UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 |
RCM TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in its Charter) |
Nevada | 95--1480559 | |||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||
2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey | 08109-4613 | |||
(Address of Principal Executive Offices) | (Zip Code) | |||
Registrant's telephone number, including area code: | (856) 356-4500 | |||
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Common Stock, par value $0.05 per share | RCMT | The NASDAQ Stock Market LLC | ||
Securities registered pursuant to Section 12(g) of the Act: | None | |||
Large Accelerated Filer [ ] | Accelerated Filer [ ] | Non-Accelerated Filer | Smaller Reporting Company [X] |
Emerging Growth Company [ ] |
RCM TECHNOLOGIES, INC. |
FORM |
TABLE OF CONTENTS |
PART | |||
III | |||
Item 10. | Directors, Executive Officers and Corporate Governance | ||
Item 11. | Executive Compensation | ||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | ||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | ||
Item 14. | Principal | ||
PART IV | |||
Item 15. | Exhibits and Financial Statement Schedules | ||
PART |
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM |
ITEM |
Name | Age | Position |
Bradley S. Vizi | 36 | Executive Chairman & President |
Kevin D. Miller | 53 | Chief Financial Officer, Treasurer and Secretary |
Michael Boyle | 48 | Division President, Information Technology Services |
Frank Petraglia | 64 | Division President, Engineering Services |
Michael Saks | 63 | Division President, Health Care Services |
ITEM |
Committee | |||
Board Member | Audit | Compensation | Nominating & Corporate Governance |
Roger H. Ballou | X(1) | X | X |
Richard A. Genovese | X | X | X(1) |
Swarna Kakodkar | X | ||
Leon Kopyt | |||
S. Gary Snodgrass | X | X(1) | X |
Bradley S. Vizi |
(1) | Chairman |
ITEM |
Revenues | Total Assets | ||
United States | $152,232 | $52,634 | |
Canada | 30,084 | 15,419 | |
Puerto Rico | 4,043 | 1,891 | |
Serbia | 378 | 3,374 | |
$186,737 | $73,318 |
ITEM |
ITEM |
Name and Principal Position | Year | Salary | Stock Awards(1) | Non-Equity Incentive Plan Compensation | All Other Compensation(2) | Total |
Bradley S. Vizi(3) | 2019 | $250,000 | $175,200 | $ - | $4,890 | $430,090 |
Executive Chairman & President | 2018 | $135,577 | $331,955 | $ - | $23,076 | $490,608 |
Michael Saks | 2019 | $275,000 | $ - | $244,678 | $20,547 | $540,225 |
President, Health Care Services | 2018 | $275,000 | $ - | $175,000 | $31,090 | $481,090 |
Kevin Miller | 2019 | $370,000 | $ - | $ - | $36,832 | $406,832 |
Chief Financial Officer | 2018 | $370,000 | 34,200 | $ - | $59,213 | $463,413 |
(1) | Mr. Vizi vested in 40,000 shares in January 2020, pursuant to a performance-based stock award based on fiscal 2019 performance metrics granted on March 6, 2019. Mr. Vizi vested in 47,148 shares in January 2019, pursuant to a performance-based stock award based on fiscal 2018 performance metrics granted on October 23, 2018. Mr. Vizi was also granted time-based restricted stock awards for 15,000 shares on June 1, 2018 and 20,000 shares on December 14, 2018. Mr. Miller was granted 10,000 shares in compensation for fiscal 2018. These amounts are based upon the grant date fair value of the option awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 718. The assumptions used in determining the amounts in the column are set forth in Note 11 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 filed with the Commission. |
(2) | This amount represents (i) premiums we paid during 2019 for medical, dental, vision, life and disability insurance on each of the officers named in this table as follows: Mr. Vizi: $4,890; Mr. Saks: $20,547; and Mr. Miller $36,832 and (ii) the following approximated amounts for Company leased automobiles or monthly automobile allowances and related expenses: Mr. Saks: $1,246. |
(3) | Mr. Vizi was appointed Executive Chairman and President on June 1, 2018. |
ITEM |
Number of Shares or Units of Stock That Have | Market Value of Shares or Units of Stock That Have | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have | |||||
Name | Not Vested | Not Vested(1) | Not Vested(2) | Not Vested(1) | ||||
Bradley S. Vizi(3) | 20,000 | $57,400 | 160,000 | $459,200 | ||||
Michael Saks | ||||||||
Kevin Miller |
(1) | Calculated by multiplying the number of shares in the preceding column by $2.87, the closing price per share of the Company’s common stock on December 27, 2019, the last trading day of our last fiscal year. |
(2) | Consists of performance-based restricted share units of 160,000 awarded to Mr. Vizi on March 6, 2019, assuming achievement of the applicable performance goals at the target level of achievement. Of this amount, 80,000 were to be earned based on achievement of the performance goals measured over the performance period beginning on December 30, 2018 and ending on December 28, 2019. On January 16, 2020, the Compensation Committee certified the results under the portion of this grant and a total of 40,000 PSUs, with a grant date fair value of $175,200, vested with respect to this portion of the award. This amount is reflected in the Summary Compensation Table. |
(3) | Mr. Vizi was appointed Executive Chairman and President on June 1, 2018. |
ITEM |
Name and Principal Position | Fees Earned Or Paid In Cash | Equity Awards(1) | All Other Compensation | Total |
Roger H. Ballou | $80,000 | $45,000 | - | $125,000 |
Richard A. Genovese | $50,000 | $45,000 | $95,000 | |
Swarna Kakodkar(2) | $2,298 | $45,000 | $47,298 | |
Leon Kopyt | $45,000 | $45,000 | - | $90,000 |
S. Gary Snodgrass | $55,000 | $45,000 | - | $100,000 |
(2) | Ms. Kakodkar was elected to the Board on December 13, 2019. |
ITEM |
Common Stock | ||||
Fiscal Year Ended December 31, 2016 | High | Low | ||
First Quarter | $6.00 | $4.52 | ||
Second Quarter | $5.87 | $5.03 | ||
Third Quarter | $6.70 | $5.15 | ||
Fourth Quarter | $7.23 | $5.80 | ||
Fiscal Year Ended December 30, 2017 | ||||
First Quarter | $6.50 | $4.51 | ||
Second Quarter | $5.80 | $4.60 | ||
Third Quarter | $5.76 | $4.91 | ||
Fourth Quarter | $7.50 | $5.50 |
Fiscal Years Ended | ||||||||
December 30, 2017 | December 31, 2016 | |||||||
Amount | % of Revenue | Amount | % of Revenue | |||||
Revenues | $186,737 | 100.0 | $176,448 | 100.0 | ||||
Cost of services | 138,350 | 74.1 | 129,418 | 73.4 | ||||
Gross profit | 48,387 | 25.9 | 47,030 | 26.6 | ||||
Selling, general and administrative | 40,385 | 21.6 | 40,063 | 22.7 | ||||
Legal, office closures and other charges | 1,447 | 0.8 | 1,283 | 0.7 | ||||
Tax credit professional fees | 259 | 0.1 | - | 0.0 | ||||
Change in contingent consideration | 781 | 0.4 | 285 | 0.1 | ||||
Goodwill impairment | 3,478 | 1.9 | - | 0.0 | ||||
Depreciation and amortization | 1,757 | 1.0 | 1,569 | 0.9 | ||||
Operating costs and expenses | 48,107 | 25.8 | 43,200 | 24.4 | ||||
Operating income | 280 | 0.1 | 3,830 | 2.2 | ||||
Other expense, net and foreign currency transactions | (525 | ) | (0.2 | ) | (528 | ) | (0.3 | ) |
(Loss) income before income taxes | (245 | ) | (0.1 | ) | 3,302 | 1.9 | ||
Income tax (benefit) expense | (2,255 | ) | (1.2 | ) | 1,544 | 0.9 | ||
Net income | $2,010 | 1.1 | $1,758 | 1.0 |
Fifty-Two Week Periods Ended | ||||
December 30, 2017 | December 31, 2016 | |||
GAAP net income | $2,010 | $1,758 | ||
Income tax (benefit) expense | (2,255 | ) | 1,544 | |
Interest expense | 590 | 539 | ||
Depreciation and amortization | 1,757 | 1,569 | ||
EBITDA (non-GAAP) | $2,102 | $5,410 | ||
Adjustments | ||||
Legal, office closures and other charges | 1,447 | 1,283 | ||
Tax credit professional fees | 259 | - | ||
Change in contingent consideration | 781 | 285 | ||
Goodwill impairment | 3,478 | - | ||
Gain on foreign currency transactions | (65 | ) | (11 | ) |
Adjusted EBITDA (non-GAAP) | $8,002 | $6,967 |
Fiscal Years Ended | |||||
December 30, 2017 | December 31, 2016 | ||||
Cash provided by (used in): | |||||
Operating activities | $5,071 | $11,635 | |||
Investing activities | ($1,803 | ) | ($831 | ) | |
Financing activities | ($826 | ) | ($11,556 | ) |
Fiscal Years | Amount |
2018 | $3,036 |
2019 | 1,695 |
2020 | 1,056 |
2021 | 516 |
2022 | 304 |
Total | $6,607 |
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED) |
ITEM | |
Name and Address of Beneficial Owner | Number of Shares | Approximate Percentage of Outstanding Common Stock(1) |
IRS Partners No. 19, L.P(2) | 3,270,665 | 24.9% |
515 S. Figueroa Street, Suite 1050 | ||
Los Angeles, CA 90071 | ||
Dimensional Fund Advisors LP(3) | 826,298 | 6.3% |
Building One | ||
6300 Bee Cave Road | ||
Austin, TX 78746 | ||
Renaissance Technologies LLC(4) | 705,462 | 5.4% |
800 Third Avenue | ||
New York, NY 10022 |
(1) | Based on 13,135,970 shares outstanding as of April 18, 2020. |
(2) | Based on Amendment No. 16 to Schedule 13D (the “Amendment”), filed with the Commission on January 17, 2020, by IRS Partnership No. 19, L.P. (“IRS 19”), The Leonetti/O’Connell Family Foundation (the “Foundation”), M2O, Inc. (“M2O”), The Michael F. O’Connell and Margo L. O’Connell Revocable Trust (the “Trust”), Michael O’Connell (“Mr. O’Connell” and, collectively with IRS 19, the Foundation, M2O and the Trust, the “O’Connell Entities”), Harvest Financial Corporation (“Harvest”) and Bradley Vizi (“Mr. Vizi”). The Amendment states that IRS 19, M2O, the Trust and Mr. O’Connell may be deemed to have the shared voting and dispositive power over the 2,692,065 shares owned by IRS 19 and that the Foundation and Mr. O’Connell may be deemed to have shared voting and dispositive power over 266,074 shares owned by the Foundation. The Amendment also states that Harvest exclusively manages IRS 19’s and the Foundation’s investment in the Common Shares pursuant to which Mr. Vizi on behalf of Harvest manages such investments. In addition to the Schedule 13D, this amount reflects certain additional information known to the Company regarding Mr. Vizi’s share ownership. As a result, Harvest and Mr. Vizi may be deemed to have shared dispositive power with respect to the 2,958,139 shares held by IRS 19 and the Foundation. Mr. Vizi has sole voting and dispositive power over 84,526 shares. |
(3) | Based on Amendment No. 19 to Schedule 13D filed with the Commission on February 12, 2020. The filing states that Dimensional Fund Advisors LP, a registered investment advisor, has sole voting power over 822,9443 of these shares and sole dispositive power as to all of these shares. |
(4) | Based on Amendment No. 3 to Schedule 13D filed with the Commission on February 13, 2020. The filing states that Renaissance Technologies LLC has sole voting power over 700,909 of these shares and sole or shared dispositive power over all of these shares. |
ITEM | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
AND RELATED STOCKHOLDER MATTERS (CONTINUED) |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for issuance under equity compensation plans, excluding securities reflected in column (a) |
(a) | (b) | (c) | |
487,034(1) | N/A(1) | 332,232 | |
Equity compensation plans not approved by security holders | ____________________ | ____________________ | ____________________ |
Total | 487,034 | N/A | 332,232 |
Name | Number of Shares | Approximate Percentage of Outstanding Common Stock | |
Roger H. Ballou | 73,062 | * | |
Richard A. Genovese | 11,968 | * | |
Swarna Kakodkar | - | * | |
Leon Kopyt | 584,702 | 4.5% | |
S. Gary Snodgrass | 56,608 | * | |
Bradley S. Vizi | 162,526 | 1.2% | |
Michael Saks | 83,343 | * | |
Frank Petraglia | 38,277 | * | |
Kevin D. Miller | 464,231 | 3.5% | |
Michael Boyle | 10,000 | * | |
All directors and executive officers as a group (10 persons) | 1,484,717 | 11.3% |
* | Represents less than one percent of our outstanding common stock. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR |
INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
PART IV |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
+ | Asset Purchase Agreement, dated November 8, 2018, by and among RCM Technologies (USA), Inc., Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC, as Sellers, certain members of Sellers, and, solely for purposes of being bound by the Parent Guarantee (as defined therein) in such agreement, RCM Technologies, Inc.; incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 15, 2018. | ||
Articles of Incorporation, as amended; incorporated by reference to Exhibit 3(a) to the | |||
Certificate of Amendment of Articles of Incorporation; incorporated by reference to Exhibit A to the | |||
Certificate of Amendment of Articles of Incorporation; incorporated by reference to Exhibit B to the | |||
Amended and Restated Bylaws; incorporated by reference to Exhibit 3.1 to the | |||
Description of Common Stock filed with the Securities and Exchange Commission on March 5, 2000. | |||
* | RCM Technologies, Inc. 2000 Employee Stock Incentive Plan, dated January 6, 2000; incorporated by reference to Exhibit A to the | ||
* | The RCM Technologies, Inc. 2007 Omnibus Equity Compensation Plan; incorporated by reference to Annex A to the | ||
* | |||
* | Amendment No. 1 to Executive Severance Agreement between RCM Technologies, Inc. and Kevin Miller dated December 26, 2017; incorporated by reference to Exhibit 10(x) to the Registrant’s Annual Report on Form 10-K for this fiscal year ended December 29, 2018, filed with the Securities and Exchange Commission on March 8, 2018. |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED) |
(b) | Exhibits (Continued) | |||
* | RCM Technologies, Inc. Amended and Restated 2014 Omnibus Equity Compensation Plan; incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement for the 2016 Annual Meeting filed with the Securities and Exchange Commission on October 28, 2016. | |||
* | Form of | |||
* | RCM Technologies, Inc. Change in Control Plan for Selected Executive Management (filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 12, 2015 and incorporated herein by reference). | |||
* | Amendment 2015-3 to the RCM Technologies, Inc. 2001 Employee Stock Purchase Plan; incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement for the 2015 Annual Meeting filed with the Securities and Exchange Commission on October 30, 2015. | |||
* | Amendment 2018-4 to the RCM Technologies, Inc. 2001 Employee Stock Purchase Plan; incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2018. | |||
* | Executive Severance Agreement, dated as of | |||
First Amendment to Third Amended and Restated Loan Agreement, dated as of August 9, 2018, by and among the Company and all of its subsidiaries, and Citizens Bank, N.A., a national banking association (as successor by merger to Citizens Bank of Pennsylvania), in its capacities as lender and as administrative agent and arranger; incorporated by reference to Exhibit 99 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on | ||||
Subsidiaries of the Registrant. | ||||
Consent of Macias, Gini & O’Connell, LLP. (Previously filed) | ||||
Consent of EisnerAmper LLP. | ||||
Certifications of Chief Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. (Filed herewith) | ||||
Certifications of Chief Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. (Filed herewith) |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED) |
(b) | Exhibits (Continued) | |||
Certifications of Chief Executive Officer Required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed | ||||
Certifications of Chief Financial Officer Required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed | ||||
* | Constitutes a management contract or compensatory plan or arrangement. |
SIGNATURES |
RCM Technologies, Inc. | |||
April 22, 2020 | By: | /s/ | |
Date: | By: | /s/ Kevin D. Miller | |
Kevin D. Miller | |||
Chief Financial Officer, Treasurer and Secretary |
Exhibit 31.1 |
December 30, | December 31, | |||||
2017 | 2016 | |||||
Current assets: | ||||||
Cash and cash equivalents | $2,851 | $279 | ||||
Accounts receivable, net | 46,080 | 45,170 | ||||
Transit accounts receivable | 3,002 | 4,295 | ||||
Prepaid expenses and other current assets | 3,706 | 3,327 | ||||
Total current assets | 55,639 | 53,071 | ||||
Property and equipment, net | 3,446 | 4,052 | ||||
Other assets: | ||||||
Deposits | 215 | 212 | ||||
Goodwill | 11,685 | 12,325 | ||||
Intangible assets, net | 105 | 171 | ||||
Deferred tax assets, net, domestic | 2,189 | - | ||||
Total other assets | 14,194 | 12,708 | ||||
Total assets | $73,279 | $69,831 |
Current liabilities: | |||||||
Accounts payable and accrued expenses | $8,634 | $8,154 | |||||
Transit accounts payable | 4,661 | 6,776 | |||||
Accrued payroll and related costs | 7,780 | 7,185 | |||||
Income taxes payable | 372 | 537 | |||||
Liability for contingent consideration from acquisitions | 741 | 1,061 | |||||
Total current liabilities | 22,188 | 23,713 | |||||
Deferred tax liability, domestic | - | 148 | |||||
Deferred tax liability, foreign | 431 | 234 | |||||
Liability for contingent consideration from acquisitions | 1,350 | 170 | |||||
Borrowings under line of credit | 27,279 | 14,311 | |||||
Total liabilities | 51,248 | 38,576 | |||||
Stockholders' equity: | |||||||
Preferred stock, $1.00 par value; 5,000,000 shares authorized; | |||||||
no shares issued or outstanding | - | - | |||||
Common stock, $0.05 par value; 40,000,000 shares authorized; | |||||||
15,017,522 shares issued and 12,194,350 shares outstanding at December 30, 2017 and 14,716,940 shares issued and 11,953,080 shares outstanding at December 31, 2016 | 751 | 736 | |||||
Additional paid-in capital | 104,540 | 115,607 | |||||
Accumulated other comprehensive loss | (2,395 | ) | (2,578 | ) | |||
Accumulated deficit | (65,878 | ) | (67,888 | ) | |||
Treasury stock (2,823,172 shares at December 30, 2017 and 2,763,860 shares at December 31, 2016) at cost | (14,987 | ) | (14,622 | ) | |||
Stockholders' equity | 22,031 | 31,255 | |||||
Total liabilities and stockholders' equity | $73,279 | $69,831 |
December 30, 2017 | December 31, 2016 | ||||
Revenues | $186,737 | $176,448 | |||
Cost of services | 138,350 | 129,418 | |||
Gross profit | 48,387 | 47,030 | |||
Operating costs and expenses | |||||
Selling, general and administrative | 40,385 | 40,063 | |||
Depreciation and amortization | 1,757 | 1,569 | |||
Legal, office closures and other charges | 1,447 | 1,283 | |||
Tax credit professional fees | 259 | - | |||
Change in contingent consideration | 781 | 285 | |||
Goodwill impairment | 3,478 | - | |||
Operating costs and expenses | 48,107 | 43,200 | |||
Operating income | 280 | 3,830 | |||
Other (expense) income | |||||
Interest expense and other, net | (590 | ) | (539 | ) | |
Gain on foreign currency transactions | 65 | 11 | |||
Other expense | (525 | ) | (528 | ) | |
(Loss) income before income taxes | (245 | ) | 3,302 | ||
Income tax (benefit) expense | (2,255 | ) | 1,544 | ||
Net income | $2,010 | $1,758 | |||
Basic and diluted net income per share | $0.17 | $0.14 |
December 30, | December 31, | |||
2017 | 2016 | |||
Net income | $2,010 | $1,758 | ||
Other comprehensive income | 183 | 267 | ||
Total comprehensive income | $2,193 | $2,025 |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Treasury Stock | Total | |||||||||||
Issued Shares | Amount | Shares | Amount | |||||||||||||
Balance, January 2, 2016 | 14,559,381 | $728 | $114,331 | ($2,845 | ) | ($69,646 | ) | 2,062,746 | ($10,365 | ) | $32,203 | |||||
Issuance of stock under employee stock purchase plan | 81,225 | 4 | 364 | - | - | - | - | 368 | ||||||||
Translation adjustment | - | - | - | 267 | - | - | - | 267 | ||||||||
Issuance of stock upon exercise of stock options | 2,500 | - | 15 | - | - | - | - | 15 | ||||||||
Issuance of stock upon vesting of restricted share units | 73,834 | 4 | (4 | ) | - | - | - | - | - | |||||||
Share based compensation expense | - | - | 901 | - | - | - | - | 901 | ||||||||
Common stock repurchase | - | - | - | - | - | 701,114 | (4,257 | ) | (4,257 | ) | ||||||
Net income | - | - | - | - | 1,758 | - | - | 1,758 | ||||||||
Balance, December 31, 2016 | 14,716,940 | $736 | $115,607 | ($2,578 | ) | ($67,888 | ) | 2,763,860 | ($14,622 | ) | $31,255 | |||||
Issuance of stock under employee stock purchase plan | 90,931 | 4 | 390 | - | 394 | |||||||||||
Translation adjustment | - | - | - | 183 | - | - | - | 183 | ||||||||
Issuance of stock upon exercise of stock options | 11,917 | 1 | 64 | - | - | - | - | 65 | ||||||||
Issuance of stock upon vesting of restricted share units | 197,734 | 10 | (10 | ) | - | - | - | - | - | |||||||
Share based compensation expense | - | - | 770 | - | - | - | - | 770 | ||||||||
Common stock repurchase | - | - | - | - | - | 59,312 | (365 | ) | (365 | ) | ||||||
Dividends to stockholders | - | - | (12,194 | ) | - | - | - | - | (12,194 | ) | ||||||
Dividends accrued | - | - | (87 | ) | - | - | - | - | (87 | ) | ||||||
Net income | - | - | - | - | 2,010 | - | - | 2,010 | ||||||||
Balance, December 30, 2017 | 15,017,522 | $751 | $104,540 | ($2,395 | ) | ($65,878 | ) | 2,823,172 | ($14,987 | ) | $22,031 |
December 30, 2017 | December 31, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $2,010 | $1,758 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,757 | 1,569 | ||||||
Increase in contingent consideration | 781 | 285 | ||||||
Goodwill impairment | 3,478 | - | ||||||
Share-based compensation expense | 770 | 901 | ||||||
Provision for losses on accounts receivable | 210 | 616 | ||||||
Deferred income tax (benefit) expense | (2,336 | ) | 463 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (459 | ) | 5,427 | |||||
Transit accounts receivable | 1,330 | 3,220 | ||||||
Prepaid expenses and other current assets | (293 | ) | 1,228 | |||||
Accounts payable and accrued expenses | (318 | ) | (290 | ) | ||||
Transit accounts payable | (2,160 | ) | (2,254 | ) | ||||
Accrued payroll and related costs | 483 | (1,473 | ) | |||||
Income taxes payable | (182 | ) | 185 | |||||
Total adjustments | 3,061 | 9,877 | ||||||
Net cash provided by operating activities | 5,071 | 11,635 | ||||||
Cash flows from investing activities: | ||||||||
Property and equipment acquired | (1,040 | ) | (846 | ) | ||||
Decrease in deposits | - | 15 | ||||||
Cash payments for business acquired, net of cash acquired | (763 | ) | - | |||||
Net cash used in investing activities | (1,803 | ) | (831 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under line of credit | 92,918 | 83,605 | ||||||
Repayments on line of credit | (79,950 | ) | (90,294 | ) | ||||
Sale of stock for employee stock purchase plan | 394 | 368 | ||||||
Exercise of stock options | 65 | 15 | ||||||
Common stock repurchases | (365 | ) | (4,257 | ) | ||||
Dividends paid to shareholders | (12,194 | ) | - | |||||
Contingent consideration paid | (1,694 | ) | (993 | ) | ||||
Net cash used in financing activities | (826 | ) | (11,556 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 130 | 46 | ||||||
Increase (decrease) in cash and cash equivalents | 2,572 | (706 | ) | |||||
Cash and cash equivalents at beginning of period | 279 | 985 | ||||||
Cash and cash equivalents at end of period | $2,851 | $279 | ||||||
Supplemental cash flow information: | ||||||||
Cash paid for: | ||||||||
Interest | $500 | $464 | ||||||
Income taxes | $522 | $927 | ||||||
Non-cash investing activities: | ||||||||
Non-cash consideration for business acquisitions | $1,896 | $695 | ||||||
Non-cash financing activities: | ||||||||
Dividend declared but unpaid on unvested restricted share units | $87 | $ - | ||||||
Vesting of restricted share units | $1,294 | $473 |
December 30, 2017 | December 31, 2016 | |||
Billed | $31,448 | $34,463 | ||
Accrued and unbilled | 10,573 | 6,894 | ||
Work-in-progress | 5,026 | 5,215 | ||
Allowance for sales discounts and doubtful accounts | (967 | ) | (1,402 | ) |
Accounts receivable, net | $46,080 | $45,170 |
December 30, 2017 | December 31, 2016 | |||
Equipment and furniture | $938 | $1,045 | ||
Computers and systems | 6,172 | 5,521 | ||
Leasehold improvements | 899 | 804 | ||
8,009 | 7,370 | |||
Less: accumulated depreciation and amortization | 4,563 | 3,318 | ||
Property and equipment, net | $3,446 | $4,052 |
Engineering | Specialty Health Care | Information Technology | Total | ||||||
Balance as of January 2, 2016 | $4,411 | $1,703 | $5,516 | $11,630 | |||||
Goodwill recorded, AHP acquisition | - | 695 | - | 695 | |||||
Balance as of December 31, 2016 | $4,411 | $2,398 | $5,516 | $12,325 | |||||
Goodwill recorded, RAF acquisition | 133 | - | - | 133 | |||||
Goodwill recorded, PSR acquisition | 2,705 | - | - | 2,705 | |||||
Goodwill impairment | - | - | (3,478 | ) | (3,478 | ) | |||
Balance as of December 30, 2017 | $7,249 | $2,398 | $2,038 | $11,685 |
December 30, 2017 | December 31, 2016 | ||
Restricted covenants | $17 | $27 | |
Customer relationships | 88 | 144 | |
Total intangible assets | $105 | $171 |
Fiscal Years Ended | ||||
December 30, 2017 | December 31, 2016 | |||
Basic weighted average shares outstanding | 11,995,341 | 12,302,558 | ||
Dilutive effect of outstanding restricted share units and stock options | 121,860 | 120,790 | ||
Weighted average dilutive shares outstanding | 12,117,201 | 12,423,348 |
December 30, 2017 | December 31, 2016 | ||
Exercise of options outstanding | 0 | 42,000 | |
Time-based restricted share units outstanding | 87,034 | 197,734 | |
Performance-based restricted share units outstanding | 400,000 | 200,000 | |
Future grants of options or shares | 332,232 | 619,266 | |
Shares reserved for employee stock purchase plan | 177,280 | 268,211 | |
Total | 996,546 | 1,327,211 |
All Stock Options Outstanding | ||||
Shares | Weighted Average Exercise Price | |||
Options outstanding as of January 2, 2016 | 44,500 | $8.12 | ||
Options granted | - | |||
Options exercised, net | (2,500 | ) | $5.62 | |
Options forfeited/cancelled | - | |||
Options outstanding as of December 31, 2016 | 42,000 | $8.27 | ||
Options exercisable as of December 31, 2016 | 27,000 | $9.47 | ||
Intrinsic value of outstanding stock options as of December 31, 2016 | $6 | |||
Intrinsic value of stock options exercised in fiscal year ended December 31, 2016 | $3 | |||
Weighted average grant date fair value of stock options issued during fiscal year ended December 31, 2016 | N/A | |||
Options outstanding as of December 31, 2016 | 42,000 | $8.27 | ||
Options granted | - | |||
Options exercised, net | (11,917 | ) | $6.00 | |
Options forfeited in cashless exercises | (5,083 | ) | $6.10 | |
Options forfeited/cancelled | (25,000 | ) | $9.81 | |
Options outstanding as of December 30, 2017 | - | |||
Options exercisable as of December 30, 2017 | - | |||
Intrinsic value of outstanding stock options as of December 30, 2017 | - | |||
Intrinsic value of stock options exercised in fiscal year ended December 30, 2017 | 17 | |||
Weighted average grant date fair value of stock options issued during fiscal year ended December 30, 2017 | - |
Nonvested Stock Options | Shares | Weighted-Average Grant-Date Fair Value | |
Nonvested at December 31, 2016 | 15,000 | $2.33 | |
Vested | 15,000 | $2.33 | |
Forfeited | - | - | |
Issued nonvested | - | - | |
Nonvested at December 30, 2017 | - | - |
Number of Time-Based Restricted Stock Units | Weighted Average Grant Date Fair Value per Share | ||
Outstanding non-vested at December 31, 2016 | 197,734 | $7.33 | |
Granted | 87,034 | $5.88 | |
Vested | (197,734 | ) | $7.33 |
Forfeited or expired | - | - | |
Outstanding non-vested at December 30, 2017 | 87,034 | $5.88 |
Number of Performance-Based Restricted Stock Units | Weighted Average Grant Date Fair Value per Share | ||
Outstanding non-vested at December 31, 2016 | 200,000 | $5.36 | |
Granted | 200,000 | $4.85 | |
Vested | - | - | |
Forfeited or expired | - | - | |
Outstanding non-vested at December 30, 2017 | 400,000 | $5.11 |
Number of Restricted Stock Units (in thousands) | Weighted Average Grant Date Fair Value per Share | |||
Outstanding non-vested at January 2, 2016 | 209 | $7.10 | ||
Granted – time-based vesting | 63 | $5.98 | ||
Granted – performance-based vesting | 200 | $5.36 | ||
Vested | (74 | ) | $5.56 | |
Forfeited or expired | - | - | ||
Outstanding non-vested at December 31, 2016 | 398 | $6.34 | ||
Granted – time-based vesting | 87 | $5.88 | ||
Granted – performance-based vesting | 200 | $4.85 | ||
Vested | (198 | ) | $7.33 | |
Forfeited or expired | - | - | ||
Outstanding non-vested at December 30, 2017 | 487 | $5.24 |
Fiscal Year Ended December 30, 2017 | Engineering | Specialty Health Care | Information Technology | Corporate | Total | |||||
Revenue | $82,753 | $71,316 | $32,668 | $ - | $186,737 | |||||
Cost of services | 60,352 | 53,801 | 24,197 | - | 138,350 | |||||
Gross profit | 22,401 | 17,515 | 8,471 | - | 48,387 | |||||
Selling, general and administrative | 16,114 | 15,811 | 8,460 | - | 40,385 | |||||
Legal, office closures and other charges | - | - | - | 1,447 | 1,447 | |||||
Tax credit professional fees | - | - | - | 259 | 259 | |||||
Change in contingent consideration | 781 | - | - | - | 781 | |||||
Goodwill impairment | - | - | 3,478 | - | 3,478 | |||||
Depreciation and amortization | 1,186 | 386 | 185 | - | 1,757 | |||||
Operating income (loss) | $4,320 | $1,318 | ($3,652 | ) | ($1,706 | ) | $280 | |||
Total assets as of December 30, 2017 | $35,121 | $22,718 | $6,288 | $9,152 | $73,279 | |||||
Capital expenditures | $472 | $494 | - | $74 | $1,040 |
Fiscal Year Ended December 31, 2016 | Engineering | Specialty Health Care | Information Technology | Corporate | Total | |||||
Revenue | $73,853 | $59,783 | $42,812 | $ - | $176,448 | |||||
Cost of services | 54,182 | 44,091 | 31,145 | - | 129,418 | |||||
Gross profit | 19,671 | 15,692 | 11,667 | - | 47,030 | |||||
Selling, general and administrative | 15,168 | 13,947 | 10,948 | - | 40,063 | |||||
Legal, office closures and other charges | - | - | - | 1,283 | 1,283 | |||||
Change in contingent consideration | 285 | - | - | - | 285 | |||||
Depreciation and amortization | 1,120 | 257 | 192 | - | 1,569 | |||||
Operating income (loss) | $3,098 | $1,488 | $527 | ($1,283 | ) | $3,830 | ||||
Total assets | $35,535 | $18,565 | $11,705 | $4,026 | $69,831 | |||||
Capital expenditures | $620 | $149 | $52 | $25 | $846 |
Fiscal Year Ended | |||||
December 30, | December 31, | ||||
2017 | 2016 | ||||
Revenues | |||||
United States | $152,232 | $146,950 | |||
Canada | 30,084 | 24,423 | |||
Puerto Rico | 4,043 | 5,075 | |||
Serbia | 378 | - | |||
$186,737 | $176,448 |
Fiscal Year Ended | |||||
December 30, | December 31, | ||||
2017 | 2016 | ||||
Total Assets | |||||
United States | $52,595 | $53,842 | |||
Canada | 15,419 | 13,953 | |||
Puerto Rico | 1,891 | 2,036 | |||
Serbia | 3,374 | - | |||
$73,279 | $69,831 |
December 30, 2017 | December 31, 2016 | |||
Tax (benefit) expense on taxable (loss) income at statutory rate of 34.0% | ($83 | ) | $1,123 | |
State and Puerto Rico income taxes, net of Federal income tax benefit | (248 | ) | 263 | |
USA 179D and Canadian R&D tax credits | (603 | ) | - | |
Permanent differences | 458 | 186 | ||
Worthless stock deduction | (2,861 | ) | - | |
Foreign income tax rates | (92 | ) | 17 | |
Impact on net deferred tax assets from 2018 Federal tax rate change | 1,015 | - | ||
Transition repatriation taxes | 198 | - | ||
Other | (39 | ) | (45 | ) |
Total income tax (benefit) expense | ($2,255 | ) | $1,544 |
Fiscal Years Ended | |||||
December 30, 2017 | December 31, 2016 | ||||
Current | |||||
Federal | ($471 | ) | $688 | ||
State and local | 118 | 402 | |||
Foreign | 237 | (3 | ) | ||
(116 | ) | 1,087 | |||
Deferred | |||||
Federal | (1,841 | ) | 372 | ||
State | (495 | ) | 108 | ||
Foreign | 197 | (23 | ) | ||
(2,139 | ) | 457 | |||
Total | ($2,255 | ) | $1,544 |
Fiscal Years Ended | ||||
December 30, 2017 | December 31, 2016 | |||
United States | ($1,660 | ) | $3,430 | |
Foreign Jurisdictions | 1,415 | (128 | ) | |
($245 | ) | $3,302 |
December 30, 2017 | December 31, 2016 | |||
Deferred tax assets: | ||||
Allowance for doubtful accounts | $235 | $451 | ||
Federal and state net operating loss carryforward | 2,501 | - | ||
Reserves and accruals | 435 | 394 | ||
Other | 53 | 323 | ||
Total deferred tax assets | 3,224 | 1,168 | ||
Deferred tax liabilities: | ||||
Acquisition amortization, net | (206 | ) | (100 | ) |
Prepaid expense deferral | (503 | ) | (750 | ) |
Bonus depreciation to be reversed | (326 | ) | (466 | ) |
Canada deferred tax liability, net | (431 | ) | (234 | ) |
Total deferred tax liabilities | (1,466 | ) | (1,550 | ) |
Total deferred tax (liability) asset, net | $1,758 | ($382 | ) |
Fiscal Years | Amount |
2018 | $3,036 |
2019 | 1,695 |
2020 | 1,056 |
2021 | 516 |
2022 | 304 |
Total | $6,607 |
Column A | Column B | Column C | Column D | Column E | |||
Description | Balance at Beginning of Period | Charged to Costs and Expenses | Deduction | Balance at End of Period | |||
Fiscal Year Ended December 30, 2017 | |||||||
Allowance for doubtful accounts on trade receivables | $1,402 | 662 | (1,097 | ) | $967 | ||
Provision for contingencies for legal matters | $455 | 192 | (522 | ) | $125 | ||
Fiscal Year Ended December 31, 2016 | |||||||
Allowance for doubtful accounts on trade receivables | $1,432 | 650 | (680 | ) | $1,402 | ||
Provision for contingencies for legal matters | $214 | 455 | (214 | ) | $455 |
Date: | ||
April 22, 2020 | Executive Chairman and |
Date: | /s/ | Kevin D. Miller | |
Kevin D. Miller Chief Financial Officer |