Customer Concentration - In fiscal 2023, the Company's four largest customers accounted for 65.6% of consolidated revenue, with Consolidated Edison at 21.0%, ADP at 18.4%, Morgan Stanley at 13.7%, and Citigroup at 12.5%[34] - The company had four customers each accounting for over 10% of consolidated revenue, totaling 65.6% of revenue in 2023, slightly down from 67.7% in 2022[131] - The accounts receivable balances for the Company's largest customers were $6,848,000 as of May 31, 2023, down from $8,668,000 in the previous year[38] Revenue and Profitability - Revenue for the fiscal year ended May 31, 2023, increased by approximately $4,121,000 or 4.2% to $101,433,000 compared to $97,312,000 in the prior year[83] - Consolidated net income attributable to TSR, Inc. was approximately $1,742,000 for the fiscal year ended May 31, 2023, down from $6,929,000 in the prior year[89] - Net income attributable to TSR, Inc. for the year ended May 31, 2023, was $1,742,065, a decrease of 75.8% compared to $6,929,220 in 2022[119] Cost and Expenses - Cost of sales rose by approximately $2,633,000 or 3.2% to $83,947,000, with cost of sales as a percentage of revenue decreasing from 83.6% to 82.8%[84] - Selling, general and administrative expenses decreased by approximately $830,000 or 5.3% to $14,789,000, with these expenses as a percentage of revenue dropping from 16.0% to 14.6%[86] - The Company has experienced significant increases in payroll-related costs, which have adversely affected profitability, particularly due to rising state unemployment tax rates and health care reforms[49] Competition and Market Conditions - The staffing industry is highly competitive, with many competitors having greater financial resources, which may challenge the Company's ability to remain competitive[54] - The trend of companies moving technology jobs offshore has negatively impacted domestic IT staffing revenue, with no assurance that this trend will reverse[50] - The Company faces intense competition for qualified technical personnel, which has resulted in increased hiring costs and may adversely affect profit margins[41] Financial Position - The company had working capital of approximately $13,551,000 as of May 31, 2023, an increase from $10,912,000 at the end of the previous fiscal year[92] - Total assets decreased to $23,347,884 as of May 31, 2023, from $24,354,297 in 2022, reflecting a decline of 4.1%[114] - Total liabilities decreased to $7,097,996 in 2023, down from $9,821,732 in 2022, a reduction of 27.6%[117] Cash Flow and Investments - Net cash flow from operations was approximately $1,754,000 for the fiscal year ended May 31, 2023, compared to a net cash outflow of $2,307,000 in the prior year[93] - Net cash used in investing activities was approximately $496,000 for the fiscal year ended May 31, 2023, primarily due to purchases of certificates of deposit[94] - The company reported a net cash outflow from financing activities of $365,618 in 2023, compared to a net inflow of $1,513,523 in 2022[129] Taxation - The effective income tax rate for the fiscal year ended May 31, 2023, was 31.5%, compared to a benefit of less than 1% in the previous year[88] - The company reported a provision for income taxes of $831,000 for 2023, compared to a benefit from income taxes of $(1,000) in 2022[119] Legal and Compliance - The Company incurred a settlement expense of $75,000 related to litigation, which was accrued in the quarter ending February 28, 2023[73] - The Company accrued $75,000 in the quarter ended February 28, 2023, related to a settlement agreement[188] - The report includes certifications by key executives, ensuring compliance with the Securities Exchange Act and Sarbanes-Oxley Act[225] Shareholder and Stock Information - The Company has significant stockholders, Zeff Capital, L.P. and QAR Industries, Inc., owning approximately 45.9% of the Company's Common Stock, which may influence business policies and decisions[61] - The stock repurchase program authorized by the Board of Directors allows for up to $500,000 of the Company's outstanding common stock to be repurchased, with 3,880 shares purchased at an average price of $8.10 in March 2023[79] - The Company has an active shelf registration statement allowing for the offering of up to $5,000,000 in common stock[191] Operational and Lease Information - The Company leases 8,000 square feet of office space in Hauppauge, New York, with annual rents of approximately $110,000, expiring on December 31, 2023[66] - Future minimum lease payments under non-cancelable operating leases total $559,920 as of May 31, 2023, with the weighted average remaining lease term being 3.6 years[167] - The Company’s operating lease expense for the fiscal year ended May 31, 2023, was $282,000, down from $326,000 in the previous year[166] Intellectual Property and Security - The Company relies on trade secrets and contractual agreements to protect its intellectual property, but there is no assurance against misappropriation[59] - The Company is exposed to increased expenses associated with data security and compliance with regulatory requirements, which may impact financial performance[58]
TSR(TSRI) - 2023 Q4 - Annual Report