Revenue and Financial Performance - Revenue for the quarter ended August 31, 2020, decreased by approximately $433,000 or 2.9% compared to the same quarter in 2019, primarily due to a lower average number of consultants on billing, which decreased from 375 to 336 [88]. - Cost of sales for the quarter ended August 31, 2020, decreased by approximately $488,000 or 3.9% to $12,183,000, resulting in a decrease in cost of sales as a percentage of revenue from 84.8% to 83.9% [90]. - Selling, general and administrative expenses decreased by approximately $919,000 or 28.8% from $3,190,000 in the quarter ended August 31, 2019, to $2,271,000 in the current quarter [91]. - Net loss attributable to TSR, Inc. was approximately $3,000 for the quarter ended August 31, 2020, compared to a loss of $663,000 in the same quarter of 2019, primarily due to reduced selling, general and administrative expenses [95]. - The effective tax rate for the quarter ended August 31, 2020, resulted in a benefit of 250.0%, compared to a benefit of 27.3% for the same quarter in 2019 [93]. Cash Flow and Working Capital - The Company had working capital of approximately $11,972,000 as of August 31, 2020, compared to $12,239,000 at May 31, 2020 [97]. - Net cash flow provided by operations during the quarter ended August 31, 2020, was approximately $1,517,000, compared to a net cash flow used in operations of $1,129,000 in the prior year period [98]. - As of August 31, 2020, the net borrowings outstanding against the line of credit were approximately $64,000, with a maximum borrowing capacity of $2,000,000 [96]. Impact of COVID-19 - The Company experienced operational challenges due to the COVID-19 pandemic, leading to terminated assignments and a decrease in demand for new assignments [89]. - The COVID-19 pandemic has negatively affected the company's business operations, with potential disruptions to client demand and workforce availability [118]. - The full financial impact of the COVID-19 pandemic remains uncertain, with existing insurance coverage potentially insufficient to cover all costs [119]. Legal and Settlement Issues - The company negotiated a legal settlement with its largest stockholder to reimburse $900,000 in legal expenses, with a net present value of $818,000 [111]. - The former CEO is seeking $1,000,000 in severance pay due to alleged wrongful termination, while the company denies these allegations and has filed counterclaims [112]. - The company is currently facing ongoing litigation that may divert resources and result in substantial liabilities, impacting financial conditions [115]. Business Expansion - The company completed the acquisition of Geneva Consulting Group, Inc. on September 1, 2020, aiming to diversify its business and expand service offerings [120]. Government Assistance - The Company secured a PPP Loan of $6,659,000, which was fully utilized to fund payroll and other allowable expenses, helping to avoid salary reductions and layoffs [89].
TSR(TSRI) - 2021 Q1 - Quarterly Report