Delaware
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13-2635899
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(State or other jurisdiction of
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(I.R.S. Employer
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Incorporation or organization)
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Identification No.) |
Large Accelerated Filer
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o |
Accelerated Filer
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o |
Non-Accelerated filer
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o (Do not check if a smaller reporting company)
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Smaller Reporting Company
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x |
Page
Number
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3
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4
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5
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6
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7
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11
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14
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15
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15
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15
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August 31,
2013
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May 31,
2013
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|||||||
(Unaudited) | (Note 1) | |||||||
ASSETS
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||||||||
Current Assets:
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||||||||
Cash and cash equivalents
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$ | 1,656,290 | $ | 1,881,161 | ||||
Certificates of deposit and marketable securities
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1,760,584 | 2,008,424 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $193,000
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9,238,264 | 9,146,283 | ||||||
Other receivables
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1,407 | 5,016 | ||||||
Prepaid expenses
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97,572 | 70,926 | ||||||
Prepaid and recoverable income taxes
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205,699 | 208,579 | ||||||
Deferred income taxes
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86,000 | 86,000 | ||||||
Total Current Assets
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13,045,816 | 13,406,389 | ||||||
Certificates of deposit
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249,000 | - | ||||||
Equipment and leasehold improvements, net of accumulated depreciation and amortization of $248,245 and $244,868
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17,260 | 16,784 | ||||||
Other assets
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49,653 | 49,653 | ||||||
Deferred income taxes
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132,000 | 146,000 | ||||||
Total Assets
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$ |
13,493,729
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$ |
13,618,826
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||||
LIABILITIES AND EQUITY
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||||||||
Current Liabilities:
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||||||||
Accounts and other payables
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$ | 857,889 | $ | 852,228 | ||||
Accrued expenses and other current liabilities
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2,246,618 | 2,389,006 | ||||||
Advances from customers
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1,424,814 | 1,448,255 | ||||||
Total Current Liabilities
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4,529,321 | 4,689,489 | ||||||
Commitments and contingencies
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||||||||
Equity: | ||||||||
TSR, Inc.:
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||||||||
Preferred stock, $1 par value, authorized 500,000 shares; none issued
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- | - | ||||||
Common stock, $.01 par value, authorized 12,500,000 shares; issued 3,114,163 shares, 1,962,062 outstanding
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31,142 | 31,142 | ||||||
Additional paid-in capital
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5,102,868 | 5,102,868 | ||||||
Retained earnings
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17,316,801 | 17,305,883 | ||||||
22,450,811 | 22,439,893 | |||||||
Less: Treasury stock, 1,152,101 shares, at cost
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13,514,003 | 13,514,003 | ||||||
Total TSR, Inc. Equity
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8,936,808 | 8,925,890 | ||||||
Noncontrolling Interest |
27,600
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3,447
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||||||
Total Equity |
8,964,408
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8,929,337 | ||||||
Total Liabilities and Equity | $ |
13,493,729
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$ |
13,618,826
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Three Months Ended
August 31,
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||||||||
2013
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2012
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|||||||
Revenue, net
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$ | 12,086,697 | $ | 11,288,445 | ||||
Cost of sales
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9,988,849 | 9,438,746 | ||||||
Selling, general and administrative expenses
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2,039,429 | 1,962,826 | ||||||
12,028,278 | 11,401,572 | |||||||
Income (loss) from operations
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58,419 | (113,127 | ) | |||||
Other income (expense):
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||||||||
Interest and dividend income
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1,704 | 3,063 | ||||||
Unrealized loss on marketable securities, net
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(1,840 | ) | (808 | ) | ||||
Income (loss) before income taxes
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58,283 | (110,872 | ) | |||||
Provision (benefit) for income taxes
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20,000 | (37,000 | ) | |||||
Consolidated net income (loss)
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38,283 | (73,872 | ) | |||||
Less: Net income attributable to noncontrolling interest
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(27,365 | ) | (19,562 | ) | ||||
Net income (loss) attributable to TSR, Inc.
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$ | 10,918 | $ | (93,434 | ) | |||
Basic and diluted net income (loss) per TSR, Inc. common share
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$ | 0.01 | $ | (0.05 | ) | |||
Weighted average number of basic and diluted common shares outstanding
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1,962,062 | 1,981,350 |
Shares of
common
stock
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Common
stock
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Additional
paid-in
capital
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Retained
earnings
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Treasury
stock
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TSR, Inc.
equity
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Non-
controlling
Interest
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Total
equity
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|||||||||||||||||||||||||
Balance at May 31, 2012
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3,114,163 | $ | 31,142 | $ | 5,102,868 | $ | 20,796,104 | $ | (13,432,092 | ) | $ | 12,498,022 | $ | 21,270 | $ | 12,519,292 | ||||||||||||||||
Purchases of treasury stock
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- | - | - | - | (16,571 | ) | (16,571 | ) | - | (16,571 | ) | |||||||||||||||||||||
Net income attributable to noncontrolling interest
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- | - | - | - | - | - | 19,562 | 19,562 | ||||||||||||||||||||||||
Distribution to noncontrolling interest
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- | - | - | - | - | - | (3,500 | ) | (3,500 | ) | ||||||||||||||||||||||
Net loss attributable to TSR, Inc.
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- | - | - | (93,434 | ) | - | (93,434 | ) | - | (93,434 | ) | |||||||||||||||||||||
Balance at August 31, 2012
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3,114,163 | $ | 31,142 | $ | 5,102,868 | $ | 20,702,670 | $ | (13,448,663 | ) | $ | 12,388,017 | $ | 37,332 | $ | 12,425,349 | ||||||||||||||||
Balance at May 31, 2013
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3,114,163 | $ | 31,142 | $ | 5,102,868 | $ | 17,305,883 | $ | (13,514,003 | ) | $ | 8,925,890 | $ | 3,447 | $ | 8,929,337 | ||||||||||||||||
Net income attributable to noncontrolling interest
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- | - | - | - | - | - | 27,365 | 27,365 | ||||||||||||||||||||||||
Distribution to noncontrolling interest
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- | - | - | - | - | - | (3,212 | ) | (3,212 | ) | ||||||||||||||||||||||
Net income attributable to TSR, Inc.
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- | - | - | 10,918 | - | 10,918 | - | 10,918 | ||||||||||||||||||||||||
Balance at August 31, 2013
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3,114,163 | $ | 31,142 | $ | 5,102,868 | $ | 17,316,801 | $ | (13,514,003 | ) | $ | 8,936,808 | $ | 27,600 | $ | 8,964,408 |
Three Months Ended
August 31,
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||||||||
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2013
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2012
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||||||
Cash flows from operating activities:
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||||||||
Consolidated net income (loss)
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$ | 38,283 | $ | (73,872 | ) | |||
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:
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||||||||
Depreciation and amortization
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3,377 | 2,697 | ||||||
Unrealized loss on marketable securities, net
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1,840 | 808 | ||||||
Deferred income taxes
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14,000 | 1,000 | ||||||
Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(91,981 | ) | 138,998 | |||||
Other receivables
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3,609 | 160 | ||||||
Prepaid expenses
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(26,646 | ) | 55 | |||||
Prepaid and recoverable income taxes
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2,880 | (39,580 | ) | |||||
Accounts and other payables and accrued expenses and other current liabilities
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(136,727 | ) | 173,177 | |||||
Advances from customers
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(23,441 | ) | (15,000 | ) | ||||
Net cash provided by (used in) operating activities
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(214,806 | ) | 188,443 | |||||
Cash flows from investing activities:
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||||||||
Proceeds from maturities of marketable securities
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993,000 | 500,000 | ||||||
Purchases of marketable securities
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(996,000 | ) | (3,237,267 | ) | ||||
Purchases of equipment and leasehold improvements
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(3,853 | ) | - | |||||
Net cash used in investing activities
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(6,853 | ) | (2,737,267 | ) | ||||
Cash flows from financing activities:
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||||||||
Purchases of treasury stock
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- | (16,571 | ) | |||||
Distribution to noncontrolling interest
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(3,212 | ) | (3,500 | ) | ||||
Net cash used in financing activities
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(3,212 | ) | (20,071 | ) | ||||
Net decrease in cash and cash equivalents
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(224,871 | ) | (2,568,895 | ) | ||||
Cash and cash equivalents at beginning of period
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1,881,161 | 7,514,749 | ||||||
Cash and cash equivalents at end of period
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$ | 1,656,290 | $ | 4,945,854 | ||||
Supplemental disclosures of cash flow data:
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||||||||
Income taxes paid
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$ | 3,000 | $ | 1,000 |
1.
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Basis of Presentation
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2.
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Net Income (Loss) Per Common Share
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3.
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Cash and Cash Equivalents
|
August 31,
2013
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May 31,
2013
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|||||||
Cash in banks
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$ | 1,336,647 | $ | 1,562,939 | ||||
Money market funds
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319,643 | 318,222 | ||||||
$ | 1,656,290 | $ | 1,881,161 |
4.
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Revenue Recognition
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5.
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Marketable Securities
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August 31, 2013
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Level 1
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Level 2
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Level 3
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Total
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||||||||||||
Certificates of Deposit
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$ | - | $ | 1,992,000 | $ | - | $ | 1,992,000 | ||||||||
Equity Securities
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17,584 | - | - | 17,584 | ||||||||||||
$ | 17,584 | $ | 1,992,000 | $ | - | $ | 2,009,584 | |||||||||
May 31, 2013
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Level 1
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Level 2
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Level 3
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Total
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||||||||||||
Certificates of Deposit
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$ | - | $ | 1,989,000 | $ | - | $ | 1,989,000 | ||||||||
Equity Securities
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19,424 | - | - | 19,424 | ||||||||||||
$ | 19,424 | $ | 1,989,000 | $ | - | $ | 2,008,424 |
August 31, 2013
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Amortized
Cost
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Gross
Unrealized
Holding
Gains
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Gross
Unrealized
Holding
Losses
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Recorded
Value
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||||||||||||
Current
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||||||||||||||||
Certificates of Deposit
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$ | 1,743,000 | $ | - | $ | - | $ | 1,743,000 | ||||||||
Equity Securities
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16,866 | 718 | - | 17,584 | ||||||||||||
$ | 1,759,866 | $ | 718 | $ | - | $ | 1,760,584 | |||||||||
Long-Term
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||||||||||||||||
Certificates of Deposit
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$ | 249,000 | $ | - | $ | - | $ | 249,000 |
May 31, 2013
|
Amortized
Cost
|
Gross
Unrealized
Holding
Gains
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Gross
Unrealized
Holding
Losses
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Recorded
Value
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||||||||||||
Current
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||||||||||||||||
Certificates of Deposit
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$ | 1,989,000 | $ | - | $ | - | $ | 1,989,000 | ||||||||
Equity Securities
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16,866 | 2,558 | - | 19,424 | ||||||||||||
$ | 2,005,866 | $ | 2,558 | $ | - | $ | 2,008,424 |
6.
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Fair Value of Financial Instruments
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7.
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Stockholders’ Equity
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8.
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Other Matters
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9.
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Recent Accounting Pronouncements
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(Dollar amounts in thousands)
Three Months Ended
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||||||||||||||||
August 31, 2013
|
August 31, 2012
|
|||||||||||||||
Amount
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% of Revenue
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Amount
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% of Revenue
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|||||||||||||
Revenue, net
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$ | 12,087 | 100.0 | % | $ | 11,289 | 100.0 | % | ||||||||
Cost of sales
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9,989 | 82.6 | % | 9,439 | 83.6 | % | ||||||||||
Gross profit
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2,098 | 17.4 | % | 1,850 | 16.4 | % | ||||||||||
Selling, general and administrative expenses
|
2,040 | 16.9 | % | 1,963 | 17.4 | % | ||||||||||
Income (loss) from operations
|
58 | 0.5 | % | (113 | ) | (1.0 | )% | |||||||||
Other income, net
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0 | 0.0 | % | 2 | 0.0 | % | ||||||||||
Income (loss) before income taxes
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58 | 0.5 | % | (111 | ) | (1.0 | )% | |||||||||
Provision (benefit) for income taxes
|
20 | 0.2 | % | (37 | ) | (0.3 | )% | |||||||||
Consolidated net income (loss)
|
$ | 38 | 0.3 | % | $ | (74 | ) | (0.7 | )% |
(a).
|
Exhibit 31.1 – Certification by J.F. Hughes pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002
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TSR Inc.
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|||
(Registrant)
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|||
Date: October 8, 2013
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/s/ J.F. Hughes
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||
J.F. Hughes, Chairman and President
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|||
Date: October 8, 2013
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/s/ John G. Sharkey
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||
John G. Sharkey, Vice President Finance and Principal Accounting Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of TSR, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a.
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All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: October 8, 2013
|
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/s/ J.F. Hughes
|
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Chairman of the Board,
|
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Chief Executive Officer and Director
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1.
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I have reviewed this Quarterly Report on Form 10-Q of TSR, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: October 8, 2013
|
|
/s/ John G. Sharkey
|
|
Vice President-Finance
|
|
and Principal Accounting Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ J.F. Hughes
|
|
Chairman of the Board,
|
|
Chief Executive Officer
|
|
and Director
|
|
October 8, 2013
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
Cash and Cash Equivalents (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of cash and cash equivalents |
|
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Condensed Consolidated Statements of Operations (Unaudited) (USD $)
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3 Months Ended | |
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Aug. 31, 2013
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Aug. 31, 2012
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Statements Of Operations [Abstract] | ||
Revenue, net | $ 12,086,697 | $ 11,288,445 |
Cost of sales | 9,988,849 | 9,438,746 |
Selling, general and administrative expenses | 2,039,429 | 1,962,826 |
Cost and expenses, total | 12,028,278 | 11,401,572 |
Income (loss) from operations | 58,419 | (113,127) |
Other income (expense): | ||
Interest and dividend income | 1,704 | 3,063 |
Unrealized loss on marketable securities, net | (1,840) | (808) |
Income (loss) before income taxes | 58,283 | (110,872) |
Provision (benefit) for income taxes | 20,000 | (37,000) |
Consolidated net income (loss) | 38,283 | (73,872) |
Less: Net income attributable to noncontrolling interest | (27,365) | (19,562) |
Net income (loss) attributable to TSR, Inc. | $ 10,918 | $ (93,434) |
Basic and diluted net income (loss) per TSR, Inc. common share | $ 0.01 | $ (0.05) |
Weighted average number of basic and diluted common shares outstanding | 1,962,062 | 1,981,350 |
Revenue Recognition
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3 Months Ended |
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Aug. 31, 2013
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Revenue Recognition [Abstract] | |
Revenue Recognition | 4. Revenue Recognition
The Company’s contract computer programming services are generally provided under time and materials arrangements with its customers. Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition,” when persuasive evidence of an arrangement exists, the services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. These conditions occur when a customer agreement is effected and the consultant performs the authorized services. Revenue is recorded net of all discounts and processing fees. Advances from customers represent amounts received from customers prior to the Company’s provision of the related services and credit balances from overpayments.
Reimbursements received by the Company for out-of-pocket expenses are characterized as revenue. |
Marketable Securities (Tables)
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Aug. 31, 2013
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of assets measured at fair value on recurring basis |
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Summary of marketable securities |
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Net Income (Loss) Per Common Share
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3 Months Ended |
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Aug. 31, 2013
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Net Income (Loss) Per Common Share [Abstract] | |
Net Income (Loss) Per Common Share | 2. Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed by dividing income (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 common stock equivalents outstanding during any of the periods presented. |
Marketable Securities
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Aug. 31, 2013
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | 5. Marketable Securities
The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Investments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows:
Level 1- These are investments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access.
Level 2- These are investments where values are based on quoted market prices that are not active or model derived valuations in which all significant inputs are observable in active markets.
Level 3- These are investments where values are derived from techniques in which one or more significant inputs are unobservable.
The following are the major categories of assets measured at fair value on a recurring basis as of August 31, 2013 and May 31, 2013 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):
Based upon the Company’s intent and ability to hold its certificates of deposit to maturity (which maturities range up to twenty four 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 marketable securities at August 31, 2013 and May 31, 2013 are summarized as follows:
The Company’s investments in marketable securities consist primarily of investments in certificates of deposit. 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. |
Cash and Cash Equivalents
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Aug. 31, 2013
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Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | 3. Cash and Cash Equivalents
The Company considers short-term highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents were comprised of the following as of August 31, 2013 and May 31, 2013:
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