Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Aug. 31, 2020 | Oct. 09, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | TSR INC | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --05-31 | |
Entity Common Stock, Shares Outstanding | 1,962,062 | |
Amendment Flag | false | |
Entity Central Index Key | 0000098338 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Aug. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity File Number | 0-8656 | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 10,802,362 | $ 9,730,022 |
Marketable securities | 40,760 | 50,344 |
Accounts receivable, net of allowance for doubtful accounts of $181,000 | 6,597,935 | 7,057,365 |
Other receivables | 7,298 | 5,088 |
Prepaid expenses | 179,907 | 202,862 |
Prepaid and recoverable income taxes | 606,051 | 598,893 |
Total Current Assets | 18,234,313 | 17,644,574 |
Equipment and leasehold improvements, net of accumulated depreciation and amortization of $279,070 and $276,673 | 25,771 | 20,191 |
Other assets | 49,653 | 49,653 |
Right-of-use asset | 322,371 | 377,182 |
Deferred income taxes | 787,000 | 784,000 |
Total Assets | 19,419,108 | 18,875,600 |
Current Liabilities: | ||
Accounts payable and other payables | 1,232,652 | 503,166 |
Accrued expenses and other current liabilities | 3,336,025 | 3,031,633 |
Advances from customers | 1,169,833 | 1,181,234 |
Revolving line of credit | 63,981 | 501,134 |
Operating lease liability - current | 170,915 | 188,799 |
Legal settlement payable - current | 288,548 | |
Total Current Liabilities | 6,261,954 | 5,405,966 |
Operating lease liability, net of current portion | 155,732 | 192,409 |
Legal settlement payable, net of current portion | 549,096 | 827,822 |
SBA Paycheck Protection Program loan payable | 6,659,220 | 6,659,220 |
Total Liabilities | 13,626,002 | 13,085,417 |
Commitments and contingencies | ||
TSR, Inc.: | ||
Preferred stock, value | ||
Common stock, $.01 par value, authorized 12,500,000 shares; issued 3,114,163 shares, 1,962,062 outstanding | 31,142 | 31,142 |
Additional paid-in capital | 5,102,868 | 5,102,868 |
Retained earnings | 14,138,796 | 14,141,796 |
Shareholder's equity before treasury stock | 19,272,806 | 19,275,806 |
Less: Treasury stock, 1,152,101 shares, at cost | 13,514,003 | 13,514,003 |
Total TSR, Inc. Equity | 5,758,803 | 5,761,803 |
Noncontrolling interest | 34,303 | 28,380 |
Total Equity | 5,793,106 | 5,790,183 |
Total Liabilities and Equity | 19,419,108 | 18,875,600 |
Class A Preferred Stock | ||
TSR, Inc.: | ||
Preferred stock, value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Allowance for doubtful accounts related to accounts receivable (in Dollars) | $ 181,000 | $ 181,000 |
Equipment and leasehold improvements, net of accumulated depreciation and amortization (in Dollars) | $ 279,070 | $ 276,673 |
Preferred stock par value (in Dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | ||
Common stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 3,114,163 | 1,962,062 |
Common stock, shares outstanding | 3,114,163 | 1,962,062 |
Treasury stock, shares | 1,152,101 | 1,152,101 |
Class A Preferred Stock | ||
Preferred stock, shares authorized | 30,000 | 0 |
Preferred stock, shares issued |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Revenue, net | $ 14,514,006 | $ 14,946,562 |
Cost of sales | 12,182,922 | 12,671,052 |
Selling, general and administrative expenses | 2,271,301 | 3,189,463 |
Cost and expenses, total | 14,454,223 | 15,860,515 |
Income (loss) from operations | 59,783 | (913,953) |
Other income (expense): | ||
Interest income and (expense), net | (52,276) | 4,915 |
Unrealized gain (loss) on marketable securities, net | (9,584) | 2,696 |
Loss before income taxes | (2,077) | (906,342) |
Benefit from income taxes | (5,000) | (247,000) |
Consolidated net income (loss) | 2,923 | (659,342) |
Less: Net income attributable to noncontrolling interest | 5,923 | 3,672 |
Net loss attributable to TSR, Inc. | $ (3,000) | $ (663,014) |
Basic and diluted net loss per TSR, Inc. common share (in Dollars per share) | $ 0 | $ (0.34) |
Basic and diluted weighted average number of common shares outstanding (in Shares) | 1,962,062 | 1,962,062 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) | Total | Common stock | Additional paid-in capital | Retained earnings | Treasury stock | TSR, Inc. equity | Non-controlling interest |
Balance at May. 31, 2019 | $ 6,917,023 | $ 31,142 | $ 5,102,868 | $ 15,268,224 | $ (13,514,003) | $ 6,888,231 | $ 28,792 |
Balance (in Shares) at May. 31, 2019 | 3,114,163 | ||||||
Net income attributable to noncontrolling interest | 3,672 | 3,672 | |||||
Net loss attributable to TSR, Inc. | (663,014) | (663,014) | (663,014) | ||||
Balance at Aug. 31, 2019 | 6,257,681 | $ 31,142 | 5,102,868 | 14,605,210 | (13,514,003) | 6,225,217 | 32,464 |
Balance (in Shares) at Aug. 31, 2019 | 3,114,163 | ||||||
Balance at May. 31, 2020 | 5,790,183 | $ 31,142 | 5,102,868 | 14,141,796 | (13,514,003) | 5,761,803 | 28,380 |
Balance (in Shares) at May. 31, 2020 | 3,114,163 | ||||||
Net income attributable to noncontrolling interest | 5,923 | 5,923 | |||||
Net loss attributable to TSR, Inc. | (3,000) | (3,000) | (3,000) | ||||
Balance at Aug. 31, 2020 | $ 5,793,106 | $ 31,142 | $ 5,102,868 | $ 14,138,796 | $ (13,514,003) | $ 5,758,803 | $ 34,303 |
Balance (in Shares) at Aug. 31, 2020 | 3,114,163 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Cash flows from operating activities: | ||
Consolidated net income (loss) | $ 2,923 | $ (659,342) |
Adjustments to reconcile consolidated net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,396 | 1,497 |
Unrealized (gain) loss on marketable securities, net | 9,584 | (2,696) |
Deferred income taxes | (3,000) | (269,000) |
Non-cash lease expense | 250 | 1,652 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 459,430 | 95,091 |
Other receivables | (2,210) | (1,256) |
Prepaid expenses | 22,955 | 54,724 |
Prepaid and recoverable income taxes | (7,158) | 23,945 |
Accounts payable, other payables, accrued expenses and other current liabilities | 1,033,878 | (353,361) |
Advances from customers | (11,401) | (20,724) |
Legal settlement payable | 9,822 | |
Net cash provided by (used in) operating activities | 1,517,469 | (1,129,470) |
Cash flows from investing activities: | ||
Proceeds from maturities of marketable securities | 247,000 | |
Purchases of equipment and leasehold improvements | (7,976) | |
Net cash (used in) provided by investing activities | (7,976) | 247,000 |
Cash flows from financing activities: | ||
Net drawings on line of credit | (437,153) | |
Net cash used in financing activities | (437,153) | |
Net increase (decrease) in cash and cash equivalents | 1,072,340 | (882,470) |
Cash and cash equivalents at beginning of period | 9,730,022 | 3,694,989 |
Cash and cash equivalents at end of period | 10,802,362 | 2,812,519 |
Supplemental disclosures of cash flow data: | ||
Income taxes paid | $ 6,000 | $ 17,000 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying condensed consolidated interim financial statements include the accounts of TSR, Inc. and its subsidiaries (the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The condensed balance sheet as of May 31, 2020, which has been derived from audited financial statements, and the unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applying to interim financial information and with the instructions to Form 10-Q of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures required by accounting principles generally accepted in the United States of America and normally included in the Company’s annual financial statements have been condensed or omitted. These condensed consolidated interim financial statements as of and for the three months ended August 31, 2020 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending May 31, 2021. These condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2020. |
Net Loss Per Common Share
Net Loss Per Common Share | 3 Months Ended |
Aug. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 2. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss available to common stockholders of TSR, Inc. by the weighted average number of common shares outstanding. The Company had no stock options or other potentially dilutive securities outstanding during any of the periods presented. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | 3. Cash and Cash Equivalents The Company considers short-term highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents were comprised of the following as of August 31, 2020 and May 31, 2020: August 31, May 31, 2020 2020 Cash in banks $ 10,749,923 $ 9,677,848 Money market funds 52,439 52,174 $ 10,802,362 $ 9,730,022 |
Marketable Securities
Marketable Securities | 3 Months Ended |
Aug. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Marketable Securities | 4. Marketable Securities The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Investments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows: Level 1- These are investments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access. Level 2- These are investments where values are based on quoted market prices that are not active or model derived valuations in which all significant inputs are observable in active markets. Level 3- These are investments where values are derived from techniques in which one or more significant inputs are unobservable. The following are the major categories of assets measured at fair value on a recurring basis as of August 31, 2020 and May 31, 2020 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3): August 31, 2020 Level 1 Level 2 Level 3 Total Equity Securities $ 40,760 $ - $ - $ 40,760 $ 40,760 $ - $ - $ 40,760 May 31, 2020 Level 1 Level 2 Level 3 Total Equity Securities 50,344 - - $ 50,344 $ 50,344 $ - $ - $ 50,344 The Company’s equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings. The Company’s marketable securities at August 31, 2020 and May 31, 2020 are summarized as follows: Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded August 31, 2020 Cost Gains Losses Value Current Equity Securities $ 16,866 $ 23,894 $ - $ 40,760 $ 16,866 $ 23,894 $ - $ 40,760 Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded May 31, 2020 Cost Gains Losses Value Current Equity Securities $ 16,866 $ 33,478 $ - $ 50,344 $ 16,866 $ 33,478 $ - $ 50,344 The Company’s investments in marketable securities consist primarily of investments in equity securities. Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery in market values. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Aug. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments ASC Topic 825, Financial Instruments |
Equity
Equity | 3 Months Ended |
Aug. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Equity | 6. Equity Rights Plan / Preferred Stock On August 29, 2018, the Board of Directors of the Company declared a dividend of one preferred share purchase right (a “Right”) for each share of Common Stock of the Company outstanding on August 29, 2018 (the “Record Date”) to the stockholders of record on that date. In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of August 29, 2018, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Class A Preferred Stock, Series One, par value $0.01 per share (“Preferred Stock”), of the Company at a price of $24.78 per one one-hundredth of a share of Preferred Stock represented by a Right (the “Purchase Price”), subject to adjustment. On August 30, 2019, the Company entered into a settlement and release agreement (the “Settlement Agreement”) with Zeff Capital, L.P., Zeff Holding Company, LLC, Daniel Zeff, QAR Industries, Inc., Robert Fitzgerald, Fintech Consulting LLC and Tajuddin Haslani (collectively, the “Investor Parties”), pursuant to which the Company agreed to, among other things, amend and restate the Rights Agreement to provide that a “Distribution Date” (as defined below) shall not occur as a result of any request by any of the Investor Parties calling for a special meeting pursuant to Article II, Section 5 of the Amended and Restated By-Laws of the Company in accordance with the terms of the Settlement Agreement. (See Note 8, “Other Matters.”) Distribution Date; Exercisability; Expiration Initially, the Rights will be attached to all certificates for shares of Common Stock and no separate certificates evidencing the Rights (“Rights Certificates”) will be issued. Until the Distribution Date (as defined below), the Rights will be transferred with and only with shares of Common Stock. As long as the Rights are attached to the shares of Common Stock, the Company will issue one Right with each new share of Common Stock so that all such shares of Common Stock will have Rights attached. The Rights will separate and begin trading separately from the Common Stock, and Rights Certificates will be issued to evidence the Rights, on the earlier to occur of (a) the Close of Business (as such term is defined in the Rights Agreement) on the tenth day following a public announcement, or the public disclosure of facts indicating, that a Person (as such term is defined in the Rights Agreement), group of affiliated or associated Persons or any other Person with whom such Person is Acting in Concert (as defined below) has acquired Beneficial Ownership (as defined below) of 5% or more of the outstanding Common Stock (an “Acquiring Person”) (or, in the event an exchange is effected in accordance with Section 27 of the Rights Agreement and the Board of Directors determines that a later date is advisable, then such later date) or (b) the Close of Business on the tenth Business Day (as such term is defined in the Rights Agreement) (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer the consummation of which would result in the Beneficial Ownership by a Person or group of 5% or more of the outstanding Common Stock (the earlier of such dates, the “Distribution Date”). As soon as practicable after the Distribution Date, unless the Rights are recorded in book-entry or other uncertificated form, the Company will prepare and cause the Right Certificates to be sent to each record holder of Common Stock as of the Close of Business on the Distribution Date. An “Acquiring Person” will not include (i) the Company, (ii) any Subsidiary (as such term is defined in the Rights Agreement) of the Company, (iii) any employee benefit plan or employee stock plan of the Company or any Subsidiary of the Company, or any trust or other entity organized, appointed, established or holding Common Stock for or pursuant to the terms of any such plan, or (iv) any Person who or which, at the time of the first public announcement of the Rights Agreement, is a Beneficial Owner of 5% or more of the Common Shares then outstanding (a “Grandfathered Stockholder”). However, if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner of any additional shares of Common Stock (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of shares of Common Stock then outstanding beneficially owned by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such Person is not the Beneficial Owner of 5% or more of the Common Stock then outstanding. In addition, upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 5%, such Grandfathered Stockholder will cease to be a Grandfathered Stockholder. In the event that after the time of the first public announcement of the Rights Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of Common Stock expires, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different shares of Common Stock that confers Beneficial Ownership of Common Stock shall be considered the acquisition of Beneficial Ownership of additional shares of Common Stock by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of the Rights Agreement unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such Person is not the Beneficial Owner of 5% or more of the Common Stock then outstanding. The Rights are not exercisable until the Distribution Date. The Rights will expire on the Close of Business on August 29, 2021 (the “Expiration Date”). Redemption At any time prior to the Close of Business on the earlier of (a) the tenth day following the Stock Acquisition Date or (b) the Expiration Date, the Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the “Redemption Price”). The “Stock Acquisition Date” is the first date on which there is a public announcement by the Company or an Acquiring Person that an Acquiring Person has become such, or such earlier date as a majority of the Board of Directors becomes aware of the existence of an Acquiring Person. The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Immediately upon the action of the Board of Directors ordering the redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Preferred Stock Rights The Preferred Stock will not be redeemable. Each share of Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors, (a) cash dividends in an amount per share (rounded to the nearest cent) equal to 100 times the aggregate per share amount of all cash dividends declared or paid on the Common Stock and (b) a preferential quarterly cash dividend (the “Preferential Dividends”) in an amount equal to $50.00 per share of Preferred Stock less the per share amount of all cash dividends declared on the Preferred Stock pursuant to clause (a) of this sentence. Each share of Preferred Stock will entitle the holder thereof to 100 votes per share, voting together with the holders of the Common Stock as a single class, except as otherwise provided in the Certificate of Designations of Class A Preferred Stock Series One filed by the Company with the Delaware Secretary of State or the Company’s Certificate of Incorporation, as amended, or Amended and Restated By-laws, as amended. In the event of any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each outstanding share of Preferred Stock shall at the same time be similarly exchanged for or changed into the aggregate amount of stock, securities, cash and/or other property (payable in like kind), as the case may be, for which or into which each share of Common Stock is changed or exchanged, multiplied by 100. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, (a) no distribution shall be made to the holders of shares of stock ranking junior to the Preferred Stock unless the holders of the Preferred Stock shall have received the greater of (i) $100 per share of Preferred Stock plus an amount equal to accrued and unpaid dividends and distributions thereon or (ii) an amount equal to 100 times the aggregate amount to be distributed per share to holders of the Common Stock, and (b) no distribution shall be made to the holders of stock ranking on a parity upon liquidation, dissolution or winding up with the Preferred Stock unless simultaneously therewith distributions are made ratably to the holders of the Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders of shares of Preferred Stock are entitled under clause (a)(i) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation, dissolution or winding up. The foregoing rights are protected by customary anti-dilution provisions. The foregoing description of the rights of the Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designations of Class A Preferred Stock Series One. Rights of Holders Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. Pursuant to the Settlement Agreement, the Company amended and restated the Rights Agreement on September 3, 2019 to confirm that a Distribution Date (as defined in the Amended and Restated Rights Agreement) shall not occur as a result of any request by any of the Investor Parties for a special meeting of the Company’s stockholders. |
Other Matters
Other Matters | 3 Months Ended |
Aug. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Matters | 7. Other Matters From time to time, the Company is party to various lawsuits, some involving material amounts. Management is not aware of any lawsuits that would have a material adverse impact on the consolidated financial position of the Company except for the litigation disclosed below. On October 16, 2018, the Company was served with a complaint filed on October 11, 2018 in the Supreme Court of the State of New York, Queens County, by Susan Paskowitz, a stockholder of the Company, against the Company; Joseph F. Hughes and Winifred M. Hughes; former directors Christopher Hughes, Raymond A. Roel, Brian J. Mangan, Regina Dowd, James J. Hill, William Kelly, and Eric Stein; as well as stockholders Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC (the “Stockholder Litigation”). The complaint purports to be a class action lawsuit asserting claims on behalf of all minority stockholders of the Company. Ms. Paskowitz alleges the following: the sale by Joseph F. Hughes and Winifred M. Hughes of an aggregate of 819,491 shares of the Company’s common stock (“controlling interest”) to Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC was in breach of Joseph F. Hughes’ and Winifred M. Hughes’ fiduciary duties and to the detriment of the Company’s minority stockholders; the former members of the Board of Directors of the Company named in the complaint breached their fiduciary duties by failing to immediately adopt a rights plan that would have prevented Joseph F. Hughes and Winifred M. Hughes from selling their shares and preserved a higher premium for all stockholders; Zeff, QAR, and Fintech are “partners” and constitute a “group.” Ms. Paskowitz also asserts that Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC aided and abetted Joseph F. Hughes’ and Winifred M. Hughes’ conduct, and ultimately sought to buy out the remaining shares of the Company at an unfair price. On June 14, 2019, Ms. Paskowitz filed an amended complaint in the Stockholder Litigation in the Supreme Court of the State of New York, Queens County against the members of the Board of Directors and Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC, which asserts substantially similar allegations to those contained in the October 11, 2018 complaint, but omits Regina Dowd, Joseph F. Hughes and Winifred M. Hughes as defendants. In addition to the former members of the Board of Directors named in the original complaint, the amended complaint names former directors Ira Cohen, Joseph Pennacchio, and William Kelly as defendants. The amended complaint also asserts a derivative claim purportedly on behalf of the Company against the named former members of the Board of Directors. The amended complaint seeks declaratory judgment and unspecified monetary damages. The complaint requests: (1) a declaration from the court that the former members of the Board of Directors named in the complaint breached their fiduciary duties by failing to timely adopt a stockholder rights plan, which resulted in the loss of the ability to auction the Company off to the highest bidder without interference from Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC; (2) damages derivatively on behalf of the Company for unspecified harm caused by the former Directors’ alleged breaches of fiduciary duties; (3) damages and equitable relief derivatively on behalf of the Company for the former Directors’ alleged failure to adopt proper corporate governance practices; and (4) damages and injunctive relief against Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC based on their knowing dissemination of false or misleading public statements concerning their status as a group. The complaint has not assigned any monetary values to alleged damages. On July 15, 2019, the Company filed an answer to the amended complaint in the Stockholder Litigation and cross-claims against Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC for breaches of their fiduciary duties, aiding and abetting breaches of fiduciary duties, and indemnification and contribution based on their misappropriation of material nonpublic information and their failure to disclose complete and accurate information in SEC filings concerning their group actions to attempt a creeping takeover of the Company, which was thereafter amended on July 26, 2019. In addition, on December 21, 2018, the Company filed a complaint in the United States District Court, Southern District of New York, against Zeff Capital, L.P., Zeff Holding Company, LLC, Daniel Zeff, QAR Industries, Inc., Robert Fitzgerald, Fintech Consulting LLC, and Tajuddin Haslani for violations of the disclosure and anti-fraud requirements of the federal securities laws under Sections 13(d) and 14(a) of the Securities Exchange Act of 1934 (“Exchange Act”), and the related rules and regulations promulgated by the SEC, for failing to disclose to the Company and its stockholders their formation of a group and the group’s intention to seize control of the Company (the “SDNY Action”). The complaint requests that the court, among other things, declare that the defendants have solicited proxies without filing timely, accurate and complete reports on Schedule 13D and Schedule 14A in violation of Sections 13(d) and 14(a) of the Exchange Act, direct the defendants to file with the SEC complete and accurate disclosures, enjoin the defendants from voting any of their shares prior to such time as complete and accurate disclosures have been filed, and enjoin the defendants from further violations of the Exchange Act with respect to the securities of the Company. On January 7, 2019, Ms. Paskowitz filed a related action against Zeff Capital, L.P., Zeff Holding Company, LLC, Daniel Zeff, QAR Industries, Inc., Robert Fitzgerald, Fintech Consulting LLC, and Tajuddin Haslani in the Southern District of New York, which asserts claims against them for breach of fiduciary duty and under federal securities laws similar to those asserted in the Company’s action. Although the Company is not a party to Ms. Paskowitz’s action, the court has determined to treat the Company’s and Ms. Paskowitz’s respective actions as related. On August 7, 2019, following the Company’s initial rescheduling of the 2018 Annual Meeting for September 13, 2019 and the filing of Preliminary Proxy Statements by the Company and Zeff Capital, L.P., Zeff Capital, L.P. filed a complaint in the Delaware Court of Chancery against the Company seeking an order requiring the Company to hold its next annual meeting of stockholders on or around September 13, 2019, and obligating the Company to elect Class I and Class III directors at that annual meeting. On August 13, 2019, the Company filed a motion for preliminary injunction in the SDNY Action in advance of the Company’s 2018 Annual Meeting originally scheduled for September 13, 2019, and requested leave to file a motion for expedited discovery. The Court denied the Company’s motion for preliminary injunction but ordered Zeff to “make clear that the second set of directors” described by Zeff in its preliminary proxy statement “is contingent upon the resolution of a proceeding in Delaware Chancery Court.” On August, 30, 2019, the Company entered into the Settlement Agreement with the Investor Parties with respect to the proxy contest pertaining to the election of directors at the 2018 Annual Meeting, which was held on October 22, 2019. Pursuant to the Settlement Agreement, the parties agreed to forever settle and resolve any and all disputes between the parties, including without limitation disputes arising out of or relating to the following litigations: (i) The complaint relating to alleged breaches of fiduciary duties filed on November 1, 2018 by Fintech Consulting LLC against the Company in the Delaware Court of Chancery, which was previously dismissed voluntarily; (ii) The complaint for declaratory and injunctive relief for violations of the federal securities laws filed on December 21, 2018 by the Company against the Investor Parties in the United States District Court in the Southern District of New York; (iii) Cross-claims relating to alleged breaches of fiduciary duties and for indemnification and contribution filed on July 26, 2019 by the Company against the Investor Parties in New York Supreme Court, Queens County; and (iv) The complaint to compel annual meeting of stockholders filed on August 7, 2019 by Zeff Capital, L.P. against the Company in the Delaware Court of Chancery. No party admitted any liability by entering into the Settlement Agreement. The Settlement Agreement did not resolve the Stockholder Litigation filed by Susan Paskowitz against the Company, Joseph F. Hughes, Winifred M. Hughes and certain former directors of the Company in the Supreme Court of the State of New York on October 11, 2018. Concurrently with the Settlement Agreement, the parties entered into a share repurchase agreement (the “Repurchase Agreement”) which provided for the purchase by the Company and Christopher Hughes, the Company’s former President and Chief Executive Officer, of the shares of the Company’s Common Stock held by the Investor Parties (the “Repurchase”). The Settlement Agreement also contemplated that, if the Repurchase was completed, the Company would make a settlement payment to the Investor Parties at the closing of the Repurchase in an amount of approximately $1,500,000 (the “Settlement Payment”). However, the Repurchase and Settlement Payment were not completed by the deadline of December 30, 2019. Pursuant to the Settlement Agreement, (1) the Company agreed to adopt an amendment to the Company’s Amended and Restated By-Laws, dated April 9, 2015 (the “By-Laws Amendment”), providing that stockholders of the Company owning at least forty percent (40%) of the issued and outstanding Common Stock may request a special meeting of stockholders; (2) the Investor Parties agreed not to take any action to call or otherwise cause a special meeting of stockholders to occur prior to December 30, 2019 (unless the Company had failed to hold the 2018 Annual Meeting); (3) the Company agreed to amend and restate the Company’s Rights Agreement, dated August 29, 2018 (the “Amended Rights Agreement”), to confirm that a Distribution Date (as defined in the Amended Rights Agreement) shall not occur as a result of any request by any of the Investor Parties for a special meeting; (4) the Company agreed that prior to the earlier of (A) the completion of the Repurchase and the payment of the Settlement Payment and (B) January 1, 2020, the Board of Directors shall not consist of more than seven (7) directors. Pursuant to the terms of the Settlement Agreement, the two nominees for director made by Zeff Capital, L.P. were elected as directors at the Company’s 2018 Annual Meeting held on October 22, 2019. Please see the Company’s current Report on Form 8-K filed with the SEC on October 21, 2019 for more information about the background of the election of directors at the Company’s 2018 Annual Meeting. Pursuant to the terms of the Settlement Agreement, inasmuch as the Repurchase was not completed and the Settlement Payment was not made by December 30, 2019, the members of the Board of Directors (other than the two directors who were nominated by Zeff Capital, L.P. and elected as directors at the 2018 Annual Meeting) resigned from the Board effective 5:00 p.m. Eastern Time on December 30, 2019. Immediately thereafter, the two remaining directors appointed Robert Fitzgerald to the Board of Directors. Please see the Company’s Current Report on Form 8-K filed with the SEC on December 31, 2019 for more information about the background and the appointment of Robert Fitzgerald. The foregoing is not a complete description of the terms of the Settlement Agreement and the Share Repurchase Agreement. For a further description of the terms of the Settlement Agreement and the Share Repurchase Agreement, including copies of the Settlement Agreement and Share Repurchase Agreement, please see the Company’s Current Report on Form 8-K filed by the Company with the SEC on September 3, 2019. On October 21, 2019, the Company entered into a Memorandum of Understanding (the “MOU”) with Susan Paskowitz providing for the settlement of the Stockholder Litigation filed by Ms. Paskowitz on October 11, 2018. The MOU provides for the settlement of the claims by Ms. Paskowitz that (1) the former members of the Board named in the original complaint allegedly breached their fiduciary duties by failing to immediately adopt a rights plan that would have prevented the sale by Joseph F. Hughes and Winifred M. Hughes of an aggregate of 819,491 shares of the Company’s common stock to the Investor Parties; (2) the former members of the Board named in the amended complaint allegedly breached their fiduciary duties and failed to adopt proper corporate governance practices; and (3) the Investor Parties acted as “partners” and constituted a “group” in their purchase of shares from Joseph F. Hughes and Winifred M. Hughes and knowingly disseminated false or misleading public statements concerning their status as a group. Pursuant to the terms of the MOU, the Company will (1) implement certain corporate governance reforms described in the MOU within 30 days of a final order and judgment entered by the court, and keep these corporate governance reforms in place for 5 years from the time of the final order and judgment; and (2) acknowledge that the plaintiff, Ms. Paskowitz, and her counsel provided a substantial benefit to the Company and its stockholders through the prosecution of the Stockholder Litigation and other related actions filed by Ms. Paskowitz described above. On December 16, 2019, the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) with Susan Paskowitz in the Stockholder Litigation. The Stipulation retains the terms and conditions of settlement of the Stockholder Litigation contained in the MOU described in the preceding paragraph, with the addition that the Company will pay to plaintiff’s counsel an award of attorneys’ fees and reimbursement of expenses in the amount of $260,000 (collectively, the “Stockholder Litigation Settlement”). The Stockholder Litigation Settlement is intended to fully, finally, and forever compromise, settle, release, resolve, and dismiss with prejudice the Stockholder Litigation and all claims asserted therein directly against all present and former defendants and derivatively against them on behalf of the Company. The Stockholder Litigation Settlement does not contain any admission of liability, wrongdoing or responsibility by any of the parties, and provides for mutual releases by all parties. Each stockholder of the Company is a member of the plaintiff class unless such stockholder opts out of the class. The Company expects that the full amount of the $260,000 settlement payment will be covered by insurance proceeds. The Stipulation remains subject to approval by the court. The Stipulation is independent of the Settlement Agreement and Share Repurchase Agreement that the Company had entered into with the Investor Parties. On December 24, 2019, Ms. Paskowitz moved for preliminary approval of the Stipulation. On May 21, 2020, the Court entered an order preliminarily approving the Stipulation. The parties have agreed on a proposed scheduling order for final approval of the Stipulation and a proposed mailing notice of the stipulation to TSR stockholders, which are both currently pending Court approval. If approved, the Court will set a settlement hearing for final approval of the Stipulation. Although the Company believes that the Stipulation represents a fair and reasonable compromise of the matters in dispute in the Stockholder Litigation, there can be no assurance that the court will approve the Stipulation as proposed, or at all. Inasmuch as the Company did not complete the Repurchase and make the Settlement Payment prior to the December 30, 2019 deadline, the members of the Board of Directors (other than the two directors who were elected as directors at the 2018 Annual Meeting) resigned from the Board effective at 5:00 p.m. Eastern Time on December 30, 2019. Immediately thereafter, the two remaining directors, Bradley M. Tirpak and H. Timothy Eriksen, appointed Robert Fitzgerald as a new director. Each of Messrs. Tirpak, Eriksen and Fitzgerald qualifies as an “independent director” under the NASDAQ Stock Market Rules. These three individuals were also appointed to the Audit Committee, Nominating Committee, Compensation Committee and Special Committee. The Board appointed Mr. Tirpak as Chairman of the Board to succeed Christopher Hughes. Mr. Hughes continued to serve as the Chief Executive Officer, President and Treasurer of the Company until January 17, 2020. Additionally, the Board appointed Mr. Eriksen as Lead Independent Director, Chairman of the Audit Committee and Chairman of the Nominating Committee. The Board also appointed Mr. Fitzgerald as the Chairman of the Compensation Committee and Chairman of the Special Committee. During the quarter ending February 29, 2020, the Company negotiated a settlement with Zeff Capital, L.P. to reimburse it for legal expenses of $900,000 (net present value of $818,000 accrued at February 29, 2020) by entering into a binding term sheet on April 1, 2020. The parties entered into a final agreement reflecting these terms on August 13, 2020. For additional information about this matter, please refer to Note 12, Legal Settlement with Investor. Please also refer to Note 11, Termination of Former CEO, regarding an ongoing lawsuit originally filed by the Company’s former Chief Executive Officer against the Company in the Supreme Court of the State of New York in March 2020. |
Recently Adopted Accounting Pro
Recently Adopted Accounting Pronouncements | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recently Adopted Accounting Pronouncements | 8. Recently Adopted Accounting Pronouncements Effective June 1, 2019, the Company adopted ASU No. 2016-02, Leases, Leases (Topic 842): Targeted Improvements |
Leases
Leases | 3 Months Ended |
Aug. 31, 2020 | |
Leases [Abstract] | |
Leases | 9. Leases The Company leases the space for its three offices. Under ASC 842, at contract inception we determine whether the contract is or contains a lease and whether the lease should be classified as an operating or finance lease. Operating leases are in right-of-use assets and operating lease liabilities in our consolidated condensed balance sheets. The Company’s leases for its three offices are classified as operating leases. The lease agreements expire on December 31, 2020, February 28, 2021 and August 31, 2022, respectively, and do not include any renewal options. In addition to the monthly base amounts in the lease agreements, the Company is required to pay real estate taxes and operating expenses during the lease terms. For the three months ended August 31, 2020 and 2019, the Company’s operating lease expense for these leases was $115,422 and $96,958, respectively. Future minimum lease payments under non-cancellable operating leases as of August 31, 2020 were as follows: (note: payments related to the lease expiring February 28, 2021 are not included below because it is a one year lease) Twelve Months Ended August 31, 2021 $ 187,692 2022 161,708 Total undiscounted operating lease payments 349,400 Less imputed interest 22,753 Present value of operating lease payments $ 326,647 The following table sets forth the right-of-use assets and operating lease liabilities as of August 31, 2020: Assets Right-of-use assets $ 322,371 Liabilities Current operating lease liabilities $ 170,915 Long-term operating lease liabilities 155,732 Total operating lease liabilities $ 326,647 The weighted average remaining lease term for the Company’s operating leases is 1.6 years. |
Line of Credit
Line of Credit | 3 Months Ended |
Aug. 31, 2020 | |
Line Of Credit [Abstract] | |
Line of Credit | 10. Line of Credit On November 27, 2019, TSR closed on a revolving credit facility (the “Credit Facility”) pursuant to a Loan and Security Agreement with Access Capital, Inc. (the “Lender”) that initially provided up to $7,000,000 in funding to TSR and its direct and indirect subsidiaries, TSR Consulting Services, Inc., Logixtech Solutions, LLC and Eurologix, S.A.R.L., each of which, together with TSR, is a borrower under the Credit Facility. Each of the borrowers has provided a security interest to the Lender in all of their respective assets to secure amounts borrowed under the Credit Facility. TSR expects to utilize the Credit Facility for working capital and general corporate purposes. TSR had also expected to utilize the Credit Facility to complete the Repurchase and make the Settlement Payment; however, TSR did not complete the Repurchase and make the Settlement Payment prior to the December 30, 2019 deadline established in the Credit Facility for such use. Because TSR did not complete the Repurchase and make the Settlement Payment prior to the December 30, 2019 deadline, the maximum amount that may now be advanced under the Credit Facility at any time shall not exceed $2,000,000. Advances under the Credit Facility accrue interest at a rate per annum equal to (x) the “base rate” or “prime rate” announced by Citibank, N.A. from time to time, which shall be increased or decreased, as the case may be, in an amount equal to each increase or decrease in such “base rate” or “prime rate,” plus (y) 1.75%. The prime rate as of August 31, 2020 was 3.25%, indicating an interest rate of 5.0% on the line of credit. The initial term of the Credit Facility is 5 years, which shall automatically renew for successive 5-year periods unless either TSR or the Lender gives written notice to the other of termination at least 60 days prior to the expiration date of the then-current term. TSR is obliged to satisfy certain financial covenants and minimum borrowing requirements under the Credit Facility, and to pay certain fees, including prepayment fees, and provide certain financial information to the Lender. As of August 31, 2020, the net borrowings outstanding against this line of credit facility were $63,981. The amount the Company has borrowed fluctuates and, at times in the prior fiscal year, it has utilized the maximum amount of $2,000,000 available under the facility to fund its payroll and other obligations. |
Termination of Former CEO
Termination of Former CEO | 3 Months Ended |
Aug. 31, 2020 | |
Termination Of Former Ceo [Abstract] | |
Termination of Former CEO | 11. Termination of Former CEO The Company terminated Christopher Hughes, the former Chief Executive Officer of the Company (“Hughes”), effective February 29, 2020 for “Cause” as defined in Section 6(a) of his Amended and Restated Employment Agreement dated August 9, 2018 (the “Employment Agreement”) and on March 2, 2020, the Company received a letter from Mr. Hughes, providing notice of his intent to resign for “Good Reason” as defined in Section 7(c) of the Employment Agreement pursuant to which he claimed to be entitled to the “Enhanced Severance Amount” under the Employment Agreement. Hughes filed a complaint against the Company in the Supreme Court of the State of New York in March 2020 alleging two causes of action: (1) breach of his employment contract; and (2) breach of duty of good faith and fair dealing. Plaintiff Hughes alleges that he was terminated without cause or in the alternative, that he resigned for good reason and therefore, pursuant to the Amended and Restated Employment Agreement, dated August 9, 2018, between the Company and Plaintiff. Plaintiff Hughes seeks contractual severance pay in the amount of $1,000,000 and reasonable costs and attorney’s fees. The Company denies Plaintiff’s allegations in their entirety and has filed counterclaims against Plaintiff for (1) declaratory relief; (2) breach of confidence/non-compete agreement; (3) declaratory and injunctive relief – confidence/non-compete; (4) tortious interference with current and prospective contractual and economic relations; (5) breach of fiduciary duty; (6) misappropriation of trade secrets; (7) declaratory and injunctive relief – unfair competition; and (8) conversion. |
Legal Settlement with Investor
Legal Settlement with Investor | 3 Months Ended |
Aug. 31, 2020 | |
Legal Settlement With Investor Disclosure [Abstract] | |
Legal Settlement with Investor | 12. Legal Settlement with Investor On April 1, 2020, the Company entered into a binding term sheet (“Term Sheet”) with Zeff Capital, L.P. (“Zeff”) pursuant to which it agreed to pay Zeff an amount of $900,000 over a period of three years in cash or cash and stock in settlement of expenses incurred by Zeff during its solicitations in 2018 and 2019 in connection with the annual meetings of the Company, the costs incurred in connection with the litigation initiated by and against the Company as well as negotiation, execution and enforcement of the Settlement and Release Agreement, dated as of August 30, 2019, by and between the Company, Zeff and certain other parties. (See Note 8.) In exchange for certain releases, the Term Sheet calls for a cash payment of $300,000 on June 30, 2021, a second cash payment of $300,000 on June 30, 2022 and a third payment of $300,00 also on June 30, 2022, which can be paid in cash or common stock at the Company’s option. There is no interest due on these payments. The agreement also has protections to defer such payment dates so that the debt covenants with the Company’s lender are not breached. On August 13, 2020, the Company, Zeff, Zeff Holding Company, LLC and Daniel Zeff entered into a settlement agreement to reflect these terms. Any installment payment which is deferred as permitted above will accrue interest at the prime rate plus 3.75%, and Zeff shall thereby have the option to convert such deferred amounts (plus accrued interest if any) into shares of the Company’s stock. The Company accrued $818,000, the estimated present value of these payments using an effective interest rate of 5%, in the quarter ended February 29, 2020, as the events relating to the expense occurred prior to such date. |
COVID-19
COVID-19 | 3 Months Ended |
Aug. 31, 2020 | |
Covid Nineteen [Abstract] | |
COVID-19 | 13. COVID-19 The COVID-19 outbreak in the United States has caused business disruption through mandated and voluntary closing of various businesses. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the closings. Therefore, the Company expects this matter to negatively impact its operating results in future periods. However, the full financial impact and duration cannot be reasonably estimated at this time. |
Payroll Protection Program Loan
Payroll Protection Program Loan | 3 Months Ended |
Aug. 31, 2020 | |
Payroll Protection Program Loan [Abstract] | |
Payroll Protection Program Loan | 14. Payroll Protection Program Loan On April 15, 2020, the Company received loan proceeds of $6,659,220 under the Paycheck Protection Program (the “PPP Loan”). The Paycheck Protection Program (“PPP”) was established under the recent congressionally-approved Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). The PPP Loan to the Company is being made through JPMorgan Chase Bank, N.A., a national banking association (the “Lender”). The original term of the PPP Loan was two years. The term has been extended to five years by the SBA. The annual interest rate on the PPP Loan is 0.98%. Payments of principal and interest on the loan will be deferred for the first six months of the term of the loan. The promissory note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may trigger the immediate repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining a judgment against the Company. Under the terms of the CARES Act, PPP Loan recipients may apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs and the maintenance of employee and compensation levels. While the Company believes that it has acted in compliance with the program and plans to seek forgiveness of the PPP Loan, no assurance can be provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. |
Subsequent Event- Geneva Consul
Subsequent Event- Geneva Consulting Group Acquisition | 3 Months Ended |
Aug. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event- Geneva Consulting Group Acquisition | 15. Subsequent Event- Geneva Consulting Group Acquisition On September 1, 2020, the Company completed the acquisition of all of the outstanding stock of Geneva Consulting Group, Inc., a New York corporation (“Geneva”) and provider of temporary and permanent information technology personnel based in Port Washington, New York. The stock of Geneva was purchased from the three shareholders of Geneva (the “Sellers”), none of which had, or will have following the acquisition, a material relationship with the Company or its affiliates. The purchase price for the shares of Geneva is comprised of the following: (i) $1.45 million in cash paid to Sellers at the closing of the acquisition, (ii) an amount, up to $0.75 million, that is equal to the amount of Geneva’s loan under the PPP that is forgiven by the SBA, (iii) an amount, up to $0.30 million which may be paid as an earnout payment in part in February 2021 and in part in August 2021 (the “Earnout Payments”) and (iv) bonus payments payable in $10,000 increments. Any such Earnout Payments and bonus payments will be determined based upon the achievement of certain criteria relating to the number the Company’s contractors working full-time at Company clients on such dates. The Company has incurred approximately $300,000 in legal fees, business broker fees, valuation services, accounting fees and other expenses to complete the Geneva acquisition, of which $122,000 of these expenses were recorded in the quarter ended August 31, 2020. |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of cash and cash equivalents | August 31, May 31, 2020 2020 Cash in banks $ 10,749,923 $ 9,677,848 Money market funds 52,439 52,174 $ 10,802,362 $ 9,730,022 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of assets measured at fair value on recurring basis | August 31, 2020 Level 1 Level 2 Level 3 Total Equity Securities $ 40,760 $ - $ - $ 40,760 $ 40,760 $ - $ - $ 40,760 May 31, 2020 Level 1 Level 2 Level 3 Total Equity Securities 50,344 - - $ 50,344 $ 50,344 $ - $ - $ 50,344 |
Schedule of certificates of deposit and marketable securities | Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded August 31, 2020 Cost Gains Losses Value Current Equity Securities $ 16,866 $ 23,894 $ - $ 40,760 $ 16,866 $ 23,894 $ - $ 40,760 Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded May 31, 2020 Cost Gains Losses Value Current Equity Securities $ 16,866 $ 33,478 $ - $ 50,344 $ 16,866 $ 33,478 $ - $ 50,344 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Leases [Abstract] | |
Schedule of future minimum lease payments under non-cancellable operating leases | Twelve Months Ended August 31, 2021 $ 187,692 2022 161,708 Total undiscounted operating lease payments 349,400 Less imputed interest 22,753 Present value of operating lease payments $ 326,647 |
Schedule of right-of-use assets and operating lease liabilities | Assets Right-of-use assets $ 322,371 Liabilities Current operating lease liabilities $ 170,915 Long-term operating lease liabilities 155,732 Total operating lease liabilities $ 326,647 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - Schedule of cash and cash equivalents - USD ($) | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | May 31, 2019 |
Schedule of cash and cash equivalents [Abstract] | ||||
Cash in banks | $ 10,749,923 | $ 9,677,848 | ||
Money market funds | 52,439 | 52,174 | ||
Total | $ 10,802,362 | $ 9,730,022 | $ 2,812,519 | $ 3,694,989 |
Marketable Securities (Details)
Marketable Securities (Details) - Schedule of assets measured at fair value on recurring basis - USD ($) | Aug. 31, 2020 | Mar. 31, 2020 |
Assets measured at fair value, Total | $ 40,760 | $ 50,344 |
Equity Securities [Member] | ||
Assets measured at fair value, Total | 40,760 | 50,344 |
Level 1 [Member] | ||
Assets measured at fair value, Total | 40,760 | 50,344 |
Level 1 [Member] | Equity Securities [Member] | ||
Assets measured at fair value, Total | 40,760 | 50,344 |
Level 2 [Member] | ||
Assets measured at fair value, Total | ||
Level 2 [Member] | Equity Securities [Member] | ||
Assets measured at fair value, Total | ||
Level 3 [Member] | ||
Assets measured at fair value, Total | ||
Level 3 [Member] | Equity Securities [Member] | ||
Assets measured at fair value, Total |
Marketable Securities (Detail_2
Marketable Securities (Details) - Schedule of certificates of deposit and marketable securities - USD ($) | 3 Months Ended | 12 Months Ended |
Aug. 31, 2020 | May 31, 2020 | |
Marketable Securities [Line Items] | ||
Amortized Cost | $ 16,866 | $ 16,866 |
Gross Unrealized Holding Gains | 23,894 | 33,478 |
Gross Unrealized Holding Losses | ||
Recorded Value | 40,760 | 50,344 |
Equity Securities [Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 16,866 | 16,866 |
Gross Unrealized Holding Gains | 23,894 | 33,478 |
Gross Unrealized Holding Losses | ||
Recorded Value | $ 40,760 | $ 50,344 |
Equity (Details)
Equity (Details) - $ / shares | 1 Months Ended | 3 Months Ended |
Aug. 29, 2018 | Aug. 31, 2020 | |
Stockholders' Equity Note [Abstract] | ||
Preferred stock rights, description | the Board of Directors of the Company declared a dividend of one preferred share purchase right (a “Right”) for each share of Common Stock of the Company outstanding on August 29, 2018 (the “Record Date”) to the stockholders of record on that date. In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of August 29, 2018, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Class A Preferred Stock, Series One, par value $0.01 per share (“Preferred Stock”), of the Company at a price of $24.78 per one one-hundredth of a share of Preferred Stock represented by a Right (the “Purchase Price”), subject to adjustment. | Each share of Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors, (a) cash dividends in an amount per share (rounded to the nearest cent) equal to 100 times the aggregate per share amount of all cash dividends declared or paid on the Common Stock and (b) a preferential quarterly cash dividend (the “Preferential Dividends”) in an amount equal to $50.00 per share of Preferred Stock less the per share amount of all cash dividends declared on the Preferred Stock pursuant to clause (a) of this sentence. Each share of Preferred Stock will entitle the holder thereof to 100 votes per share, voting together with the holders of the Common Stock as a single class, except as otherwise provided in the Certificate of Designations of Class A Preferred Stock Series One filed by the Company with the Delaware Secretary of State or the Company’s Certificate of Incorporation, as amended, or Amended and Restated By-laws, as amended. In the event of any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each outstanding share of Preferred Stock shall at the same time be similarly exchanged for or changed into the aggregate amount of stock, securities, cash and/or other property (payable in like kind), as the case may be, for which or into which each share of Common Stock is changed or exchanged, multiplied by 100. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, (a) no distribution shall be made to the holders of shares of stock ranking junior to the Preferred Stock unless the holders of the Preferred Stock shall have received the greater of (i) $100 per share of Preferred Stock plus an amount equal to accrued and unpaid dividends and distributions thereon or (ii) an amount equal to 100 times the aggregate amount to be distributed per share to holders of the Common Stock, and (b) no distribution shall be made to the holders of stock ranking on a parity upon liquidation, dissolution or winding up with the Preferred Stock unless simultaneously therewith distributions are made ratably to the holders of the Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders of shares of Preferred Stock are entitled under clause (a)(i) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation, dissolution or winding up. |
Rights agreement, description | (a) the Close of Business (as such term is defined in the Rights Agreement) on the tenth day following a public announcement, or the public disclosure of facts indicating, that a Person (as such term is defined in the Rights Agreement), group of affiliated or associated Persons or any other Person with whom such Person is Acting in Concert (as defined below) has acquired Beneficial Ownership (as defined below) of 5% or more of the outstanding Common Stock (an “Acquiring Person”) (or, in the event an exchange is effected in accordance with Section 27 of the Rights Agreement and the Board of Directors determines that a later date is advisable, then such later date) or (b) the Close of Business on the tenth Business Day (as such term is defined in the Rights Agreement) (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer the consummation of which would result in the Beneficial Ownership by a Person or group of 5% or more of the outstanding Common Stock (the earlier of such dates, the “Distribution Date”). | |
Beneficial ownership percentage, description | Beneficial Owner of 5% or more of the Common Shares then outstanding (a “Grandfathered Stockholder”). However, if a Grandfathered Stockholder becomes, after such time, the Beneficial Owner of any additional shares of Common Stock (regardless of whether, thereafter or as a result thereof, there is an increase, decrease or no change in the percentage of shares of Common Stock then outstanding beneficially owned by such Grandfathered Stockholder) then such Grandfathered Stockholder shall be deemed to be an Acquiring Person unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such Person is not the Beneficial Owner of 5% or more of the Common Stock then outstanding. In addition, upon the first decrease of a Grandfathered Stockholder’s Beneficial Ownership below 5%, such Grandfathered Stockholder will cease to be a Grandfathered Stockholder. In the event that after the time of the first public announcement of the Rights Agreement, any agreement, arrangement or understanding pursuant to which any Grandfathered Stockholder is deemed to be the Beneficial Owner of Common Stock expires, terminates or no longer confers any benefit to or imposes any obligation on the Grandfathered Stockholder, any direct or indirect replacement, extension or substitution of such agreement, arrangement or understanding with respect to the same or different shares of Common Stock that confers Beneficial Ownership of Common Stock shall be considered the acquisition of Beneficial Ownership of additional shares of Common Stock by the Grandfathered Stockholder and render such Grandfathered Stockholder an Acquiring Person for purposes of the Rights Agreement unless, upon such acquisition of Beneficial Ownership of additional shares of Common Stock, such Person is not the Beneficial Owner of 5% or more of the Common Stock then outstanding. | |
Redemption price per share | $ 0.01 |
Other Matters (Details)
Other Matters (Details) - USD ($) | Dec. 16, 2019 | Oct. 16, 2018 | Feb. 29, 2020 | Oct. 21, 2019 | Aug. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | |||||
Aggregate of common stock, shares | 819,491 | ||||
Settlement payment | $ 1,500,000 | ||||
Settlement agreement, description | (1) the Company agreed to adopt an amendment to the Company’s Amended and Restated By-Laws, dated April 9, 2015 (the “By-Laws Amendment”), providing that stockholders of the Company owning at least forty percent (40%) of the issued and outstanding Common Stock may request a special meeting of stockholders; (2) the Investor Parties agreed not to take any action to call or otherwise cause a special meeting of stockholders to occur prior to December 30, 2019 (unless the Company had failed to hold the 2018 Annual Meeting); (3) the Company agreed to amend and restate the Company’s Rights Agreement, dated August 29, 2018 (the “Amended Rights Agreement”), to confirm that a Distribution Date (as defined in the Amended Rights Agreement) shall not occur as a result of any request by any of the Investor Parties for a special meeting; (4) the Company agreed that prior to the earlier of (A) the completion of the Repurchase and the payment of the Settlement Payment and (B) January 1, 2020, the Board of Directors shall not consist of more than seven (7) directors. | ||||
Memorandum of understanding, description | the Company entered into a Memorandum of Understanding (the “MOU”) with Susan Paskowitz providing for the settlement of the Stockholder Litigation filed by Ms. Paskowitz on October 11, 2018. The MOU provides for the settlement of the claims by Ms. Paskowitz that (1) the former members of the Board named in the original complaint allegedly breached their fiduciary duties by failing to immediately adopt a rights plan that would have prevented the sale by Joseph F. Hughes and Winifred M. Hughes of an aggregate of 819,491 shares of the Company’s common stock to the Investor Parties; (2) the former members of the Board named in the amended complaint allegedly breached their fiduciary duties and failed to adopt proper corporate governance practices; and (3) the Investor Parties acted as “partners” and constituted a “group” in their purchase of shares from Joseph F. Hughes and Winifred M. Hughes and knowingly disseminated false or misleading public statements concerning their status as a group. | ||||
Corporate governance reforms period year | 5 years | ||||
Stipulation and agreement of settlement, description | the Company entered into a Stipulation and Agreement of Settlement (the “Stipulation”) with Susan Paskowitz in the Stockholder Litigation. The Stipulation retains the terms and conditions of settlement of the Stockholder Litigation contained in the MOU described in the preceding paragraph, with the addition that the Company will pay to plaintiff’s counsel an award of attorneys’ fees and reimbursement of expenses in the amount of $260,000 (collectively, the “Stockholder Litigation Settlement”). The Stockholder Litigation Settlement is intended to fully, finally, and forever compromise, settle, release, resolve, and dismiss with prejudice the Stockholder Litigation and all claims asserted therein directly against all present and former defendants and derivatively against them on behalf of the Company. The Stockholder Litigation Settlement does not contain any admission of liability, wrongdoing or responsibility by any of the parties, and provides for mutual releases by all parties. Each stockholder of the Company is a member of the plaintiff class unless such stockholder opts out of the class. The Company expects that the full amount of the $260,000 settlement payment will be covered by insurance proceeds. The Stipulation remains subject to approval by the court. The Stipulation is independent of the Settlement Agreement and Share Repurchase Agreement that the Company had entered into with the Investor Parties. | ||||
Legal expenses | $ 900,000 | ||||
Accrued net present value | $ 818,000 |
Recently Adopted Accounting P_2
Recently Adopted Accounting Pronouncements (Details) | Jun. 02, 2019USD ($) |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Increase in total assets and total liabilities | $ 690,000 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 115,422 | $ 96,958 |
Operating Lease, Weighted Average Remaining Lease Term | 1 year 219 days |
Leases (Details) - Schedule of
Leases (Details) - Schedule of future minimum lease payments under non-cancellable operating leases | Aug. 31, 2020USD ($) |
Schedule of future minimum lease payments under non-cancellable operating leases [Abstract] | |
2021 | $ 187,692 |
2022 | 161,708 |
Total undiscounted operating lease payments | 349,400 |
Less imputed interest | 22,753 |
Present value of operating lease payments | $ 326,647 |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of right-of-use assets and operating lease liabilities - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Schedule of right-of-use assets and operating lease liabilities [Abstract] | ||
Right-of-use assets | $ 322,371 | $ 377,182 |
Current operating lease liabilities | 170,915 | |
Long-term operating lease liabilities | 155,732 | $ 192,409 |
Total operating lease liabilities | $ 326,647 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Dec. 30, 2019 | Nov. 27, 2019 | Aug. 31, 2020 | |
Line of Credit (Details) [Line Items] | |||
Borrowed amount under credit facility | $ 2,000,000 | ||
Line of credit facility, description | Advances under the Credit Facility accrue interest at a rate per annum equal to (x) the “base rate” or “prime rate” announced by Citibank, N.A. from time to time, which shall be increased or decreased, as the case may be, in an amount equal to each increase or decrease in such “base rate” or “prime rate,” plus (y) 1.75%. The prime rate as of August 31, 2020 was 3.25%, indicating an interest rate of 5.0% on the line of credit. The initial term of the Credit Facility is 5 years, which shall automatically renew for successive 5-year periods unless either TSR or the Lender gives written notice to the other of termination at least 60 days prior to the expiration date of the then-current term. | ||
Net borrowings outstanding | $ 63,981 | ||
Credit Facility [Member] | |||
Line of Credit (Details) [Line Items] | |||
Borrowed amount under credit facility | $ 2,000,000 | ||
Loan and Security Agreement [Member] | |||
Line of Credit (Details) [Line Items] | |||
Borrowed amount under credit facility | $ 7,000,000 |
Termination of Former CEO (Deta
Termination of Former CEO (Details) | 1 Months Ended |
Feb. 29, 2020 | |
Termination Of Former Ceo [Abstract] | |
Enhanced severance amount, description | (1) breach of his employment contract; and (2) breach of duty of good faith and fair dealing. Plaintiff Hughes alleges that he was terminated without cause or in the alternative, that he resigned for good reason and therefore, pursuant to the Amended and Restated Employment Agreement, dated August 9, 2018, between the Company and Plaintiff. Plaintiff Hughes seeks contractual severance pay in the amount of $1,000,000 and reasonable costs and attorney’s fees. The Company denies Plaintiff’s allegations in their entirety and has filed counterclaims against Plaintiff for (1) declaratory relief; (2) breach of confidence/non-compete agreement; (3) declaratory and injunctive relief – confidence/non-compete; (4) tortious interference with current and prospective contractual and economic relations; (5) breach of fiduciary duty; (6) misappropriation of trade secrets; (7) declaratory and injunctive relief – unfair competition; and (8) conversion. |
Legal Settlement with Investor
Legal Settlement with Investor (Details) - USD ($) | 1 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2021 | Apr. 01, 2020 | Aug. 31, 2020 | Aug. 13, 2020 | Feb. 29, 2020 | |
Legal Settlement with Investor (Details) [Line Items] | ||||||
Legal Settlement amount payable | $ 900,000 | |||||
Settlement period | 3 years | |||||
Accrued interest rate, percentage | 3.75% | |||||
Accrued liabilities | $ 818,000 | |||||
Effective interest rate | 5.00% | |||||
Subsequent Event [Member] | ||||||
Legal Settlement with Investor (Details) [Line Items] | ||||||
Cash payment | $ 300,000 | |||||
Subsequent Event [Member] | Second Cash Payment [Member] | ||||||
Legal Settlement with Investor (Details) [Line Items] | ||||||
Cash payment | $ 300,000 | |||||
Subsequent Event [Member] | Third Cash Payment [Member] | ||||||
Legal Settlement with Investor (Details) [Line Items] | ||||||
Cash payment | $ 30,000 |
Payroll Protection Program Lo_2
Payroll Protection Program Loan (Details) - Paycheck Protection Program [Member] | Apr. 15, 2020USD ($) |
Payroll Protection Program Loan (Details) [Line Items] | |
Proceeds from loan | $ 6,659,220 |
Annual interest rate | 0.98% |
Loan term | 6 months |
Subsequent Event- Geneva Cons_2
Subsequent Event- Geneva Consulting Group Acquisition (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Sep. 01, 2020 | Aug. 31, 2020 | |
Subsequent Event- Geneva Consulting Group Acquisition (Details) [Line Items] | ||
Incurred costs | $ 300,000 | |
Acquisition expence | $ 122,000 | |
Subsequent Event [Member] | ||
Subsequent Event- Geneva Consulting Group Acquisition (Details) [Line Items] | ||
Acquisition description | The purchase price for the shares of Geneva is comprised of the following: (i) $1.45 million in cash paid to Sellers at the closing of the acquisition, (ii) an amount, up to $0.75 million, that is equal to the amount of Geneva’s loan under the PPP that is forgiven by the SBA, (iii) an amount, up to $0.30 million which may be paid as an earnout payment in part in February 2021 and in part in August 2021 (the “Earnout Payments”) and (iv) bonus payments payable in $10,000 increments. Any such Earnout Payments and bonus payments will be determined based upon the achievement of certain criteria relating to the number the Company’s contractors working full-time at Company clients on such dates. |