Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2020 | Jul. 31, 2020 | Nov. 30, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | TSR INC | ||
Entity Central Index Key | 0000098338 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --05-31 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2020 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 3,169,000 | ||
Entity Common Stock, Shares Outstanding | 1,962,062 | ||
Entity Filer Number | 0-8656 | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2020 | May 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 9,730,022 | $ 3,694,989 |
Certificates of deposit and marketable securities | 50,344 | 527,232 |
Accounts receivable: | ||
Trade, net of allowance for doubtful accounts of $181,000 in 2020 and 2019 | 7,057,365 | 7,443,581 |
Other | 5,088 | 5,321 |
Accounts Receivables, Net | 7,062,453 | 7,448,902 |
Prepaid expenses | 202,862 | 118,482 |
Prepaid and recoverable income taxes | 598,893 | 52,385 |
Total Current Assets | 17,644,574 | 11,841,990 |
Equipment and leasehold improvements, at cost: | ||
Equipment | 112,435 | 104,223 |
Furniture and fixtures | 124,371 | 111,107 |
Leasehold improvements | 60,058 | 60,058 |
Property, Plant And Equipment, Gross | 296,864 | 275,388 |
Less accumulated depreciation and amortization | 276,673 | 268,886 |
Property, Plant and Equipment, Net | 20,191 | 6,502 |
Other assets | 49,653 | 49,653 |
Right-of-use asset | 377,182 | |
Deferred income taxes | 784,000 | 636,000 |
Total Assets | 18,875,600 | 12,534,145 |
Current Liabilities: | ||
Accounts and other payables | 503,166 | 574,540 |
Accrued expenses and other current liabilities: | ||
Salaries, wages and commissions | 2,240,063 | 2,895,603 |
Other | 791,570 | 956,965 |
Accrued expenses and other current liabilities, Current | 3,031,633 | 3,852,568 |
Advances from customers | 1,181,234 | 1,190,014 |
Revolving line of credit | 501,134 | |
Operating lease liability- current | 188,799 | |
Total Current Liabilities | 5,405,966 | 5,617,122 |
Operating lease liability, net of current portion | 192,409 | |
Legal settlement payable | 827,822 | |
SBA Paycheck Protection Program loan payable | 6,659,220 | |
Total Liabilities | 13,085,417 | 5,617,122 |
Commitments and Contingencies | ||
TSR, Inc. | ||
Preferred stock, $1.00 par value, authorized 500,000 shares; none issued | ||
Common stock, $0.01 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 | 14,141,796 | 15,268,224 |
Shareholder's equity before treasury stock | 19,275,806 | 20,402,234 |
Less: treasury stock, 1,152,101 shares, at cost | 13,514,003 | 13,514,003 |
Total TSR, Inc. Equity | 5,761,803 | 6,888,231 |
Noncontrolling Interest | 28,380 | 28,792 |
Total Equity | 5,790,183 | 6,917,023 |
Total Liabilities and Equity | 18,875,600 | 12,534,145 |
Class A Preferred Stock | ||
TSR, Inc. | ||
Preferred stock, $1.00 par value, authorized 500,000 shares; none issued |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | May 31, 2020 | May 31, 2019 |
Allowance for doubtful accounts related to accounts receivable | $ 181,000 | $ 181,000 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 12,500,000 | 12,500,000 |
Common stock, shares issued | 3,114,163 | 3,114,163 |
Common stock, shares outstanding | 1,962,062 | 1,962,062 |
Treasury stock, shares | 1,152,101 | 1,152,101 |
Class A Preferred Stock | ||
Preferred stock, shares authorized | 30,000 | 30,000 |
Preferred stock, shares issued |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Statement [Abstract] | ||
Revenue, net | $ 59,121,401 | $ 63,340,028 |
Cost of sales | 49,943,405 | 53,514,636 |
Selling, general and administrative expenses | 10,928,648 | 11,672,946 |
Cost and expenses, total | 60,872,053 | 65,187,582 |
Loss from operations | (1,750,652) | (1,847,554) |
Other income (expense): | ||
Interest and dividend income | 4,877 | 22,309 |
Interest expense | (79,386) | |
Loss on sale of fixed asset | (2,882) | |
Unrealized gain (loss) from marketable securities, net | 15,112 | (8,928) |
Operating Income, Total | (59,397) | 10,499 |
Loss before income taxes | (1,810,049) | (1,837,055) |
Benefit for income taxes | (712,000) | (538,000) |
Consolidated net loss | (1,098,049) | (1,299,055) |
Less: Net income attributable to noncontrolling interest | 28,379 | 36,940 |
Net loss attributable to TSR, Inc. | $ (1,126,428) | $ (1,335,995) |
Basic and diluted net loss per TSR, Inc. common share | $ (0.57) | $ (0.68) |
Basic and diluted weighted average number of common shares outstanding | 1,962,062 | 1,962,062 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) | Common stock | Additional paid-in capital | Retained earnings | Treasury stock | TSR, Inc. equity | Non-controlling interest | Total |
Balance at May. 31, 2018 | $ 31,142 | $ 5,102,868 | $ 16,604,219 | $ (13,514,003) | $ 8,224,226 | $ 44,552 | $ 8,268,778 |
Balance, shares at May. 31, 2018 | 3,114,163 | ||||||
Net income attributable to noncontrolling interest | 36,940 | 36,940 | |||||
Distribution to noncontrolling interest | (52,700) | (52,700) | |||||
Net loss attributable to TSR, Inc. | (1,335,995) | (1,335,995) | (1,335,995) | ||||
Balance at May. 31, 2019 | $ 31,142 | 5,102,868 | 15,268,224 | (13,514,003) | 6,888,231 | 28,792 | 6,917,023 |
Balance, shares at May. 31, 2019 | 3,114,163 | ||||||
Net income attributable to noncontrolling interest | 28,379 | 28,379 | |||||
Distribution to noncontrolling interest | (28,791) | (28,791) | |||||
Net loss attributable to TSR, Inc. | (1,126,428) | (1,126,428) | (1,126,428) | ||||
Balance at May. 31, 2020 | $ 31,142 | $ 5,102,868 | $ 14,141,796 | $ (13,514,003) | $ 5,761,803 | $ 28,380 | $ 5,790,183 |
Balance, shares at May. 31, 2020 | 3,114,163 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Cash flows from operating activities: | ||
Consolidated net loss | $ (1,098,049) | $ (1,299,055) |
Adjustments to reconcile consolidated net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,787 | 11,586 |
Unrealized (gain) loss from marketable securities, net | (15,112) | 8,928 |
Loss on sale of fixed asset | 2,882 | |
Noncash lease expense | 4,026 | |
Deferred income taxes | (148,000) | (558,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable-trade | 386,216 | (215,758) |
Other receivables | 233 | (3,227) |
Prepaid expenses | (84,380) | (20,138) |
Prepaid and recoverable income taxes | (546,508) | (24,171) |
Accounts and other payables and accrued expenses and other current liabilities | (892,309) | 534,667 |
Legal settlement payable | 827,822 | |
Advances from customers | (8,780) | (21,218) |
Net cash used in operating activities | (1,567,054) | (1,583,504) |
Cash flows from investing activities: | ||
Proceeds from maturities of marketable securities | 492,000 | 740,000 |
Purchases of marketable securities | (739,000) | |
Proceeds from sale of fixed asset | 10,000 | |
Purchases of equipment and leasehold improvements | (21,476) | (3,244) |
Net cash provided by investing activities | 470,524 | 7,756 |
Cash flows from financing activities: | ||
Net drawings on line of credit | 501,134 | |
Proceeds from SBA Paycheck Protection Program loan | 6,659,220 | |
Distributions to noncontrolling interest | (28,791) | (52,700) |
Net cash provided by (used in) financing activities | 7,131,563 | (52,700) |
Net increase (decrease) in cash and cash equivalents | 6,035,033 | (1,628,448) |
Cash and cash equivalents at beginning of year | 3,694,989 | 5,323,437 |
Cash and cash equivalents at end of year | 9,730,022 | 3,694,989 |
Supplemental disclosures of cash flow data: | ||
Income taxes paid | $ 30,000 | $ 52,000 |
Summary of Business and Signifi
Summary of Business and Significant Accounting Policies | 12 Months Ended |
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Business and Significant Accounting Policies | (1) Summary of Business and Significant Accounting Policies (a) Business, Nature of Operations and Customer Concentrations TSR, Inc. and Subsidiaries (the “Company”) are primarily engaged in providing contract computer programming services to commercial customers located primarily in the Metropolitan New York area. The Company provides its customers with technical computer personnel to supplement their in-house information technology (“IT”) capabilities. In addition, beginning in fiscal 2017, the Company has provided and continues to provide administrative (non-IT) workers on a contract basis to two of its existing customers. In fiscal 2020, three customers each accounted for more than 10% of the Company’s consolidated revenue, constituting a combined 53.3%. The largest of these constituted 21.2% of consolidated revenue. In fiscal 2019, three customers each accounted for more than 10% of the Company’s consolidated revenue, constituting a combined 51.4%. The largest of these constituted 22.5% of consolidated revenue. The accounts receivable balances associated with the Company’s largest customers were $3,747,000 for three customers at May 31, 2020 and $3,657,000 for three customers at May 31, 2019. The Company operates in one business segment, contract staffing services. (b) Principles of Consolidation The consolidated financial statements include the accounts of TSR, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. (c) Revenue Recognition Effective June 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-08, Principal versus Agent Consideration In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients Revenues are recognized as control of the promised service is transferred to customers, in an amount that reflects the consideration expected in exchange for the services. Revenues from contract assignments are recognized over time, based on hours worked by the Company’s contract professionals. The performance of the requested service over time is the single performance obligation for assignment revenues. Certain customers may receive discounts (e.g., volume discounts, rebates, prompt-pay discounts) and adjustments to the amounts billed. These discounts, rebates and adjustments are considered variable consideration. Volume discounts are the largest component of variable consideration and are estimated using the most likely amount method prescribed by ASC 606, contracts terms and estimates of revenue. Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods. Payment terms vary and the time between invoicing and when payment is due is not significant. There are no financing components to the Company’s arrangements. There are no incremental costs to obtain contracts and costs to fulfill contracts are expensed as incurred. The Company’s operations are primarily located in the United States. The Company recognizes most of its revenue on a gross basis when it acts as a principal in its transactions. The Company has direct contractual relationships with its customers, bears the risks and rewards of its arrangements, and has the discretion to select the contract professionals and establish the price for the services to be provided. Additionally, the Company retains control over its contract professionals based on its contractual arrangements. The Company primarily provides services through its employees and to a lesser extent, through subcontractors; the related costs are included in cost of sales. The Company includes billable expenses (out-of-pocket reimbursable expenses) in revenue and the associated expenses are included in cost of sales. (d) 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 May 31, 2020 and 2019: 2020 2019 Cash in banks $ 9,677,848 $ 3,072,218 Money market funds 52,174 622,771 $ 9,730,022 $ 3,694,989 (e) Certificates of Deposit and Marketable Securities The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Investments recorded in the accompanying 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 May 31, 2020 and 2019 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): Level 1 Level 2 Level 3 Total May 31, 2020 Equity Securities $ 50,344 $ - $ - $ 50,344 $ 50,344 $ - $ - $ 50,344 Level 1 Level 2 Level 3 Total May 31, 2019 Certificates of Deposit $ - $ 492,000 $ - $ 492,000 Equity Securities 35,232 - - 35,232 $ 35,232 $ 492,000 $ - $ 527,232 Based upon the Company’s intent and ability to hold its certificates of deposit to maturity (which maturities range up to 12 months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates market value. The Company’s equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings. The Company’s certificates of deposit and marketable securities at May 31, 2020 and 2019 are summarized as follows: Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded Cost Gains Losses Value May 31, 2020 Current Equity Securities $ 16,866 $ 33,478 $ - $ 50,344 $ 16,866 $ 33,478 $ - $ 50,344 May 31, 2019 Current Certificates of Deposit $ 492,000 $ - $ - $ 492,000 Equity Securities 16,866 18,366 - 35,232 $ 508,866 $ 18,366 $ - $ 527,232 The Company’s investments in marketable securities consist primarily of investments in certificates of deposit and 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. (f) Accounts Receivable and Credit Policies The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. In addition to reviewing delinquent accounts receivable, management considers many factors in estimating its general allowance, including historical data, experience, customer types, creditworthiness and economic trends. From time to time, management may adjust its assumptions for anticipated changes in any of those or other factors expected to affect collectability. (g) Depreciation and Amortization Depreciation and amortization of equipment and leasehold improvements has been computed using the straight-line method over the following useful lives: Equipment 3 years Furniture and fixtures 3 years Automobiles 3 years Leasehold improvements Lesser of lease term or useful life (h) Net Loss Per Common Share Basic net loss per common share is computed by dividing 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 the fiscal years ended May 31, 2020 or 2019. (i) Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial reporting and tax bases of the Company’s assets and liabilities at enacted rates expected to be in effect when such amounts are realized or settled. The effect of enacted tax law or rate changes is reflected in income in the period of enactment. (j) Fair Value of Financial Instruments ASC Topic 825, Financial Instruments (k) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, provisions for doubtful accounts receivable and assessments of the recoverability of the Company’s deferred tax assets. Actual results could differ from those estimates. (l) Long-Lived Assets The Company reviews its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows undiscounted and without interest is less than the carrying amount of the asset, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its fair value. (m) Impact of New Accounting Standards Effective June 1, 2019, the Company adopted ASU No. 2016-02, Leases, Leases (Topic 842): Targeted Improvements (n) Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, certificates of deposit, marketable securities and accounts receivable. The Company places its cash equivalents with high-credit quality financial institutions and brokerage houses. The Company has substantially all of its cash in four bank accounts. At times, such amounts may exceed federally insured limits. The Company holds its marketable securities in brokerage accounts. The Company has not experienced losses in any such accounts. As a percentage of revenue, the three largest customers consisted of 53.1% of the net accounts receivable balance at May 31, 2020. |
Income Taxes
Income Taxes | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (2) Income Taxes A reconciliation of the provision for income taxes computed at the federal statutory rates of 21.0% for fiscal 2020 and fiscal 2019 to the reported amounts is as follows: 2020 2019 Amount % Amount % Amounts at statutory federal tax rate $ (380,000 ) (21.0 )% $ (386,000 ) (21.0 )% Noncontrolling interest (6,000 ) (0.3 ) (8,000 ) (0.4 ) State and local taxes, net of federal income tax effect (147,000 ) (8.1 ) (115,000 ) (6.3 ) Benefit of NOL at higher federal rate (202,000 ) (11.2 ) - - Non-deductible expenses and other 23,000 1.3 (29,000 ) (1.6 ) $ (712,000 ) (39.3 )% $ (538,000 ) (29.3 )% The components of the provision for income taxes are as follows: Federal State Total 2020: Current $ (586,000 ) $ 22,000 $ (564,000 ) Deferred 16,000 (164,000 ) (148,000 ) $ (570,000 ) $ (142,000 ) $ (712,000 ) 2019: Current $ (10,000 ) $ 30,000 $ 20,000 Deferred (383,000 ) (175,000 ) (558,000 ) $ (393,000 ) $ (145,000 ) $ (538,000 ) The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets at May 31, 2020 and 2019 are as follows: 2020 2019 Allowance for doubtful accounts receivable $ 52,000 $ 52,000 Accrued compensation and other accrued expenses 23,000 33,000 Net operating loss carryforwards 487,000 554,000 Equipment and leasehold improvement depreciation and amortization (3,000 ) 1,000 Unrealized gain (10,000 ) (5,000 ) Legal settlement with investor 233,000 - Other items, net 2,000 1,000 Total deferred income tax assets $ 784,000 $ 636,000 The Company believes that it is more likely than not that it will realize the benefits of its deferred tax assets based primarily on the Company's history of and projections for taxable income in the future. The federal net operating loss carryforwards may be used indefinitely and the state carryforwards are generally usable for 20 years. The Company recognizes interest and penalties associated with tax matters as selling, general and administrative expenses and includes accrued interest and penalties with accrued and other liabilities in the consolidated balance sheets. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law in response to the COVID-19 pandemic. The CARES Act provides numerous tax provisions and stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property. The Company has evaluated the provisions of the CARES Act relating to income taxes which resulted in the ability to carryback net operating losses and file for a federal tax refund of approximately $586,000 which has been recorded in the May 31, 2020 consolidated balance sheet. In the third quarter of fiscal 2018, the Company discovered it had not filed required information returns related to a foreign bank account opened by a subsidiary in fiscal 2016 with contributions totaling approximately $25,000. The Company has accrued an expense of $30,000 with a charge to selling, general and administrative expenses for potential penalties that may be assessed. The Company will monitor this reserve periodically to determine if it is more-likely-than-not that penalties will be assessed. Changes to the reserve may occur due to changes in judgment, abatement, negotiation or expiration of the statute of limitations on the returns. A reconciliation of the beginning and ending amount of unrecognized tax benefit as follows: 2020 2019 Balance at beginning of fiscal year $ 30,000 $ 30,000 Additions based on tax positions related to current year - - Additions for tax positions of prior years - - Reductions for tax positions of prior years - - Settlements - - Balance at end of fiscal year $ 30,000 $ 30,000 The Company's federal and state income tax returns prior to fiscal year 2017 are closed. |
Leases
Leases | 12 Months Ended |
May 31, 2020 | |
Leases [Abstract] | |
Leases | (3) 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 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 fiscal years ended May 31, 2020 and 2019, the Company's operating lease expense for these leases was $417,000 and $388,000. Future minimum lease payments under non-cancelable operating leases as of May 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 May 31, 2021 $ 208,777 2022 160,912 2023 40,629 Total undiscounted operating lease payments 410,318 Less imputed interest 29,110 Present value of operating lease payments $ 381,208 The following table sets forth the right-of-use assets and operating lease liabilities as of May 31, 2020: Assets Right-of-use assets $ 377,182 Liabilities Current operating lease liabilities $ 188,799 Long-term operating lease liabilities 192,409 - Total operating lease liabilities $ 381,208 The weighted average remaining lease term for the Company's operating leases is 1.9 years. |
Line of Credit
Line of Credit | 12 Months Ended |
May 31, 2020 | |
Line of Credit [Abstract] | |
Line of Credit | (4) Line of Credit On November 27, 2019, TSR, Inc. ("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 May 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 May 31, 2020, the net borrowings outstanding against this line of credit facility were $501,134. The amount the Company has borrowed fluctuates and, at times, it has utilized the maximum amount of $2,000,000 available under the facility to fund its payroll and other obligations. |
Legal Settlement with Investor
Legal Settlement with Investor | 12 Months Ended |
May 31, 2020 | |
Legal Settlement [Abstract] | |
Legal Settlement with Investor | (5) 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 7.) In exchange for certain mutual 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. |
Equity
Equity | 12 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
Equity | (6) Equity Common Stock Transactions On July 24, 2018, Joseph F. Hughes and Winifred Hughes filed Amendments to Schedule 13D with the United States Securities and Exchange Commission (the "SEC") in which Joseph F. Hughes and Winifred Hughes disclosed that they had collectively sold 819,491 shares of the Company's Common Stock jointly held by them in a privately-negotiated transaction to Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC. Joseph F. Hughes was the former Chairman and Chief Executive Officer of the Company. Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC acquired, in the aggregate, 41.8% of the Company's issued and outstanding Common Stock in this transaction. Amendments to Schedule 13D previously filed by Joseph F. Hughes and Winifred Hughes on July 17, 2018 attached an exhibit wherein it was stated that prior to the transaction described above, Zeff Capital, L.P. owned 77,615 shares or approximately 4% of the Company's issued and outstanding Common Stock. The Company became aware on July 30, 2018 that Fintech Consulting LLC and Tajuddin Haslani filed a Schedule 13D with the SEC disclosing beneficial ownership of 376,100 shares of Common Stock, which represents approximately 19.2% of the Company's issued and outstanding Common Stock. The Company became aware on August 23, 2018 that Zeff Capital, L.P., Zeff Holding Company, LLC and Daniel Zeff filed an Amendment to Schedule 13D with the SEC disclosing the additional purchase by Zeff Capital, L.P. of an aggregate of 55,680 shares of Common Stock. As a result of these additional purchases of Common Stock, Zeff Capital, L.P., Zeff Holding Company, LLC and Daniel Zeff beneficially own a total of 437,774 shares of Common Stock, which represents approximately 22.3% of the Company's issued and outstanding Common Stock. The Company became aware on August 28, 2018 that QAR Industries, Inc. and Robert Fitzgerald filed an Amendment to Schedule 13D with the SEC disclosing the additional purchase by QAR Industries, Inc. of an aggregate of 4,070 shares of Common Stock. As a result of these additional purchases of Common Stock, QAR Industries, Inc. and Robert Fitzgerald beneficially own a total of 143,900 shares of Common Stock, which represents approximately 7.3% of the Company's issued and outstanding Common Stock. The Company became aware on September 10, 2019 that QAR Industries, Inc. and Robert Fitzgerald filed an Amendment to Schedule 13D with the SEC disclosing beneficial ownership of an aggregate of 139,200 shares of Common Stock, which represents approximately 7.1% of the Company's issued and outstanding Common Stock. 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 7, "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 Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated By-laws. 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 | 12 Months Ended |
May 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. (See Note 5.) |
Termination of Former CEO
Termination of Former CEO | 12 Months Ended |
May 31, 2020 | |
Termination Of Former CEO [Abstract] | |
Termination of Former CEO | (8) 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. |
COVID-19
COVID-19 | 12 Months Ended |
May 31, 2020 | |
Covid Nineteen [Abstract] | |
COVID-19 | (9) 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 | 12 Months Ended |
May 31, 2020 | |
Payroll Protection Program Loan [Abstract] | |
Payroll Protection Program Loan | (10) Payroll Protection Program Loan On April 15, 2020, TSR, Inc. (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. |
Summary of Business and Signi_2
Summary of Business and Significant Accounting Policies (Policies) | 12 Months Ended |
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business, Nature of Operations and Customer Concentrations | (a) Business, Nature of Operations and Customer Concentrations TSR, Inc. and Subsidiaries (the “Company”) are primarily engaged in providing contract computer programming services to commercial customers located primarily in the Metropolitan New York area. The Company provides its customers with technical computer personnel to supplement their in-house information technology (“IT”) capabilities. In addition, beginning in fiscal 2017, the Company has provided and continues to provide administrative (non-IT) workers on a contract basis to two of its existing customers. In fiscal 2020, three customers each accounted for more than 10% of the Company’s consolidated revenue, constituting a combined 53.3%. The largest of these constituted 21.2% of consolidated revenue. In fiscal 2019, three customers each accounted for more than 10% of the Company’s consolidated revenue, constituting a combined 51.4%. The largest of these constituted 22.5% of consolidated revenue. The accounts receivable balances associated with the Company’s largest customers were $3,747,000 for three customers at May 31, 2020 and $3,657,000 for three customers at May 31, 2019. The Company operates in one business segment, contract staffing services. |
Principles of Consolidation | (b) Principles of Consolidation The consolidated financial statements include the accounts of TSR, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Revenue Recognition | (c) Revenue Recognition Effective June 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-08, Principal versus Agent Consideration In May 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients Revenues are recognized as control of the promised service is transferred to customers, in an amount that reflects the consideration expected in exchange for the services. Revenues from contract assignments are recognized over time, based on hours worked by the Company’s contract professionals. The performance of the requested service over time is the single performance obligation for assignment revenues. Certain customers may receive discounts (e.g., volume discounts, rebates, prompt-pay discounts) and adjustments to the amounts billed. These discounts, rebates and adjustments are considered variable consideration. Volume discounts are the largest component of variable consideration and are estimated using the most likely amount method prescribed by ASC 606, contracts terms and estimates of revenue. Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods. Payment terms vary and the time between invoicing and when payment is due is not significant. There are no financing components to the Company’s arrangements. There are no incremental costs to obtain contracts and costs to fulfill contracts are expensed as incurred. The Company’s operations are primarily located in the United States. The Company recognizes most of its revenue on a gross basis when it acts as a principal in its transactions. The Company has direct contractual relationships with its customers, bears the risks and rewards of its arrangements, and has the discretion to select the contract professionals and establish the price for the services to be provided. Additionally, the Company retains control over its contract professionals based on its contractual arrangements. The Company primarily provides services through its employees and to a lesser extent, through subcontractors; the related costs are included in cost of sales. The Company includes billable expenses (out-of-pocket reimbursable expenses) in revenue and the associated expenses are included in cost of sales. |
Cash and Cash Equivalents | (d) 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 May 31, 2020 and 2019: 2020 2019 Cash in banks $ 9,677,848 $ 3,072,218 Money market funds 52,174 622,771 $ 9,730,022 $ 3,694,989 |
Certificates of Deposit and Marketable Securities | (e) Certificates of Deposit and Marketable Securities The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Investments recorded in the accompanying 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 May 31, 2020 and 2019 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3): Level 1 Level 2 Level 3 Total May 31, 2020 Equity Securities $ 50,344 $ - $ - $ 50,344 $ 50,344 $ - $ - $ 50,344 Level 1 Level 2 Level 3 Total May 31, 2019 Certificates of Deposit $ - $ 492,000 $ - $ 492,000 Equity Securities 35,232 - - 35,232 $ 35,232 $ 492,000 $ - $ 527,232 Based upon the Company’s intent and ability to hold its certificates of deposit to maturity (which maturities range up to 12 months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates market value. The Company’s equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings. The Company’s certificates of deposit and marketable securities at May 31, 2020 and 2019 are summarized as follows: Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded Cost Gains Losses Value May 31, 2020 Current Equity Securities $ 16,866 $ 33,478 $ - $ 50,344 $ 16,866 $ 33,478 $ - $ 50,344 May 31, 2019 Current Certificates of Deposit $ 492,000 $ - $ - $ 492,000 Equity Securities 16,866 18,366 - 35,232 $ 508,866 $ 18,366 $ - $ 527,232 The Company’s investments in marketable securities consist primarily of investments in certificates of deposit and 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. |
Accounts Receivable and Credit Policies | (f) Accounts Receivable and Credit Policies The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. In addition to reviewing delinquent accounts receivable, management considers many factors in estimating its general allowance, including historical data, experience, customer types, creditworthiness and economic trends. From time to time, management may adjust its assumptions for anticipated changes in any of those or other factors expected to affect collectability. |
Depreciation and Amortization | (g) Depreciation and Amortization Depreciation and amortization of equipment and leasehold improvements has been computed using the straight-line method over the following useful lives: Equipment 3 years Furniture and fixtures 3 years Automobiles 3 years Leasehold improvements Lesser of lease term or useful life |
Net Loss Per Common Share | (h) Net Loss Per Common Share Basic net loss per common share is computed by dividing 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 the fiscal years ended May 31, 2020 or 2019. |
Income Taxes | (i) Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial reporting and tax bases of the Company’s assets and liabilities at enacted rates expected to be in effect when such amounts are realized or settled. The effect of enacted tax law or rate changes is reflected in income in the period of enactment. |
Fair Value of Financial Instruments | (j) Fair Value of Financial Instruments ASC Topic 825, Financial Instruments |
Use of Estimates | (k) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, provisions for doubtful accounts receivable and assessments of the recoverability of the Company's deferred tax assets. Actual results could differ from those estimates. |
Long-Lived Assets | (l) Long-Lived Assets The Company reviews its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows undiscounted and without interest is less than the carrying amount of the asset, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its fair value. |
Impact of New Accounting Standards | (m) Impact of New Accounting Standards Effective June 1, 2019, the Company adopted ASU No. 2016-02, Leases, Leases (Topic 842): Targeted Improvements |
Credit Risk | (n) Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, certificates of deposit, marketable securities and accounts receivable. The Company places its cash equivalents with high-credit quality financial institutions and brokerage houses. The Company has substantially all of its cash in four bank accounts. At times, such amounts may exceed federally insured limits. The Company holds its marketable securities in brokerage accounts. The Company has not experienced losses in any such accounts. As a percentage of revenue, the three largest customers consisted of 53.1% of the net accounts receivable balance at May 31, 2020. |
Summary of Business and Signi_3
Summary of Business and Significant Accounting Policies (Tables) | 12 Months Ended |
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of cash and cash equivalents | 2020 2019 Cash in banks $ 9,677,848 $ 3,072,218 Money market funds 52,174 622,771 $ 9,730,022 $ 3,694,989 |
Schedule of assets measured at fair value on recurring basis | Level 1 Level 2 Level 3 Total May 31, 2020 Equity Securities $ 50,344 $ - $ - $ 50,344 $ 50,344 $ - $ - $ 50,344 Level 1 Level 2 Level 3 Total May 31, 2019 Certificates of Deposit $ - $ 492,000 $ - $ 492,000 Equity Securities 35,232 - - 35,232 $ 35,232 $ 492,000 $ - $ 527,232 |
Schedule of deposit and marketable securities | Gross Gross Unrealized Unrealized Amortized Holding Holding Recorded Cost Gains Losses Value May 31, 2020 Current Equity Securities $ 16,866 $ 33,478 $ - $ 50,344 $ 16,866 $ 33,478 $ - $ 50,344 May 31, 2019 Current Certificates of Deposit $ 492,000 $ - $ - $ 492,000 Equity Securities 16,866 18,366 - 35,232 $ 508,866 $ 18,366 $ - $ 527,232 |
Schedule of useful lives of assets | Equipment 3 years Furniture and fixtures 3 years Automobiles 3 years Leasehold improvements Lesser of lease term or useful life |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of reconciliation of provision for income taxes computed at federal statutory rates | 2020 2019 Amount % Amount % Amounts at statutory federal tax rate $ (380,000 ) (21.0 )% $ (386,000 ) (21.0 )% Noncontrolling interest (6,000 ) (0.3 ) (8,000 ) (0.4 ) State and local taxes, net of federal income tax effect (147,000 ) (8.1 ) (115,000 ) (6.3 ) Benefit of NOL at higher federal rate (202,000 ) (11.2 ) - - Non-deductible expenses and other 23,000 1.3 (29,000 ) (1.6 ) $ (712,000 ) (39.3 )% $ (538,000 ) (29.3 )% |
Schedule of provision for income taxes | Federal State Total 2020: Current $ (586,000 ) $ 22,000 $ (564,000 ) Deferred 16,000 (164,000 ) (148,000 ) $ (570,000 ) $ (142,000 ) $ (712,000 ) 2019: Current $ (10,000 ) $ 30,000 $ 20,000 Deferred (383,000 ) (175,000 ) (558,000 ) $ (393,000 ) $ (145,000 ) $ (538,000 ) |
Schedule of deferred income tax assets | 2020 2019 Allowance for doubtful accounts receivable $ 52,000 $ 52,000 Accrued compensation and other accrued expenses 23,000 33,000 Net operating loss carryforwards 487,000 554,000 Equipment and leasehold improvement depreciation and amortization (3,000 ) 1,000 Unrealized gain (10,000 ) (5,000 ) Legal settlement with investor 233,000 - Other items, net 2,000 1,000 Total deferred income tax assets $ 784,000 $ 636,000 |
Schedule of unrecognized tax benefit | 2020 2019 Balance at beginning of fiscal year $ 30,000 $ 30,000 Additions based on tax positions related to current year - - Additions for tax positions of prior years - - Reductions for tax positions of prior years - - Settlements - - Balance at end of fiscal year $ 30,000 $ 30,000 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
May 31, 2020 | |
Leases [Abstract] | |
Schedule of future minimum lease payments of operating leases | Twelve Months Ended May 31, 2021 $ 208,777 2022 160,912 2023 40,629 Total undiscounted operating lease payments 410,318 Less imputed interest 29,110 Present value of operating lease payments $ 381,208 |
Schedule of right-of-use assets and operating lease liabilities | Assets Right-of-use assets $ 377,182 Liabilities Current operating lease liabilities $ 188,799 Long-term operating lease liabilities 192,409 - Total operating lease liabilities $ 381,208 |
Summary of Business and Signi_4
Summary of Business and Significant Accounting Policies (Details) - USD ($) | May 31, 2020 | May 31, 2019 | May 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Cash in banks | $ 9,677,848 | $ 3,072,218 | |
Money market funds | 52,174 | 622,771 | |
Total | $ 9,730,022 | $ 3,694,989 | $ 5,323,437 |
Summary of Business and Signi_5
Summary of Business and Significant Accounting Policies (Details 1) - Fair Value, Measurements, Recurring [Member] - USD ($) | May 31, 2020 | May 31, 2019 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | $ 50,344 | $ 527,232 |
Certificates of Deposit [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 492,000 | |
Equity Securities [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 50,344 | 35,232 |
Level 1 [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 50,344 | 35,232 |
Level 1 [Member] | Certificates of Deposit [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | ||
Level 1 [Member] | Equity Securities [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 50,344 | 35,232 |
Level 2 [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 492,000 | |
Level 2 [Member] | Certificates of Deposit [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | 492,000 | |
Level 2 [Member] | Equity Securities [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | ||
Level 3 [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | ||
Level 3 [Member] | Certificates of Deposit [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total | ||
Level 3 [Member] | Equity Securities [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Assets measured at fair value, Total |
Summary of Business and Signi_6
Summary of Business and Significant Accounting Policies (Details 2) - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 16,866 | $ 508,866 |
Gross Unrealized Holding Gains | 33,478 | 18,366 |
Gross Unrealized Holding Losses | ||
Recorded Value | 50,344 | 527,232 |
Certificates of Deposit [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 492,000 | |
Gross Unrealized Holding Gains | ||
Gross Unrealized Holding Losses | ||
Recorded Value | 492,000 | |
Equity Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 16,866 | 16,866 |
Gross Unrealized Holding Gains | 33,478 | 18,366 |
Gross Unrealized Holding Losses | ||
Recorded Value | $ 50,344 | $ 35,232 |
Summary of Business and Signi_7
Summary of Business and Significant Accounting Policies (Details 3) | 12 Months Ended |
May 31, 2020 | |
Equipment [Member] | |
Summary of depreciation and amortization of equipment and leasehold improvements useful lives | |
Depreciation and amortization of equipment and leasehold improvements, useful life | 3 years |
Furniture and Fixtures [Member] | |
Summary of depreciation and amortization of equipment and leasehold improvements useful lives | |
Depreciation and amortization of equipment and leasehold improvements, useful life | 3 years |
Automobiles [Member] | |
Summary of depreciation and amortization of equipment and leasehold improvements useful lives | |
Depreciation and amortization of equipment and leasehold improvements, useful life | 3 years |
Leasehold Improvements [Member] | |
Summary of depreciation and amortization of equipment and leasehold improvements useful lives | |
Depreciation and amortization of equipment and leasehold improvements, useful lives | Lesser of Lease term or useful life |
Summary of Business and Signi_8
Summary of Business and Significant Accounting Policies (Details Textual) | 12 Months Ended | |
May 31, 2020USD ($)Customers | May 31, 2019USD ($)Customers | |
Summary of Business and Significant Accounting Policies (Textual) | ||
Number of customers | Customers | 3 | 3 |
Concentration risk percentage | 10.00% | |
Constituting combined risk percentage | 53.30% | 51.40% |
Largest concentration risk percentage | 21.20% | 22.50% |
Accounts receivable with largest customers | $ | $ 3,747,000 | $ 3,657,000 |
Accounts Receivable [Member] | ||
Summary of Business and Significant Accounting Policies (Textual) | ||
Largest concentration risk percentage | 53.10% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Amounts at statutory federal tax rate, Amount | $ (380,000) | $ (386,000) |
Noncontrolling interest, Amount | (6,000) | (8,000) |
State and local taxes, net of federal income tax effect., Amount | (147,000) | (115,000) |
Benefit of NOL at higher federal rate, Amount | (202,000) | |
Non-deductible expenses and other, Amount | 23,000 | (29,000) |
Provision for income taxes, Amount | $ (712,000) | $ (538,000) |
Amounts at statutory federal tax rate, % | (21.00%) | (21.00%) |
Noncontrolling interest, % | (0.30%) | (0.40%) |
State and local taxes, net of federal income tax effect., % | (8.10%) | (6.30%) |
Benefit of NOL at higher federal rate, % | (11.20%) | |
Non-deductible expenses and other, % | 1.30% | (1.60%) |
Provision for income taxes, % | (39.90%) | (29.30%) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal tax expense, Current | $ (586,000) | $ (10,000) |
State tax expense, Current | 22,000 | 30,000 |
Provisions for income taxes, Current, Total | (564,000) | 20,000 |
Federal tax expense, Deferred | 16,000 | (383,000) |
State tax expense, Deferred | (164,000) | (175,000) |
Provisions of income taxes, Deferred, Total | (148,000) | (558,000) |
Federal provision for income taxes | (570,000) | (393,000) |
State provision for income taxes | (142,000) | (145,000) |
Provision for income taxes, Total | $ (712,000) | $ (538,000) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | May 31, 2020 | May 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Allowance for doubtful accounts receivable | $ 52,000 | $ 52,000 |
Accrued compensation and other accrued expenses | 23,000 | 33,000 |
Net operating loss carryforwards | 487,000 | 554,000 |
Equipment and leasehold improvement depreciation and amortization | (3,000) | 1,000 |
Unrealized gain | (10,000) | (5,000) |
Legal settlement with investor | 233,000 | |
Other items, net | 2,000 | 1,000 |
Total deferred income tax assets | $ 784,000 | $ 636,000 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Balance at beginning of fiscal year | $ 30,000 | $ 30,000 |
Additions based on tax positions related to current year | ||
Additions for tax positions of prior years | ||
Reductions for tax positions of prior years | ||
Settlements | ||
Balance at end of fiscal year | $ 30,000 | $ 30,000 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
May 31, 2018 | May 31, 2020 | |
Income Taxes (Textual) | ||
Federal tax refund | $ 586,000 | |
Subsidiary contributions taxes | $ 25,000 | |
Accrued expense | $ 30,000 |
Leases (Details)
Leases (Details) | May 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 208,777 |
2022 | 160,912 |
2023 | 40,629 |
Total undiscounted operating lease payments | 410,318 |
Less imputed interest | 29,110 |
Present value of operating lease payments | $ 381,208 |
Leases (Details 1)
Leases (Details 1) - USD ($) | May 31, 2020 | May 31, 2019 |
Assets | ||
Right-of-use assets | $ 377,182 | |
Liabilities | ||
Current operating lease liabilities | 188,799 | |
Long-term operating lease liabilities | 192,409 | |
Total operating lease liabilities | $ 381,208 |
Leases (Details Textual)
Leases (Details Textual) | 12 Months Ended | |
May 31, 2020USD ($)Office | May 31, 2019USD ($) | |
Leases (Textual) | ||
Operating lease expense | $ | $ 417,000 | $ 388,000 |
Weighted average remaining lease term of operating leases | 1 year 10 months 25 days | |
Number of offices | Office | 3 | |
Lease agreements expires, description | The lease agreements expire on December 31, 2020, February 28, 2021 and August 31, 2022, respectively, and do not include any renewal options. |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 30, 2019 | Nov. 27, 2019 | May 31, 2020 | |
Line of Credit (Textual) | |||
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 May 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. | ||
Credit Facility [Member] | |||
Line of Credit (Textual) | |||
Borrowed amount under credit facility | $ 2,000,000 | ||
Net borrowings outstanding | $ 501,134 | ||
Loan and Security Agreement [Member] | |||
Line of Credit (Textual) | |||
Borrowed amount under credit facility | $ 7,000,000 |
Legal Settlement with Investor
Legal Settlement with Investor (Details) - USD ($) | Apr. 02, 2020 | Aug. 13, 2020 | Feb. 29, 2020 |
Legal Settlement with Investor (Textual) | |||
Effective interest rate | 5.00% | ||
Accrued interest | $ 818,000 | ||
Subsequent Event [Member] | Prime Rate [Member] | |||
Legal Settlement with Investor (Textual) | |||
Effective interest rate | 3.75% | ||
Zeff Capital [Member] | |||
Legal Settlement with Investor (Textual) | |||
Legal Settlement, description | 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 7.) In exchange for certain mutual 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. |
Equity (Details)
Equity (Details) - shares | Sep. 10, 2019 | Oct. 16, 2018 | Aug. 29, 2018 | Aug. 28, 2018 | Aug. 23, 2018 | Jul. 31, 2018 | Jul. 24, 2018 | May 31, 2020 |
Equity (Textual) | ||||||||
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 Amended and Restated Certificate of Incorporation, as amended, or Amended and Restated By-laws. 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. | ||||||
Aggregate shares of common stock | 4,070 | |||||||
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"). | |||||||
Beneficially shares of common stock | 819,491 | 143,900 | 376,100 | |||||
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. | |||||||
Percentage of common stock issued and outstanding | 7.30% | 19.20% | ||||||
Rights plan expiration date | Aug. 29, 2021 | |||||||
Redemption of rights, description | 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 $0.01 per Right (the "Redemption Price"). | |||||||
Zeff Capital, L.P. [Member] | ||||||||
Equity (Textual) | ||||||||
Aggregate shares of common stock | 77,615 | |||||||
Percentage of common stock issued and outstanding | 4.00% | |||||||
Joseph F. Hughes and Winifred Hughes [Member] | ||||||||
Equity (Textual) | ||||||||
Sale of common stock transaction, description | The Company's Common Stock jointly held by them in a privately-negotiated transaction to Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC. Joseph F. Hughes was the former Chairman and Chief Executive Officer of the Company. | |||||||
Sale of common stock shares | 819,491 | |||||||
Joseph F. Hughes and Winifred Hughes [Member] | Zeff Capital, L.P., QAR Industries, Inc. and Fintech Consulting LLC [Member] | ||||||||
Equity (Textual) | ||||||||
Percentage of common stock issued and outstanding | 41.80% | |||||||
Daniel Zeff [Member] | Zeff Capital, L.P., Zeff Holding Company, LLC [Member] | ||||||||
Equity (Textual) | ||||||||
Aggregate shares of common stock | 55,680 | |||||||
Beneficially shares of common stock | 437,774 | |||||||
Percentage of common stock issued and outstanding | 22.30% | |||||||
Robert Fitzgerald [Member] | QAR Industries, Inc. [Member] | ||||||||
Equity (Textual) | ||||||||
Beneficially shares of common stock | 139,200 | |||||||
Percentage of common stock issued and outstanding | 7.10% |
Other Matters (Details)
Other Matters (Details) - USD ($) | Dec. 16, 2019 | Oct. 16, 2018 | Feb. 29, 2020 | Oct. 21, 2019 | Aug. 28, 2018 | Jul. 31, 2018 | Apr. 09, 2015 | Mar. 31, 2020 |
Other Matters (Textual) | ||||||||
Aggregate of common stock, shares | 819,491 | 143,900 | 376,100 | |||||
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. | |||||||
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 |
Termination of Former CEO (Deta
Termination of Former CEO (Details) | 1 Months Ended |
Feb. 29, 2020 | |
Termination of Former CEO (Textual) | |
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 $1,000,000 and reasonable costs and attorney's fees. The Company denies Plaintiff's allegations in their entirety and has filed counterclaims against Plaintiff for (1) declaratory relief; (2) breach of confidence/non-compete agreement; (3) declaratory and injunctive relief – confidence/non-compete; (4) tortious interference with current and prospective contractual and economic relations; (5) breach of fiduciary duty; (6) misappropriation of trade secrets; (7) declaratory and injunctive relief – unfair competition; and (8) conversion. |
Payroll Protection Program Lo_2
Payroll Protection Program Loan (Details) - Paycheck Protection Program [Member] | Apr. 15, 2020USD ($) |
Payroll Protection Program Loan (Textual) | |
Proceeds from loan | $ 6,659,220 |
Annual interest rate | 0.98% |
Loan term | 6 months |