[X]
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for the Quarterly Period Ended June 30, 2007.
|
Delaware
|
52-1868008
|
(State
of incorporation)
|
(I.R.S.
Employer Identification No.)
|
Large
accelerated filer [ ]
|
Accelerated
filer [ ]
|
Non-accelerated
filer [X]
|
PAGE
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
3
|
Item
1.
|
Financial
Statements:
|
|
Consolidated
Balance Sheets as of June 30, 2007 and December 31, 2006
|
3
|
|
Consolidated
Statements of Operations for the Three and Six Months Ended June 30,
2007 and June 30, 2006
|
4
|
|
Consolidated
Statements of Comprehensive Income (Loss) for the Three and Six Months
Ended June 30, 2007 and June 30, 2006
|
5
|
|
Consolidated
Statement of Changes in Stockholders’ Equity for the Six Months Ended June
30, 2007
|
6
|
|
Consolidated
Statements of Cash Flows for the Six Months Ended June 30, 2007 and
June 30, 2006
|
7
|
|
Notes
to Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
16
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
29
|
Item
4.
|
Controls
and Procedures
|
30
|
PART
II.
|
OTHER
INFORMATION
|
31
|
Item
1.
|
Legal
Proceedings
|
31
|
Item
1A.
|
Risk
Factors
|
31
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
31
|
Item
3.
|
Defaults
Upon Senior Securities
|
31
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
32
|
Item
5.
|
Other
Information
|
32
|
Item
6.
|
Exhibits
|
32
|
SIGNATURES
|
33
|
PART
I - FINANCIAL INFORMATION
|
|||||||
Item
1. Financial Statements
|
|||||||
GSE
SYSTEMS, INC. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(in
thousands, except share data)
|
|||||||
Unaudited
|
|||||||
June
30, 2007
|
December
31, 2006
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$ 6,565
|
$ 1,073
|
|||||
Restricted
cash
|
-
|
63
|
|||||
Contract
receivables
|
11,577
|
10,669
|
|||||
Prepaid
expenses and other current assets
|
842
|
494
|
|||||
Total
current assets
|
18,984
|
12,299
|
|||||
Equipment
and leasehold improvements, net
|
432
|
354
|
|||||
Software
development costs, net
|
998
|
820
|
|||||
Goodwill
|
1,739
|
1,739
|
|||||
Long-term
restricted cash
|
3,472
|
2,291
|
|||||
Other
assets
|
806
|
945
|
|||||
Total
assets
|
$ 26,431
|
$ 18,448
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of long-term debt
|
$ -
|
$ 2,155
|
|||||
Accounts
payable
|
3,008
|
2,461
|
|||||
Accrued
expenses
|
855
|
2,072
|
|||||
Accrued
compensation and payroll taxes
|
1,850
|
1,535
|
|||||
Billings
in excess of revenue earned
|
1,360
|
1,867
|
|||||
Accrued
warranty
|
668
|
746
|
|||||
Other
current liabilities
|
155
|
-
|
|||||
Total
current liabilities
|
7,896
|
10,836
|
|||||
Other
liabilities
|
517
|
251
|
|||||
Total
liabilities
|
8,413
|
11,087
|
|||||
Commitments
and contingencies
|
-
|
-
|
|||||
Stockholders'
equity:
|
|||||||
Preferred
stock $.01 par value, 2,000,000 shares authorized,
|
|||||||
shares
issued and outstanding none in 2007 and 33,920
|
|||||||
in
2006
|
-
|
-
|
|||||
Common
stock $.01 par value, 18,000,000 shares authorized,
|
|||||||
shares
issued and outstanding 14,856,102 in 2007 and
|
|||||||
11,013,822
in 2006
|
149
|
110
|
|||||
Additional
paid-in capital
|
47,774
|
37,504
|
|||||
Accumulated
deficit
|
(28,918)
|
(29,297)
|
|||||
Accumulated
other comprehensive loss
|
(987)
|
(956)
|
|||||
Total
stockholders' equity
|
18,018
|
7,361
|
|||||
Total
liabilities and stockholders' equity
|
$ 26,431
|
$ 18,448
|
|||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
GSE
SYSTEMS, INC. AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||
(Unaudited)
|
||||||||||||
Three
months ended
|
Six
months ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||
Contract
revenue
|
$ 8,398
|
$ 6,556
|
$ 16,243
|
$ 12,140
|
||||||||
Cost
of revenue
|
5,544
|
4,700
|
11,195
|
8,833
|
||||||||
Gross
profit
|
2,854
|
1,856
|
5,048
|
3,307
|
||||||||
Operating
expenses:
|
||||||||||||
Selling,
general and administrative
|
2,063
|
1,202
|
3,754
|
2,223
|
||||||||
Administrative
charges from GP Strategies
|
-
|
171
|
-
|
342
|
||||||||
Depreciation
|
58
|
44
|
109
|
91
|
||||||||
Total
operating expenses
|
2,121
|
1,417
|
3,863
|
2,656
|
||||||||
Operating
income
|
733
|
439
|
1,185
|
651
|
||||||||
Interest
expense, net
|
(209)
|
(216)
|
(363)
|
(373)
|
||||||||
Loss
on extinguishment of debt
|
-
|
-
|
-
|
(1,428)
|
||||||||
Other
income (expense), net
|
(104)
|
(71)
|
(265)
|
(20)
|
||||||||
Income
(loss) before income taxes
|
420
|
152
|
557
|
(1,170)
|
||||||||
Provision
for income taxes
|
72
|
28
|
178
|
28
|
||||||||
Net
income (loss)
|
348
|
124
|
379
|
(1,198)
|
||||||||
Preferred
stock dividends
|
-
|
(86)
|
(49)
|
(115)
|
||||||||
Net
income (loss) attributed to common shareholders
|
$ 348
|
$ 38
|
$ 330
|
$ (1,313)
|
||||||||
Basic
income (loss) per common share
|
$ 0.03
|
$
-
|
$ 0.03
|
$ (0.14)
|
||||||||
Diluted
income (loss) per common share
|
$ 0.02
|
$ -
|
$ 0.02
|
$ (0.14)
|
||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
GSE
SYSTEMS, INC. AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||||||
(in
thousands)
|
||||||||||||
(Unaudited)
|
||||||||||||
Three
months ended
|
Six
months ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
income (loss)
|
$ 348
|
$ 124
|
$ 379
|
$ (1,198)
|
||||||||
Foreign
currency translation adjustment
|
(23)
|
79
|
31
|
103
|
||||||||
Comprehensive
income (loss)
|
$ 325
|
$ 203
|
$ 410
|
$ (1,095)
|
||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
GSE
SYSTEMS, INC, AND SUBSIDIARIES
|
|||||||||||||||||||
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
|
|||||||||||||||||||
(in
thousands)
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Preferred
|
Common
|
Additional
|
Other
|
||||||||||||||||
Stock
|
Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
|||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Total
|
||||||||||||
Balance,
January 1, 2007
|
34
|
$ -
|
11,014
|
$ 110
|
$ 37,504
|
$ (29,297)
|
$ (956)
|
$ 7,361
|
|||||||||||
Issuance
of common stock
|
-
|
-
|
1,667
|
17
|
8,684
|
-
|
-
|
8,701
|
|||||||||||
Conversion
of preferred
|
|||||||||||||||||||
stock
to common stock
|
(34)
|
-
|
1,916
|
19
|
(19)
|
-
|
-
|
-
|
|||||||||||
Preferred
stock dividends paid
|
-
|
-
|
-
|
-
|
(49)
|
-
|
-
|
(49)
|
|||||||||||
Stock-based
compensation expense
|
-
|
-
|
-
|
-
|
172
|
-
|
-
|
172
|
|||||||||||
Common
stock issued for
|
|||||||||||||||||||
options
exercised
|
-
|
-
|
209
|
2
|
778
|
-
|
-
|
780
|
|||||||||||
Tax
benefit of options exercised
|
-
|
-
|
-
|
-
|
19
|
-
|
-
|
19
|
|||||||||||
Issuance
of restricted common stock
|
-
|
-
|
17
|
-
|
116
|
-
|
-
|
116
|
|||||||||||
Issuance
of warrants
|
-
|
-
|
-
|
-
|
510
|
-
|
-
|
510
|
|||||||||||
Common
stock issued for warrants
exercised
|
-
|
-
|
33
|
1
|
59
|
-
|
-
|
60
|
|||||||||||
Foreign
currency translation
|
|
||||||||||||||||||
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(31)
|
(31)
|
|||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
379
|
-
|
379
|
|||||||||||
Balance,
June 30, 2007
|
-
|
$ -
|
14,856
|
$ 149
|
$ 47,774
|
$ (28,918)
|
$ (987)
|
$
18,018
|
|||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
GSE
SYSTEMS, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
(in
thousands)
|
||||||||
(Unaudited)
|
||||||||
Six
months ended
|
||||||||
June
30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ |
379
|
$ | (1,198 | ) | |||
Adjustments
to reconcile net income (loss) to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
|
109
|
91
|
||||||
Capitalized
software amortization
|
171
|
188
|
||||||
Amortization
of deferred financing costs
|
267
|
178
|
||||||
Note
payable discount amortization
|
-
|
58
|
||||||
Loss
on extinguishment of debt
|
-
|
1,428
|
||||||
Stock-based
compensation expense
|
288
|
68
|
||||||
Elimination
of profit on Emirates Simulation Academy, LLC contract
|
266
|
61
|
||||||
Changes
in assets and liabilities:
|
||||||||
Contract
receivables
|
(908 | ) | (1,679 | ) | ||||
Prepaid
expenses and other assets
|
(348 | ) | (130 | ) | ||||
Accounts
payable, accrued compensation and accrued expenses
|
(73 | ) | (1,002 | ) | ||||
Due
to GP Strategies Corporation
|
-
|
(332 | ) | |||||
Billings
in excess of revenues earned
|
(507 | ) |
782
|
|||||
Accrued
warranty reserves
|
(78 | ) | (135 | ) | ||||
Other
liabilities
|
155
|
15
|
||||||
Net
cash used in operating activities
|
(279 | ) | (1,607 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Investment
in Emirates Simulation Academy, LLC
|
(128 | ) |
-
|
|||||
Release
of cash as collateral under letters of credit
|
63
|
-
|
||||||
Restriction
of cash as collateral under letters of credit or
guarantees
|
(1,181 | ) | (2,314 | ) | ||||
Capital
expenditures
|
(186 | ) | (106 | ) | ||||
Capitalized
software development costs
|
(349 | ) | (147 | ) | ||||
Net
cash used in investing activities
|
(1,781 | ) | (2,567 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Increase/(decrease) in
borrowings under lines of credit
|
(2,155 | ) |
2,390
|
|||||
Net
proceeds from issuance of common stock and warrants
|
9,211
|
-
|
||||||
Net
proceeds from issuance of preferred stock
|
-
|
3,856
|
||||||
Paydown
of note payable
|
-
|
(2,000 | ) | |||||
Proceeds
from issuance of common stock
|
840
|
130
|
||||||
Tax
benefit from option exercises
|
19
|
-
|
||||||
Payment
of preferred stock dividends
|
(49 | ) | (115 | ) | ||||
Payment
of ManTech preferred stock dividends
|
(316 | ) |
-
|
|||||
Deferred
financing costs
|
-
|
(448 | ) | |||||
Net
cash provided by financing activities
|
7,550
|
3,813
|
||||||
Effect
of exchange rate changes on cash
|
2
|
18
|
||||||
Net
increase (decrease) in cash and cash equivalents
|
5,492
|
(343 | ) | |||||
Cash
and cash equivalents at beginning of year
|
1,073
|
1,321
|
||||||
Cash
and cash equivalents at end of period
|
$ |
6,565
|
$ |
978
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
1.
|
Basis
of Presentation and Revenue
Recognition
|
2.
|
Basic
and Diluted Loss Per Common
Share
|
(in
thousands, except for share amounts)
|
Three
months ended
|
Six
months ended
|
||||||||
June
30,
|
June
30,
|
|||||||||
2007
|
2006
|
2007
|
2006
|
|||||||
Numerator:
|
||||||||||
Net
income (loss)
|
$ 348
|
$ 124
|
$ 379
|
$ (1,198)
|
||||||
Preferred
stock dividends
|
-
|
(86)
|
(49)
|
(115)
|
||||||
Net
income (loss) attributed to common stockholders
|
$ 348
|
$ 38
|
$ 330
|
$ (1,313)
|
||||||
Denominator:
|
||||||||||
Weighted-average
shares outstanding for basic
|
||||||||||
earnings
per share
|
13,131,312
|
9,387,372
|
12,424,389
|
9,245,390
|
||||||
Effect
of dilutive securities:
|
||||||||||
Employee
stock options, warrants,
|
||||||||||
options
outside the plan, and
|
||||||||||
convertible
preferred stock
|
1,580,385
|
1,743,300
|
2,273,928
|
-
|
||||||
Adjusted
weighted-average shares outstanding
|
||||||||||
and
assumed conversions for diluted
|
||||||||||
earnings
per share
|
14,711,697
|
11,130,672
|
14,698,317
|
9,245,390
|
||||||
Shares
related to dilutive securities excluded
|
||||||||||
because
inclusion would be anti-dilutive
|
82,500
|
2,881,820
|
82,500
|
3,163,653
|
3.
|
Software
Development Costs
|
4.
|
Investment
in Emirates Simulation Academy,
LLC
|
5.
|
Stock-Based
Compensation
|
6.
|
Long-term
Debt
|
7.
|
Common
Stock
|
8.
|
Series
A Convertible Preferred
Stock
|
9.
|
Letters
of Credit and Performance
Bonds
|
10.
|
Income
Taxes
|
11.
|
Administrative
Charges from GP Strategies
|
12.
|
Commitments
and Contingencies
|
13.
|
Recent
Accounting Pronouncements
|
(in
thousands)
|
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||||
2007
|
%
|
2006
|
%
|
2007
|
%
|
2006
|
%
|
|||||||||
Contract
revenue
|
$ 8,398
|
100.0
%
|
$ 6,556
|
100.0
%
|
$ 16,243
|
100.0
%
|
$ 12,140
|
100.0
%
|
||||||||
Cost
of revenue
|
5,544
|
66.0
%
|
4,700
|
71.7
%
|
11,195
|
68.9
%
|
8,833
|
72.8
%
|
||||||||
Gross
profit
|
2,854
|
34.0
%
|
1,856
|
28.3
%
|
5,048
|
31.1
%
|
3,307
|
27.2
%
|
||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general and administrative
|
2,063
|
24.6
%
|
1,202
|
18.3
%
|
3,754
|
23.1
%
|
2,223
|
18.3
%
|
||||||||
Administrative
charges from
|
||||||||||||||||
GP
Strategies
|
-
|
0.0
%
|
171
|
2.6
%
|
-
|
0.0
%
|
342
|
2.8
%
|
||||||||
Depreciation
|
58
|
0.7
%
|
44
|
0.7
%
|
109
|
0.7
%
|
91
|
0.7
%
|
||||||||
Total
operating expenses
|
2,121
|
25.3
%
|
1,417
|
21.6
%
|
3,863
|
23.8
%
|
2,656
|
21.8
%
|
||||||||
Operating
income
|
733
|
8.7
%
|
439
|
6.7
%
|
1,185
|
7.3
%
|
651
|
5.4
%
|
||||||||
Interest
expense, net
|
(209)
|
(2.5)%
|
(216)
|
(3.3)%
|
(363)
|
(2.3)%
|
(373)
|
(3.1)%
|
||||||||
Loss
on extinquishment of debt
|
-
|
0.0
%
|
-
|
0.0
%
|
-
|
0.0
%
|
(1,428)
|
(11.8)%
|
||||||||
Other
income (expense), net
|
(104)
|
(1.2)%
|
(71)
|
(1.1)%
|
(265)
|
(1.6)%
|
(20)
|
(0.1)%
|
||||||||
Income
(loss) before income taxes
|
420
|
5.0
%
|
152
|
2.3
%
|
557
|
3.4
%
|
(1,170)
|
(9.6)%
|
||||||||
Provision
for income taxes
|
72
|
0.9
%
|
28
|
0.4
%
|
178
|
1.1
%
|
28
|
0.3
%
|
||||||||
Net
income (loss)
|
$ 348
|
4.1
%
|
$ 124
|
1.9
%
|
$ 379
|
2.3
%
|
$ (1,198)
|
(9.9)%
|
¨
|
Business
development and marketing costs increased from $541,000 in the second
quarter 2006 to $648,000 in the second quarter of 2007 and increased
from
$1.0 million for the six months ended June 30, 2006 to $1.3 million
in the
same period 2007. In the latter part of 2006, the Company added
additional business development personnel, plus the Company has incurred
higher bidding and proposal costs in
2007.
|
¨
|
The
Company’s general and administrative expenses totaled $1.3 million in the
second quarter 2007, which was 116.6% higher than the $567,000 incurred
in
the second quarter 2006. Likewise, for the six months ended June
30, 2007,
general and administrative expenses increased from $1.0 million in
the
first six months of 2006 to $2.1 million. The increases are due
to the following:
|
o
|
The
Management Services Agreement with GP Strategies was terminated on
December 31, 2006. Under this agreement, General Physics (a GP
Strategies subsidiary) provided corporate support services, including
accounting, finance, human resources, legal, and network
support. In conjunction with the reinstatement of these
corporate services in-house, the Company hired several personnel,
implemented a new financial system and contracted with outside vendors
to
provide payroll services and IT support and hosting
services.
|
o
|
In
February 2007, the Board of Directors approved a new Director compensation
plan. In 2006, only the audit committee members received
compensation; in 2007 all independent directors will receive
compensation. In addition, the independent directors were
awarded 10,000 stock options each on February 6, 2007. The
options were valued using the Black-Scholes method, and the cost
is being
amortized over the three year vesting
period.
|
o
|
The
Company also established a two-man advisory committee to the Board
of
Directors which met once in the first quarter 2007. The advisory
committee
members are not affiliated with the Company or any of its subsidiaries.
The advisory board committee members receive a fee of $7,500 for
each
meeting that they attend.
|
o
|
In
May 2006, the Company hired an outside investor relations
firm. The firm receives a monthly fee of $3,500 and a total of
50,000 shares of GSE common stock, with 2,778 shares earned as of
the last
day of each month during the 18 month consulting period. The
shares are not deliverable to the firm until October 31,
2007. The fair value of the shares earned is determined
using the closing AMEX price as of the last day of each
month.
|
o
|
The
amount of tax loss carryforward which can be used by the Company
may be
significantly limited due to changes in the Company’s ownership which have
occurred subsequent to the spin-off of GSE by GP Strategies, including
the
equity transactions that occurred in 2006 and 2007. In 2007,
the Company has hired an independent accounting firm to evaluate
the
changes in the Company’s ownership and to determine the amount of any
limitation on the usage of the loss
carryforwards.
|
o
|
As
of June 30, 2007, the Company’s market capitalization exceeded $75
million. Thus in accordance with the Sarbanes-Oxley Act of
2002, the Company will be required to hire its independent registered
public accountants to perform an audit of the Company’s
internal controls over financial reporting as of December 31,
2007.
|
¨
|
Gross
spending on software product development (“development”) totaled $401,000
in the quarter ended June 30, 2007 as compared to $213,000 in the
same
period of 2006. For the six months ended June 30, 2007, gross development
spending totaled $701,000 versus $352,000 in the same period of
2006. For the three months ended June, 2007, the Company
expensed $187,000 and capitalized $214,000 of its development spending
while in the three months ended June 30, 2006, the Company expensed
$94,000 and capitalized $119,000 of its development
spending. For the six months ended June 30, 2007, the Company
expensed $352,000 and capitalized $349,000 of its development spending
and
expensed $205,000 and capitalized $147,000 of its development spending
in
the six months ended June 30, 2006. The Company’s capitalized
development expenditures in 2007 were related to the development
of a new
graphic user interface (“GUI”) for THEATRe, the replacement of the GUI for
SimSuite Pro with JADE Designer, and the addition of new features
to JADE
Topmeret and Opensim. The Company anticipates that its
total gross development spending in 2007 will approximate $1.2
million.
|
¨
|
The
Company accounts for its investment in ESA using the equity
method. In accordance with the equity method, the Company has
eliminated 10% of the profit from this contract as the training simulators
are assets that will be recorded on the books of ESA, and the Company
is
thus required to eliminate its proportionate share of the profit
included
in the asset value. The profit elimination totaled $146,000 and
$266,000 for the three and six months ended June 30, 2007 and $61,000
for
both the three and six months ended June 30,
2006.
|
¨
|
At
June 30, 2007, the Company had contracts for the sale of approximately
61
million Japanese Yen and 125,000 Pounds Sterling at fixed rates.
The
contracts expire on various dates through January 2008. The
Company had not designated the contracts as hedges and has recorded
the
change in the estimated fair value of the contracts during the three
and
six months ended June 30, 2007 of ($2,000) and ($2,000) in other
income
(expense).
|
¨
|
At
June 30, 2006, the Company had contracts for the sale of approximately
176
million Japanese Yen at fixed rates. The Company had not
designated the contracts as hedges and has recorded the change in
the
estimated fair value of the contracts during the three and six months
ended June 30, 2006 of ($5,000) and ($17,000), respectively, in other
income (expense).
|
¨
|
A
$908,000 increase in contract receivables mainly due to an increase
in
unbilled receivables.
|
¨
|
A
$507,000 decrease in billings in excess of revenue
earned.
|
¨
|
A
$1.7 million increase in contracts receivable. The increase
mainly reflected a $2.1 million invoice issued in January 2006 to
the ESA
for an advance payment on the UAE training center project that was
outstanding at June 30, 2006. The Company received $1.5 million
of the ESA receivable in July 2006 and the balance in December
2006.
|
¨
|
A
$1.0 million decrease in accounts payable, accrued compensation and
accrued expenses. The reduction mainly reflected the
utilization of a portion of the funds received through the Company’s
convertible preferred stock transaction to pay down accounts
payable.
|
¨
|
A
$782,000 increase in billings in excess of revenues
earned. This increase was also due to the advance payment
billing to ESA.
|
Proposal
|
For
|
Withheld
|
Total
|
||||||
1)
|
Election
of Directors for a three year term expiring in 2010:
|
||||||||
Jerome
I. Feldman
|
10,512,377
|
495,774
|
11,008,151
|
||||||
John
V. Moran
|
10,551,492
|
456,659
|
11,008,151
|
||||||
George
J. Pedersen
|
10,432,349
|
575,802
|
11,008,151
|
||||||
The
following directors are serving terms until the annual meeting
in 2008 and
were not reelected
|
|||||||||
at
the June 28, 2007 annual meeting:
|
|||||||||
Michael
D. Feldman
|
|||||||||
Sheldon
L. Glashow
|
|||||||||
Roger
L. Hagengruber
|
|||||||||
The
following directors are serving terms until the annual meeting
in 2009 and
were not reelected
|
|||||||||
at
the June 28, 2007 annual meeting:
|
|||||||||
Scott
N. Greenberg
|
|||||||||
Joseph
W. Lewis
|
|||||||||
O.
Lee Tawes, III
|
|||||||||
Proposal
|
For
|
Against
|
Abstain
|
Total
|
|||||
2)
|
Ratification
of KPMG LLP as
|
||||||||
the
Company's independent registered
|
|||||||||
public
accountants for the 2007 fiscal year
|
10,972,810
|
21,924
|
13,417
|
11,008,151
|
|||||
3)
|
Proposal
|
||||||||
Ratification
of the grant of non-plan options
|
|||||||||
awarded
in 1998 to certain directors
|
7,982,129
|
3,019,302
|
6,720
|
11,008,151
|
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002.
|
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer pursuant
to
Section 906 of the Sarbanes-Oxley Act of
2002.
|