are conducted at the local and national level through the Company'sCompany’s network of branch offices.  Sales activities and productivity are tracked and rankings established and published.  Sales between business units are recognized and financially encouraged.  The Company emphasizes long-term personal relationships with customers that are developed through regular assessment of customer requirements and proactive monitoring of service performance.  The Company'sCompany’s sales personnel make regular visits to existing and prospective customers.  New customers are obtained through active sales programs and referrals.  The Company encourages its employees to participate in national and regional trade associations, local chambers of commerce and other civic associations.  The Company seeks to develop strategic partnering relationships with its customers by providing comprehensive solutions for all aspects of a customer'scustomer’s engineering, information technology and other professional services needs.  The Company concentrates on providing carefully screened professionals with the appropriate skills in a timely manner and at competitive prices.  The Company regularly monitors the quality of the services provided by its personnel and obtains feedback from its customers as to their satisfaction with the services provided.

The Company devotes a significant amount of time and resources, primarily at the branch level, to locating, training and retaining its professional personnel.  Full-time recruiters utilize the Company'sCompany’s proprietary databases of available personnel, which are cross-indexed by competency and skill to match potential candidates with the specific project requirements of the customer.  The qualified personnel in the databases are identified through numerous channels, including networking, referrals, trade shows, job fairs, schools, newspaper and trade journal advertising, Internetinternet recruiting services and the Company'sCompany’s website.

The Company believes that a significant element of the Company'sCompany’s success in retaining qualified consultants and contract personnel is the Company'sCompany’s use of consultant relationship managers and technical practice managers.  Consultant relationship managers are qualified Company personnel dedicated to maintaining on-site contact with, and monitoring the satisfaction levels of, the Company'sCompany’s consultants and contract personnel while they are on assignment.  Practice managers are consulting managers responsible for the technical development and career development of the Company'sCompany’s technical personnel within the defined practice areas.  The Company provides technical training and skills development through vendor-sponsored courses, computer-based training tools and on the job mentoring programs.

RCM has continued to engage in strategic initiatives to improve upon its ability to secure data, deliver services and improve on its communication infrastructure.

RCM has partnered with several internationally recognized vendors to deploy their business solutions internally, with systems designed to provide centralized management and a supported network.

RCM has upgraded its perimeter network and WAN architecture throughout the U.S.United States and Canada to a secure centralized model. The hub datacenter at its operational headquarters has been outfitted with redundant fiber circuits, and redundant firewalls, routers and switching architecture that protects against hardware failure. Access to the network is restricted for security reasons.

The Company has enhanced its ERP hardware, Application and Operating system to accommodate its growing needs.  The branch offices of the Company are networked to the corporate offices via private circuits, which enable the ERP application to be accessed securely at all operational locations.  The ERP system supports Company-wide operations such as payroll, billing, human resources, project systems, accounts receivable, accounts payable, all general ledger accounting, budgeting and consolidation reporting functionality.  The Company believes that at some point it will become necessary to upgrade or replace its financial reporting and accounting system.  The Company has not determined when this contemplated replacement may be necessary, but may undertake a comprehensive review of the system during fiscal 2018.2019. The Company estimates this upgrade or replacement of its ERP system will cost somewhere between $1.0 million and $2.0 million. These estimates are subject to change.

The Company'sCompany’s internet presence is an integral part of its strategic initiative to improve visibility and contextualize its business offerings. The Company'sCompany’s website has been revised, making the site more interactive, with improved web analytics.

The Company uses a cloud based solution for sourcing candidates and fulfilling client requirements. The integrated solution allows RCM to track all client requirements on an enterprise level.  RCM recruiters are able to search multiple sources (e.g. job boards) to identify and match suitable candidates for an opportunity or need, and to build and maintain a proprietary database of prequalified candidates, thereby enhancing our ability to respond quickly to client demands.  Customized reporting and query capabilities allow RCM management to monitor personnel performance and client responsiveness. All data and information is accessible via a web portal.

In the interest of consolidation and being green, RCM continues to deploy sophisticated virtualization technology. Implementation of V-motion, fault tolerance, high availability and centralized management are an integral part of this solution.  Green initiatives include partnerships with vendors for the recycling of used printers, toners, servers, desktops and mobile devices.

RCM has implemented a number of safeguards to protect the Company from various system-related risks including Redundant Telecommunications and server systems architecture, multi-tiered server and desktop backup infrastructure, and data center physical and environmental controls.  In addition, RCM has developed disaster recovery / business continuity procedures for all offices.

Given the significant amount of data generated in the Company'sCompany’s key processes including recruiting, sales, payroll and customer invoicing, RCM has established redundant procedures, functioning on a daily basis, within the Company'sCompany’s primary data center.  This redundancy should mitigate the risks related to hardware, application and data loss by utilizing the concept of live differential backups of servers and desktops to Storage Area Network (SAN) devices on its backup LAN, culminating in offsite tape storage at an independent facility. Controls within the data center environment ensure that all systems are proactively monitored and data is properly archived.

Additionally, RCM has contracted and brokered strategic relationships with third-party vendors to meet its recovery objectives in the event of a system disruption.  For example, comprehensive service level agreements for RCM'sRCM’s data circuits and network devices guarantee minimal outages as well as network redundancy and scalability.

The Company maintains a disaster recovery plan that outlines the recovery time / point objectives (RTO / RPO), organization structure, roles and procedures, including site addendum disaster plans for all of its key operating offices.  Corporate IT personnel regulate the maintenance and integrity of backed-up data throughout the Company.

The Parsippany Datacenter moved in the first quarter of fiscal 2015 to a third-party Internet Data Center ("IDC"(“IDC”). The IDC provides RCM with a robust data center environment with redundant HVAC, commercial power feeds, ten 2000kW diesel generator sets with five 10,000-gallon, above-ground fuel oil storage tanks to provide standby power and dry pipe fire suppression.  In addition, the IDC provides 24x7 security staffing, closed-circuit monitors, secure-card key access, biometrics scanners, man traps, and alarmed doors.  

The market for engineering and IT services is highly competitive and is subject to rapid change.  As the market demand has shifted, many software companies have adopted tactics to pursue services and consulting offerings making them direct competitors when in the past they may have been alliance partners.  Primary competitors include participants from a variety of market segments, including publicly and privately held firms, systems consulting and implementation firms, application software firms, service groups of computer equipment companies, facilities management companies, general management consulting firms and staffing companies.  In addition, the Company competes with its clients'clients’ internal resources, particularly where these resources represent a fixed cost to the client.  Such competition may impose additional pricing pressures on the Company.

The Company believes its principal competitive advantages in the engineering and IT services market include: strong relationships with existing clients, a long-term track record with over 1,000 clients, a broad range of services, technical expertise, knowledge and experience in multiple industry sectors, quality and flexibility of service, responsiveness to client needs and speed in delivering IT solutions.

Additionally, the Company competes for suitable acquisition candidates based on its differentiated acquisition model, its entrepreneurial and decentralized operating philosophy, and its strong corporate-level support and resources.

The Company'sCompany’s operating results can be affected by the seasonal fluctuations in client expenditures.  Expenditures in the Engineering and Information Technology segments can be negatively impacted during the first quarter of the year when clients are finalizing their budgets.  Quarterly results generally fluctuate depending on, among other things, the number of billing days in a quarter and the seasonality of clients'clients’ businesses. The business is also affected by the timing of holidays and seasonal vacation patterns, generally resulting in lower revenues and gross profit in the fourth quarter of each year, not considering any non-seasonal impact. Extreme weather conditions may also affect demand in the first and fourth quarters of the year as certain clients'clients’ facilities are located in geographic areas subject to closure or reduced hours due to inclement weather.  The Company generally experiences an increase in its cost of sales and a corresponding decrease in gross profit and gross margin percentage in the first and second fiscal quarters of each year as a result of resetting certain state and federal employment tax rates and related salary limitations.  Also, the Company'sCompany’s Specialty Health Care segment typically experiences a significant decline in revenues due to the substantial closure of one of its largest customers, the New York City Department of Education, and other educational institution clients during the third quarter due to their summer recess.

The Company is a consulting firm and employment service provider and  is generally subject to one or more of the following types of government regulation: (1) regulation of the employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers' compensation;workers’ compensation, (2) registration, licensing, record keeping and reporting requirements;requirements, and (3) federal contractor compliance.  The Company believes it is in material compliance with all employee related statutes.

Management believes the RCM Technologies, Inc. name is extremely valuable and important to its business. The Company endeavors to protect its intellectual property rights and maintain certain trademarks, trade names, service marks and other intellectual property rights, including The Source of Smart Solutions®.  The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company'sCompany’s use of its proprietary rights.

As of December 30, 2017,29, 2018, the Company employed an administrative, sales, recruiting and management staff of approximately 220240 people, including licensed engineers and certified IT specialists who, from time to time, participate in engineering design and IT projects undertaken by the Company.  As of December 30, 2017,29, 2018, there were approximately 645580 engineering and technical personnel, 2,1352,230 specialty health care services personnel and approximately 245285 information technology personnel assigned by the Company to work on client projects or assignments for various periods.  None of the Company'sCompany’s employees are party to a collective bargaining agreement.

RCM electronically files its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission ("SEC"(“SEC”).  The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxies, information statements, and other information regarding issuers that file electronically.

RCM makes available on its website or by responding free of charge to requests addressed to the Company'sCompany’s Corporate Secretary, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed by the Company with the SEC pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended.  These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.  The Company'sCompany’s website is http://www.rcmt.com.  The information contained on the Company'sCompany’s website, or on other websites linked to the Company'sCompany’s website, is not part of this document.  Reference herein to the Company'sCompany’s website is an inactive text reference only.

RCM has adopted a Code of Conduct applicable to all of its directors, officers and employees. In addition, the Company has adopted a Code of Ethics, within the meaning of applicable SEC rules, applicable to its Chief Executive Officer, Chief Financial Officer and Controller. Both the Code of Conduct and Code of Ethics are available, free of charge, by sending a written request to the Company'sCompany’s Corporate Secretary. If the Company makes any amendments to either of these Codes (other than technical, administrative, or other non-substantive amendments), or waives (explicitly or implicitly) any provision of the Code of Ethics to the benefit of its Chief Executive Officer, Chief Financial Officer or Controller, it intends to disclose the nature of the amendment or waiver, its effective date and to whom it applies in the investor relations portion of the website, or in a report on Form 8-K filed with the SEC.

Adverse global economic conditions, such as the worldwide crisis that began in mid-2007, may create conditions such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and volatility in credit, equity and fixed income markets.   Any or all of these developments can negatively affect the Company'sCompany’s business, operating results or financial condition in a number of ways.  For example, current or potential customers may be unable to fund capital spending programs, new product launches of other similar endeavors whereby they might procure services from the Company, and therefore delay, decrease or cancel purchases of services or not pay or delay paying for previously purchased services.  In addition, these conditions may cause the Company to incur increased expenses or make it more difficult either to utilize existing debt capacity or otherwise obtain financing for operations, investing activities (including the financing of any future acquisitions), or financing activities, all of which could adversely affect the Company'sCompany’s business, financial condition and results of operations.

Staffing firms and employment service providers are generally subject to one or more of the following types of government regulation: (1) regulation of the employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers'workers’ compensation; (2) registration, licensing, record keeping and reporting requirements; and (3) federal contractor compliance.  Failure to comply with these regulations could result in the Company incurring penalties and other liabilities, monetary and otherwise.

The staffing services and outsourcing markets are highly competitive and have limited barriers to entry.  RCM competes in global, national, regional, and local markets with numerous temporary staffing and permanent placement companies.  Price competition in the staffing industry is significant and pricing pressures from competitors and customers are increasing.  In addition, there is increasing pressure on companies to outsource certain areas of their business to low cost offshore outsourcing firms.  RCM expects that the level of competition will remain high in the future, which could limit RCM'sRCM’s ability to maintain or increase its market share or profitability.  Our inability to compete successfully with our competitors could adversely affect the Company'sCompany’s business, financial condition and results of operations.

As described in "Item“Item 1. Business,"” our operating results are subject to seasonal fluctuations, with reduced demand often occurring during first quarter of the year when clients are finalizing their engineering and IT budgets, and also during periods in which there are a substantial amount of holidays and season vacations.  In particular, one of the largest customers in our Specialty Health Care group, the New York City Department of Education, significantly reduces activity during the third quarter, when schools are closed for summer recess.  Our operating results for any given period may fluctuate as a result of the timing of holidays, vacations and other events, and if we were to experience unfavorable performance during periods in which we would otherwise expect to have high seasonal demand, we may have limited ability to make up for such performance during periods of seasonally lower demand.

The Company has a dispute with a customer that is a major utility in the United States. Both parties agreed in fiscal 2017 to resolve this dispute through binding arbitration.  Arbitration hearings with this customer started in fiscal 2018.  Essentially, the customer has not paid the balance of accounts receivable the Company believes are owed tofor certain disputed projects.  As of December 29, 2018, the Company. The Company recently compelled arbitration with this customer. The total amount dueof outstanding receivables from this customer on these disputed projects is $6.9$8.9 million, subject to anpotential upward adjustment following disclosures by the customerin damages claimed in the arbitration.  Additionally, as part of the arbitration process, the customer has asserted counter claimscounter-claims. While the total amount of $9.3asserted counter-claims is unknown as of December 29, 2018, the total amount of such counter-claims is anticipated to at least exceed $10.6 million.  The Company also believes these counter claims werecounter-claims are retaliatory in nature.  Prior to the arbitration,Company asserting its claims, the customer had not asserted any claims.counter-claims.  The Company believes these counter-claims asserted claimsby its customer have no merit and were merely asserted as a strategy to reduce the Company'sCompany’s own claims in any arbitration award or potential settlement agreement. The Company believes that its accounts receivable balance, subject to reserves, is fully collectible. Furthermore, the Company believes that this arbitration will conclude sometime inby the end of the Company’s fiscal year 2018.third quarter of 2019.  While the Company believes the customer's counter claimscustomer’s counter-claims to be frivolous and without merit, it can give no assurances that it will ultimately not have to pay all or a portion of such claims.counter-claims.  The Company is continuing work on one of the engagements that have given rise to this dispute and also on several engagements from the same client that are not currently part of the arbitration.

Especially in light of the Fukushima Daiichi nuclear plant malfunction that occurred in March 2011, new and existing concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel.  Among other things, these concerns have led to, and are expected to continue to lead to, various proposals to regulators and governing bodies in some localities where nuclear facilities are located for legislative and regulatory changes that could lead to the shut-down of nuclear units, denial of license renewal applications, municipalization of nuclear units, restrictions on nuclear units or other adverse effects on owning and operating nuclear generating units.  Should these concerns or proposals lead to a diminishment of or reduced growth in the nuclear power industry, the Company'sCompany’s Engineering segment, which has a focus on the nuclear power industry, could be harmed, and the Company'sCompany’s business, financial condition and results of operations could be materially adversely affected.

In addition, our liability insurance does not cover accidents occurring at nuclear power facilities.  Should we be found to be responsible for such an event, we may not be able to cover relating damages, and our business would be adversely affected.

  

The Company'sCompany’s Engineering segment has entered into arrangements to provide construction management and engineering services to customers under which arrangements the Company then engages subcontractors to provide the construction services.  Ultimately, as a primary contractor, the Company is responsible for the nonperformance or negligence of its subcontractors, whom the Company requires to be adequately insured and to issue performance bonds for their assignment.  Should a subcontractor not perform or act negligently and should there be inadequate insurance or performance bonds in place, the Company might not be able to mitigate its primary liability to the customer, and the Company'sCompany’s business, financial condition and results of operations could be materially adversely affected.  In addition, while payments to subcontractors typically are due from the Company only after the Company receives payment from the ultimate customer, the Company faces the risk that, should a customer not pay the Company, or should a subcontractor demand payment from the Company prior to the Company'sCompany’s receipt of payment from its customer, the Company'sCompany’s business, financial condition and results of operations could be materially adversely affected.

The Company'sCompany’s operations depend on the continued efforts of its officers and other executive management.  The loss of key officers and members of executive management may cause a significant disruption to the Company'sCompany’s business.

RCM also depends on the performance and productivity of its local managers and field personnel.  The Company'sCompany’s ability to attract and retain new business is significantly affected by local relationships and the quality of service rendered.  The loss of key managers and field personnel may also jeopardize existing client relationships with businesses that continue to use the Company'sCompany’s services based upon past relationships with local managers and field personnel.  In order to fulfill the requirements of the Company'sCompany’s customers, the Company must be able to recruit and retain appropriate personnel for client assignments.

If the Company were unable to borrow under its Revolving Credit Facility (see "Item“Item 7.  Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Financing Activities"Activities”), it may adversely affect liquidity, results of operations and financial condition.  The Company'sCompany’s liquidity depends on its ability to generate sufficient cash flows from operations and, from time to time, borrowings under the Revolving Credit Facility with the Company'sCompany’s agent lender Citizens Bank of Pennsylvania. The Company believes that Citizens Bank is liquid and is not aware of any current risk that they will become illiquid.  At December 30, 2017,29, 2018, the Company had $27.2$27.5 million in borrowings under the Revolving Credit Facility outstanding and $0.8$1.6 million outstanding under letters of credit.  At December 30, 2017, the Company hadcredit, with availability for additional borrowings under the Revolving Credit Facility of $7.0$15.9 million.

The Revolving Credit Facility contains various financial and non-financial covenants.  At December 30, 2017,29, 2018, the Company was in compliance with the covenants and other provisions of the Credit Facility. Any failure to be in compliance could have a material adverse effect on liquidity, results of operations and financial condition.

The Company is exposed to risks associated with foreign currency fluctuations and changes in exchange rates.  RCM'sRCM’s exposure to foreign currency fluctuations relates to operations in Canada and Serbia, principally conducted through its Canadian and Serbian subsidiaries.  Exchange rate fluctuations affect the U.S.United States dollar value of reported earnings derived from the Canadian operations as well as the carrying value of the Company'sCompany’s investment in the net assets related to these operations.  The Company does not engage in hedging activities with respect to foreign operations.

At any time, U.S.United States federal tax laws or the administrative interpretations of those laws may be changed. In December 2017, the legislation commonly referred to as the Tax Cuts and Jobs Act, which made widespread changes to the Internal Revenue Code, was signed into law; whilelaw.  While the Company believes that this law generally has had and will continue to have a favorable effect on corporations and their shareholders, uncertainty remains regarding the full effect that this law will have on the Company and its customers, vendors, shareholders and other stakeholders. The Company also cannot predict whether, when or to what extent other new U.S.United States federal tax laws, regulations, interpretations or rulings will be issued. As a result, changes in U.S.United States federal tax laws could negatively impact our operating results, financial condition and business operations, and adversely impact the Company'sCompany’s shareholders.  At any time, tax laws in the Company’s other jurisdictions, Canada, Puerto Rico and Serbia, may also change.  These tax law changes may have a material impact on the Company’s income tax expense.

The Company self-insures a portion of the exposure for losses related to workers'workers’ compensation and employees'employees’ medical insurance.  The Company has established reserves for workers'workers’ compensation and employee medical insurance claims based on historical loss statistics and periodic independent actuarial valuations.  Significant differences in actual experience or significant changes in assumptions may materially affect the Company'sCompany’s future financial results.

The Company may be subject to claims by clients related to errors and omissions, misuse of proprietary information, discrimination and harassment, theft and other criminal activity, malpractice, and other claims stemming from the improper activities or alleged activities of temporary professionals.  There can be no assurance that current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims.

Claims raised by clients stemming from the improper actions of temporary professionals, even if without merit, could cause the Company to incur significant expense associated with rework costs or other damages related to such claims.  Furthermore, such claims by clients could damage the Company'sCompany’s business reputation and result in the discontinuation of client relationships.

The Company reviews prospective acquisitions as an element of its growth strategy.  The failure of any acquisition to meet the Company'sCompany’s expectations, whether due to a failure to successfully integrate any future acquisition or otherwise, may result in damage to the Company'sCompany’s financial performance and/or divert management'smanagement’s attention from its core operations or could negatively affect the Company'sCompany’s ability to meet the needs of its customers promptly.

The Company operates its business in Canada and, to a less significant extent, in Puerto Rico and Serbia.  For the fiscal year ended December 30, 2017,29, 2018, approximately 18.5%17.2 % of the Company'sCompany’s revenues were generated outside the United States.  There are certain risks inherent in conducting business internationally including:  the imposition of trade barriers, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivables collection, difficulties in complying with a variety of foreign laws, changes in legal or regulatory requirements, difficulties in staffing and managing foreign operations, complex and uncertain employment environments, political instability and potentially adverse tax consequences.  To the extent the Company experiences these risks, the business and results of operations could be adversely affected.

Management believes the RCM Technologies, Inc. name is extremely valuable and important to its business. The Company endeavors to protect its intellectual property rights and maintain certain trademarks, trade names, service marks and other intellectual property rights, including The Source of Smart Solutions®.  The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company'sCompany’s use of its proprietary rights.  The Company'sCompany’s success depends on its ability to successfully obtain and maintain, and prevent misappropriation or infringement of, its intellectual property, maintain trade secret protection, and conduct operations without violating or infringing on the intellectual property rights of third parties.  Intellectual property litigation is expensive and time-consuming, and it is often difficult, if not impossible, to predict the outcome of such litigation.  If the Company is involved in an intellectual property litigation, its business, financial condition and results of operations could be materially adversely affected.

Uninterruptible Power Supply (UPS), card key access, fire suppression, and environmental control systems protect RCM'sRCM’s datacenter.  All systems are monitored on a 24/7 basis with alerting capabilities via voice or email.  The telecommunications architecture at RCM utilizes managed private circuits from AT&T, which encompasses provisioning redundancy and diversity.

The Company'sCompany’s ability to protect its data center against damage from fire, power loss, telecommunications failure and other disasters is critical to business operations.  In order to provide many of its services, RCM must be able to store, retrieve, process and manage large databases and periodically expand and upgrade its capabilities.  Any damage to the Company'sCompany’s data centers or any failure of the Company'sCompany’s telecommunication links that interrupts its operations or results in an inadvertent loss of data could adversely affect the Company'sCompany’s ability to meet its customers'customers’ needs and their confidence in utilizing the Company for future services.

RCM'sRCM’s ability to protect its data, provide services and safeguard its installations, as it relates to the IT infrastructure, is in part dependent on several outside vendors with whom the Company maintains service level agreements.

We are highly dependent on information technology systems to operate our business. A breakdown, invasion, corruption, destruction or interruption of critical information technology systems by employees, others with authorized access to our systems or unauthorized persons could negatively impact operations.  In the ordinary course of business, we collect, store and transmit confidential information and it is critical that we do so in a secure manner to maintain the confidentiality and integrity of such information.  Additionally, we outsource certain elements of our information technology systems to third parties.  As a result of this outsourcing, our third party vendors may or could have access to our confidential information making such systems vulnerable.  Data breaches of our information technology systems, or those of our third party vendors, may pose a risk that sensitive data may be exposed to unauthorized persons or to the public.  While we believe that we have taken appropriate security measures to protect our data and information technology systems, and have been informed by our third party vendors that they have as well, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems, or those of our third party vendors, that could adversely affect our business.

The Company is currently, and may in the future become, involved in legal or arbitration proceedings and claims arising from time to time in the course of its business.  An adverse outcome in any such litigation or arbitration could have an adverse impact on the consolidated financial position, consolidated results of operations and cash flows of the Company.

Not applicable.

The Company provides specialty professional consulting services, principally performed at various client locations, through 3029 administrative and sales offices located in the United States, Puerto Rico, Canada and Serbia.  The majority of the Company'sCompany’s offices typically consist of 1,000 to 15,000 square feet and are typically leased by the Company for terms of one to three years.  Offices in larger or smaller markets may vary in size from the typical office.  The Company does not expect that it will be difficult to maintain or find suitable lease space at reasonable rates in its markets or in areas where the Company contemplates expansion.

The Company'sCompany’s executive office is located at 2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613. These premises consist of approximately 11,20011,100 square feet and are leased at a rate of approximately $16.80 per square foot per annum for a term ending on June 30, 2020.

Not applicable.

Shares of the Company'sCompany’s common stock are traded on The NASDAQ Global Market under the Symbol "RCMT."  The following table sets forth approximate high and low sales prices for the two years in the period ended December 30, 2017 as reported by The NASDAQ Global Market:“RCMT.”

On December 28, 2017, the Company paid to stockholders of record on December 22, 2017 a special cash dividend of $1.00 per share of common stock.  The Company also accrued $1.00 per share on 87,034 unvested restricted share units.  All restricted share units contain a dividend equivalent provision entitling holders to dividends paid between the restricted stock unit grant date and ultimate share distribution date.  Total accrued dividends as of December 30, 201729, 2018 were $87,034$52,000 to be paid from fiscal 20182019 to fiscal 2020.  Dividends on any forfeited restricted share units will be forfeited.

The entire fiscal 2017 dividend was treated as return of capital.

The Company earns permanent placement fees from providing permanent placement services.  Fees for placementsThese fees are typically based on a percentage of the compensation paid to the person placed with the Company’s client.

The deferred revenue balance at December 29, 2018 and December 30, 2017 was $150 and $596 respectively, and is included in accounts payable and accrued expense in the accompanying consolidated balance sheet at that date.  Revenue is recognized when the service has been performed.  Deferred revenue may be recognized over a period exceeding one year from the time it was recorded on the balance sheet.  For the fifty-two week period ended December 29, 2018, the Company recognized revenue of $596 that was included in deferred revenue at the timebeginning of the candidate commences employment.  The Company guarantees its permanent placements on a prorated basis for 90 days.  In the event a candidate is not retained for the 90-day period, the Company will provide a suitable replacement candidate.  In the event a replacement candidate cannot be located, the Company will provide a prorated refund to the client.  An allowance for refunds, based upon the Company's historical experience, is recorded in the financial statements.  Revenues are recorded on a gross basis.reporting period. 

The Company'sCompany’s accounts receivable are primarily due from trade customers.  Credit is extended based on evaluation of customers'customers’ financial condition and, generally, collateral is not required.  Accounts receivable payment terms vary and are stated in the financial statements at amounts due from customers net of an allowance for doubtful accounts.  Accounts outstanding longer than the payment terms are considered past due.  The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company'sCompany’s previous loss history, the customer'scustomer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole.  The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables previously written off are credited to bad debt expense.

As of December 30, 2017, the carrying amount of our Information Technology reporting unit exceeded its fair value; therefore, theThere was no goodwill impairment in fiscal 2018. The Company recorded a goodwill impairment charge of $3.5 million in the fiscal year ended December 30, 2017.  This charge is recognized as "Goodwill Impairment" on our Consolidated Statements of Income. The remaining goodwill balance as of December 30, 2017 forrelated to its Information Technology Segment. Prior to fiscal 2018 the Company’s Information Technology Segment declines in revenue, gross profit and operating income.  Although the Company experienced a decline in revenues in its Information Technology segment in fiscal 2018 as compared to fiscal 2017, that decline was approximately $2.0 million. The continuedprimarily due to the sale of the Company’s Microsoft business unit at the end of fiscal 2017. Furthermore, the Company saw improvement in its quarterly revenue trend from its Information Technology segment during fiscal 2018.  Any future decline of our revenue, cash flows and/or stock price may give rise to a triggering event that may require the Company to record additional impairment charges on goodwill in the future.  The Company did not record a goodwill impairment charge in the fiscal year ended December 31, 2016.

During all periods presented, the Company determined that the existing qualitative factors did not suggest that an impairment of goodwill exists for both its Engineering and Specialty Healthcare Segments.  There can be no assurance that future indicators of impairment and tests of goodwill impairment will not result in impairment charges for both its Engineering and Specialty Healthcare segments.

The Company evaluates long-lived assets and intangible assets with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  When it is probable that undiscounted future cash flows will not be sufficient to recover an asset'sasset’s carrying amount, the asset is written down to its fair value.  Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell.

The Company uses stock options and restricted stock units to attract, retain and reward employees for long-term service.  The Company follows "Share-Based“Share-Based Payment,"” which requires that the compensation cost relating to stock-based payment transactions be recognized in the financial statements.  This compensation cost is measured based on the fair value of the equity or liability instruments issued.  The Company measures stock-based compensation cost using the Black-Scholes option pricing model for stock options and the fair value of the underlying common stock at the date of grant for restricted stock units.

The Company has risk participation arrangements with respect to workers compensation and health care insurance.  The Company establishes loss provisions based on historical experience and in the case of expected losses from workers compensation, considers input from third parties.  The amounts included in the Company'sCompany’s costs related to this risk participation are estimated and can vary based on changes in assumptions, the Company'sCompany’s claims experience or the providers included in the associated insurance programs.

The Company'sCompany’s future effective tax rates could be adversely affected by changes in the valuation of its deferred tax assets or liabilities or changes in tax laws or interpretations thereof. In addition, the Company is subject to the examination of its income tax returns by the Internal Revenue Service and other tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

The Company pays bonuses to certain executive management, field management and corporate employees based on, or after giving consideration to, a variety of financial performance measures. Bonuses for executive management, field management and certain corporate employees are accrued throughout the year for payment during the first quarter of the following year, based in part upon anticipated annual results compared to annual budgets.  In addition, the Company pays discretionary bonuses to certain employees, which are not related to budget performance. Variances in actual results versus budgeted amounts can have a significant impact on the calculations and therefore on the estimates of the required accruals.  Accordingly, the actual earned bonuses may be materially different from the estimates used to determine the quarterly accruals.

The Company'sCompany’s growth prospects are influenced by broad economic trends.  The pace of customer capital spending programs, new product launches and similar activities have a direct impact on the need for engineering and information technology services.  When the U.S.,United States, Canadian or global economies decline, the Company'sCompany’s operating performance could be adversely impacted.  The Company believes that its fiscal discipline, strategic focus on targeted vertical markets and diversification of service offerings provides some insulation from adverse trends.  However, declines in the economy could result in the need for future cost reductions or changes in strategy. 

Additionally, changes in government regulations could result in prohibition or restriction of certain types of employment services or the imposition of new or additional employee benefits, licensing or tax requirements with respect to the provision of employment services that may reduce the Company'sCompany’s future earnings.  There can be no assurance that the Company will be able to increase the fees charged to its clients in a timely manner and in a sufficient amount to cover increased costs as a result of any of the foregoing.

The consulting and employment services market is highly competitive with limited barriers to entry.  The Company competes in global, national, regional and local markets with numerous competitors in all of the Company'sCompany’s service lines.  Price competition in the industries the Company serves is significant, and pricing pressures from competitors and customers are increasing.  The Company expects that the level of competition will remain high in the future, which could limit the Company'sCompany’s ability to maintain or increase its market share or profitability.

A summary of operating results for the fifty-two week periods ended December 30, 201729, 2018 and December 31, 201630, 2017 is as follows (in thousands):

The Company has material operations in Canada, primarily from the Company'sCompany’s Engineering segment; this business is conducted primarily in Canadian dollars. Since the Company reports its consolidated results in U.S.United States dollars the consolidated results are subject to potentially material fluctuations as a result of changes in the Canadian dollar to U.S.United States dollar exchange rate (the "Exchange Rate"“Exchange Rate”). For the fifty-two week period ended December 30, 2017,29, 2018, the Company generated total revenues from its Canadian clients of $30.1$27.9 million in U.S.United States dollars at an Exchange Rate of 77.2%77.3% as compared to $24.4$30.1 million in U.S.United States dollars at an Exchange Rate of 75.5%77.2 % for the prior year comparable period.

Engineering revenues of $82.7$86.1 million for the fifty-two week period ended December 30, 201729, 2018 increased 12.1%4.0%, or $8.9$3.3 million, as compared to the comparable prior year period.  The increase was primarily due to increasesan increase in revenuesrevenue of $5.1$5.6 million from the Company'sCompany’s Energy Services Group $3.2and $2.6 million from the Company'sTKE acquisition, offset by decreases of $2.7 million from the Company’s Aerospace Group and $2.2 million from the Company’s Canadian Power Systems Engineering Group and $0.6 million from the Company's Aerospace Engineering Group.  Gross profit increased 13.9%0.8%, or $2.7$0.2 million, as compared to the comparable prior year period. Gross profit increased due tobecause of the increase in revenues and an increase in grossrevenue. Gross margin to 27.1%of 26.2% for the current period as compared to 26.6%decreased from 27.1% for the comparable prior year period. The gross margin increasedecrease was primarily due to moreless favorable utilization of billable consultants on fixed price contracts as the Company naturally experiences variability in utilization from quarter to quarter.utilization. The Engineering segment operating income was $4.3increased by $1.1 million to $5.4 million for the fifty-two week period ended December 30, 201729, 2018, as compared to $3.1$4.3 million for the comparable prior year period. The improvementincrease in operating income was primarily driven bydue to the fiscal 2017 increase to contingent consideration which generated an operating expense of $0.8 million. The balance of the increase to operating income was primarily due to the increase in gross profit and was offset by an increase in SGA expense of $0.9 million and an increase in contingent consideration of $0.5 million. The increase in SGA expense was primarily due to a higher allocation of corporate-generated SGA expense and also increased investment in selling costs.profit.

Specialty Health Care revenues of $71.3$83.7 million for the fifty-two week period ended December 30, 201729, 2018 increased 19.3%17.3%, or $11.5$12.3 million, as compared to the comparable prior year period.  The primary drivers of the increase in the revenues for the Specialty Health Care segment were increases of $5.7$9.7 million from the New York City Office, $3.1office, $4.1 million from the Honolulu office, $1.9$1.3 million from the Chicago office, $0.9Locum Tenens practice and $0.7 million from the HIM group and $0.5practice, offset primarily by decreases in revenue of $2.1 million from the travel nursing staffing group, and, partially offset by a decrease in revenue of $0.6$0.7 million from the permanent placement groups.Chicago office and $0.7 million from the Permanent Placement Group.  The primary reason for revenue increases in New York City and Hawaii werewas the incremental additionsaddition of paraprofessionals billed on school contracts. The Company primarily attributes the decline in revenue from its travel nursing staffing group to increased competition from large national competitors. The Specialty Health Care segment'ssegment’s gross profit increased by 11.6%7.4%, or $1.8$1.3 million, to $17.5$18.8 million for the fifty-two week period ended December 30, 201729, 2018 as compared to $15.7$17.5 million for the prior year period. The increase in gross profit was primarily driven by the increase in revenues, offset by lower gross profit margin. The Specialty Health Care segment'ssegment’s gross profit margin for the fifty-two week period ended December 30, 201729, 2018 decreased to 24.6%22.5% as compared to 26.2%24.6% for the comparable prior year period. The decrease in gross profit margin was primarily driven by thea decrease in high gross profit margin permanent placement revenues, the large increase in lower gross margin paraprofessional revenues in New York City and decreasesa decrease in gross profit margin from the travel nursing staffing group, generally due to market factors including increased competition and constrained labor.  Specialty Health Care experienced operating income of $1.3$1.9 million for the fifty-two week period ended December 30, 201729, 2018 as compared to $1.5$1.3 million for the comparable prior year period. The primary reason for the decreaseincrease in operating income was the increase to gross profit, offset by an increase of $0.7 million in SGA expense, partially offset by the increase in gross profit.expense.  SGA expense increased by $1.9 million, primarily due to the need to increase SGA infrastructure expense in order to support the increased activity levels associated with higher revenues in the current period and anticipated, continued increased activity for the Company's fiscal 2018 and a higher allocation of corporate-generated SGA expense.

Information Technology revenues of $32.7$30.6 million for the fifty-two week period ended December 30, 201729, 2018 decreased 23.7%6.3%, or $10.1$2.0 million, as compared to $42.8$32.7 million for the comparable prior year period.  The decrease was primarily from the sale of the Company’s Microsoft Business and reductions in project revenues from several large clients that were not replaced.  The Microsoft Business generated $1.8 million in revenues for the fifty-two week period ended December 30, 2017.  Gross profit of $8.5$7.9 million for the fifty-two week period ended December 30, 201729, 2018 decreased 27.3%6.5%, or $3.2$0.6 million, as compared to $11.7$8.5 million for the comparable prior year period. The decrease in gross profit was primarily due to the decrease in revenues and also impacted by a small decrease in gross profit margin.  The Information Technology gross profit margin for the fifty-two week period ended December 30, 201729, 2018 was 26.0%25.9% as compared to 27.3%26.0% for the comparable prior year period. Gross profit margin decreased because large project high-value, high-margin revenues decreased and thereby increased the portion of lowerThe Microsoft Business contributed $0.5 million in gross profit margin staffing-oriented revenues.for the comparable prior year period.  The Information Technology segment experienced a negligible operating loss in the current period as compared to an operating loss of $3.7 million for the fifty-two week period ended December 30, 2017 as compared to operating income of $0.5 million for the comparable prior year period.  The decreasechange in operating incomeloss was primarily due todriven by the goodwill impairment expense of $3.5 million and also a decrease in gross profit, partially offset by a decrease in SGA expense.  SGA expense of $8.5 million for the fifty-two week period ended December 30, 2017 decreased $2.4 million as compared to $10.9 milliongoodwill impairment in the comparable prior year period.period and also impacted by a decrease of $0.6 million in SGA expense. The decrease in SGA expense was primarily due to lower selling costs associated with lower revenue and gross profit,, a focus on reducingrightsizing SGA expense and also a lower allocation of corporate SGA expense.

The following non-GAAP measures, which adjust for the categories of expenses described below, primarily changes in contingent consideration as a result of re-measurement in the amount of contingent consideration we expect to pay with respect to past acquisitions, are non-GAAP financial measures.  Our management believes that these non-GAAP financial measures ("EBITDA", "Adjusted EBITDA", "Adjusted(“EBITDA,” “Adjusted EBITDA,” “Adjusted Net Income"Income” and "Diluted EPS"“Diluted EPS”) are useful information for investors, shareholders and other stakeholders of our company in gauging our results of operations on an ongoing basis and to enhance investors'investors’ overall understanding of our current financial performance and period-to-period comparisons.  We believe that both EBITDA is aand Adjusted EBITDA are performance measuremeasures and not a liquidity measure,measures, and therefore a reconciliation between net income and EBITDA and Adjusted EBITDA has been provided.  Neither EBITDA nor Adjusted EBITDA should not be considered as an alternative to net income as an indicator of performance.  In addition, neither EBITDA does not takenor Adjusted EBITDA takes into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows.  We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP.  These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The following unaudited table presents the Company's GAAP Net Income measure and the corresponding adjustments used to calculate "EBITDA"“EBITDA” and "Adjusted EBITDA"“Adjusted EBITDA” for the fifty-two weeksweek periods ended December 30, 201729, 2018 and December 31, 2016.30, 2017. 

  

The following table summarizes the major captions from the Company'sCompany’s Consolidated Statements of Cash Flows

($ in thousands):

Operating activities provided $5.1used $0.1 million of cash for the fifty-two week period ended December 30, 201729, 2018 as compared to $11.6providing $5.1 million in the comparable prior year period.  The major variant components of cash typically used in or provided by or used in operating activities in the fifty-two week period ended December 30, 2017 and the comparable prior year period are as follows: net income and changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and accrued payroll and related costs.  The following major non-cash expenses also provided cash: $1.6 million from depreciation and amortization, $0.5 million from share-based compensation, $1.1 million from provision for losses on accounts receivable and $1.5 million from deferred tax expense.

Net income for the fifty-two week period ended December 30, 201729, 2018 was $2.0$2.7 million as compared to $1.8$2.0 million for the comparable prior year period.  An increase in accounts receivables in the fifty-two week period ended December 30, 201729, 2018 used $0.5$7.7 million of cash as compared to providing $5.4$0.5 million in the comparable prior year period. The Company primarily attributes the increase in accounts receivables for the fifty-two week period ended December 30, 201729, 2018 to increased revenuesthe increase in revenue, particularly in the Company’s fourth quarter of fiscal 2017 compared2018. The Company anticipates that its accounts receivable balance relative to the fourth quarter ofrevenues will improve during fiscal 2016, offset by improved collections, across all three of the Company's business segments.2019. 

The Company'sCompany’s transit accounts payable generallyusually exceeds the Company'sCompany’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business.  The net of transit accounts payable and transit accounts receivable was a net liabilityreceivable of $0.1 million and a net payable of $1.7 million as of December 29, 2018 and December 30, 2017, respectively, so the cash impact during the fifty-two week period ended December 29, 2018 used $1.8 million in cash.  The net of transit accounts payable and transit accounts receivable were  net liabilities of $1.7 million and $2.5 million as of December 30, 2017 and December 31, 2016, respectively, so the cash impact during the fifty-two week period ended December 30, 2017 used $0.8 million in cash. The net of transit accounts payable and transit accounts receivable was a net liability of $2.5 million and $1.5 million as of December 31, 2016 as of January 2, 2016, respectively, so the cash impact during the fifty-two week period ended December 31, 2016 provided $1.0 million in cash. 

Prepaid expenses and other current assets used $0.3$0.2 million in cash for the fifty-two week period ended December 30, 201729, 2018 as compared to providing $1.2$0.3 million in the comparable prior year period.  The Company attributes these changes to general timing of payments in the normal course of business.

Accounts payable and accrued expenses used $0.3provided $1.0 million of cash for both the fifty-two week period ended December 30, 201729, 2018 and used $0.3 million for the comparable prior year period.  The Company attributes these changes to general timing of payments to vendors in the normal course of business. 

An increaseChanges in accrued payroll and related costs for the fifty-two week periodperiods ended December 29, 2018 and December 30, 2017 provided $1.3 million and $0.5 million in cash, as comparedrespectively.  A large portion of current period cash provided from changes in accrued payroll and related costs consists of $0.8 million in severance and related costs accrued for payment to using $1.5 million for the comparable prior year period.Company’s former chief executive officer.  There are three primary factors that impact accrued payroll and related costs: 1) there is a general correlation to operating expenses as payroll and related costs is the Company'sCompany’s largest expense group, so as operating costs increase or decrease, absent all other factors, so will the accrued payroll and related costs; 2) the Company pays the majority of its employeespayroll every two weeks and normally has thirteen weeks in a fiscal quarter, which means that the Company normally has a major payroll on the last business day of every other quarter; and 3) most of the Company'sCompany’s senior management participate in annual incentive plans and while progress advances are oftensometimes made during the fiscal year, these accrued bonus balances, to the extent they are projected to be achieved, generally accumulate throughout the year.  The Company'sCompany’s last major payroll for the fifty-two week period ended December 30, 201729, 2018 was paid on December 22, 2017.  The Company primarily attributes the increase in accrued payroll and related costs as of December 30, 2017 as compared to December 31, 2016 to fewer advanced payments made to senior managers under incentive compensation plans during fiscal 2017 as compared to fiscal 2016.21, 2018.

Investing activities used cash of $1.8$2.6 million for the fifty-two week period ended December 30, 201729, 2018 as compared to $0.8$1.8 million for the comparable prior year period.  The primary difference in the two periods presented is from the PSR acquisition which used $1.0Investing activities included increases for property and equipment of $0.5 million in cash at closing.and payments for businesses acquired of $0.3 million.

Financing activities used $0.8provided $0.3 million of cash for the fifty-two week period ended December 30, 201729, 2018 as compared to $11.6using $0.8 million in the comparable prior year period.  The Company made net borrowings under its line of credit of $13.0$0.3 million during the fifty-two week period ended December 30, 201729, 2018 as compared to net repayments of $6.7$13.0 million in the comparable prior year period.  The primary reason for borrowing during fiscal 2017net borrowings in the prior year period was to pay a special dividend totalingof $12.2 million. The Company also used $0.4 million and $4.3 million to repurchase common stock during the fifty-two week period ended December 30, 2017 and comparable prior year period, respectively.  The reason for the large difference is that Company believes that issuing a special dividend was a better use of capital in the current fiscal year than repurchasing stock. The Company also used $1.7 million and $1.0 million to pay contingent consideration for the current and prior year periods, respectively. The Company generated cash of $0.4 million from sales of shares from its equity plans for the current and prior year periods.  The Company paid $0.3 million in contingent consideration during the current fiscal year, as compared to $1.7 million in the comparable prior year period.

The Company and its subsidiaries are party to a loan agreementamended and restated its Revolving Credit Facility with Citizens Bank of Pennsylvania whichon August 9, 2018.  As amended and restated, the Revolving Credit Facility now provides for a $35$45.0 million revolving credit facility and includes(increased from $40.0 million), no longer has a sub-limit of $5 million for letters of credit (the "Revolving Credit Facility")(from a sub-limit of $5.0 million) and expires December 11, 2019.on August 8, 2023. The amended and restated Revolving Credit Facility has been amended several times, most recently pursuant to the Ninth Amendment entered into on December 8, 2017 whenprovides the Company was grantedwith waivers that expressly allows a cash dividendfrom certain financial covenant calculations of up to $12.4$1.4 million and waivesin the borrowers’ fiscal year ending on December 31, 2018 for certain expenses, fromincluding severance accrued for the Company's loan covenant calculations, including $1.3 millionCompany’s former chief executive officer and related payroll taxes, continuation of certain expensesbenefits and professional fees, charges incurred related to transactional financial advisory fees, legal costs, office closuresfees associated with defending an ongoing frivolous lawsuit with a competitor of the Company, and other expenses in fiscal 2017, up to $1.0 million consulting expenses for analyzing tax credits for research and development costs and 179D energy savings tax credits onsearch fees associated with hiring a rolling four quarter basis and up to $4.6 million for goodwill impairment.  senior executive.  Except as noted, all material terms remain unchanged.

All borrowings under the Revolving Credit Facility are collateralized by all of the assets of the Company and its subsidiaries and a pledge of the stock of its subsidiaries.  The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts on the Company'sCompany’s ability to borrow in order to pay dividends unless expressly permitted.  The Company did get permission from Citizens Bank to pay its dividend in 2017.dividends.  As of December 30, 2017,29, 2018, the Company was in compliance with all covenants contained in itsthe Revolving Credit Facility.

Borrowings under the line of credit as of December 29, 2018 and December 30, 2017 and December 31, 2016 were $27.3$27.5 million and $14.3$27.3 million, respectively.  At December 30, 201729, 2018 and December 31, 2016,30, 2017, there were letters of credit outstanding for $1.6 million and $0.8 million.million, respectively.  At December 30, 2017,29, 2018, the Company had availability for additional borrowings under the Revolving Credit Facility of $6.9$15.9 million.

On December 28, 2017, the Company paid to stockholders of record on December 22, 2017 a special cash dividend of $1.00 per share of common stock.  The Company also accrued $1.00 per share on 87,034 unvested restricted share units.  All restricted share units contain a dividend equivalent provision entitling holders to dividends paid between the restricted stock unit grant date and ultimate share distribution date.  Total accrued dividends as of December 30, 201729, 2018 were $87,034$52,000 to be paid from fiscal 20182019 to fiscal 2020.  Dividends on any forfeited restricted share units will be forfeited.

The Company anticipates that its primary uses of capital in future periods will be for working capital purposes.  Funding for any long-term and short-term capital requirements as well as future acquisitions will be derived from one or more of the Revolving Credit Facility (or a replacement thereof), funds generated through operations or future financing transactions.  The Company is subject to legal proceedings and claims that arise from time to time in the ordinary course of its business, which may or may not be covered by insurance.  Were an unfavorable final outcome to occur, there exists the possibility of a material adverse impact on our financial position, liquidity, and the results of operations.

The Company has a dispute with a customer that is a major utility in the United States. Both parties agreed in fiscal 2017 to resolve this dispute through binding arbitration.  Arbitration hearings with this customer started in fiscal 2018.  Essentially, the customer has not paid the balance of accounts receivable the Company believes are owed tofor certain disputed projects.  As of December 29, 2018, the Company. The Company recently compelled arbitration with this customer. The total amount dueof outstanding receivables from this customer on these disputed projects is $6.9$8.9 million, subject to anpotential upward adjustment following disclosures by the customerin damages claimed in the arbitration.  Additionally, as part of the arbitration process, the customer has asserted counter claimscounter-claims. While the total amount of $9.3asserted counter-claims is unknown as of December 29, 2018, the total amount of such counter-claims is anticipated to at least exceed $10.6 million.  The Company also believes these counter claims werecounter-claims are retaliatory in nature.  Prior to the arbitration,Company asserting its claims, the customer had not asserted any claims.counter-claims.  The Company believes these counter-claims asserted claimsby its customer have no merit and were merely asserted as a strategy to reduce the Company'sCompany’s own claims in any arbitration award or potential settlement agreement. The Company believes that its accounts receivable balance, subject to reserves, is fully collectible. Furthermore, the Company believes that this arbitration will conclude sometime inby the end of the Company’s fiscal year 2018.third quarter of 2019.  While the Company believes the customer's counter claimscustomer’s counter-claims to be frivolous and without merit, it can give no assurances that it will ultimately not have to pay all or a portion of such claims.counter-claims.  The Company is continuing work on one of the engagements that have given rise to this dispute and also on several engagements from the same client that are not currently part of the arbitration.

The Company utilizes SAP software for its financial reporting and accounting system which was implemented in 1999 and has not undergone significant upgrades since its initial implementation.  The Company believes that it will become necessary to upgrade or replace its SAP financial reporting and accounting system.  The Company has not determined when this contemplated replacement may be necessary, but may undertake a comprehensive review of the system during fiscal 2018.2019.  The Company estimates this upgrade or replacement of their financial reporting and accounting system will cost between $1.0 million and $2.0 million.  These estimates are subject to material change.

The Company'sCompany’s current commitments consist primarily of lease obligations for office space.  The Company believes that its capital resources are sufficient to meet its present obligations and those to be incurred in the normal course of business for at least the next 12 months.

The Company leases office facilities and various equipment under non-cancelable leases expiring at various dates through November 2022.March 2024.  Certain leases are subject to escalation clauses based upon changes in various factors.  The minimum future annual operating lease commitments for leases with non-cancelable terms, exclusive of unknown operating escalation charges, are as follows (in thousands):

As of December 30, 2017,29, 2018, the Company had sixfour active acquisition agreements whereby additional contingent consideration may be earned by the former shareholders: 1) effective July 1, 2012 the Company acquired certain assets of BGA, LLC ("BGA"(“BGA”); 2) effective August 1, 2014 the Company acquired all of the stock of Point Comm, Inc. ("PCI"); 3) effective July 5, 2015, the Company acquired certain assets of Substation Design Services, LLC ("SDS"(“SDS”); 4) effective December 31, 2016, the Company acquired certain assets of Allied Health Professionals, LLC ("AHP"); 5) effective April 16, 2017 the Company acquired certain assets of R.A.F. Services, Inc. ("RAF") and 6)3) effective October 1, 2017, the Company acquired all of the stock of PSR Engineering Solutions d.o.o. Beograd (Voždovac) ("PSR"(“PSR”) and 4) effective September 30, 2018 the Company acquired certain assets of Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC (together, “TKE”). The Company estimates future contingent payments at December 30, 201729, 2018 as follows:

Significant employment agreements are as follows:

The Company is a party to an Executive Severance AgreementsAgreement (the "Executive“Executive Severance Agreements"Agreement”) with Rocco Campanelli,each of Bradley S. Vizi, the Company's Executive Chairman and President (dated as of June 1, 2018), and Kevin Miller, the Company’s Chief ExecutiveFinancial Officer (dated as of February 28, 2014, and Kevin Miller, the Company's Chief Financial Officer,as amended) which setsets forth the terms and conditions of certain payments to be made by the Company to each executive in the event, while employed by the Company, such executivethe Executive experiences (a) a termination of employment unrelated to a "Change“Change in Control"Control” (as defined therein) or (b) there occurs a Change in Control and either (i) the executive'sExecutive’s employment is terminated for a reason related to the Change in Control or (ii) in the executivecase of Mr. Miller, Mr. Miller remains continuously employed with the Company for a specified period of timethree months following the Change in Control (i.e., twelve months for Mr. Campanelli and three months for Mr. Miller).Control.

Under the terms of the Executive Severance Agreements,Agreement, if either (a) the executiveExecutive is involuntarily terminated by the Company for any reason other than "Cause"“Cause” (as defined therein), "Disability"“Disability” (as defined therein) or death, or (b) the executiveExecutive resigns for "Good Reason"“Good Reason” (as defined therein), and, in each case, the termination is not a "Termination“Termination Related to a Change in Control"Control” (as defined below), the executiveExecutive will receive the following severance payments: (i) an amount equal to 1.5 times the sum of (a) the executive'sExecutive’s annual base salary as in effect immediately prior to the termination date (before taking into account any reduction that constitutes Good Reason) ("(“Annual Base Salary"Salary”) and (b) the highest annual bonus paid to the executiveExecutive in any of the three fiscal years immediately preceding the executive'shis termination date ("Bonus"(“Bonus”), to be paid in installments over the twelve month period following the executive'sExecutive’s termination date; and (ii) for a period of eighteen months following the executive'sExecutive’s termination date, a monthly payment equal to the monthly COBRA premium that the executiveExecutive is required to pay to continue medical, vision, and dental coverage, for himself and, where applicable, his spouse and eligible dependents.

Notwithstanding the above, if the executiveExecutive has a termination as described above and can reasonably demonstrate that such termination would constitute a Termination Related to a Change in Control, and a Change in Control occurs within 120 days following the executive'sExecutive’s termination date, the executiveExecutive will be entitled to receive the payments set forth below for a Termination Related to a Change in Control, less any amounts already paid to the executive,Executive, upon consummation of the Change in Control.

Under the terms of the Executive Severance Agreements,Agreement, if a Change in Control occurs and (a) the executiveExecutive experiences a Termination Related to a Change in Control on account of (i) an involuntary termination by the Company for any reason other than Cause, death, or Disability, (ii) an involuntary termination by the Company within a specified period of timetwelve months (for Mr. Vizi) or three months (for Mr. Miller) following a Change in Control (i.e., twelve months for Mr. Campanelli and three months for Mr. Miller) on account of Disability or death, or (iii) a resignation by the executiveExecutive with Good Reason; or (b) in the case of Mr. Miller, a resignation by the executive,Mr. Miller, with or without Good Reason, which results in a termination date that is the last day of the specifiedthree month period (i.e., twelve months for Mr. Campanelli and three months for Mr. Miller) following a Change in Control, then the executiveExecutive will receive the following severance payments: (1) a lump sum payment equal to two times the sum of the executive'sExecutive’s (a) Annual Base Salary and (b) Bonus; and (2) a lump sum payment equal to twenty-four multiplied by the monthly COBRA premium cost, as in effect immediately prior to the executive'sExecutive’s termination date, for the executiveExecutive to continue medical, dental and vision coverage, as applicable, in such Company plans for himself and, if applicable, his spouse and eligible dependents.  Upon the occurrence of a Change in Control, the Company shall establish an irrevocable rabbi trust and contribute to the rabbi trust the applicable amounts due under the Executive Severance Agreements.

TheMr. Miller’s Executive Severance Agreements provideAgreement provides that if the executiveMr. Miller remains continuously employed for a specified period of timethree months following a Change in Control (i.e., twelve months for Mr. Campanelli and three months for Mr. Miller) and is employed by the Company on the last day of such specified period, the executiveMr. Miller will receive a lump sum payment equal to two times the sum of the executive'shis (a) Annual Base Salary and (b) Bonus (the "Change“Change in Control Payment"Payment”).  If the executiveMr. Miller receives the Change in Control Payment, the executivehe will not be eligible to receive any severance payments under his Executive Severance Agreement.

None.

Consulting, staffing, and project services are generally priced based on mark-ups on prevailing rates of pay, and as a result are able to generally maintain their relationship to direct labor costs.  Permanent placement services are priced as a function of salary levels of the job candidates.

The Company'sCompany’s business is labor intensive; therefore, the Company has a high exposure to increasing health care benefit costs.  The Company attempts to compensate for these escalating costs in its business cost models and customer pricing by passing along some of these increased health care benefit costs to its customers and employees, however, the Company has not been able to pass on all increases.  The Company is continuing to review its options to further control these costs, which the Company does not believe are representative of general inflationary trends.  Otherwise, inflation has not been a meaningful factor in the Company'sCompany’s operations.

The Company'sCompany’s exposure to market risk for changes in interest rates relates primarily to the Company'sCompany’s investment portfolio and debt instruments, which primarily consist of its Revolving Credit Facility. The Company does not have any derivative financial instruments in its portfolio.  The Company places its investments in instruments that meet high credit quality standards.  The Company is averse to principal loss and ensures the safety and preservation of its invested funds by limiting default risk, market risk and reinvestment risk.  As of December 30, 2017,29, 2018, the Company'sCompany’s investments consisted of cash and money market funds.  The Company does not use interest rate derivative instruments to manage its exposure to interest rate changes.  Based on the Company'sCompany’s variable-rate line of credit balances during the fiscal year ended December 30, 2017,29, 2018, if the interest rate on the Company'sCompany’s variable-rate line of credit (using an incremental borrowing rate) during the period had been 1.0% higher, the Company'sCompany’s interest expense on an annualized basis would have increased by $0.2$0.3 million.  The Company does not expect any material loss with respect to its investment portfolio.

The financial statements, together with the report of the Company'sCompany’s Independent Registered Public Accounting Firm, begins on page F-1.

None.

The Company'sCompany’s management, under the supervision and with the participation of the Company'sCompany’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company'sCompany’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that those disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms and is accumulated and communicated to the Company'sCompany’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company'scompany’s assets that could have a material effect on the financial statements.

Management performed an assessment of the effectiveness of our internal control over financial reporting as of December 30, 201729, 2018 based upon criteria in Internal Control-Integrated Framework issued and updated in fiscal 2013 by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"(“COSO”). Based on this assessment, management determined that the company'scompany’s internal control over financial reporting was effective as of December 30, 2017,29, 2018, based on the criteria in Internal Control-Integrated Framework issued by COSO.

There have been no changes in the Company'sCompany’s internal control over financial reporting that occurred during the Company'sCompany’s most recent fiscal quarter and that have materially affected, or are reasonably likely to materially affect, the Company'sCompany’s internal control over financial reporting.

None.

The information required by Item 10 shall be included in the 20182019 Proxy Statement and is incorporated herein by reference.

The information required by Item 11 shall be included in the 20182019 Proxy Statement and is incorporated herein by reference.

Except as set forth below, the information required by Item 12 shall be included in the 20182019 Proxy Statement and is incorporated herein by reference.

The table below presents certain information concerning securities issuable in connection with equity compensation plans that have been approved by the Company'sCompany’s shareholders and that have not been approved by the Company'sCompany’s shareholders.

The information required by Item 13 shall be included in the 20182019 Proxy Statement and is incorporated herein by reference.

The information required by Item 14 shall be included in the 20182019 Proxy Statement and is incorporated herein by reference.

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.