TSR, Inc. (NASDAQ:TSRI) Files An 8-K Other Events
Item 8.01 Other Events
On November 25, 2019, the board of directors of TSR, Inc. (“TSR”) approved a revolving credit facility (the “Credit Facility”) that will provide up to $7,000,000 in funding to TSR and its direct and indirect subsidiaries, TSR Consulting Services, Inc., Logixtech Solutions, LLC and Eurologix, S.A.R.L., each of which together with TSR would be a borrower under the Credit Facility. Each of the borrowers will provide a security interest in all of their respective assets to secure amounts borrowed under the Credit Facility.
Once the closing of the Credit Facility is completed, TSR expects to utilize the Credit Facility for working capital and general corporate purposes, and, subject to the satisfaction of certain conditions, described in the following paragraph, to (i) complete the repurchase of shares of TSR’s common stock held by certain investor parties to the terms of the Share Repurchase Agreement previously entered into among TSR, Christopher Hughes, the Chairman, President and Chief Executive Officer of TSR, and such investor parties, and (ii) make the settlement payment to such investor parties to the terms of the Settlement and Release Agreement previously entered into among TSR and such investor parties. The Share Repurchase Agreement and the Settlement and Release Agreement are more fully described in TSR’s current report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2019.
The maximum amount that may be advanced under the Credit Facility at any time will be the lesser of (a) $7,000,000 and (b) an amount equal to 90% of the collective net face amount of certain billed and unbilled eligible accounts of TSR and its subsidiaries (in each case less the amount of any reserves that the lender may require). Notwithstanding the foregoing, the maximum amount that may be advanced under the Credit Facility shall not exceed $2,000,000 until such time as TSR has completed, prior to 5:00 p.m. on December 30, 2019, an equity contribution or other capital infusion acceptable to the lender in an amount of at least $750,000, in addition to certain other conditions related to the performance by TSR and Christopher Hughes of their obligations under the Share Repurchase Agreement and Settlement and Release Agreement.
Advances under the Credit Facility will accrue interest at a rate per annum equal to (x) the “base rate” or “prime rate” announced by Citibank, N.A. from time to time, which shall be increased or decreased, as the case may be, in an amount equal to each increase or decrease in such “base rate” or “prime rate,” plus (y) 1.75%. The initial term of the Credit Facility will be 5 years, which shall automatically renew for successive 5-year periods unless either TSR or the lender gives written notice to the other of termination at least 60 days prior to the expiration date of the then-current term.
TSR would be obliged to satisfy certain financial covenants and minimum borrowing requirements under the Credit Facility, and to pay certain fees, including prepayment fees, and provide certain financial information to the lender.
The closing of the Credit Facility is pending, and there can be no assurance that the transactions contemplated by the Credit Facility will be consummated.
Information Concerning Forward-Looking Statements
Certain statements in this report which are not historical facts may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Words such as “anticipate,” “believe,” “demonstrate,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “should,” and “will,” and similar expressions identify forward-looking statements. Such forward-looking statements are based upon TSR’s current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. Specifically, forward-looking statements in this report may include, but are not limited to, the statements regarding the closing of the Credit Facility, and the full performance of the obligations under the Settlement and Release Agreement and Share Repurchase Agreement and the occurrence of the events contemplated thereunder. These and other forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause the actual events to differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and other factors include, among others, the factors and matters described in TSR’s filings with the SEC, including, but not limited to, TSR’s most recent Form 10-K, Forms 10-Q and Forms 8-K, which are available at www.sec.gov. The forward-looking statements included in this report are made only as of the date of this report and we do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
About TSR, Inc. (NASDAQ:TSRI)
TSR, Inc. is engaged in providing contract computer programming services to its customers. The Company provides its customers with technical computer personnel. It provides its customers with technical computer personnel to supplement their in-house information technology (IT) capabilities. The Company offers staffing capabilities in the areas of mainframe and mid-range computer operations, personal computers and client-server support, Internet and e-commerce operations, voice and data communications (including local and wide area networks), and help desk support. It provides services on day-to-day operations, special projects and on short-term or long-term basis. It also offers various services to other companies in various sectors, such as insurance, pharmaceutical and biotechnology, publishing and new media, financial services and project utilities. It provides contract computer programming services in the New York metropolitan area, New England and the Mid-Atlantic region.