0000944480-15-000017.txt : 20150319 0000944480-15-000017.hdr.sgml : 20150319 20150319165941 ACCESSION NUMBER: 0000944480-15-000017 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20150318 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers FILED AS OF DATE: 20150319 DATE AS OF CHANGE: 20150319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSE SYSTEMS INC CENTRAL INDEX KEY: 0000944480 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 521868008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14785 FILM NUMBER: 15713444 BUSINESS ADDRESS: STREET 1: 1332 LONDONTOWN BLVD CITY: SYKESVILLE STATE: MD ZIP: 21784 BUSINESS PHONE: 4109707874 MAIL ADDRESS: STREET 1: 1332 LONDONTOWN BLVD CITY: SYKESVILLE STATE: MD ZIP: 21784 8-K 1 gse12312014earnings_agreemen.htm GSE 12-31-2014 EARNINGS AND EMPLOYMENT AGREEMENTS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) March 18, 2015

GSE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-14785	52-1868008
(State or other jurisdiction	(Commission File Number)	(I.R.S. Employer
of incorporation)		Identification No.)

1332 Londontown Blvd, Sykesville, MD 21784

(Address of principal executive office and zip code)

(410) 970-7800

Registrant's telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation or the registrant under any of the following provisions (see General Instructions A.2 below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d - 2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e - 4 (c))

Form 8-K

Item 2.02 Results of Operations and Financial Condition

On March 19, 2015 the Company announced its financial results for the quarter and year ended December 31, 2014. The earnings release is attached hereto as Exhibit 99.1 to this Form 8-K.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Employment Agreements

The Board of Directors of the Company approved entering into Employment Agreements (the "Agreements") with each of the following named executive officers (the "Executive Officers"): James A. Eberle, Chief Executive Officer, Jeffery G. Hough, Senior Vice President and Chief Financial Officer, and Lawrence M. Gordon, Senior Vice President and General Counsel. The Agreements are effective (the "Effective Date") as of January 1, 2015 and each Agreement runs from January 1, 2015 through December 31, 2016 (the "Employment Period"). On each anniversary of the Effective Date, the term shall be automatically extended, upon the same terms and conditions, for an additional, consecutive one-year period, unless either party provides written notice to the other of its intention not to extend the term at least 10 days' prior to the end of the then current term.

Effective January 1, 2015, the base salaries for each of the following Executive Officers is as follows:

James A. Eberle	$	336,000
Jeffery G. Hough		237,590
Lawrence M. Gordon		248,350

The base salary will be reviewed at least annually by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") and the Compensation Committee may, but shall not be required to, increase (but not decrease) the base salary during the Employment Period.

For each calendar year during the Employment Period, Messrs. Hough and Gordon will be eligible to earn an annual bonus award (the "Bonus") of up to 25% of base salary (Mr. Eberle up to 50% of base salary), based upon the achievement of annual performance goals established by the Compensation Committee

The Company shall pay the monthly medical and dental insurance premiums for each Executive Officer in association with Company-provided health insurance plans. Each Executive Officer is entitled to receive vacation in accordance with the Company's policy for its senior executives and may participate in other Company sponsored benefit plans including life insurance and 401(k) retirement plans. Each Executive Officer is entitled to reimbursement by the Company for all reasonable expenses incurred by him in connection with his employment. Reimbursable expenses include, but are not limited to, business travel and customer entertainment expenses.

The Company may terminate each Agreement for cause. Examples of "cause" include (i) the willful and continued failure by the Executive Officer to substantially perform his duties or obligations, after written demand for substantial performance is delivered by the Company, (ii) the willful engaging by the Executive Officer in misconduct which will have a material adverse effect on the reputation, operations, prospects or business relations of the Company, (iii) the conviction of the Executive Officer of any felony or the entry by the Executive Officer of any plea of nolo contendere in response to an indictment for a crime involving moral turpitude, (iv) the abuse of alcohol, illegal drugs or other controlled substances which impact the Executive Officer's performance of his duties or (v) the material breach by the Executive Officer of a material term or condition of their Agreement.

Notice of termination must be in writing and must state the reason for termination. The Executive Officer (with his attorney) will have the opportunity to be heard by the Company's Board of Directors. In the event of termination for cause, the Executive Officer shall continue to receive his full salary through the date of termination. In the event of disability, the Executive Officer will continue to receive his full salary (less any sum payable under the Company's disability benefit plan) until his employment is terminated.

If the Company terminates the Executive Officer's employment for a reason other than (i) death, (ii) disability or (iii) cause, then the Company shall pay the Executive Officer his full salary and provide the Executive Officer his benefits for a period of 12 months. In addition, all options to purchase the Company's common stock granted to the Executive Officer under the Company's option plan or otherwise shall immediately become fully vested and shall terminate on such date as they would have terminated if his employment by the Company had not been terminated.

In the event a Change of Control (as defined in the Agreement) of the Company occurs and the Executive Officer terminates his employment for Good Reason (as defined in the Agreement), then for a period of 12 months (18 months for Mr. Eberle) from the date of his termination, the Executive Officer would continue to receive salary and the benefits that he is receiving as of the date the Change of Control occurs. In addition, the Executive Officer would also be entitled to receive on the date of termination an amount equal to the average of the amounts paid to him as a bonus for the two years prior to the year in which the Change of Control takes place.

The foregoing is a brief description of the terms of the Agreements described herein and by its nature is incomplete. It is qualified in its entirety by the text of the respective Agreements, copies of which are included herewith as Exhibits to this Current Report on Form 8-K. All readers of this Current Report on Form 8-K are encouraged to read the entire text of the Agreements referred to in the text.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

10.1	Employment Agreement, dated as of January 1, 2015, between GSE Systems, Inc. and James A. Eberle.*

10.2	Employment Agreement, dated as of January 1, 2015, between GSE Systems, Inc. and Jeffery G. Hough.*

10.3	Employment Agreement, dated as of January 1, 2015, between GSE Systems, Inc. and Lawrence M. Gordon.*

99.1	Press Release of GSE Systems, Inc. announcing its results for the quarter and year ended December 31, 2014.*

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		GSE SYSTEMS, INC.

Date: March 19, 2015		/s/ Jeffery G. Hough
		Jeffery G. Hough
		Senior Vice President and
		Chief Financial Officer

EX-10.1 2 exh10-1eberleagreement.htm EXHIBIT 10.1 EBERLE EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of January 1, 2015 (the "Effective Date"), between GSE Systems, Inc. a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD 21784 (the "Company"), and James Eberle, residing at 645 Quarry Road, Lititz, PA 17543 ("Employee").

WITNESSETH

WHEREAS, Employee was employed by the Company pursuant to a two-year Employment Agreement that expired on December 31, 2014. The Company desires to enter into a new employment agreement (the "Agreement") with the Employee in order to continue and secure the employment of Employee with the Company, on the terms and conditions contained in this Agreement with the understanding the Employee is being offered secure terms of employment in this Agreement in exchange for Employee's agreement to the restrictive covenants contained in this Agreement, including a non-compete and non-solicit, among other things.

NOW, THEREFORE, in consideration of the premises, the mutual promises, covenants, and conditions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:

Section 1. Employment.

The Company hereby agrees to continue to employ Employee, and Employee hereby agrees to continue his employment with the Company, upon the terms and subject to the conditions set forth in this Agreement.

Section 2. Capacity and Duties.

Employee shall be employed in the capacity of Chief Executive Officer of the Company and shall have the duties, responsibilities, and authorities normally performed by the Chief Executive Officer of a company and such other duties, responsibilities, and authorities as are assigned to him by the Board of Directors of the Company (the "Board") so long as such additional duties, responsibilities, and authorities are consistent with Employee's position and level of authority as Chief Executive Officer of the Company. The Employee shall devote substantially all of his business time and attention to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would materially conflict or interfere with the performance of such duties either directly or indirectly. The Employee will be permitted to act or serve as a director, trustee, or committee member of any type of civic or charitable organization as long as such activities do not materially interfere with the performance of the Employee's duties and responsibilities to the Company as provided hereunder.

Section 3. Term of Employment.

The term of this Agreement shall commence on the Effective Date and continue for a period of two years (the "Term"). On each anniversary of the Effective Date, the Term shall be automatically extended, upon the same terms and conditions, for an additional, consecutive one-year period, unless either party provides written notice to the other of its intention not to extend the Term at least 10 days' prior to the end of the then current Term.

Section 4. Compensation.

During the Term, subject to all the terms and conditions of this Agreement and as compensation for all services to be rendered by Employee under this Agreement, the Company shall pay to or provide Employee with the following:

(a) Base Salary. The Company shall pay to Employee a base annual salary (the "Base Salary") at the rate of Three Hundred Thirty Six Thousand ($336,000). The Employee's Base Salary shall be reviewed at least annually by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") and the Compensation Committee may, but shall not be required to, increase (but not decrease) the Base Salary during the Term. The Base Salary will be payable at such intervals as salaries are paid generally to other executive officers of the Company.

(b) Bonus. For each calendar year of the Term, the Employee shall be eligible to earn an annual bonus award (the "Bonus") of up to 50% of Base Salary, based upon the achievement of annual performance goals established by the Compensation Committee. The amount of Bonus to be paid to Employee for any year of this Agreement may, at the discretion of the Board of Directors of the Company, be (i) prorated for the number of months which Employee was employed by the Company during such year and (ii) paid on or prior to March 15 of the following year.

(d) Automobile. The Company shall pay the maintenance, gas, and insurance expenses in connection with Employee's automobile.

(e) Medical and Dental Insurance. The Company shall pay Employee's monthly Medical and Dental Insurance premiums in association with Company provided health insurance plans.

(f) Benefit Plans. Employee shall be entitled to participate in all employee benefit plans maintained by the Company for its senior executives or employees, including without limitation the Company's medical and 401(k) plans.

Section 5. Expenses.

The Company shall reimburse Employee for all reasonable expenses (including, but not limited to, continuing education, business travel, and customer entertainment expenses) incurred by him in connection with his employment hereunder in accordance with the written policy and guidelines established by the Company for executive officers.

Section 6. Non-Competition, Non-Solicitation, Non-Disparagement.

(a) Non-Competition. Because of the Company's legitimate business interest as described herein and the good and valuable consideration offered to the Employee, during the Term and for the 12-month period beginning on the last day of the Employee's employment with the Company, the Employee agrees and covenants not to engage in Prohibited Activity within the United States.

1.1 For purposes of this Section 6, "Prohibited Activity" is activity in which the Employee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the same or similar business as the Company.

Nothing herein shall prohibit the Employee from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Employee is not a controlling person of, or a member of a group that controls, such corporation.

(b) Non-solicitation of Employees. The Employee agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company during the Term and the 12-month period beginning on the last day of the Employee's employment with the Company.

(c) Non-solicitation of Customers. The Employee understands and acknowledges that because of the Employee's experience with and relationship to the Company, he will have access to and learn about much or all of the Company's customer information. "Customer Information" includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer.

The Employee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm to the Company.

The Employee agrees and covenants, during the Term and for the 12-month period following the effective date of termination of this Agreement for any reason, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company or for purposes of inducing any such customer to terminate its relationship with the Company.

(d) Non-disparagement. The Employee agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, or any of its employees, officers and directors.

Section 7. Patents.

Any interest in patents, patent applications, inventions, copyrights, developments, and processes ("Such Inventions") which Employee now or hereafter during the period he is employed by the Company under this Agreement may own or develop relating to the fields in which the Company or any of its subsidiaries may then be engaged shall belong to the Company; and forthwith upon request of the Company, Employee shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to Such Inventions free and clear of all liens, charges, and encumbrances.

Section 8. Confidential Information.

All Confidential Information which Employee may now possess, may obtain during the Term, or may create prior to the end of the Term relating to the business of the Company or of any of its customers or suppliers shall not be published, disclosed, or made accessible by him to any other person, firm, or corporation either during or after the termination of his employment or used by him except during the Term in the business and for the benefit of the Company, in each case without prior written permission of the Company. Employee shall return all tangible evidence of any Confidential Information to the Company prior to or at the termination of his employment. For purposes of this Agreement, "Confidential Information" means any and all information related to the Company or any of its subsidiaries that is not generally known by others with whom they compete or do business.

Section 9. Termination.

Except as provided in Section 13, Employee's employment hereunder may be terminated prior to the expiration of the Term under the following circumstances:

(a) Death. Employee's employment hereunder shall terminate upon his death.

(b) Disability. If, as a result of Employee's incapacity due to physical or mental illness, Employee shall have been absent from his duties hereunder on a full-time basis for the entire period of three (3) consecutive months, and within 30 days after a Notice of Termination (as defined in Section 9(e)) is given shall not have returned to the performance of his duties hereunder on a full-time basis, the Company may terminate Employee's employment hereunder.

(c) Cause. The Company may terminate Employee's employment hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate Employee's employment hereunder upon the occurrence of any of the following (i) the willful and continued failure by Employee to substantially perform his duties or obligations hereunder (other than any such failure resulting from Employee's incapacity due to physical or mental illness), after written demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes Employee has not substantially performed his duties or obligations, (ii) the willful engaging by Employee in misconduct which, in the reasonable opinion of the Board of the Company, will have a material adverse effect on the reputation, operations, prospects or business relations of the Company, (iii) the conviction of Employee of any felony or the entry by Employee of any plea of nolo contendere in response to an indictment for a crime involving moral turpitude, (iv) Employee abuses alcohol, illegal drugs or other controlled substances which impact Employee's performance of his duties or (v) the material breach by Employee of a material term or condition of this Agreement. For purposes of this paragraph, no act, or failure to act, on Employee's part shall be considered "willful" if it was done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause without the following: (i) reasonable notice to Employee setting forth the reasons for the Company's intention to terminate for Cause, (ii) an opportunity for Employee, together with his counsel, to be heard before the Board, and (iii) delivery to Employee of a Notice of Termination in accordance with Section 9(e).

(d) Termination Without Cause. The Employee's employment hereunder may be terminated without cause by either the Company or the Employee at any time and for any reason; provided that, unless otherwise provided herein, either party shall be required to give the other party at least 30 days advance written notice of any termination of the Employee's employment. The giving by the Company of notice of its intent not to extend the Term pursuant to Section 3 shall be deemed, at the option of the Employee, to be a termination of his employment without cause ("Deemed Termination"). Employee may exercise that option by giving written notice thereof to the Company within 30 days of his receipt of the notice of non-renewal.

(e) Notice of Termination. Any termination of Employee's employment (other than termination pursuant to Section 9(a)) shall be communicated by a Notice of Termination given by the terminating party to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated.

(f) Date of Termination. "Date of Termination" shall mean (i) if Employee's employment is terminated by his death, the date of his death, (ii) if Employee's employment is terminated pursuant to Section 9(b), 30 days after Notice of Termination is given (provided that Employee shall not have returned to the performance of his duties on a full-time basis during such 30-day period), (iii) if a Deemed Termination event occurs, upon the date of Employee's notice to the Company of exercise of his option to treat such event as a termination without Cause, and (iv) if Employee's employment is terminated for any other reason, the date specified in the Notice of Termination, which shall not be earlier than the date on which the Notice of Termination is given.

Section 10. Compensation upon Termination or During Disability.

(a) During any period that Employee fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("disability period"), Employee shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 9(b), provided that payments so made to Employee during the disability period shall be reduced by the sum of the amounts, if any, payable to Employee at or prior to the time of any such payment under disability benefit plans of the Company and which were not previously applied to reduce any such payment.

(b) If Employee's employment shall be terminated for Cause, the Company shall pay Employee his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given.

(c) If Employee's employment shall be terminated by the Company for a reason other than (i) Death, (ii) Disability or (iii) Cause, upon Employee's execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the "Release") and such Release becoming effective within 21 days following the Termination Date, the Employee shall be entitled to receive his full salary and to continue participating in all medical, dental and life insurance benefits ("Benefits") for a period of 12 months. Salary shall be paid at such intervals as salaries are paid generally to other executive officers of the Company. Receipt of Benefits will be in the form of payment by the Company of Employee's medical, dental and life insurance premiums on the same terms as in effect at the time of termination of employment, and allowing the Employee to continue to participate in the Company sponsored 401(k), including the Company match. In addition, Employee shall also be entitled to receive a payment equal to the product of (I) the Bonus, if any, that the Employee would have earned for the calendar year in which the Date of Termination occurs had he been employed as of the last day of such year, based on the Company's actual results of operations for such year and (II) a fraction, the numerator of which is the number of days the Employee was employed by the Company during the year of termination and the denominator of which is the number of days in such year. This amount shall be paid on the date that annual bonuses are paid to similarly situated employees, but in no event later than two-and-a-half (2 1/2) months following the end of the calendar year in which the Date of Termination occurs. Finally, all options to purchase the Company's common stock granted to Employee under the Company's option plan or otherwise shall immediately become fully vested and shall terminate on such date as they would have terminated if Employee's employment by the Company had not terminated.

Section 11. Accelerated Vesting of Options Upon Change of Control.

After the date of this Agreement, in the event of a Change of Control (as defined below) of the Company, the options granted to Employee under the Company's option plan or otherwise shall become fully vested on the day immediately prior to the date such Change of Control shall be deemed to have occurred, and any conditions to the Employee's entitlement to such options under the Company's option plan or otherwise shall be deemed to have been satisfied.

For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

(a) Any person (other than a person in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of voting securities of the Company) becomes the beneficial owner, directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company's then outstanding securities; or

(b) The stockholders of the Company approve: (x) a plan of complete liquidation of the Company (which includes a termination and liquidation of all Employee's rights under any arrangement governed by Section 409A of the Internal Revenue Code of 1986, as amended ("Code"); or (y) an agreement for the sale or disposition of all or substantially all the Company's assets; or (z) a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least a majority of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.

For purposes of this definition of Change in Control, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Act of 1934, as amended (the "1934 Act"), and used in Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof, and "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and regulations under the 1934 Act.

Section 12. Successors; Binding Agreement.

This Agreement is personal to the Employee and shall not be assigned by the Employee. Any purported assignment by the Employee shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

Section 13. Severance upon Change of Control.

In the event of a Change of Control, Employee may terminate this Agreement within one year of such Change in Control for Good Reason (as defined herein). Upon termination for Good Reason, Employee shall, for a period of 18 months from the date of his termination, continue to receive the salary and Benefits that Employee is receiving as of the date the Change of Control occurs. Such salary and Benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company. In addition, the Employee shall also be entitled to receive on the Date of Termination an amount, payable in one lump sum, equal to the average of the Bonus amounts paid to Employee for the two years prior to the year in which the Change of Control takes place.

"Good Reason" shall mean that any of the following has occurred: (a) without Employee's prior written consent, Employee's duties, responsibilities or authority become materially reduced as compared to those of Employee's current position; (b) Employee's annual base salary (as the same may be increased at any time hereafter) and bonus programs are reduced; (c) Employee's Benefits are either discontinued or materially reduced; (d) Employee's primary office or location is moved more than fifty (50) miles from Employee's current office or location; or (e) either the Company or any successor company materially breaches this Agreement. In the event of Employee's decision to terminate employment for Good Reason, Employee must give notice to Company of the existence of the conditions giving rising to the termination for Good Reason within ninety (90) days of the initial existence of the conditions. Upon such notice, Company shall have a period of thirty (30) days during which it may remedy the conditions ("Cure Period"). If the Company fails to cure the conditions constituting the Good Reason during the Cure Period to Employee's reasonable satisfaction, Employee's termination of employment must occur within a period of ninety (90) days following the expiration of the Cure Period in order for the termination to constitute a termination pursuant to Good Reason for purposes of this Agreement.

Section 14. No Third Party Beneficiaries.

This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 12).

Section 15. Fees and Expenses.

The Company shall pay all reasonable legal fees and related expenses (including the costs of experts, evidence, and reasonable attorney's fees) incurred by Employee as a result of a contest or dispute relating to this Agreement if such contest or dispute is settled or adjudicated on terms that are substantially in favor of Employee. In addition, the Company shall pay Employee interest, at the prevailing prime rate, on any amounts that are determined to be payable to Employee hereunder that are not paid when due.

Section 16. Representations and Warranties of Employee.

Employee represents and warrants to the Company that (a) Employee is under no contractual or other restriction or obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder and (b) Employee is under no physical or mental disability that would hinder his performance of duties under this Agreement.

Section 17. Life Insurance.

If requested by the Company, Employee shall submit to such physical examinations and otherwise take such actions and execute and deliver such documents as may be reasonably necessary to enable the Company, at its expense and for its own benefit, to obtain life insurance on the life of Employee. Employee has no reason to believe that his life is not insurable with a reputable insurance company at rates now prevailing in the City of Baltimore for healthy men of his age.

Section 18. Modification.

This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.

Section 19. Notices.

Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested, or delivered against receipt to the party to whom it is to be given at the address of such party set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 19).

Section 20. Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without giving effect to conflict of laws. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Maryland. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

Section 21. 409A of the Code.

This Agreement is intended to comply with the requirements of Section 409A of the Code or any exemption from Section 409A of the Code, and shall in all respects be administered in accordance with and interpreted to ensure compliance with Section 409A of the Code. Employee's termination of employment under this Agreement shall be interpreted in a manner consistent with the separation from service rules under Section 409A of the Code. For purposes of Section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment and the right to a series of payments under this Agreement shall be treat as a right to a series of separate payments. In no event shall Employee, directly or indirectly, designate the calendar year of the payment. Furthermore, if, at the time of termination of employment with the Company, Company has stock which is publicly traded on an established securities market and Employee is a "specified employee" (as defined in Section 409A of the Code) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under Section 409A of the Code, then Company shall postpone the commencement of the payment of such payment or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-deferral exception under Section 409A of the Code and are in excess of the lessor of two (2) times (i) Employee's then annual compensation or (ii) the limit on compensation then set forth in Section 401(a)(17) of the Code, until the first payroll date that occurs after the date that is six months following Employee's separation from service with the Company (within the meaning of Section 409A of the Code). The accumulated postponed amount shall be paid in a lump sum payment within ten days after the end of the six month period.

Section 22. Survival

Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

Section 23. Acknowledgment of Full Understanding.

THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

GSE SYSTEMS, INC.

By:	/s/ Lawrence M. Gordon	March 18, 2015
	Lawrence M. Gordon	Date
	Senior Vice President and General
	Counsel


	/s/ James Eberle	March 18, 2015
	James Eberle	Date

EX-10.2 3 exh10-2houghagreement.htm EXHIBIT 10.2 HOUGH EMPLOYMENT AGREEMENT

Exhibit 10.2

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of January 1, 2015 (the "Effective Date"), between GSE Systems, Inc. a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD 21784 (the "Company"), and Jeffery G. Hough, residing at 12263 Bare Bush Path, Columbia, MD 21044 ("Employee").

WITNESSETH

Section 1. Employment.

Section 2. Capacity and Duties.

Employee shall be employed in the capacity of Senior Vice President and Chief Financial Officer of the Company and shall have the duties, responsibilities, and authorities normally performed by a Senior Vice President and Chief Financial Officer of a company and such other duties, responsibilities, and authorities as are assigned to him by the Board of Directors of the Company (the "Board") so long as such additional duties, responsibilities, and authorities are consistent with Employee's position and level of authority as Senior Vice President and Chief Financial Officer of the Company of the Company. The Employee shall devote substantially all of his business time and attention to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would materially conflict or interfere with the performance of such duties either directly or indirectly. The Employee will be permitted to act or serve as a director, trustee, or committee member of any type of civic or charitable organization as long as such activities do not materially interfere with the performance of the Employee's duties and responsibilities to the Company as provided hereunder.

Section 3. Term of Employment.

The term of this Agreement shall commence on the Effective Date and continue for a period of two years (the "Term"). On each anniversary of the Effective Date, the Term shall be automatically extended, upon the same terms and conditions, for an additional, consecutive one year period, unless either party provides written notice to the other of its intention not to extend the Term at least 10 days' prior to the end of the then current Term.

Section 4. Compensation.

(a) Base Salary. The Company shall pay to Employee a base annual salary (the "Base Salary") at the rate of Two Hundred Thirty Seven Thousand Five Hundred and Ninety Dollars ($237,590). The Employee's Base Salary shall be reviewed at least annually by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") and the Compensation Committee may, but shall not be required to, increase (but not decrease) the Base Salary during the Term. The Base Salary will be payable at such intervals as salaries are paid generally to other executive officers of the Company.

(b) Bonus. For each calendar year of the Term, the Employee shall be eligible to earn an annual bonus award (the "Bonus") of up to 25% of Base Salary, based upon the achievement of annual performance goals established by the Compensation Committee. The amount of Bonus to be paid to Employee for any year of this Agreement shall be (i) prorated for the number of months which Employee was employed by the Company during such year and (ii) paid on or prior to March 15 of the following year. In addition, at the discretion of the Compensation Committee of the Board of Directors, in 2015 the Employee shall be eligible to receive a bonus of up to $15,000 based upon the results of operations of Hyperspring for the six-month period ending June 30, 2015 and such other factors as they deem relevant.

(d) Automobile. The Company shall pay the maintenance, gas, and insurance expenses in connection with Employee's automobile.

(e) Medical and Dental Insurance. The Company shall pay Employee's monthly Medical and Dental Insurance premiums in association with Company provided health insurance plans.

Section 5. Expenses.

Section 6. Non-Competition, Non-Solicitation, Non-Disparagement.

For purposes of this Section 6, "Prohibited Activity" is activity in which the Employee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the same or similar business as the Company.

The Employee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm to the Company.

Section 7. Patents.

Section 8. Confidential Information.

Section 9. Termination.

Except as provided in Section 13, Employee's employment hereunder may be terminated prior to the expiration of the Term under the following circumstances:

(a) Death. Employee's employment hereunder shall terminate upon his death.

Section 10. Compensation upon Termination or During Disability.

Section 11. Accelerated Vesting of Options Upon Change of Control.

For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

Section 12. Successors; Binding Agreement.

Section 13. Severance upon Change of Control.

In the event of a Change of Control, Employee may terminate this Agreement within one year of such Change in Control for Good Reason (as defined herein). Upon termination for Good Reason, Employee shall, for a period of 12 months from the date of his termination, continue to receive the salary and Benefits that Employee is receiving as of the date the Change of Control occurs. Such salary and Benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company. In addition, the Employee shall also be entitled to receive on the Date of Termination an amount, payable in one lump sum, equal to the average of the Bonus amounts paid to Employee for the two years prior to the year in which the Change of Control takes place.

Section 14. No Third Party Beneficiaries.

This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 12).

Section 15. Fees and Expenses.

Section 16. Representations and Warranties of Employee.

Section 17. Life Insurance.

Section 18. Modification.

Section 19. Notices.

Section 20. Governing Law.

Section 21. 409A of the Code.

Section 22. Survival

Section 23. Acknowledgment of Full Understanding.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

GSE SYSTEMS, INC.

By:	/s/ Lawrence M. Gordon	March 18, 2015
	Lawrence M. Gordon	Date
	Senior Vice President and General
	Counsel


	/s/ Jeffery G. Hough	March 18, 2015
	Jeffery G. Hough	Date

EX-10.3 4 exh10-3gordonagreement.htm EXHIBIT 10-3 GORDON EMPLOYMENT AGREEMENT

Exhibit 10.3

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of January 1, 2015 (the "Effective Date"), between GSE Systems, Inc. a Delaware corporation with principal executive offices at 1332 Londontown Blvd., Sykesville, MD 21784 (the "Company"), and Lawrence M. Gordon residing at 30 Talbot Court, Short Hills, NJ 07078 ("Employee").

WITNESSETH

Section 1. Employment.

Section 2. Capacity and Duties.

Employee shall be employed in the capacity of Senior Vice President and General Counsel of the Company and shall have the duties, responsibilities, and authorities normally performed by a Senior Vice President and General Counsel of a company and such other duties, responsibilities, and authorities as are assigned to him by the Board of Directors of the Company (the "Board") so long as such additional duties, responsibilities, and authorities are consistent with Employee's position and level of authority as Senior Vice President and General Counsel of the Company of the Company. The Employee shall devote substantially all of his business time and attention to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would materially conflict or interfere with the performance of such duties either directly or indirectly. The Employee will be permitted to act or serve as a director, trustee, or committee member of any type of civic or charitable organization as long as such activities do not materially interfere with the performance of the Employee's duties and responsibilities to the Company as provided hereunder.

Section 3. Term of Employment.

The term of this Agreement shall commence on the Effective Date and continue for a period of two years (the "Term"). On each anniversary of the Effective Date, the Term shall be automatically extended, upon the same terms and conditions, for an additional, consecutive one year period, unless either party provides written notice to the other of its intention not to extend the Term at least 10 days' prior to the end of the then current Term.

Section 4. Compensation.

(a) Base Salary. The Company shall pay to Employee a base annual salary (the "Base Salary") at the rate of Two Hundred, Forty Eight Thousand, Three Hundred Fifty Dollars ($248,350). The Employee's Base Salary shall be reviewed at least annually by the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") and the Compensation Committee may, but shall not be required to, increase (but not decrease) the Base Salary during the Term. The Base Salary will be payable at such intervals as salaries are paid generally to other executive officers of the Company.

(b) Bonus. For each calendar year of the Term, the Employee shall be eligible to earn an annual bonus award (the "Bonus") of up to 25% of Base Salary, based upon the achievement of annual performance goals established by the Compensation Committee. The amount of Bonus to be paid to Employee for any year of this Agreement shall be (i) prorated for the number of months which Employee was employed by the Company during such year and (ii) paid on or prior to March 15 of the following year. In addition, at the discretion of the Compensation Committee of the Board of Directors, in 2015 the Employee shall be eligible to receive a bonus of up to $50,000 based upon the results of operations of Hyperspring for the six-month period ending June 30, 2015 and such other factors as they deem relevant.

(d) Automobile. The Company shall pay the maintenance, gas, and insurance expenses in connection with Employee's automobile.

(e) Medical and Dental Insurance. The Company shall pay Employee's monthly Medical and Dental Insurance premiums in association with Company provided health insurance plans.

Section 5. Expenses.

Section 6. Non-Competition, Non-Solicitation, Non-Disparagement.

The Employee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm to the Company.

The Employee agrees and covenants, during the Term and for the 12-month period following the effective date of the termination of this Agreement for any reason, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company or for purposes of inducing any such customer to terminate its relationship with the Company.

Section 7. Patents.

Section 8. Confidential Information.

Section 9. Termination.

Except as provided in Section 13, Employee's employment hereunder may be terminated prior to the expiration of the Term under the following circumstances:

(a) Death. Employee's employment hereunder shall terminate upon his death.

Section 10. Compensation upon Termination or During Disability.

Section 11. Accelerated Vesting of Options Upon Change of Control.

For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions shall have been satisfied:

Section 12. Successors; Binding Agreement.

Section 13. Severance upon Change of Control.

In the event of a Change of Control, Employee may terminate this Agreement within one year of such Change in Control for Good Reason (as defined herein). Upon termination for Good Reason, Employee shall, for a period of 12 months from the date of his termination, continue to receive the salary and Benefits that Employee is receiving as of the date the Change of Control occurs. Such salary and Benefits shall be paid at such intervals as salaries are paid generally to other executive officers of the Company. In addition, the Employee shall also be entitled to receive on the Date of Termination an amount, payable in one lump sum, equal to the average of the Bonus amounts paid to Employee for the two years prior to the year in which the Change of Control takes place.

Section 14. No Third Party Beneficiaries.

This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement (except as provided in Section 12).

Section 15. Fees and Expenses.

Section 16. Representations and Warranties of Employee.

Section 17. Life Insurance.

Section 18. Modification.

Section 19. Notices.

Section 20. Governing Law.

Section 21. 409A of the Code.

Section 22. Survival

Section 23. Acknowledgment of Full Understanding.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

GSE SYSTEMS, INC.

By:	/s/ James A. Eberle	March 18, 2015
	James A. Eberle	Date
	Chief Executive Officer


	/s/ Lawrence M. Gordon	March 18, 2015
	Lawrence M. Gordon	Date

EX-99.1 5 exh99-1pressrelease.htm GSE SYSTEMS 2014 FOURTH QUARTER FINANCIAL RESULTS

Exhibit 99.1

FOR IMMEDIATE RELEASE

GSE SYSTEMS ANNOUNCES 2014 FOURTH QUARTER FINANCIAL RESULTS

Q4 2014 OVERVIEW

·	Revenue rose 6.9% to $13.1 million from $12.3 million in Q4 2013.

·	Gross profit of $4.1 million, or 30.9% of revenue, compared to gross profit of $3.6 million, or 29.5% of revenue, in Q4 2013.

·	Net loss of $0.8 million, or $0.05 per diluted share, compared to a net loss of $0.2 million, or $0.01 per diluted share, in Q4 2013.

·	Net loss includes $0.5 million of pre-tax charges related to restructuring and Hyperspring acquisition costs.

At December 31, 2014

·	Total cash and equivalents of $13.6 million, or $0.76 per diluted share, excluding $4.2 million of restricted cash.

·	Working capital of $11.5 million.

·	$0 long-term debt.

·	Backlog of $48.4 million, up 6% from $45.7 million at end of Q3 2014.

Sykesville, MD – March 19, 2015 - GSE Systems, Inc. ("GSE" or "the Company") (NYSE MKT: GVP), a global energy industry performance improvement company, today announced financial results for the fourth quarter ("Q4") and year ended December 31, 2014. Results for Q4 2014 and full year 2014 include the results of Hyperspring, LLC ("Hyperspring") from the date of its acquisition on November 14, 2014.

With the acquisition of Hyperspring, the Company has commenced reporting selected financial results for two business segments: Staff Augmentation, which provides personnel to fulfill staff positions on a short-term basis to energy industry customers; and Performance Improvement Solutions, which provides simulation, engineering and training solutions and services to the nuclear and fossil fuel power industry and to the chemical and petrochemical industries. Hyperspring's results are included in the Staff Augmentation segment.

Jim Eberle, Chief Executive Officer of GSE, said, "In Q4 2014, we made significant strides in positioning GSE for the future with our acquisition of Hyperspring, our investment in IntelliQlik, LLC, and the restructuring of our U.S. and Swedish operations. Hyperspring's staff augmentation business contributed $2.3 million to our consolidated Q4 revenue and in 2015 we will be focusing on expanding Hyperspring's U.S. nuclear customer base and diversifying into the fossil power industry. IntelliQlik continues its development of a next generation, cloud-based software platform for online learning and learning management for all energy sectors and remains on target for a launch in late 2015. We have restructured our Swedish operations due to a reduced level of simulation business in Japan post-Fukushima and in Europe with the continent's overall economic slowdown. In 2015 our Performance Improvement Solutions business will be investing in additional business development and operations personnel for solutions aimed specifically at the chemical and petrochemical industries. Our balance sheet remains strong, with approximately $13.6 million of cash and equivalents at quarter-end and no long-term debt, providing us with flexibility to selectively pursue additional growth opportunities as they arise."

Q4 2014 RESULTS

Q4 2014 revenue increased 6.9% to $13.1 million from $12.3 million in Q4 2013, driven by $2.3 million of incremental Staff Augmentation revenue for services provided by Hyperspring, which more than offsets a $1.4 million decline in Performance Improvement Solutions revenue. The decline in Performance Improvement Solutions revenue primarily was attributable to a $2.5 million decrease in revenue from the $36.6 million Slovakia simulator project, which was completed and entered warranty in April 2014. Revenue generated from domestic fossil fuel simulation projects increased by $1.4 million in Q4 2014 as compared to Q4 2013 mainly due to a large contract received from a U.S. utility for new high-fidelity operator training simulators for four power plants.

Gross profit in Q4 2014 increased to $4.1 million, or 30.9% of revenue, from $3.6 million, or 29.5% of revenue, in Q4 2013. Staff Augmentation gross profit was $0.2 million, or 9.8% of Staff Augmentation revenue, in Q4 2014. Performance Improvement Solutions gross profit was $3.9 million, or 35.3% of Performance Improvement Solutions revenue, in Q4 2014. The increase in Performance Improvement Solutions gross profit as compared to 4Q 2013 is mainly attributable to an increase in the Company's Swedish gross profit due to the restructuring activities that occurred earlier in 2014 and an increase in EnVision^TM product gross profit offset by a reduction in nuclear simulation gross profit due to the completion of the Slovakia project in April 2014.

Selling, general & administrative expenses in Q4 2014 rose 21.2% to $4.7 million from $3.9 million in Q4 2013. This increase was primarily due to higher software product development expenses ($0.5 million), severance costs related to our U.S. operations ($0.4 million) and Hyperspring acquisition expenses ($0.1 million).

Operating loss for Q4 2014 was $0.9 million compared to an operating loss of $0.5 million in Q4 2013. Excluding the severance and acquisition expenses, Q4 2014 operating loss was $0.4 million.

Net loss for Q4 2014 was $0.8 million, or $0.05 per basic and diluted share, compared to a net loss of $0.2 million, or $0.01 per basic and diluted share, in Q4 2013.

The EBITDA (Earnings before interest, taxes, depreciation and amortization) loss for Q4 2014 was $0.7 million compared to EBITDA of $0.2 million in Q4 2013.

Backlog at December 31, 2014 rose to $48.4 million from $45.7 million at September 30, 2014, and included approximately $6.7 million of Hyperspring backlog.

GSE's cash position at December 31, 2014 was $13.6 million, excluding $4.2 million of restricted cash, as compared to $16.0 million, excluding $4.2 million of restricted cash, at September 30, 2014. The decline in cash at December 31, 2014 from September 30, 2014 primarily reflects the $3.0 million payment made by the Company to purchase Hyperspring in Q4 2014.

CONFERENCE CALL

Management will host a conference call today at 4:30 pm Eastern Time to discuss Q4 results and other matters.

Interested parties may participate in the call by dialing:

·	(877) 407-9753 (Domestic) or

·	(201) 493-6739 (International)

The conference call will also be accessible via the following link:

http://www.investorcalendar.com/IC/CEPage.asp?ID=173718

ABOUT GSE SYSTEMS, INC.

GSE Systems, Inc. provides performance improvement solutions to the energy and process industries. We improve human performance though turnkey training, unique visualization and simulation applications, and our staff of instructors, as well as plant improvement through our engineering expertise and use of technology to improve plant design, commissioning and operations. The Company has more than 300 employees and over four decades of experience as well as more than 1,100 installations and hundreds of customers in over 50 countries spanning the globe. GSE Systems is headquartered in Sykesville (Baltimore), Maryland, with offices in St. Marys, Georgia; Cary, North Carolina; Huntsville, Alabama; Chennai, India; Nyköping, Sweden; Stockton-on-Tees, UK; Glasgow, UK; and Beijing, China. Information about GSE Systems is available at www.gses.com.

FORWARD LOOKING STATEMENTS

We make statements in this press release that are considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. These statements reflect our current expectations concerning future events and results. We use words such as "expect," "intend," "believe," "may," "will," "should," "could," "anticipates," and similar expressions to identify forward-looking statements, but their absence does not mean a statement is not forward-looking. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our periodic reports under the forward-looking statements and risk factors sections. We do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Company Contact		The Equity Group Inc.
Jim Eberle		Devin Sullivan
Chief Executive Officer		Senior Vice President
GSE Systems, Inc.		(212) 836-9608
(410) 970-7950		dsullivan@equityny.com

		Kalle Ahl, CFA
		Senior Associate
		(212) 836-9614
		kahl@equityny.com

GSE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	unaudited
	Three Months ended						Year ended
	December 31,						December 31,
	2014			2013			2014			2013


Contract revenue	$	13,107		$	12,262		$	37,930		$	47,562
Cost of revenue		9,054			8,649			26,551			34,981
Write-down of capitalized software development costs		-			-			-			2,174
Gross profit		4,053			3,613			11,379			10,407
Selling, general and administrative		4,748			3,917			17,570			15,836
Goodwill impairment loss		-			-			-			4,462
Depreciation		132			136			545			570
Amortization of definite-lived intangible assets		85			52			193			207
Operating expenses		4,965			4,105			18,308			21,075
Operating loss		(912	)		(492	)		(6,929	)		(10,668	)
Interest income, net		40			20			143			105
Gain on derivative instruments		31			486			209			265
Other income (expense), net		8			(7	)		1			(67	)
Income (loss) before income taxes		(833	)		7			(6,576	)		(10,365	)
Provision for income taxes		4			169			166			146
Net loss	$	(837	)	$	(162	)	$	(6,742	)	$	(10,511	)
Basic loss per common share	$	(0.05	)	$	(0.01	)	$	(0.38	)	$	(0.58	)
Diluted loss per common share	$	(0.05	)	$	(0.01	)	$	(0.38	)	$	(0.58	)
Weighted average shares outstanding - Basic		17,887,859			17,905,977			17,887,859			18,150,915
Weighted average shares outstanding - Diluted		17,887,859			17,905,977			17,887,859			18,150,915

GSE SYSTEMS, INC AND SUBSIDIARIES

Selected balance sheet data

	December 31, 2014		December 31, 2013

Cash and cash equivalents	$	13,583	$	15,643
Restricted cash - current		613		45
Current assets		31,729		43,944
Long-term restricted cash		3,591		1,021
Total assets		45,999		48,827

Current liabilities	$	20,273	$	17,953
Long-term liabilities		1,986		487
Stockholders' equity		23,740		30,387

EBITDA Reconciliation

EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Management believes EBITDA, in addition to operating profit, net income and other GAAP measures, is useful to investors to evaluate the Company's results because it excludes certain items that are not directly related to the Company's core operating performance. Investors should recognize that EBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for or superior to, any measure of performance prepared in accordance with GAAP. A reconciliation of EBITDA to the most directly comparable GAAP measure in accordance with SEC Regulation G follows:

	Three Months ended						Year ended
	December 31,						December 31,
	2014			2013			2014			2013

Net loss	$	(837	)	$	(162	)	$	(6,742	)	$	(10,511	)
Interest income, net		(40	)		(20	)		(143	)		(105	)
Provision for income taxes		4			169			166			146
Write-down of capitalized software development costs		-			-			-			2,174
Depreciation and amortization		217			188			738			777
Goodwill impairment loss		-			-			-			4,462
EBITDA	$	(656	)	$	175		$	(5,981	)	$	(3,057	)

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