PART
III
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance.
|
Directors
and Executive Officers
Set
forth below are the names, ages and positions and offices held with the Company of each director and executive officer of the
Company. Directors are classified as either Class I, Class II or Class III directors, with each class serving for a term of three
(3) years. The term of Class I directors is set to expire at the 2018 annual meeting of stockholders of the Company. The term
of Class II directors is set to expire at the 2020 annual meeting of stockholders, and the term of Class III directors is set
to expire at the 2019 annual meeting of stockholders. Executive officers serve until such time as their successor is duly elected
and qualifies.
|
Name
|
|
Age
|
|
Position
|
|
Year First Officer or Director
|
|
Ira D. Cohen (1)(2)(3)(4)
|
|
68
|
|
Class I Director
|
|
2018
|
|
Christopher Hughes
|
|
58
|
|
Chairman of the Board, Chief Executive Officer, President, Treasurer and Class II Director
|
|
2000
|
|
William J. Kelly (1)(2)(3)(5)
|
|
57
|
|
Class III Director
|
|
2018
|
|
Brian J. Mangan (1)(3)(5)(6)
|
|
61
|
|
Class III Director
|
|
2016
|
|
Joseph Pennacchio
|
|
72
|
|
Class II Director
|
|
2018
|
|
Raymond A. Roel (2)(5)(7)
|
|
64
|
|
Class I Director
|
|
2005
|
|
John G. Sharkey
|
|
60
|
|
Senior Vice President, Chief Financial Officer and Secretary
|
|
1990
|
|
Eric M. Stein (1)(2)(3)
|
|
65
|
|
Class II Director
|
|
2018
|
|
(1)
|
Member
of the Compensation Committee of the Board.
|
|
(2)
|
Member
of the Audit Committee of the Board.
|
|
(3)
|
Member
of the Nominating Committee of the Board.
|
|
(4)
|
Mr.
Cohen is the Chairman of the Special Committee of the Board.
|
|
(5)
|
Member
of the Special Committee of the Board.
|
|
(6)
|
Mr.
Mangan is the Chairman of the Audit Committee of the Board.
|
|
(7)
|
Mr.
Roel is the Chairman of the Compensation and Nominating Committees of the Board.
|
There
are no family relationships between any of the Company’s executive officers and directors, except that Christopher Hughes,
the Chairman of the Board, Chief Executive Officer, President and Treasurer and a director of the Company, is the brother-in-law
of Joseph Pennacchio, a director of the Company. Christopher Hughes is the son of Joseph F. Hughes, the Company’s former
Chairman of the Board, Chief Executive Officer, President and Treasurer prior to his retirement as of July 5, 2017. None of the
Company’s directors currently serves, or has served during the past five years, as a director of any company with a class
of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange
Act or any company registered as an investment company under the Investment Company Act of 1940.
Biographical
Information
Mr.
Ira D. Cohen was appointed to the Board on August 31, 2018, effective September 2, 2018, upon the recommendation of the Nominating
Committee to fill the vacancy that resulted from Regina Dowd’s resignation from the Board on August 27, 2018. In accordance
with the Company’s Amended and Restated By-laws, as amended, Mr. Cohen was appointed to serve for the remainder of Ms. Dowd’s
term as a Class I director, which term is scheduled to expire at the 2018 annual meeting of stockholders, or until his successor
is elected and qualifies. Mr. Cohen is an Operating Partner of Updata Partners, a technology growth private equity firm that he
co-founded in 1998. Mr. Cohen previously served as a Senior Advisor of DCS Advisory, Inc., a U.S.-based technology focused investment
banking firm (owned by Daiwa Securities Group, Inc.), and also served as the Chairman of Daiwa’s majority-owned subsidiary
in India. Mr. Cohen began his financial career at Laventhol and Horwath, an international CPA firm, where he attained the position
of Manager and was responsible for the audits of a myriad of clients, including large public and private companies and non-profit
organizations. He continues to maintain CPA status. Mr. Cohen acquired substantial experience with mergers and acquisitions, going-private
transactions and other sophisticated corporate finance transactions and corporate divestures through his service as an executive
officer, director and/or financial advisor of both publicly-traded and private companies, including Datastream Systems, Inc. (NASDAQ:
DTSM), where he also served as Chairman of the Audit Committee; Alphanet Solutions, Inc. (NASDAQ: ALPH), where he also served
on the Audit Committee and as Chairman of the Executive Committee; Tridex Corporation (AMEX: TRDX); Computer Magnetics, Inc. (NASDAQ:
CMCX); MetPath, Inc. (now Quest Diagnostic Labs) (NYSE: DGX); and CGA Computer, Inc. Mr. Cohen also co-founded Updata Advisors,
Inc., an investment banking firm, in 1986, which subsequently merged into Signal Hill Capital Group, which thereafter was acquired
by Daiwa Securities Group.
The
Company believes that Mr. Cohen’s substantial experience with mergers and acquisitions and other sophisticated corporate
transactions that he has acquired through his service as an executive officer and director of, and financial advisor to, several
public and private companies make him a valuable member of the Board. The Company further values Mr. Cohen’s contributions
as Chairman of the Special Committee and as a member of the Audit Committee, Compensation Committee and Nominating Committee.
Mr.
Christopher Hughes was elected Chairman of the Board, President, Chief Executive Officer and Treasurer of the Company on July
5, 2017. His term as President, Chief Executive Officer and Treasurer is governed by his Amended and Restated Employment Agreement
with the Company dated August 9, 2018, which is described under “Summary Compensation Table – Employment Agreements
and Arrangements” below. He has served as a director of the Company since January 2005, and his current term as a director
expires at the 2020 annual meeting of stockholders. Mr. Hughes served a previous term as a director of the Company from April
2000 until September 2004, and served as the Vice President, Sales of TSR Consulting Services, Inc., the Company’s computer
programming services subsidiary, from 1991 through 2006. From 2007 until his appointment as President and Chief Executive Officer
of the Company on July 5, 2017, Mr. Hughes served as Senior Vice President of the Company and President of TSR Consulting Services,
Inc. Mr. Hughes is a 1984 graduate of St. Bonaventure University.
The
Company believes that Mr. Hughes’ long career with the Company and tenure as an executive officer of the Company, over which
time he has acquired a deep and close familiarity with the Company’s business and client base, and knowledge of the contract
computer programming industry, make him uniquely qualified to serve as the Chairman of the Company’s Board.
Mr.
William J. Kelly was appointed to the Board on July 27, 2018 upon the recommendation of the Nominating Committee to fill one
of the two vacancies on the Board created as a result of the Board’s expansion of the size of the Board from five directors
to seven directors on the same date. The Board appointed Mr. Kelly as a Class III director to serve for the remainder of the term
of the Class III directors, which term is scheduled to expire at the 2019 annual meeting of stockholders, or until his successor
is elected and qualifies. From 2007 to May 2019, Mr. Kelly has served as the Chief Information Officer of Robert Allen Duralee
Group, a wholesaler and distributor specializing in fabrics, drapery hardware and trimmings for residential, hospitality and manufacturing
use, where Mr. Kelly manages the company’s information technology (“IT”) group and IT vendor relationships.
From 1988 to 2007 Mr. Kelly held positions of increasing authority and responsibility at Levitz Home Furnishings, Inc., culminating
with the position of Senior Vice President of Information Technology in which role he managed a staff of more than 60 IT professionals
performing in-house software development, data center operations, network administration, telecommunications and corporate facilities
management.
Based
on his extensive experience in and knowledge of the IT industry that he has acquired over the course of a long career serving
in management-level positions within the IT groups of a number of companies, the Company believes that Mr. Kelly is well-equipped
to understand the IT staffing needs of the Company’s customers and other matters relevant to the Company’s business.
The Company further values Mr. Kelly’s membership on the Audit Committee, Compensation Committee, Nominating Committee and
Special Committee.
Mr.
Brian J. Mangan has served as a director of the Company since January 2016. His current term as a director expires at the
2019 annual meeting of stockholders. Mr. Mangan is a former senior finance executive for the Disney/ABC Television Group. Prior
to his retirement from the Disney/ABC Television Group in 2013, Mr. Mangan was the east coast Senior Vice President Finance for
the ABC Television Network (“ABC”) for six years. During that time, he directed ABC’s executive team responsible
for financial statement preparation and reporting, internal control review, annual budgets, forecasts and long-term strategic
plans. Mr. Mangan was also involved in many major company and network initiatives, including the development of strategies to
increase operational efficiency and reduce costs of programming and production to address the television industry’s rapidly
changing economics and technology. Having joined ABC as a Senior Accountant in 1983, Mr. Mangan assumed positions of increasing
responsibility during almost 30 years with the company. He was promoted to Director in 1993, Assistant Controller in 1997, Vice
President in 2003 and then Senior Vice President in 2007. Mr. Mangan began his career performing audits for New York State. He
holds an MBA in Finance from Adelphi University, a BBA degree in Accounting from Hofstra University and a Certificate in Financial
Planning (CFP).
The
Company believes that Mr. Mangan is a valuable member of the Company’s Board based on his strong business and accounting/audit
background, and his experience serving in leadership- and management-level roles with responsibility for formulating business
and operational strategy. The Company further values Mr. Mangan’s contributions as Chairman of the Audit Committee and as
a member of the Compensation Committee, Nominating Committee and Special Committee.
Mr.
Joseph Pennacchio was appointed to the Board on July 27, 2018 upon the recommendation of the Nominating Committee to fill
one of the two vacancies on the Board created as a result of the Board’s expansion of the size of the Board from five directors
to seven directors on the same date. The Board appointed Mr. Pennacchio as a Class II director to serve for the remainder of the
term of the Class II directors, which term is scheduled to expire at the 2020 annual meeting of stockholders, or until his successor
is elected and qualifies. Mr. Pennacchio is a retired executive with background and experience in managing large corporate enterprises
in the retail industry, including in connection with various merger and acquisition transactions. From 2005 to 2009 he served
as the Chief Executive Officer of WestPoint Home, Inc., a privately-held textile manufacturer and distributor for which Mr. Pennacchio
oversaw the opening of new manufacturing facilities in Bahrain and Pakistan, as well as a number of acquisitions. From 1997 to
2005 he served as the Chief Executive Officer of Aurafin LLC, a privately-held jewelry manufacturer and wholesaler. Aurafin had
factories in several foreign countries. During his tenure, Aurafin LLC acquired both public and private companies. From 1994 to
1996 Mr. Pennacchio served as the Chief Executive Officer of Jan Bell Marketing, Inc., a privately-held jewelry retailer. He was
President of Jordan Marsh department stores, a division of Federated Department Stores, from 1992 to 1994.
The
Company believes that Mr. Pennacchio is a valuable member of the Company’s Board based on his extensive experience serving
in executive roles at a number of different companies, demonstrating a proficiency with navigating the challenges faced by a variety
of businesses and industries, and his strong background in mergers and acquisitions.
Mr.
Raymond A. Roel has served as a director of the Company since January 2005. His current term as a director expires at the
2018 annual meeting of stockholders. Beginning in July 2013, Mr. Roel became the sole principal of Ray Roel Consulting LLC, a
marketing communications consultancy to clients primarily engaged in the healthcare, advertising and other business-to-business
sectors. Mr. Roel previously served in a variety of marketing communications roles at divisions of Interpublic Group of Companies,
Inc., for more than 17 years. These positions included Internal Communications Director of McCann Worldgroup; Global Director
of Corporate Communications at McCann Health; and Director of Worldwide System Development and Director of Business Development,
North America at McCann Relationship Marketing. These positions involved a substantial number of mergers and acquisitions and
new business activities. Prior to joining Interpublic, Mr. Roel was VP, Director of Worldwide Communications at Ogilvy & Mather
Direct for six years. He has served on numerous industry and non-profit boards. Mr. Roel is a 1977 graduate of Brown University
with a B.A. in Semiotics (linguistics).
The
Company believes that Mr. Roel’s experience in business, including his background in marketing and corporate communications,
are particularly relevant to the Company’s business given the emphasis on sales and effective communication with the Company’s
customers regarding their staffing requirements, and make Mr. Roel a valuable member of the Board. The Company further values
Mr. Roel’s contributions as Chairman of the Compensation Committee and Nominating Committee and as a member of the Audit
Committee and Special Committee.
Mr.
John G. Sharkey was appointed Senior Vice President, Chief Financial Officer and Secretary of the Company effective June 1,
2019. He had served as the Vice President, Finance, Controller and Secretary of the Company since 1990. Mr. Sharkey received a
Master’s Degree in Finance from Adelphi University and received his Certified Public Accountant certification from the State
of New York. From 1987 until joining the Company in October 1990, Mr. Sharkey was Controller of a publicly-held electronics manufacturer.
From 1984 to 1987, he served as Deputy Auditor of a commercial bank, having responsibility over the internal audit department.
Prior to 1984, Mr. Sharkey was employed by KPMG LLP as a senior accountant.
Mr.
Eric M. Stein was appointed to the Board on July 17, 2018 upon the recommendation of the Nominating Committee to fill the
vacancy that resulted from the resignation of James J. Hill on July 9, 2018. The Board appointed Mr. Stein as a Class II director
to serve for the remainder of the term of the Class II directors, which term is scheduled to expire at the 2020 annual meeting
of stockholders, or until his successor is elected and qualifies. Mr. Stein is an executive in sales and sales management. He
is currently Regional Director of Sales at Fortinet, a leading provider of cyber security solutions. From 2007 to May 2018 he
served as Managing Director of Global Sales of Mozy, a wholly-owned subsidiary of Dell EMC, where he was responsible for building
the company’s Global Sales Team and for staffing the Global Pre-Sales Team and Professional Services Team. Mr. Stein previously
held District Manager-level positions at various regional Dell EMC offices in New York and Atlanta beginning in 2003. Prior to
Dell EMC, he was a Senior VP Sales at Comdisco.
The
Company believes that Mr. Stein is a valuable member of the Board as a result of his long experience as a sales executive and
his work in a leadership role in the development of sales teams. The Company further values Mr. Stein’s membership on the
Audit Committee, Compensation Committee and Nominating Committee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company’s officers and directors and persons who beneficially own more than ten percent
of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the “SEC”). Officers, directors and greater than ten percent Stockholders are
required by regulation of the SEC to furnish the Company with copies of all Section 16(a) forms they file.
Based
solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Company believes that all of its officers, directors and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with respect to reports required to be filed by Section
16(a) of the Exchange Act during the fiscal year ended May 31, 2019.
Code
of Ethics
The
Company has adopted a code of ethics that applies to all of its employees, including the chief executive officer and chief financial
and accounting officer. The code of ethics is available on the Investor Relations page of the Company’s website at www.tsrconsulting.com.
The Company intends to post on its website all disclosures that are required by law or NASDAQ Capital Market listing standards
concerning any amendments to, or waivers from, the Company’s code of ethics. Stockholders may request a free copy of the
code of ethics by writing to Corporate Secretary, TSR, Inc., 400 Oser Avenue, Suite 150, Hauppauge, NY 11788. Disclosure regarding
any amendments to, or waivers from, provisions of the code of ethics that apply to the Company’s directors or principal
executive and financial officers will be included in a Current Report on Form 8-K filed with the SEC within four business
days following the date of the amendment or waiver, unless website posting of such amendments or waivers is then permitted by
the rules of the NASDAQ Capital Market and the SEC.
Audit
Committee
The
Audit Committee’s current members are Brian J. Mangan (Chairman), Ira D. Cohen, William J. Kelly, Raymond A. Roel and Eric
M. Stein. Each of the members of the Audit Committee is an independent director under the rules of the NASDAQ Capital Market.
The Audit Committee’s primary functions are to assist the Board in monitoring the integrity of the Company’s financial
statements and systems of internal control. The Audit Committee has direct responsibility for the appointment, independence and
performance of the Company’s independent auditors. The Audit Committee is responsible for pre-approving any engagements
of the Company’s independent auditors. The Audit Committee operates under a written charter approved by the Board on September
16, 2004, and amended as of October 10, 2008. A copy of the Audit Committee Charter is available on the Investor Relations page
of the Company’s website at www.tsrconsulting.com.
The
Board has determined that Brian J. Mangan, the Chairman of the Audit Committee, and Ira D. Cohen, a member of the Audit Committee,
meet the requirements of an “audit committee financial expert” as such term is defined in applicable regulations of
the SEC.
|
Item
11.
|
Executive
Compensation.
|
Executive
Compensation
The
following table sets forth information concerning the annual and long-term compensation of the Named Executive Officers (as defined
below) for services in all capacities to the Company for the fiscal years ended May 31, 2019 and 2018. The Named Executive Officers
for the fiscal years ended May 31, 2019 and 2018 are (1) Joseph F. Hughes, who served as President and Chief Executive Officer
during the fiscal year ended May 31, 2018 until his retirement on July 5, 2017, (2) Christopher Hughes, who served as Senior Vice
President during the fiscal year ended May 31, 2018 until his appointment as President and Chief Executive Officer effective July
5, 2017, and (3) John G. Sharkey, who served as Vice President, Finance for the fiscal years ended May 31, 2019 and May 31, 2018
(the “Named Executive Officers”).
SUMMARY
COMPENSATION TABLE
|
Name and Principal Position
|
|
Fiscal
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
|
|
Total
|
|
|
Joseph F. Hughes,
|
|
2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
President and Chief Executive Officer (1)
|
|
2018
|
|
|
$
|
48,000
|
(4)
|
|
$
|
100,000
|
(5)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
82,000
|
(6)
|
|
|
|
$
|
230,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher Hughes,
|
|
2019
|
|
|
$
|
390,000
|
|
|
$
|
100,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,000
|
(7)
|
|
|
|
$
|
515,000
|
|
|
President and Chief Executive Officer (2)
|
|
2018
|
|
|
$
|
350,000
|
|
|
$
|
150,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,000
|
(7)
|
|
|
|
$
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Sharkey,
|
|
2019
|
|
|
$
|
250,000
|
|
|
$
|
75,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,000
|
(8)
|
|
|
|
$
|
331,000
|
|
|
Vice President, Finance (3)
|
|
2018
|
|
|
$
|
250,000
|
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,000
|
(8)
|
|
|
|
$
|
306,000
|
|
|
(1)
|
Joseph
F. Hughes retired as President and Chief Executive Officer of the Company effective July 5, 2017.
|
|
(2)
|
Christopher
Hughes served as Senior Vice President of the Company during the 2018 fiscal year and until his appointment as President and
Chief Executive Officer of the Company effective July 5, 2017.
|
|
(3)
|
John
G. Sharkey served as Vice President, Finance for the 2019 and 2018 fiscal years. Mr. Sharkey was subsequently appointed as
Senior Vice President and Chief Financial Officer effective June 1, 2019.
|
|
(4)
|
Represents
the pro-rated amount of an annual salary of $500,000 for the period beginning on June 1, 2017 and ending on the effective
date of Joseph F. Hughes’ retirement from the Company on July 5, 2017.
|
|
(5)
|
Represents
a one-time founder’s bonus paid to Joseph F. Hughes in connection with his retirement from the Company effective July
5, 2017, which was paid to Mr. Hughes in cash.
|
|
(6)
|
Of
this amount, $19,000 related to Mr. Joseph Hughes’ personal use of an automobile provided by the Company for the 2018
fiscal year; $15,000 was paid to Mr. Joseph Hughes for premiums for medical insurance benefits for the 2018 fiscal year; and
$48,000 was accrued in the 2018 fiscal year with respect to premiums for medical insurance benefits for Mr. Joseph Hughes
for the 2019 and 2020 fiscal years. See “Employment Agreements and Arrangements” below.
|
|
(7)
|
Of
these amounts, $3,000 related to Mr. Christopher Hughes’ personal use of an automobile provided by the Company for the
2019 and 2018 fiscal years; and $22,000 was paid to Mr. Christopher Hughes for premiums for medical insurance benefits for
the 2019 and 2018 fiscal years.
|
|
(8)
|
Amounts
related to Mr. Sharkey’s personal use of an automobile provided by the Company.
|
Outstanding
Equity Awards at Fiscal Year End
There
were no outstanding equity awards at the end of fiscal 2019.
Employment
Agreements and Arrangements
Joseph
F. Hughes was compensated at a base salary of $500,000 per annum pursuant to an unwritten employment agreement between Mr. Hughes
and the Company. Mr. Hughes retired on July 5, 2017 and received a pro-rated amount of his annual base salary for the period from
June 1, 2017 to July 5, 2017. In connection with Mr. Hughes’ retirement, the Board awarded him a one-time founder’s
bonus of $100,000, which was paid to Mr. Hughes in cash. The Board also approved the continued payment by the Company of the remaining
payments of the lease for the automobile used by Mr. Hughes until the lease expired in May, 2018. Further, the Board approved
the continued payment by the Company for health insurance coverage for Mr. Hughes and his spouse under the Company’s executive
medical plan until May 31, 2018 and approved payments of $2,000 per month to Mr. Hughes for a period of two years thereafter to
assist Mr. Hughes with the cost of obtaining his own private health insurance coverage. In the event Mr. Hughes passes away prior
to May 31, 2020, the Company will make the $2,000 monthly payments described in the preceding sentence to Mr. Hughes’ spouse
during her lifetime according to the same schedule for the remainder of the period. Notwithstanding the foregoing, inasmuch as
the Company was able to maintain insurance coverage for Mr. Hughes and his spouse under the Company’s executive medical
plan for the Company’s 2019 fiscal year and for the Company’s 2020 fiscal year when the term of the plan renewed as
of June 1, 2019, the Company continued to pay for insurance coverage for Mr. Hughes and his spouse under the Company’s executive
medical plan through the end of the Company’s 2019 fiscal year, and has continued to pay for insurance coverage under the
executive medical plan for Mr. Hughes and his spouse for the Company’s 2020 fiscal year.
On
May 24, 2019, the Company entered into a written amended and restated employment agreement with John G. Sharkey (the “Sharkey
Employment Agreement”) that superseded the employment agreement that the Company and Mr. Sharkey had entered into in June
2015. The Sharkey Employment Agreement terminates May 31, 2020 and automatically renews for successive renewal terms of one (1)
year each unless either party gives notice of non-renewal to the other party at least thirty (30) days prior to the expiration
of the initial term or the then-current renewal term. The Sharkey Employment Agreement provides for an annualized base salary
in the amount of $285,000 for the period from June 1, 2019 through December 31, 2019. Beginning January 1, 2020, the annualized
base salary increases to the amount of $310,000. Thereafter, the Compensation Committee will review Mr. Sharkey’s base salary
on an annual basis and the Board may increase his base salary, in its sole discretion. In addition to base salary, the Sharkey
Employment Agreement provides that Mr. Sharkey will be eligible to receive an annual cash bonus for each fiscal year in an amount
determined by the Compensation Committee in its sole discretion and subject to the approval of the Board, which may be based upon
standards that the Compensation Committee establishes with Mr. Sharkey, subject to the Board’s approval. The target amount
of the annual bonus will not be less than $85,000, provided that the actual amount of the annual bonus may be higher or lower
than the target amount. The Sharkey Employment Agreement further provides that the Company pay Mr. Sharkey an annual bonus in
the amount of $75,000 for the fiscal year ended May 31, 2019, which is the annual bonus that is to be paid to Mr. Sharkey under
the terms of the Mr. Sharkey’s former employment agreement for the fiscal year ending May 31, 2019 and which the Company
paid in a lump sum. As set forth in the Summary Compensation Table above, the Company paid an annual bonus to Mr. Sharkey in the
amount of $50,000 for the fiscal year ended May 31, 2018.
In
the event that (a) the Company terminates Mr. Sharkey’s employment without “Cause” (as defined in the Sharkey
Employment Agreement), (b) Mr. Sharkey terminates his employment for “Good Reason” (as defined in the Sharkey Employment
Agreement) or (c) Mr. Sharkey’s employment terminates upon the expiration of the term as a result of the Company providing
a notice of non-renewal of the then-current term of the Sharkey Employment Agreement, then Mr. Sharkey will be entitled to receive
the following: (i) a severance payment equal to the sum of (x) 1.5 times Mr. Sharkey’s annual base salary at the rate in
effect on the date of termination, (y) 1.5 times Mr. Sharkey’s annual bonus based on the bonus awarded to him for the fiscal
year prior to the fiscal year in which the date of termination occurred, and (z) in the case of a termination by the Company without
“Cause” or a termination by Mr. Sharkey for “Good Reason,” the base salary that Mr. Sharkey would have
received if he had remained employed from the date of termination through the last day of the initial term or then-current renewal
term, which severance payment will be payable in a single lump sum on the Company’s first regular pay date following the
date on which the General Release (as defined in the Sharkey Employment Agreement) becomes effective; (ii) payment of the full
bonus for the fiscal year in which the date of termination occurs (the “Termination Year Bonus”), which Termination
Year Bonus will be based on the bonus awarded to Mr. Sharkey for the fiscal year prior to the fiscal year in which the date of
termination occurred and will be payable within thirty (30) days following the date of termination; (iii) continued medical and
dental insurance benefits for Mr. Sharkey and his family that are at least comparable to the benefits generally offered to all
eligible Company employees until the earlier of (x) the two-year anniversary of Mr. Sharkey’s employment termination date,
and (y) the date that Mr. Sharkey is eligible for comparable coverage under the group health insurance plans of another employer;
and (iv) for two (2) years following the date of termination, the Company will reimburse Mr. Sharkey for the monthly cost of his
car lease, subject to certain parameters described in the Sharkey Employment Agreement. In addition to the foregoing benefits,
the Company will also pay Mr. Sharkey the Accrued Obligations (as defined in the Sharkey Employment Agreement). With the exception
of the Accrued Obligations and the Termination Year Bonus, the Company’s obligation to pay the foregoing benefits is subject
to Mr. Sharkey’s execution and non-revocation of a general release of claims against the Company, and his continued compliance
with all post-termination covenants.
In
the event that either (a) the Company terminates Mr. Sharkey’s employment for “Cause,” (b) Mr. Sharkey terminates
his employment without “Good Reason” or (c) Mr. Sharkey’s employment terminates due to his death, disability
or the expiration of the then-current term of the Sharkey Employment Agreement as a result of Mr. Sharkey providing a notice of
non-renewal, then the Company’s sole obligations to Mr. Sharkey shall be: (i) the payment of Mr. Sharkey’s accrued
but unpaid base salary and business expenses incurred by Mr. Sharkey that had not yet been reimbursed; (ii) in the case of a termination
by Mr. Sharkey without “Good Reason” or a termination due to Mr. Sharkey’s death or disability, a pro-rated
bonus for the fiscal year in which the date of termination occurs (calculated based on the bonus awarded for the prior fiscal
year and pro-rated based upon the number of days that Mr. Sharkey was employed in the fiscal year in which the date of termination
occurs) (the “Pro-Rata Bonus”); and (iii) in the case of the expiration of the then-current term of the Sharkey Employment
Agreement as a result of Mr. Sharkey providing a notice of non-renewal, his Termination Year Bonus (calculated based on the bonus
awarded for the prior fiscal year). The Company will pay the Accrued Obligations, the Pro-Rata Bonus and the Termination Year
Bonus in a single lump sum within thirty (30) days following the date of termination.
The
Sharkey Employment Agreement incorporates the terms and provisions of a Maintenance of Confidence and Non-Compete Agreement between
the Company and Mr. Sharkey dated as of May 24, 2019. The Maintenance of Confidence and Non-Compete Agreement sets forth Mr. Sharkey’s
covenants against the disclosure of confidential information, covenants against the solicitation of customers, employees and independent
contractors and a covenant against competition (all in accordance with the terms set forth therein) and supersedes any prior agreements
entered into by Mr. Sharkey pertaining to such covenants.
The
Sharkey Employment Agreement does not provide for any payments in connection with a change in control of the Company.
In
April 2017, in anticipation of the expiration of Christopher Hughes’ prior employment agreement, the Company entered into
a written employment agreement with Mr. Hughes, which was effective as of May 1, 2017 and which was scheduled to terminate on
May 31, 2022 (the “Hughes Employment Agreement”). The Hughes Employment Agreement provided for an annual base salary
of $350,000 and an annual bonus for fiscal years beginning with the fiscal year ended May 31, 2018 to be approved by the Compensation
Committee in its discretion, which may be based upon standards that the Compensation Committee approves at the beginning of each
fiscal year commencing with the fiscal year beginning June 1, 2017, and which standards may be modified thereafter with the Compensation
Committee’s approval. The Hughes Employment Agreement provided that the Company shall pay any annual bonus that may become
payable within 120 days of the end of the applicable fiscal year, for the period to which the bonus relates. In addition, the
Hughes Employment Agreement provided that the Company shall pay Mr. Hughes an advance on his annual bonus for the current fiscal
year within 30 days after the end of each fiscal quarter (other than the fourth fiscal quarter) in an amount equal to the bonus
which would have been earned through the end of such fiscal quarter, based on any standards approved by the Compensation Committee.
Each such advance of the bonus was to be approved by the Compensation Committee unless it is paid in accordance with a formula
approved in advance for such fiscal year. In the event that following any fiscal quarter or following completion of the Company’s
audited financial statements, any advance payment of the bonus previously paid with respect to any fiscal year (or portion thereof)
exceeded the amount that Mr. Hughes is entitled to receive through the end of such fiscal quarter or fiscal year, Mr. Hughes was
required to promptly return such excess amount to the Company.
On
August 9, 2018, the Company and Christopher Hughes entered into an Amended and Restated Employment Agreement, dated and effective
as of August 9, 2018 (the “Amended and Restated Hughes Employment Agreement”), that superseded the Hughes Employment
Agreement. The Amended and Restated Hughes Employment Agreement has a term of three years, nine months and twenty-two days, and
is scheduled to expire on May 31, 2022. The Amended and Restated Hughes Employment Agreement provides for an annual base salary
of $400,000, which the Company’s Compensation Committee will review on an annual basis, and which the Company’s Board
may increase in the Board’s discretion. Mr. Hughes is eligible to receive an annual cash bonus in the discretion of the
Compensation Committee, which may be based upon standards established by the Compensation Committee and approved by the Board.
Mr. Hughes is entitled to receive advance payments of the bonus on a quarterly basis based on the amount of the bonus that would
have been earned through the end of each quarter according to such standards. Such advance payments of the bonus are subject to
recapture by the Company in the event that the amount paid as the advance exceeds the amount that Mr. Hughes was actually entitled
to receive. Mr. Hughes is entitled to participate in any pension, profit-sharing, retirement, hospitalization, insurance, medical
services or other employee benefit plan generally available to the Company’s executives, to the extent that he is eligible
to participate under the terms and conditions of such plans. Mr. Hughes is also entitled to executive medical benefits and a car
(leased or owned at the sole discretion of the Company) in such amounts for the car as determined by the Board, provided that
the executive medical benefits and car may be discontinued at the end of any fiscal year at the discretion of the Board.
The
Company has the right to immediately terminate Mr. Hughes’ employment for “Cause” (as defined in the Amended
and Restated Hughes Employment Agreement), in which event Mr. Hughes shall be entitled to receive his base salary for the month
in which the termination is effective.
The
Company has the right to terminate Mr. Hughes’ employment upon fifteen days written notice in the event Mr. Hughes is unable
to perform his duties on account of illness, accident or other physical or mental incapacity for a period of six consecutive months
or an aggregate of 180 days in any period of twelve consecutive months, in which event Mr. Hughes shall be entitled to receive
his base salary and reimbursement of approved expenses for the month in which termination is effective.
The
Company may terminate Mr. Hughes’ employment for any other reason upon thirty days written notice, in which event Mr. Hughes
shall be entitled to receive (a) reimbursement of any unpaid approved expenses, (b) severance from the Company in an amount equal
to (i) two times his base salary plus (ii) two times his bonus for the then-current fiscal year, or if that bonus amount cannot
be determined, two times the amount of the bonus paid to him in the prior fiscal year, (c) continued group health insurance benefits
(including both group health insurance benefits generally offered to all eligible employees of the Company and supplemental executive
health insurance benefits) until the earlier of the second anniversary of termination or such time as Mr. Hughes is eligible for
comparable coverage under the group health insurance plans of another employer and (d) reimbursement for the monthly cost of his
car lease until the second anniversary of the termination of his employment; provided that, as a condition to his right to receive
the payments and benefits in clauses (b), (c) and (d), Mr. Hughes executes, delivers and does not revoke a release of all claims
against the Company and its affiliates.
The
Amended and Restated Hughes Employment Agreement incorporates the terms and provisions of a Maintenance of Confidence and Non-Compete
Agreement between the Company and Mr. Hughes dated as of August 9, 2018. The Maintenance of Confidence and Non-Compete Agreement
sets forth Mr. Hughes’ covenants against the disclosure of confidential information, covenants against the solicitation
of customers, employees and independent contractors and a covenant against competition (all in accordance with the terms set forth
therein) and supersedes any prior agreements entered into by Mr. Hughes pertaining to such covenants.
See
“Payments in Connection with Termination of Employment and Change in Control” below for a description of payments
that Mr. Hughes is entitled to receive under his Amended and Restated Hughes Employment Agreement in connection with a termination
of his employment in connection with a change in control of the Company.
Payments
in Connection with Termination of Employment and Change in Control
The
Amended and Restated Hughes Employment Agreement provides that in the event that Mr. Hughes’ employment is terminated without
“cause” during the six-month period prior to, or within one year after, a “change in control” (as defined
in the Amended and Restated Hughes Employment Agreement) of the Company, or if Mr. Hughes resigns from his employment for “good
reason” within one year after a change in control of the Company, then Mr. Hughes shall be entitled to receive (a) his base
salary through the date of termination or resignation plus his bonus pro-rated through such date, (b) an amount equal to two times
his base salary plus two times his bonus for the then-current fiscal year, or if such bonus amount cannot be determined, two times
the bonus paid to him in the prior fiscal year, provided that Mr. Hughes executes and delivers a release of all claims against
the Company, (c) continued group health insurance benefits (including both group health insurance benefits generally offered to
all eligible employees of the Company and supplemental executive health insurance benefits) until the earlier of the second anniversary
of termination or such time as Mr. Hughes is eligible for comparable coverage under the group health insurance plans of another
employer and (d) reimbursement for the monthly cost of his car lease until the second anniversary of the termination of his employment;
provided that, as a condition to his right to receive the payments and benefits in clauses (b), (c) and (d), Mr. Hughes executes,
delivers and does not revoke a release of all claims against the Company and its affiliates. “Good reason” means either
(i) a material breach by the Company of the Amended and Restated Hughes Employment Agreement, (ii) a material diminution in Mr.
Hughes’ authority, duties or responsibilities, or (iii) a relocation by the Company of Mr. Hughes’ principal place
of business for the performance of his duties to a location that is anywhere outside of a 100 mile radius of the Borough of Manhattan.
Director
Compensation
The
following table sets forth information concerning the compensation of the non-officer directors of the Company who served as directors
during the fiscal year ended May 31, 2019. Directors of the Company who also serve as executive officers of the Company are not
paid any compensation for their service as directors. For the fiscal year ended May 31, 2019, Christopher Hughes was the only
director of the Company who also served as an executive officer.
|
Name
|
|
Fees
Earned
Or Paid
In Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change in Pension
Value and Nonqualified Deferred Compensation Earnings
|
|
|
All Other Compensation
|
|
|
Total
|
|
|
Ira D. Cohen
|
|
$
|
15,834
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
15,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regina Dowd
|
|
$
|
2,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
J. Hill
|
|
$
|
2,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Kelly
|
|
$
|
17,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
17,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian J. Mangan
|
|
$
|
27,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
27,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Pennacchio
|
|
$
|
10,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raymond
A. Roel
|
|
$
|
22,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric M. Stein
|
|
$
|
10,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,000
|
|
For
their service, members of the Board who are not officers of the Company received an annual retainer of $10,000, payable quarterly
during fiscal 2019. Brian J. Mangan received an additional annual retainer of $10,000 for his services as Audit Committee Chairman
during fiscal 2019. Raymond A. Roel received an additional annual retainer of $5,000 for his services as Compensation Committee
Chairman during fiscal 2019. Each of Ira D. Cohen, William J. Kelly, Brian J. Mangan and Raymond A. Roel received an additional
retainer of $7,500 for serving as a member of the Special Committee. James J. Hill resigned from the Board on July 9, 2018, and
Regina Dowd resigned from the Board on August 27, 2018.
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Principal
Stockholders and Security Ownership of Management
The
outstanding voting stock of the Company as of September 23, 2019 consisted of 1,962,062 shares of Common Stock. The table below
sets forth the beneficial ownership of the Common Stock of the Company’s directors, executive officers and persons known
to the Company to be the beneficial owner of more than five percent (5%) of the outstanding shares of Common Stock as of September
23, 2019:
|
|
|
Beneficial Ownership of Common Stock
|
|
|
Name of Beneficial Owner – Directors,
Officers and 5% Stockholders
|
|
No. of Shares (1)
|
|
|
Percent of
Class
|
|
|
Ira D. Cohen (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
Fintech Consulting LLC (4)
|
|
|
376,000
|
|
|
|
19.2
|
%
|
|
Robert Fitzgerald (5)
|
|
|
139,200
|
(6)
|
|
|
7.1
|
%
|
|
Tajuddin Haslani (4)
|
|
|
376,100
|
(13)
|
|
|
19.2
|
%
|
|
Christopher Hughes (2)(3)(7)
|
|
|
11,842
|
(8)
|
|
|
0.6
|
%
|
|
William J. Kelly (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
Philip J. LaBlonde (9)
|
|
|
135,000
|
|
|
|
6.9
|
%
|
|
Brian J. Mangan (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
Joseph Pennacchio (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
QAR Industries, Inc. (5)
|
|
|
139,200
|
|
|
|
7.1
|
%
|
|
Raymond A. Roel (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
John G. Sharkey (2)(10)
|
|
|
6,750
|
|
|
|
0.3
|
%
|
|
Eric M. Stein (2)(3)
|
|
|
-
|
|
|
|
-
|
|
|
Zeff Capital, L.P. (11)
|
|
|
437,774
|
|
|
|
22.3
|
%
|
|
Zeff Holding Company, LLC (11)
|
|
|
437,774
|
(12)
|
|
|
22.3
|
%
|
|
Daniel Zeff (11)
|
|
|
437,774
|
(12)
|
|
|
22.3
|
%
|
|
All Directors and Executive Officers as a Group (8 persons)
|
|
|
18,592
|
|
|
|
0.9
|
%
|
|
(1)
|
In
accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner, for purposes of this table,
of any shares of the Company’s Common Stock if such person has voting or investment power with respect to such shares.
This includes shares of Common Stock (a) subject to options exercisable within sixty (60) days, and (b) (1) owned by a person’s
spouse, (2) owned by other immediate family members who share a household with such person, or (3) held in trust or held in
retirement accounts or funds for the benefit of the such person, over which shares the person named in the table may possess
voting and/or investment power. Unless otherwise stated herein, each beneficial owner has sole voting power and sole investment
power.
|
|
(2)
|
This
executive officer and/or director maintains a mailing address at 400 Oser Avenue, Suite 150, Hauppauge, New York 11788.
|
|
(3)
|
Such
person currently serves as a director of the Company.
|
|
(4)
|
Based
on a Schedule 13D filed by Fintech Consulting LLC and Tajuddin Haslani with the SEC on July 30, 2018. Based on the Schedule
13D, Tajuddin Haslani is the managing member of Fintech Consulting LLC and the reporting persons maintain a mailing address
at 120 S. Wood Avenue, Suite 300, Iselin, New Jersey 08830.
|
|
(5)
|
Based
on an Amendment to Schedule 13D filed by QAR Industries, Inc. and Robert Fitzgerald with the SEC on September 10, 2019. Based
on the Amendment to Schedule 13D, Robert Fitzgerald is the President of QAR Industries, Inc. and the reporting persons maintain
a mailing address at 101 SE 25th Avenue, Mineral Wells, Texas 76067.
|
|
(6)
|
Represents
the same shares owned by QAR Industries, Inc.
|
|
(7)
|
Mr.
Christopher Hughes served as the Senior Vice President of the Company until July 5, 2017 at which time he was elected Chairman,
President, Chief Executive Officer and Treasurer of the Company.
|
|
(8)
|
Includes
5,566 shares held of record by Christopher Hughes’ wife, as to which Mr. Hughes disclaims beneficial ownership.
|
|
(9)
|
Based
on a Schedule 13D filed by Philip J. LaBlonde with the SEC on August 11, 2016. Based on the Schedule 13D, Philip J. LaBlonde
maintains a mailing address at 15120 Honors Circle, Carmel, Indiana 46033.
|
|
(10)
|
John
G. Sharkey served as the Vice President, Finance, Controller and Secretary of the Company until June 1, 2019. Effective June
1, 2019, Mr. Sharkey was appointed Senior Vice President, Chief Financial Officer and Secretary of the Company.
|
|
(11)
|
Based
on an Amendment to Schedule 13D filed by Zeff Capital, L.P., Zeff Holding Company, LLC and Daniel Zeff with the SEC on September
4, 2019. Based on the Amendment to Schedule 13D, Zeff Capital, L.P. is the owner of the 437,774 shares reported on the Amendment;
Zeff Holding Company, LLC is the general partner of Zeff Capital, L.P.; Daniel Zeff is the sole manager of Zeff Holding Company,
LLC; and all of the reporting persons maintain a mailing address at 885 Sixth Avenue, New York, New York 10001.
|
|
(12)
|
Represents
the same shares owned by Zeff Capital, L.P.
|
|
(13)
|
Includes
376,000 shares owned by Fintech Consulting LLC.
|
|
Item
13.
|
Certain
Relationships and Related Transactions and Director Independence.
|
Related
Party Transactions
The Audit Committee is
responsible for reviewing and approving all transactions between the Company and any related party pursuant to the Audit Committee’s
charter. Except as described below, the Company was not a participant in any transaction since the beginning of the 2019 fiscal
year in which any related person had a direct or indirect material interest and in which the amount involved exceeded the lesser
of $120,000 or 1% of the average of the Company’s total assets at the end of each of the Company’s two prior fiscal
years, and no such transactions are currently proposed. Regina Dowd, who served as a director of the Company during fiscal 2019
until her resignation as a director on August 27, 2018, was also employed as a sales executive of the Company for which she was
paid compensation in the amount of $149,000 for the 2019 fiscal year. The Company and Ms. Dowd entered into an employment agreement
dated as of July 1, 2019, pursuant to which the Company employs Ms. Dowd as an Account Manager for a three-year term expiring on
June 30, 2022, and on an at-will basis thereafter, for an annual base salary of $60,000 and eligibility to earn commissions pursuant
to an incentive compensation/commission plan.
In
addition, in connection with the settlement of a civil action brought against the Company in June 2019 by Ms. Dowd and Joseph
F. Hughes, the former Chief Executive Officer and Chairman of the Company, concerning their right to indemnification by the Company
for legal fees incurred by them in connection with certain lawsuits previously disclosed by the Company in its reports filed with
the SEC that affect the Company, Ms. Dowd (in her capacity as a former director of the Company) and Mr. Joseph Hughes (in his
capacity as the former Chairman, President and Chief Executive Officer of the Company), the Company agreed to pay approximately
$385,000 in legal fees incurred by them.
Board
of Directors and Director Independence
The
Board of Directors for the 2019 fiscal year consisted of Christopher Hughes (Chairman), Ira D. Cohen, William J. Kelly, Brian
J. Mangan, Joseph Pennacchio, Raymond A. Roel and Eric Stein. In addition, James J. Hill served as a director during the 2019
fiscal year until his resignation as a director on July 9, 2018, and Regina Dowd served as a director during the 2019 fiscal year
until her resignation as a director on August 27, 2018. Ira D. Cohen, William J. Kelly, Brian J. Mangan and Raymond A. Roel qualify
as “independent directors” under the NASDAQ rules.
|
Item
14.
|
Principal
Accounting Fees and Services.
|
Audit
Fees
The
aggregate fees billed by CohnReznick LLP for professional services related to the audit of the Company’s consolidated financial
statements and the review of the consolidated condensed financial statements included in the Company’s quarterly reports
on Form 10-Q for the fiscal years ended May 31, 2019 and 2018 were $78,000 and $75,000, respectively.
Audit-Related
Fees
There
were no fees billed by CohnReznick LLP for audit related services for the fiscal years ended May 31, 2019 or 2018.
Tax
Fees
There
were no fees billed by CohnReznick LLP for tax services during the fiscal years ended May 31, 2019 or 2018.
All
Other Fees
There
were no fees billed by CohnReznick LLP related to any other non-audit services for the fiscal year ended May 31, 2019. There were
$6,000 of fees billed by CohnReznick LLP related to other non-audit services for the fiscal year ended May 31, 2018, which related
to review of the Company’s information returns filed with the Internal Revenue Service related to a foreign bank account.
Policy
on Pre-Approval of Audit and Permissible Non-Audit Services
The
Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public
accounting firm. In accordance with its charter, the Audit Committee approves, in advance, all audit and permissible non-audit
services to be performed by the independent registered public accounting firm. Such approval process ensures that the independent
registered public accounting firm does not provide any non-audit services to the Company that are prohibited by law or regulation.