(Mark One)
|
|||
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
|
||
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
|
Commission File Number 001-14785
|
GSE Systems, Inc.
|
(Exact name of registrant as specified in its charter)
|
Delaware
|
52-1868008
|
|
(State of incorporation)
|
(I.R.S. Employer Identification Number)
|
|
1332 Londontown Blvd., Suite 200, Sykesville MD
|
21784
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code: (410) 970-7800
|
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, $.01 par value
|
Nasdaq
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
PART I
|
Page
|
|
Item 1.
|
Business
|
3
|
Item 1A.
|
Risk Factors
|
8
|
Item 1B.
|
Unresolved Staff Comments
|
14
|
Item 2.
|
Properties
|
14
|
Item 3.
|
Legal Proceedings
|
14
|
Item 4.
|
Mine Safety Disclosures
|
14
|
PART II
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
|
15
|
Item 6.
|
Selected Financial Data
|
15
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
16
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
24
|
Item 8.
|
Financial Statements and Supplementary Data
|
25
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
58
|
Item 9A.
|
Controls and Procedures
|
58
|
Item 9B.
|
Other Information
|
58
|
PART III
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance*
|
58
|
Item 11.
|
Executive Compensation*
|
59
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*
|
59
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence*
|
60
|
Item 14.
|
Principal Accountant Fees and Services*
|
60
|
PART IV
|
||
Item 15.
|
Exhibits and Financial Statement Schedules
|
60
|
Item 16.
|
Form 10-K Summary
|
61
|
SIGNATURES
|
62
|
|
Exhibits Index
|
61
|
* |
to be incorporated by reference from the Proxy Statement for the registrant’s 2019 Annual Meeting of Shareholders.
|
- |
changes in the rate of economic growth in the United States and other major international economies;
|
- |
changes in investment by the nuclear and fossil electric utility industry, the chemical and petrochemical industries, or the U.S. military;
|
- |
changes in the financial condition of our customers;
|
- |
changes in the regulatory environment;
|
- |
changes in project design or schedules;
|
- |
contract cancellations;
|
- |
changes in our estimates of costs to complete projects;
|
- |
changes in trade, monetary and fiscal policies worldwide;
|
- |
currency fluctuations;
|
- |
war and/or terrorist attacks on facilities either owned by our customers or our company, or where equipment or services are or may be provided;
|
- |
initiation, prosecution, or outcomes of future litigation;
|
- |
protection and validity of our trademarks and other intellectual property rights;
|
- |
increasing competition by foreign and domestic companies;
|
- |
compliance with our debt covenants;
|
- |
recoverability of claims against our customers and others; and
|
- |
changes in estimates used in our critical accounting policies.
|
·
|
Performance Improvement Solutions (approximately 47% of revenue)
|
·
|
Nuclear Industry Training and Consulting (approximately 53% of revenue)
|
● |
Universal Training Simulators: These products complement our
Self-Paced Training Tutorials by reinforcing what the student learned in the tutorial, putting it into practice on the Universal Simulator. The simulation models are high fidelity and engineering correct, but represent a typical plant
or typical process, rather than the exact replication of a client's plant. We have delivered over 360 such simulation models to clients consisting of major oil companies and educational institutions.
|
● |
Part-Task Training Simulators: Like our Universal Simulators, we
provide other unique training solutions such as a generic nuclear plant simulator and VPanel® displays, which replicate control room hardware and simulator solutions specific to industry needs such as severe accident models
to train on and aid in the understanding of events like the Fukushima Daiichi accident.
|
● |
Plant-Specific Operator Training Simulators: These simulators
exactly replicate the plant control room and plant operations. They provide the highest level of realism and training available, and allow users to practice their own plant-specific procedures. Clients can safely practice startup,
shutdown, and other normal operations, as well as response to abnormal events we all hope they never have to experience in real life. Since our inception, we have delivered over 480 plant-specific simulators to clients in the nuclear
power, fossil power and process industries worldwide.
|
Years ended December 31,
|
|||
2018
|
2017
|
||
Nuclear power
|
91%
|
83%
|
|
Fossil fuel power
|
6%
|
9%
|
|
Process
|
3%
|
6%
|
|
Other
|
0%
|
2%
|
|
Total
|
100%
|
100%
|
·
|
export laws and regulations that could erode our profit margins or restrict the export of some or all of our products;
|
·
|
compliance with the U.S. Foreign Corrupt Practices Act and similar non-U.S. regulations such as the UK Bribery Act;
|
·
|
the burden and cost of compliance with foreign laws, treaties and technical standards generally, as well as responding to changes
in those requirements;
|
·
|
contract award and funding delays;
|
·
|
potential restrictions on transfers of funds;
|
·
|
potential difficulties in accounts receivable collection;
|
·
|
currency fluctuations, including costs and potentially limited availability of viable hedging options;
|
·
|
import and export duties and value added or other taxes;
|
·
|
transportation and communication delays and interruptions;
|
·
|
differences in insurance availability and coverage in some jurisdictions;
|
·
|
difficulties involving strategic alliances and managing foreign sales agents or representatives;
|
·
|
uncertainties arising from foreign local business practices and cultural considerations; and
|
·
|
potential military conflicts and political risks.
|
Years ended December 31,
|
|||
2018
|
2017
|
||
Customer A
|
48%
|
48%
|
|
Customer B
|
12%
|
16%
|
|
Years ended December 31,
|
|||
2018
|
2017
|
||
Customer C
|
26%
|
31%
|
|
·
|
potential exposure to unknown liabilities of the acquired companies;
|
·
|
higher than anticipated acquisition costs and expenses;
|
·
|
depletion of cash and other company assets and resources in connection with the acquisition or integration;
|
·
|
difficulty and expense of integrating the operations and personnel of the companies, especially if the
acquired operations are geographically distant or culturally different;
|
·
|
potential disruption of our ongoing business and diversion of management time and attention;
|
·
|
failure to maximize our financial and strategic position by the successful incorporation of acquired
technology;
|
·
|
difficulties in adopting and maintaining uniform standards, controls, procedures, and policies;
|
·
|
loss of key employees and customers as a result of changes in management; and
|
·
|
possible dilution to our shareholders.
|
· |
providing that our Board of Directors fixes the number of members of the board and fills all vacancies on the Board of Directors;
|
· |
providing for the division of our Board of Directors into three classes with staggered terms;
|
· |
limiting who may call special meetings of stockholders;
|
· |
prohibiting stockholder action by written consent, thereby requiring stockholder action to be taken at a meeting of the stockholders;
|
· |
establishing advance notice requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted on
by stockholders at stockholder meetings;
|
· |
establishing supermajority vote requirements for certain amendments to our certificate of incorporation and bylaws;
|
· |
limiting the right of stockholders to remove directors; and
|
· |
authorizing the issuance of "blank check" preferred stock, which could be issued by our Board of Directors to increase the number of outstanding shares and
thwart a takeover attempt.
|
ITEM 2. |
PROPERTIES.
|
ITEM 3. |
LEGAL PROCEEDINGS.
|
ITEM 4. |
MINE SAFETY DISCLOSURES.
|
ITEM 5. |
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES.
|
2018
|
||||||||
Quarter
|
High
|
Low
|
||||||
First
|
$
|
3.55
|
$
|
3.10
|
||||
Second
|
$
|
3.40
|
$
|
3.10
|
||||
Third
|
$
|
3.80
|
$
|
2.75
|
||||
Fourth
|
$
|
3.50
|
$
|
2.00
|
2017
|
||||||||
Quarter
|
High
|
Low
|
||||||
First
|
$
|
3.85
|
$
|
3.05
|
||||
Second
|
$
|
3.75
|
$
|
2.85
|
||||
Third
|
$
|
3.55
|
$
|
2.35
|
||||
Fourth
|
$
|
3.60
|
$
|
3.10
|
ITEM 6. |
SELECTED FINANCIAL DATA.
|
ITEM 7. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
|
($ in thousands)
|
Years ended December 31,
|
|||||||||||||||
2018
|
%
|
2017
|
%
|
|||||||||||||
Revenue
|
$
|
92,249
|
100.0
|
%
|
$
|
70,880
|
100.0
|
%
|
||||||||
Cost of revenue
|
69,119
|
74.9
|
%
|
52,336
|
73.8
|
%
|
||||||||||
Gross profit
|
23,130
|
25.1
|
%
|
18,544
|
26.2
|
%
|
||||||||||
Operating expenses
|
||||||||||||||||
Selling, general and administrative
|
17,469
|
18.9
|
%
|
15,469
|
21.8
|
%
|
||||||||||
Research and development
|
899
|
1.0
|
%
|
1,391
|
2.0
|
%
|
||||||||||
Restructuring charges
|
1,269
|
1.4
|
%
|
778
|
1.1
|
%
|
||||||||||
Depreciation
|
515
|
0.6
|
%
|
342
|
0.5
|
%
|
||||||||||
Amortization of definite-lived intangible assets
|
1,612
|
1.7
|
%
|
335
|
0.5
|
%
|
||||||||||
Total operating expenses
|
21,764
|
23.6
|
%
|
18,315
|
25.8
|
%
|
||||||||||
Operating income
|
1,366
|
1.5
|
%
|
229
|
0.3
|
%
|
||||||||||
Interest (expense) income, net
|
(268
|
)
|
-0.3
|
%
|
80
|
0.1
|
%
|
|||||||||
(Loss) Gain on derivative instruments, net
|
(350
|
)
|
-0.4
|
%
|
99
|
0.1
|
%
|
|||||||||
Other income (expense), net
|
29
|
0.0
|
%
|
(4
|
)
|
0.0
|
%
|
|||||||||
Income before income taxes
|
777
|
0.8
|
%
|
404
|
0.6
|
%
|
||||||||||
Provision (benefit) for income taxes
|
1,131
|
1.2
|
%
|
(6,153
|
)
|
-8.7
|
%
|
|||||||||
Net (loss) Income
|
$
|
(354
|
)
|
-0.4
|
%
|
$
|
6,557
|
9.3
|
%
|
(in thousands)
|
Year ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Revenue:
|
||||||||
Performance Improvement Solutions
|
$
|
42,954
|
$
|
39,899
|
||||
Nuclear Industry Training and Consulting
|
49,295
|
30,981
|
||||||
Total revenue
|
$
|
92,249
|
$
|
70,880
|
($ in thousands)
|
Years ended December 31,
|
|||||||||||||||
2018
|
%
|
2017
|
%
|
|||||||||||||
Gross profit:
|
||||||||||||||||
Performance Improvement Solutions
|
$
|
16,457
|
38.3
|
%
|
$
|
13,712
|
34.4
|
%
|
||||||||
Nuclear Industry Training and Consulting
|
6,673
|
13.5
|
%
|
4,832
|
15.6
|
%
|
||||||||||
Consolidated gross profit
|
$
|
23,130
|
25.1
|
%
|
$
|
18,544
|
26.2
|
%
|
($ in thousands)
|
Years ended December 31,
|
|||||||||||||||
2018
|
%
|
2017
|
%
|
|||||||||||||
Selling, general and administrative expenses:
|
||||||||||||||||
Corporate charges
|
$
|
12,826
|
73.4
|
%
|
$
|
10,428
|
67.4
|
%
|
||||||||
Business development
|
3,478
|
19.9
|
%
|
3,560
|
23.0
|
%
|
||||||||||
Facility operation & maintenance (O&M)
|
866
|
5.0
|
%
|
908
|
5.9
|
%
|
||||||||||
Contingent consideration
|
-
|
0.0
|
%
|
446
|
2.9
|
%
|
||||||||||
Bad debt expense
|
294
|
1.7
|
%
|
118
|
0.8
|
%
|
||||||||||
Other
|
5
|
0.0
|
%
|
9
|
0.1
|
%
|
||||||||||
Total
|
$
|
17,469
|
100.0
|
%
|
$
|
15,469
|
100.0
|
%
|
·
|
A $11.7 million decrease in net inflows from changes in net working capital primarily due to significantly
increased billing in the last quarter of 2018 and a higher accounts receivable balance as of December 31, 2018.
|
·
|
A $3.2 million increase in operating expenses (excluding non-cash operating expenses) mainly driven by higher
administrative cost due to recent acquisitions.
|
·
|
The decrease was partially offset by a $4.6 million increase in gross profit, primarily driven by increased
revenues contributed from both business segments.
|
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
|
December 31,
|
December 31,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Net (loss) Income
|
$
|
679
|
$
|
6,601
|
$
|
(354
|
)
|
$
|
6,557
|
|||||||
Interest expense (income), net
|
115
|
(20
|
)
|
268
|
(80
|
)
|
||||||||||
Provision (benefit) for income taxes
|
1,007
|
(6,552
|
)
|
1,131
|
(6,153
|
)
|
||||||||||
Depreciation and amortization
|
776
|
392
|
2,634
|
1,146
|
||||||||||||
EBITDA
|
2,577
|
421
|
3,679
|
1,470
|
||||||||||||
Gain from the change in fair value of contingent consideration
|
-
|
10
|
-
|
446
|
||||||||||||
Restructuring charges
|
92
|
733
|
1,269
|
778
|
||||||||||||
Stock-based compensation expense
|
(9
|
)
|
599
|
1,526
|
2,472
|
|||||||||||
Impact of the change in fair value of derivative instruments
|
44
|
127
|
350
|
(99
|
)
|
|||||||||||
Acquisition-related expense
|
49
|
-
|
540
|
473
|
||||||||||||
Bad debt expense due to customer bankruptcy
|
20
|
-
|
85
|
122
|
||||||||||||
Adjusted EBITDA
|
$
|
2,773
|
$
|
1,890
|
$
|
7,449
|
$
|
5,662
|
|
Three Months ended
|
Twelve Months ended
|
||||||||||||||
|
December 31,
|
December 31,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
audited
|
audited
|
||||||||||||
Net (loss) Income
|
$
|
679
|
$
|
6,601
|
$
|
(354
|
)
|
$
|
6,557
|
|||||||
Gain from the change in fair value of contingent consideration
|
-
|
10
|
-
|
446
|
||||||||||||
Restructuring charges
|
92
|
733
|
1,269
|
778
|
||||||||||||
Stock-based compensation expense
|
(9
|
)
|
599
|
1,526
|
2,472
|
|||||||||||
Impact of the change in fair value of derivative instruments
|
44
|
127
|
350
|
(99
|
)
|
|||||||||||
Acquisition-related expense
|
49
|
-
|
540
|
473
|
||||||||||||
Amortization of intangible assets related to acquisitions
|
518
|
187
|
1,612
|
335
|
||||||||||||
Bad debt expense due to customer bankruptcy
|
20
|
-
|
85
|
122
|
||||||||||||
Tax reform impact
|
-
|
2,497
|
-
|
2,497
|
||||||||||||
Release of valuation allowance
|
(339
|
)
|
(10,555
|
)
|
(339
|
)
|
(10,555
|
)
|
||||||||
Adjusted net income
|
$
|
1,054
|
$
|
199
|
$
|
4,689
|
$
|
3,026
|
||||||||
Diluted earnings (loss) per common share
|
$
|
0.03
|
$
|
0.33
|
$
|
(0.02
|
)
|
$
|
0.33
|
|||||||
Adjusted earnings per common share – Diluted
|
$
|
0.05
|
$
|
0.01
|
$
|
0.24
|
$
|
0.15
|
||||||||
Weighted average shares outstanding – Diluted
|
20,100,489
|
19,790,696
|
19,922,151
|
19,605,427
|
||||||||||||
ITEM 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
ITEM 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
Page
|
|
GSE Systems, Inc. and Subsidiaries
|
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
F-2
|
Consolidated Statements of Operations for the Years ended December 31, 2018 and 2017
|
F-3
|
Consolidated Statements of Comprehensive (Loss) Income for the Years ended December 31, 2018 and 2017
|
F-4
|
Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2018 and 2017
|
F-5
|
Consolidated Statements of Cash Flows for the Years ended December 31, 2018 and 2017
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
December 31,
|
||||||||
ASSETS
|
2018
|
2017
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
12,123
|
$
|
19,111
|
||||
Restricted cash
|
-
|
960
|
||||||
Contract receivables, net
|
21,077
|
13,997
|
||||||
Prepaid expenses and other current assets
|
1,800
|
2,795
|
||||||
Total current assets
|
35,000
|
36,863
|
||||||
Equipment, software and leasehold improvements
|
5,293
|
4,782
|
||||||
Accumulated depreciation
|
(4,228
|
)
|
(3,719
|
)
|
||||
Equipment, software and leasehold improvements, net
|
1,065
|
1,063
|
||||||
Software development costs, net
|
615
|
690
|
||||||
Goodwill
|
13,170
|
8,431
|
||||||
Intangible assets, net
|
6,080
|
2,604
|
||||||
Deferred tax assets
|
5,461
|
6,494
|
||||||
Other assets
|
49
|
37
|
||||||
Total assets
|
$
|
61,440
|
$
|
56,182
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current portion of long-term debt, net of debt issuance costs and original issue discount
|
$
|
1,902
|
$
|
-
|
||||
Accounts payable
|
1,307
|
1,251
|
||||||
Accrued expenses
|
2,646
|
2,276
|
||||||
Accrued compensation
|
3,649
|
2,866
|
||||||
Billings in excess of revenue earned
|
10,609
|
14,543
|
||||||
Accrued warranty
|
981
|
1,433
|
||||||
Current contingent consideration
|
-
|
1,701
|
||||||
Income taxes payable
|
1,176
|
1,113
|
||||||
Other current liabilities
|
60
|
69
|
||||||
Total current liabilities
|
22,330
|
25,252
|
||||||
Long-term debt, less current portion, net of debt issuance costs and original issue discount
|
6,610
|
-
|
||||||
Other liabilities
|
1,371
|
1,258
|
||||||
Total liabilities
|
30,311
|
26,510
|
||||||
Commitments and contingencies (FN16)
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock $.01 par value; 2,000,000 shares authorized; no shares issued and
outstanding
|
-
|
-
|
||||||
Common stock $0.01 par value; 60,000,000 shares authorized, 21,485,445 shares issued,
19,886,534 shares outstanding as of December 31, 2018; 30,000,000 shares authorized, 21,024,395 shares issued, 19,425,484 shares outstanding as of December 31, 2017
|
214
|
210
|
||||||
Additional paid-in capital
|
78,118
|
76,802
|
||||||
Accumulated deficit
|
(42,569
|
)
|
(42,870
|
)
|
||||
Accumulated other comprehensive loss
|
(1,635
|
)
|
(1,471
|
)
|
||||
Treasury stock at cost, 1,598,911 shares
|
(2,999
|
)
|
(2,999
|
)
|
||||
Total stockholders' equity
|
$
|
31,129
|
$
|
29,672
|
||||
Total liabilities and stockholders' equity
|
$
|
61,440
|
$
|
56,182
|
Years ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Revenue
|
$
|
92,249
|
$
|
70,880
|
||||
Cost of revenue
|
69,119
|
52,336
|
||||||
Gross profit
|
23,130
|
18,544
|
||||||
Operating expenses
|
||||||||
Selling, general and administrative
|
17,469
|
15,469
|
||||||
Research and development
|
899
|
1,391
|
||||||
Restructuring charges
|
1,269
|
778
|
||||||
Depreciation
|
515
|
342
|
||||||
Amortization of definite-lived intangible assets
|
1,612
|
335
|
||||||
Total operating expenses
|
21,764
|
18,315
|
||||||
Operating income
|
1,366
|
229
|
||||||
Interest (expense) income, net
|
(268
|
)
|
80
|
|||||
(Loss) Gain on derivative instruments, net
|
(350
|
)
|
99
|
|||||
Other income (expense), net
|
29
|
(4
|
)
|
|||||
Income before income taxes
|
777
|
404
|
||||||
Provision (benefit) for income taxes
|
1,131
|
(6,153
|
)
|
|||||
Net (loss) Income
|
$
|
(354
|
)
|
$
|
6,557
|
|||
Basic (loss) earnings per common share
|
$
|
(0.02
|
)
|
$
|
0.34
|
|||
Diluted (loss) earnings per common share
|
$
|
(0.02
|
)
|
$
|
0.33
|
|||
Weighted average shares outstanding - Basic
|
19,704,999
|
19,259,966
|
||||||
Weighted average shares outstanding - Diluted
|
19,704,999
|
19,605,427
|
Years ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Net (loss) Income
|
$
|
(354
|
)
|
$
|
6,557
|
|||
Foreign currency translation adjustment
|
(164
|
)
|
306
|
|||||
Comprehensive (loss) Income
|
$
|
(518
|
)
|
$
|
6,863
|
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other Comprehensive
|
Treasury Stock
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Shares
|
Amount
|
Total
|
|||||||||||||||||||||||||
Balance, January 1, 2017
|
20,434
|
$
|
204
|
$
|
75,120
|
$
|
(49,427
|
)
|
$
|
(1,777
|
)
|
(1,599
|
)
|
$
|
(2,999
|
)
|
$
|
21,121
|
||||||||||||||
Cumulative effect of new accounting principle
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
2,398
|
-
|
-
|
-
|
-
|
2,398
|
||||||||||||||||||||||||
Common stock issued for options exercised
|
182
|
2
|
207
|
-
|
-
|
-
|
-
|
209
|
||||||||||||||||||||||||
Common stock issued for RSUs vested
|
409
|
4
|
(4
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Shares withheld to pay taxes
|
-
|
-
|
(919
|
)
|
-
|
-
|
-
|
-
|
(919
|
)
|
||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
306
|
-
|
-
|
306
|
||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
6,557
|
-
|
-
|
-
|
6,557
|
||||||||||||||||||||||||
Balance, December 31, 2017
|
21,024
|
$
|
210
|
$
|
76,802
|
$
|
(42,870
|
)
|
$
|
(1,471
|
)
|
(1,599
|
)
|
$
|
(2,999
|
)
|
$
|
29,672
|
||||||||||||||
Cumulative effect of adopting ASC 606
|
-
|
-
|
-
|
655
|
-
|
-
|
-
|
655
|
||||||||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
1,668
|
-
|
-
|
-
|
-
|
1,668
|
||||||||||||||||||||||||
Common stock issued for options exercised
|
220
|
2
|
134
|
-
|
-
|
-
|
-
|
136
|
||||||||||||||||||||||||
Common stock issued for RSUs vested
|
241
|
2
|
(2
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Shares withheld to pay taxes
|
-
|
-
|
(484
|
)
|
-
|
-
|
-
|
-
|
(484
|
)
|
||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
(164
|
)
|
-
|
-
|
(164
|
)
|
||||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(354
|
)
|
-
|
-
|
-
|
(354
|
)
|
||||||||||||||||||||||
Balance, December 31, 2018
|
21,485
|
$
|
214
|
$
|
78,118
|
$
|
(42,569
|
)
|
$
|
(1,635
|
)
|
(1,599
|
)
|
$
|
(2,999
|
)
|
$
|
31,129
|
Years ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net (loss) Income
|
$
|
(354
|
)
|
$
|
6,557
|
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
activities:
|
||||||||
Write-off of long-lived assets to be disposed of
|
-
|
222
|
||||||
Accrued severance costs
|
-
|
465
|
||||||
Depreciation
|
515
|
342
|
||||||
Amortization of definite-lived intangible assets
|
1,612
|
335
|
||||||
Amortization of capitalized software development costs
|
507
|
469
|
||||||
Stock-based compensation expense
|
1,526
|
2,472
|
||||||
Bad debt expense
|
294
|
118
|
||||||
Loss (gain) on derivative instruments, net
|
350
|
(99
|
)
|
|||||
Deferred income taxes
|
644
|
(6,678
|
)
|
|||||
Loss on sale of equipment, software, and leasehold improvements
|
-
|
2
|
||||||
Changes in assets and liabilities:
|
||||||||
Contract receivables, net
|
(5,656
|
)
|
10,006
|
|||||
Prepaid expenses and other assets
|
856
|
1,020
|
||||||
Accounts payable, accrued compensation and accrued expenses
|
(838
|
)
|
(1,904
|
)
|
||||
Billings in excess of revenue earned
|
(2,984
|
)
|
(6,897
|
)
|
||||
Accrued warranty
|
(322
|
)
|
462
|
|||||
Other liabilities
|
367
|
370
|
||||||
Net cash (used in) provided by operating activities
|
(3,483
|
)
|
7,262
|
|||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(513
|
)
|
(112
|
)
|
||||
Capitalized software development costs
|
(432
|
)
|
(177
|
)
|
||||
Acquisition of Absolute Consulting, net of cash acquired
|
-
|
(9,066
|
)
|
|||||
Acquisition of True North Consulting, net of cash acquired
|
(9,609
|
)
|
-
|
|||||
Net cash used in investing activities
|
(10,554
|
)
|
(9,355
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of long-term debt, net of debt issuance costs and original issue
discount
|
10,154
|
-
|
||||||
Repayment of long-term debt
|
(1,642
|
)
|
-
|
|||||
Proceeds from issuance of common stock on the exercise of stock options
|
136
|
209
|
||||||
Shares withheld to pay taxes
|
(484
|
)
|
(919
|
)
|
||||
Contingent consideration payments to former Hyperspring, LLC owners
|
(1,701
|
)
|
(404
|
)
|
||||
Net cash provided by (used in) financing activities
|
6,463
|
(1,114
|
)
|
|||||
Effect of exchange rate changes on cash
|
(374
|
)
|
391
|
|||||
Net decrease in cash and cash equivalents
|
(7,948
|
)
|
(2,816
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of year
|
20,071
|
22,887
|
||||||
Cash, cash equivalents and restricted cash at end of year
|
$
|
12,123
|
$
|
20,071
|
||||
(in thousands)
|
As of and for the
|
|||||||
years ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Beginning balance
|
$
|
1,953
|
$
|
1,478
|
||||
Current year provision
|
(107
|
)
|
707
|
|||||
Current year claims
|
(215
|
)
|
(245
|
)
|
||||
Currency adjustment
|
(10
|
)
|
13
|
|||||
Ending balance
|
$
|
1,621
|
$
|
1,953
|
(in thousands, except for per share data)
|
Years ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Numerator:
|
||||||||
Net (loss) income attributed to common stockholders
|
$
|
(354
|
)
|
$
|
6,557
|
|||
Denominator:
|
||||||||
Weighted-average shares outstanding for basic earnings per share
|
19,704,999
|
19,259,966
|
||||||
Effect of dilutive securities:
|
||||||||
Employee stock options and warrants
|
-
|
345,461
|
||||||
Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings
per share
|
19,704,999
|
19,605,427
|
||||||
Shares related to dilutive securities excluded because inclusion would be anti-dilutive
|
217,152
|
374,833
|
Consolidated Statement of Operations
|
||||||||||||
Twelve months ended December 31, 2017
|
||||||||||||
As reported
|
Adjustment
|
As revised
|
||||||||||
Benefit for income taxes
|
$
|
(4,980
|
)
|
$
|
(1,173
|
)
|
$
|
(6,153
|
)
|
|||
Net Income
|
5,384
|
1,173
|
6,557
|
|||||||||
Basic earnings per common share
|
$
|
0.28
|
$
|
0.06
|
$
|
0.34
|
||||||
Diluted earnings per common share
|
0.27
|
0.06
|
0.33
|
Consolidated Statements of Changes in Stockholders' Equity
|
||||||||||||
Twelve months ended December 31, 2017
|
||||||||||||
As reported
|
Adjustment
|
As revised
|
||||||||||
Cumulative effect of new accounting principle
|
$
|
1,173
|
$
|
(1,173
|
)
|
$
|
-
|
|||||
Net Income
|
5,384
|
1,173
|
6,557
|
Consolidated Balance Sheets
|
||||||||||||
Balance at December 31, 2017
|
||||||||||||
As reported
|
Adjustment
|
As revised
|
||||||||||
Deferred tax assets
|
$
|
7,167
|
$
|
(673
|
)
|
$
|
6,494
|
|||||
Total assets
|
56,855
|
(673
|
)
|
56,182
|
||||||||
Other liabilities
|
1,931
|
673
|
1,258
|
|||||||||
Total liabilities
|
$
|
27,183
|
$
|
673
|
$
|
26,510
|
Twelve months ended December 31, 2018
|
||||||||||||
As Reported
|
Balance without adoption of ASC 606
|
Effect of Change
|
||||||||||
Revenue
|
$
|
92,249
|
$
|
92,723
|
$
|
(474
|
)
|
|||||
Gross profit
|
23,130
|
23,604
|
(474
|
)
|
||||||||
Provision for income taxes
|
1,131
|
1,257
|
126
|
|||||||||
Net loss
|
(354
|
)
|
(6
|
)
|
(348
|
)
|
||||||
Basic loss per common share
|
(0.02
|
)
|
-
|
|||||||||
Diluted loss per common share
|
(0.02
|
)
|
-
|
Balance at December 31, 2018
|
||||||||||||
As Reported
|
Balance without adoption of ASC 606
|
Effect of Change
|
||||||||||
Contract receivables, net
|
$
|
21,077
|
$
|
21,077
|
$
|
-
|
||||||
Deferred tax assets
|
5,461
|
5,576
|
(115
|
)
|
||||||||
Billings in excess of revenue earned
|
10,609
|
11,088
|
(479
|
)
|
||||||||
Accumulated deficit
|
(42,569
|
)
|
(42,933
|
)
|
364
|
Total purchase price
|
$
|
9,915
|
||
Purchase price allocation:
|
||||
Cash
|
306
|
|||
Contract receivables
|
1,870
|
|||
Prepaid expenses and other current assets
|
8
|
|||
Property, and equipment, net
|
1
|
|||
Intangible assets
|
5,088
|
|||
Accounts payable, accrued expenses
|
(1,744
|
)
|
||
Accrued compensation
|
(353
|
)
|
||
Total identifiable net assets
|
5,176
|
|||
Goodwill
|
4,739
|
|||
Net assets acquired
|
$
|
9,915
|
Intangible Assets
|
Weighted Average Amortization Period
|
Fair Value
|
||||||
(in years)
|
(in thousands)
|
|||||||
Customer relationships
|
15
|
$
|
3,758
|
|||||
Tradename
|
10
|
582
|
||||||
Alliance agreements
|
5
|
527
|
||||||
Non-compete agreements
|
4
|
221
|
||||||
Total
|
$
|
5,088
|
(in thousands)
|
||||
Total purchase price
|
$
|
9,521
|
||
Purchase price allocation:
|
||||
Cash
|
$
|
455
|
||
Contract receivables
|
5,121
|
|||
Prepaid expenses and other current assets
|
68
|
|||
Property, and equipment, net
|
184
|
|||
Intangible assets
|
2,569
|
|||
Accounts payable, accrued expenses, and other liabilities
|
(78
|
)
|
||
Accrued compensation
|
(1,617
|
)
|
||
Total identifiable net assets
|
6,702
|
|||
Goodwill
|
2,819
|
|||
Net assets acquired
|
$
|
9,521
|
Intangible Assets
|
Weighted Average Amortization Period
|
Fair Value
|
||||||
|
(in years)
|
(in thousands)
|
||||||
Customer relationships
|
10
|
$
|
1,856
|
|||||
Trademarks/Names
|
3
|
713
|
||||||
Total
|
$
|
2,569
|
(in thousands)
|
(unaudited)
|
|||||||
Twelve Months Ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Revenue
|
$
|
95,419
|
$
|
110,274
|
||||
Net (Loss) Income
|
(1,717
|
)
|
5,524
|
|||||
Basic (loss) earnings per common share
|
$
|
(0.09
|
)
|
$
|
0.29
|
|||
Diluted (loss) earnings per common share
|
$
|
(0.09
|
)
|
$
|
0.28
|
Twelve Months Ended December 31,
|
||||||||
2018
|
2017(1)
|
|||||||
Performance Improvement Solutions segment
|
||||||||
System Design and Build
|
$
|
25,948
|
$
|
29,217
|
||||
Software
|
2,883
|
3,409
|
||||||
Training and Consulting Services
|
14,123
|
7,273
|
||||||
Nuclear Industry Training and Consulting segment
|
||||||||
Training and Consulting Services
|
49,295
|
30,981
|
||||||
Total revenue
|
$
|
92,249
|
$
|
70,880
|
December 31, 2018
|
December 31, 2017
|
|||||||
Billings in excess of revenue earned (BIE)
|
$
|
10,609
|
$
|
14,543
|
||||
Revenue recognized in the period from amounts included in BIE at the beginning of the period
|
$
|
11,275
|
-
|
(in thousands)
|
Total Expected Termination Costs
|
Termination Costs for the Year
|
Accumulated Termination Costs
|
Expected Costs Remaining
|
||||||||||||
Employee termination benefits
|
$
|
820
|
$
|
355
|
$
|
820
|
$
|
-
|
||||||||
Lease termination costs
|
700
|
700
|
700
|
-
|
||||||||||||
Assets write-offs
|
222
|
-
|
222
|
-
|
||||||||||||
Other restructuring costs
|
419
|
214
|
260
|
159
|
||||||||||||
Total
|
$
|
2,161
|
$
|
1,269
|
2,002
|
$
|
159
|
(in thousands)
|
Employee Termination Benefits
|
Lease Termination Costs
|
Other Restructuring Costs
|
Total
|
||||||||||||
Balance as of January 1, 2018
|
$
|
465
|
$
|
-
|
$
|
-
|
$
|
465
|
||||||||
Accruals
|
341
|
668
|
214
|
1,223
|
||||||||||||
Payments
|
(737
|
)
|
(635
|
)
|
(214
|
)
|
(1,586
|
)
|
||||||||
Currency translation adjustments
|
(17
|
)
|
1
|
-
|
(16
|
)
|
||||||||||
Balance as of December 31, 2018
|
$
|
52
|
$
|
34
|
$
|
-
|
$
|
86
|
Performance Improvement Solutions
|
Nuclear Industry Training and Consulting
|
Total
|
||||||||||
Net book value at January 1, 2017
|
$
|
-
|
$
|
5,612
|
$
|
5,612
|
||||||
Acquisition
|
-
|
2,819
|
2,819
|
|||||||||
Dispositions
|
-
|
-
|
-
|
|||||||||
Goodwill impairment loss
|
-
|
-
|
-
|
|||||||||
Net book value at December 31, 2017
|
$
|
-
|
$
|
8,431
|
$
|
8,431
|
||||||
Acquisition
|
4,739
|
-
|
4,739
|
|||||||||
Dispositions
|
-
|
-
|
-
|
|||||||||
Goodwill impairment loss
|
-
|
-
|
-
|
|||||||||
Net book value at December 31, 2018
|
$
|
4,739
|
$
|
8,431
|
$
|
13,170
|
(in thousands)
|
As of December 31, 2018
|
|||||||||||
Gross Carrying Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Amortized
intangible assets:
|
||||||||||||
Customer relationships
|
$
|
6,831
|
$
|
(2,375
|
)
|
$
|
4,456
|
|||||
Trade names
|
1,295
|
(318
|
)
|
977
|
||||||||
Developed technology
|
471
|
(471
|
)
|
-
|
||||||||
Non-contractual customer relationships
|
433
|
(433
|
)
|
-
|
||||||||
Noncompete agreement
|
221
|
(35
|
)
|
186
|
||||||||
Alliance agreement
|
527
|
(66
|
)
|
461
|
||||||||
Others
|
167
|
(167
|
)
|
-
|
||||||||
Total
|
$
|
9,945
|
$
|
(3,865
|
)
|
$
|
6,080
|
|||||
(in thousands)
|
As of December 31, 2017
|
|||||||||||
Gross Carrying Amount
|
Accumulated Amortization
|
Net
|
||||||||||
Amortized
intangible assets:
|
||||||||||||
Customer relationships
|
$
|
3,074
|
$
|
(1,218
|
)
|
$
|
1,856
|
|||||
Trade names
|
713
|
(33
|
)
|
680
|
||||||||
Developed technology
|
471
|
(412
|
)
|
59
|
||||||||
Non-contractual customer relationships
|
433
|
(426
|
)
|
7
|
||||||||
Others
|
167
|
(165
|
)
|
2
|
||||||||
Total
|
$
|
4,858
|
$
|
(2,254
|
)
|
$
|
2,604
|
(in thousands)
|
||||
Years ended December 31:
|
||||
2019
|
$
|
1,654
|
||
2020
|
1,332
|
|||
2021
|
903
|
|||
2022
|
674
|
|||
2023
|
455
|
|||
Thereafter
|
1,062
|
|||
$
|
6,080
|
(in thousands)
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Billed receivables
|
$
|
15,998
|
$
|
8,154
|
||||
Unbilled receivables
|
5,506
|
5,980
|
||||||
Allowance for doubtful accounts
|
(427
|
)
|
(137
|
)
|
||||
Total contract receivables, net
|
$
|
21,077
|
$
|
13,997
|
(in thousands)
|
As of and for the
|
|||||||
Years ended December 31,
|
||||||||
2018
|
2017
|
|||||||
Beginning balance
|
$
|
137
|
$
|
17
|
||||
Current year provision
|
294
|
118
|
||||||
Current year write-offs
|
-
|
-
|
||||||
Currency adjustment
|
(4
|
)
|
2
|
|||||
Ending balance
|
$
|
427
|
$
|
137
|
(in thousands)
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Inventory
|
$
|
139
|
$
|
755
|
||||
Income tax receivable
|
310
|
418
|
||||||
Prepaid expenses
|
556
|
549
|
||||||
Other current assets
|
795
|
1,073
|
||||||
Total
|
$
|
1,800
|
$
|
2,795
|
(in thousands)
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Computer equipment
|
$
|
2,178
|
$
|
2,101
|
||||
Software
|
1,682
|
1,598
|
||||||
Leasehold improvements
|
619
|
454
|
||||||
Furniture and fixtures
|
814
|
629
|
||||||
5,293
|
4,782
|
|||||||
Accumulated depreciation
|
(4,228
|
)
|
(3,719
|
)
|
||||
Equipment, software and leasehold improvements, net
|
$
|
1,065
|
$
|
1,063
|
(in thousands)
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Beginning balance
|
$
|
690
|
$
|
982
|
||||
Additions
|
432
|
177
|
||||||
Amortization
|
(507
|
)
|
(469
|
)
|
||||
Ending balance
|
$
|
615
|
$
|
690
|
||||
Quoted Prices
in Active Markets
for Identical Assets
|
Significant
Other Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(in thousands)
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Money market funds
|
$
|
824
|
$
|
-
|
$
|
-
|
$
|
824
|
||||||||
Foreign exchange contracts
|
-
|
43
|
-
|
43
|
||||||||||||
Total assets
|
$
|
824
|
$
|
43
|
$
|
-
|
$
|
867
|
||||||||
Liability awards
|
-
|
(118
|
)
|
-
|
(118
|
)
|
||||||||||
Interest rate swap contract
|
-
|
(103
|
)
|
-
|
(103
|
)
|
||||||||||
Total liabilities
|
$
|
-
|
$
|
(221
|
)
|
$
|
-
|
$
|
(221
|
)
|
Quoted Prices
in Active Markets
for Identical Assets
|
Significant
Other Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
(in thousands)
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
Money market funds
|
$
|
3,240
|
$
|
-
|
$
|
-
|
$
|
3,240
|
||||||||
Foreign exchange contracts
|
-
|
201
|
-
|
201
|
||||||||||||
Total assets
|
$
|
3,240
|
$
|
201
|
$
|
-
|
$
|
3,441
|
||||||||
Liability awards
|
$
|
-
|
$
|
(242
|
)
|
$
|
-
|
$
|
(242
|
)
|
||||||
Contingent consideration liability
|
-
|
-
|
(1,701
|
)
|
(1,701
|
)
|
||||||||||
Total liabilities
|
$
|
-
|
$
|
(242
|
)
|
$
|
(1,701
|
)
|
$
|
(1,943
|
)
|
Balance, January 1, 2018
|
$
|
1,701
|
||
Payments made on contingent liabilities
|
(1,701
|
)
|
||
Change in fair value
|
-
|
|||
Balance, December 31, 2018
|
$
|
-
|
Long-term debt, net of discount
|
$
|
8,512
|
||
Less: current portion of long-term debt
|
1,902
|
|||
Long-term debt, less current portion
|
$
|
6,610
|
December 31,
|
||||||||
(in thousands)
|
2018
|
2017
|
||||||
Asset derivatives
|
||||||||
Prepaid expenses and other current assets
|
$
|
43
|
$
|
201
|
||||
43
|
201
|
|||||||
Liability derivatives
|
||||||||
Other liabilities
|
(103
|
)
|
-
|
|||||
(103
|
)
|
-
|
||||||
Net fair value
|
$
|
(60
|
)
|
$
|
201
|
Years ended December 31,
|
||||||||
(in thousands)
|
2018
|
2017
|
||||||
Foreign exchange contracts- change in fair value
|
$
|
(150
|
)
|
$
|
73
|
|||
Interest rate swap - change in fair value
|
(103
|
)
|
-
|
|||||
Remeasurement of related contract receivables and billings in excess of revenue earned
|
(97
|
)
|
26
|
|||||
$
|
(350
|
)
|
$
|
99
|
(in thousands)
|
Years ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Domestic
|
$
|
2,512
|
$
|
1,580
|
||||
Foreign
|
(1,735
|
)
|
(1,176
|
)
|
||||
Total
|
$
|
777
|
$
|
404
|
(in thousands)
|
Years ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Current:
|
||||||||
Federal
|
$
|
(6
|
)
|
$
|
459
|
|||
State
|
259
|
47
|
||||||
Foreign
|
234
|
19
|
||||||
Subtotal
|
487
|
525
|
||||||
Deferred:
|
||||||||
Federal
|
600
|
(5,867
|
)
|
|||||
State
|
67
|
(942
|
)
|
|||||
Foreign
|
(23
|
)
|
131
|
|||||
Subtotal
|
644
|
(6,678
|
)
|
|||||
Total
|
$
|
1,131
|
$
|
(6,153
|
)
|
Effective Tax Rate Percentage (%)
|
|||
Years ended December 31,
|
|||
2018
|
2017
|
||
Statutory federal income tax rate
|
21.0%
|
34.0%
|
|
State income taxes, net of federal tax benefit
|
30.1%
|
(184.7)%
|
|
Effect of foreign operations
|
(2.1)%
|
55.4%
|
|
Change in valuation allowance
|
(43.6)%
|
(2,332.0)%
|
|
Meals and Entertainment
|
10.0%
|
37.9%
|
|
Stock based compensation
|
(6.9)%
|
(81.7)%
|
|
162(m) Limit on compensation
|
0.0%
|
52.2%
|
|
Subpart F Income
|
0.0%
|
3.0%
|
|
Other permanent differences
|
0.4%
|
0.2%
|
|
Uncertain Tax Positions
|
46.3%
|
338.1%
|
|
Change in tax rate
|
(2.8)%
|
618.1%
|
|
Worthless stock deduction
|
0.0%
|
(257.0)%
|
|
Expired stock options
|
50.7%
|
30.2%
|
|
Change in APB 23
|
(4.4)%
|
46.0%
|
|
Prior year reconciling items
|
(2.4)%
|
117.3%
|
|
Expiration of capital Loss
|
49.3%
|
0.0%
|
|
Effective tax rate
|
145.6%
|
(1,523.0)%
|
(in thousands)
|
As of December 31,
|
|||||||
2018
|
2017
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$
|
4,074
|
$
|
5,009
|
||||
Capital loss carryforwards
|
-
|
383
|
||||||
Accruals
|
760
|
487
|
||||||
Reserves
|
479
|
514
|
||||||
Alternative minimum tax credit carryforwards
|
213
|
299
|
||||||
Stock-based compensation expense
|
563
|
1,002
|
||||||
Intangibles
|
674
|
433
|
||||||
Undistributed earnings of foreign subsidiary
|
-
|
-
|
||||||
Other
|
324
|
135
|
||||||
Total deferred tax asset
|
7,087
|
8,262
|
||||||
Valuation allowance
|
(756
|
)
|
(1,095
|
)
|
||||
Total deferred tax asset less valuation allowance
|
6,331
|
7,167
|
||||||
Deferred tax liabilities:
|
||||||||
Undistributed earnings of foreign subsidiary
|
(103
|
)
|
(149
|
)
|
||||
Software development costs
|
(163
|
)
|
(188
|
)
|
||||
Fixed Assets
|
(44
|
)
|
(91
|
)
|
||||
Indefinite-lived intangibles
|
(525
|
)
|
(337
|
)
|
||||
Other
|
(138
|
)
|
(45
|
)
|
||||
Total deferred tax liability
|
(973
|
)
|
(810
|
)
|
||||
Net deferred tax asset
|
$
|
5,358
|
$
|
6,357
|
China
|
Ukraine
|
South Korea
|
U.S.
|
|||||||||||||||||||||||||||||||||
(in thousands)
|
Tax
|
Interest and Penalties
|
Tax
|
Interest and Penalties
|
Tax
|
Interest and Penalties
|
Tax
|
Interest and Penalties
|
Total
|
|||||||||||||||||||||||||||
Balance, January 1, 2017
|
$
|
202
|
$
|
209
|
$
|
89
|
$
|
28
|
$
|
129
|
$
|
8
|
$
|
-
|
-
|
$
|
665
|
|||||||||||||||||||
Increases
|
14
|
53
|
11
|
-
|
212
|
37
|
833
|
-
|
1,160
|
|||||||||||||||||||||||||||
Decreases
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Balance, December 31, 2017
|
$
|
216
|
$
|
262
|
$
|
100
|
$
|
28
|
$
|
341
|
$
|
45
|
$
|
833
|
$
|
-
|
$
|
1,825
|
||||||||||||||||||
Increases
|
-
|
23
|
-
|
44
|
120
|
66
|
163
|
4
|
420
|
|||||||||||||||||||||||||||
Decreases
|
12
|
-
|
18
|
-
|
-
|
-
|
-
|
30
|
||||||||||||||||||||||||||||
Balance, December 31, 2018
|
$
|
204
|
$
|
285
|
$
|
82
|
$
|
72
|
$
|
461
|
$
|
111
|
$
|
996
|
$
|
4
|
$
|
2,215
|
Number
of Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value (in thousands)
|
Weighted
Average
Remaining
Contractual Life
(Years)
|
|||||||||||||
Options outstanding at January 1, 2018
|
1,046,833
|
$
|
3.33
|
|||||||||||||
Options granted
|
-
|
-
|
||||||||||||||
Options exercised
|
(486,500
|
)
|
1.88
|
|||||||||||||
Options forfeited
|
(505,333
|
)
|
4.89
|
|||||||||||||
Options outstanding at December 31, 2018
|
55,000
|
1.87
|
$
|
17
|
2.08
|
|||||||||||
Options expected to vest
|
-
|
-
|
$
|
-
|
-
|
|||||||||||
Options exercisable at December 31, 2018
|
55,000
|
$
|
-
|
$
|
-
|
-
|
Number
of Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value (in thousands)
|
Weighted
Average
Remaining
Contractual Life
(Years)
|
|||||||||||||
Options outstanding at January 1, 2017
|
1,556,833
|
$
|
3.15
|
|||||||||||||
Options granted
|
-
|
-
|
||||||||||||||
Options exercised
|
(320,000
|
)
|
2.05
|
|||||||||||||
Options forfeited
|
(190,000
|
)
|
4.01
|
|||||||||||||
Options outstanding at December 31, 2017
|
1,046,833
|
3.33
|
$
|
928
|
1.28
|
|||||||||||
Options expected to vest
|
24,000
|
1.90
|
$
|
33
|
4.72
|
|||||||||||
Options exercisable at December 31, 2017
|
1,022,833
|
$
|
3.36
|
$
|
895
|
1.20
|
Number of Shares
|
Weighted Average Fair Value
|
|||||||
Nonvested options at January 1, 2018
|
24,000
|
$
|
0.97
|
|||||
Options granted
|
-
|
-
|
||||||
Options forfeited
|
-
|
-
|
||||||
Options vested during the period
|
(24,000
|
)
|
0.97
|
|||||
Nonvested options at December 31, 2018
|
-
|
$
|
-
|
Number of Shares
|
Weighted Average Fair Value
|
|||||||
Nonvested options at January 1, 2017
|
72,000
|
$
|
0.97
|
|||||
Options granted
|
-
|
-
|
||||||
Options forfeited
|
-
|
-
|
||||||
Options vested during the period
|
(48,000
|
)
|
0.97
|
|||||
Nonvested options at December 31, 2017
|
24,000
|
$
|
0.97
|
Number of Shares
|
Weighted Average Fair Value
|
|||||||
Nonvested RSUs at January 1, 2018
|
1,634,663
|
$
|
1.96
|
|||||
RSUs granted
|
428,526
|
3.23
|
||||||
RSUs forfeited
|
(140,997
|
)
|
2.47
|
|||||
RSUs vested
|
(350,667
|
)
|
3.30
|
|||||
Nonvested RSUs at December 31, 2018
|
1,571,525
|
$
|
1.96
|
|||||
Nonvested RSUs at January 1, 2017
|
1,688,480
|
$
|
1.45
|
|||||
RSUs granted
|
644,677
|
3.24
|
||||||
RSUs forfeited
|
(5,500
|
)
|
3.40
|
|||||
RSUs vested
|
(692,994
|
)
|
1.89
|
|||||
Nonvested RSUs at December 31, 2017
|
1,634,663
|
$
|
1.96
|
(in thousands)
|
Gross Future
|
|||
Minimum Lease
|
||||
Payments
|
||||
2019
|
$
|
922
|
||
2020
|
785
|
|||
2021
|
796
|
|||
2022
|
771
|
|||
2023
|
451
|
|||
Thereafter
|
106
|
|||
Total
|
$
|
3,831
|
(in thousands)
|
Years ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Revenue:
|
||||||||
Performance Improvement Solutions
|
$
|
42,954
|
$
|
39,899
|
||||
Nuclear Industry Training and Consulting
|
49,295
|
30,981
|
||||||
$
|
92,249
|
$
|
70,880
|
|||||
Depreciation:
|
||||||||
Performance Improvement Solutions
|
$
|
385
|
$
|
321
|
||||
Nuclear Industry Training and Consulting
|
130
|
21
|
||||||
$
|
515
|
$
|
342
|
|||||
Amortization of definite-lived intangible assets:
|
||||||||
Performance Improvement Solutions
|
$
|
898
|
$
|
246
|
||||
Nuclear Industry Training and Consulting
|
714
|
89
|
||||||
$
|
1,612
|
$
|
335
|
|||||
Operating income
|
||||||||
Performance Improvement Solutions
|
$
|
2,640
|
$
|
(3,191
|
)
|
|||
Nuclear Industry Training and Consulting
|
(1,274
|
)
|
3,420
|
|||||
Operating income
|
$
|
1,366
|
$
|
229
|
||||
Interest (expense) income, net
|
(268
|
)
|
80
|
|||||
(Loss) Gain on derivative instruments, net
|
(350
|
)
|
99
|
|||||
Other income (expense), net
|
29
|
(4
|
)
|
|||||
Income before income taxes
|
$
|
777
|
$
|
404
|
(in thousands)
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Performance Improvement Solutions
|
$
|
40,353
|
$
|
33,434
|
||||
Nuclear Industry Training and Consulting
|
21,087
|
22,748
|
||||||
Intercompany receivable elimination
|
-
|
-
|
||||||
Total assets
|
$
|
61,440
|
$
|
56,182
|
(in thousands)
|
Year ended December 31, 2018
|
|||||||||||||||||||
United States
|
Europe
|
Asia
|
Eliminations
|
Consolidated
|
||||||||||||||||
Revenue
|
$
|
88,979
|
$
|
2,150
|
$
|
1,120
|
$
|
-
|
$
|
92,249
|
||||||||||
Transfers between geographic locations
|
2,046
|
-
|
199
|
(2,245
|
)
|
-
|
||||||||||||||
Total revenue
|
$
|
91,025
|
$
|
2,150
|
$
|
1,319
|
$
|
(2,245
|
)
|
$
|
92,249
|
|||||||||
Operating income (loss)
|
$
|
2,902
|
$
|
(1,116
|
)
|
$
|
(420
|
)
|
$
|
-
|
$
|
1,366
|
||||||||
Total assets, at December 31
|
$
|
171,206
|
$
|
3,893
|
$
|
3,592
|
$
|
(117,251
|
)
|
$
|
61,440
|
|||||||||
(in thousands)
|
Year ended December 31, 2017
|
|||||||||||||||||||
United States
|
Europe
|
Asia
|
Eliminations
|
Consolidated
|
||||||||||||||||
Revenue
|
$
|
66,249
|
$
|
3,196
|
$
|
1,435
|
$
|
-
|
$
|
70,880
|
||||||||||
Transfers between geographic locations
|
1,953
|
-
|
668
|
(2,621
|
)
|
-
|
||||||||||||||
Total revenue
|
$
|
68,202
|
$
|
3,196
|
$
|
2,103
|
$
|
(2,621
|
)
|
$
|
70,880
|
|||||||||
Operating income (loss)
|
$
|
1,930
|
$
|
(1,585
|
)
|
$
|
(116
|
)
|
$
|
-
|
$
|
229
|
||||||||
Total assets, at December 31
|
$
|
148,717
|
$
|
5,057
|
$
|
4,313
|
$
|
(101,905
|
)
|
$
|
56,182
|
|||||||||
December 31, 2018
|
December 31, 2017
|
|||||||
Cash and cash equivalents
|
$
|
12,123
|
$
|
19,111
|
||||
Restricted cash
|
-
|
960
|
||||||
Cash, cash equivalents, and restricted cash
|
$
|
12,123
|
$
|
20,071
|
(in thousands)
|
Year ended December 31,
|
|||||||
2018
|
2017
|
|||||||
Cash paid:
|
||||||||
Interest
|
$
|
278
|
$
|
-
|
||||
Income taxes
|
$
|
187
|
$
|
155
|
||||
ITEM 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
|
ITEM 9A. |
CONTROLS AND PROCEDURES.
|
ITEM 9B. |
OTHER INFORMATION.
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
ITEM 11. |
EXECUTIVE COMPENSATION.
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
|
Plan Category
|
Number of Securities to
be Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(a)
|
Weighted Average Exercise Price of
Outstanding Options, Warrants and Rights
(b)
|
Number of Securities Remaining
Available for Future Issuance Under Equity Compensation Plans
(Excluding Securities Reflected in Column (a))
(c)
|
||||||||||
Equity compensation plans approved by security holders
|
Options
|
55,000
|
$
|
1.87
|
|||||||||
RSUs
|
1,316,525
|
$
|
1.96
|
||||||||||
1,371,525
|
$
|
1.96
|
2,247,848
|
||||||||||
Equity compensation plans not approved by security holders
|
--
|
$
|
--
|
--
|
|||||||||
Total
|
1,371,525
|
$
|
1.96
|
2,247,848
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
|
ITEM 14. |
PRINCIPAL ACCOUNTING FEES AND SERVICES.
|
ITEM 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
GSE Systems, Inc. and Subsidiaries
|
Report of Independent Registered Public Accounting Firm
|
Consolidated Balance Sheets as of December 31, 2018 and 2017
|
Consolidated Statements of Operations for the years ended December 31, 2018 and 2017
|
Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2018 and 2017
|
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2018 and 2017
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017
|
Notes to Consolidated Financial Statements
|
ITEM 16. |
FORM 10-K SUMMARY.
|
Exhibit
|
Description of Exhibits
|
|
|
2.
|
Plan of acquisition, reorganization, arrangement, liquidation, or succession
|
|
|
Membership Interests Purchase Agreement, dated as of November 14, 2014, by and between Dale Jennings, Paul Abbott, Shawn McKeever
and Mickey Ellis and GSE Performance Solutions, Inc. Incorporated herein by reference to Exhibit 2.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on November 17, 2014.
|
|
Amendment to Membership Interests Purchase Agreement, dated as of May 13, 2015. Incorporated herein by reference to Exhibit 10.2
of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on May 14, 2015.
|
|
Stock Purchase Agreement, dated as of September 20, 2017, by and among GSE Systems, Inc., through its wholly owned subsidiary GSE
Performance Solutions, Inc., Richard and Cynthia Linton (and certain trusts owned thereby) and Absolute Consulting, Inc. Incorporated herein by reference to Exhibit 2.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange
Commission on September 20, 2017.
|
|
|
Membership Interest Purchase Agreement, dated as of May 11, 2018, between True North Consulting LLC, Donald R. Horn, Jenny C. Horn,
GSE Performance Solutions, Inc., and Donald R. Horn in his capacity as Seller Representative. Incorporated herein by reference to Exhibit 2.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on May 14, 2018.
|
Membership Interest Purchase Agreement, dated as of February 15, 2019, between DP Engineering Co. Ltd., Steven L. Pellerin,
Christopher A. Davenport, GSE Performance Solutions, Inc., and Steven L. Pellerin in his capacity as Seller Representative. Incorporated herein by reference to Exhibit 2.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange
Commission on February 19, 2019.
|
|
3.
|
Articles of Incorporation and Bylaws
|
Restatement of Certificate of
Incorporation dated November 14, 2016. Incorporated herein by reference to Exhibit 3.1 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on November 14, 2016.
|
|
Certificate of the Elimination of the
Series A Cumulative Convertible Preferred Stock dated November 14, 2016. Incorporated herein by reference to Exhibit 3.2 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on November 14, 2016.
|
|
Amendment to the Certificate of Incorporation of GSE Systems, Inc. Incorporated herein by reference to Exhibit 3.1 of GSE Systems,
Inc. Form 8-K filed with the Securities and Exchange Commission on June 15, 2018.
|
|
Third Amended and Restated Bylaws of GSE Systems, Inc. Incorporated herein by reference to Exhibit 3.2 of GSE Systems, Inc. Form
8-K filed with the Securities and Exchange Commission on September 16, 2016.
|
|
First Amendment to the Third Amended and Restated Bylaws of GSE Systems, Inc. Incorporated herein by reference to Exhibit 3.2 of
GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on June 15, 2018.
|
10.
|
Material Contracts
|
Office Lease Agreement between 1332 Londontown, LLC and GSE Systems, Inc. (dated as of February 27, 2008). Incorporated herein by
reference to Exhibit 10.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on March 11, 2008.
|
|
Amendment of Lease to Office Lease
Agreement, dated May 28, 2008. Incorporated herein by reference to Exhibit 10.20 of GSE Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 19, 2015.
|
|
Second Amendment of Lease to Office Lease
Agreement, dated July 22, 2010. Incorporated herein by reference to Exhibit 10.21 of GSE Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 19, 2015.
|
|
Third Amendment of Lease to Office Lease
Agreement, dated May 15, 2012. Incorporated herein by reference to Exhibit 10.22 of GSE Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 19, 2015.
|
|
Fourth Amendment of Lease to Office Lease
Agreement, dated April 15, 2014. Incorporated herein by reference to Exhibit 10.1 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on May 15, 2014.
|
|
GSE Systems, Inc.
1995 Long-Term Incentive Plan, amended and restated, dated as of March 6, 2014. Incorporated herein by reference to Exhibit A of GSE Systems, Inc. Form DEF 14A filed with the Securities and Exchange Commission on April 29, 2014. *
|
|
Form of Option Agreement Under the GSE
Systems, Inc. 1995 Long-Term Incentive Plan. Incorporated herein by reference to GSE Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 31, 1997. *
|
|
Form of Restricted Share Unit Agreement
pursuant to the GSE Systems, Inc. 1995 Long-Term Incentive Plan, as amended and restated, dated as of April 22, 2016. Incorporated herein by reference to Exhibit 10.2 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange
Commission on November 14, 2016.*
|
|
Form of Amendment to
Restricted Share Unit Agreement, dated July 1, 2016. Incorporated herein by reference to Exhibit 99.8 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 1, 2016. *
|
|
Employment
Agreement, dated July 1, 2016, between GSE Systems, Inc. and Emmett A. Pepe. Incorporated herein by reference to Exhibit 99.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 5, 2016. *
|
|
Amendment to Employment Agreement between
Emmett Pepe and GSE Systems, Inc. dated as of June 12, 2017. Incorporated herein by reference to Exhibit 99.4 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on June 16, 2017.*
|
|
Amendment No. 2 to Employment Agreement
between GSE Systems, Inc. and Emmett Pepe, dated as of January 11, 2019. Incorporated herein by reference to Exhibit 99.3 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on January 11, 2019.*
|
|
Employment Agreement between Christopher
D. Sorrells and GSE Systems, Inc. dated as of August 15, 2016. Incorporated herein by reference to Exhibit 10.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on August 19, 2016. *
|
|
Amendment to Employment Agreement between
Christopher D. Sorrells and GSE Systems, Inc. dated as of June 12, 2017. Incorporated herein by reference to Exhibit 99.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on June 16, 2017.*
|
|
Amendment No. 2 to Employment Agreement
between GSE Systems, Inc. and Christopher D. Sorrells, dated as of January 11, 2019. Incorporated herein by reference to Exhibit 99.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on January 11, 2019.*
|
|
|
Employment Agreement between Bahram
Meyssami and GSE Systems, Inc. dated as of December 1, 2015. Incorporated herein by reference to Exhibit 10.1 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on May 15, 2017.*
|
Amendment to Employment Agreement between
Bahram Meyssami and GSE Systems, Inc. dated as of June 12, 2017. Incorporated herein by reference to Exhibit 99.3 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on June 16, 2017.*
|
|
Employment Agreement between Kyle J. Loudermilk and GSE Systems, Inc., dated as of July 1, 2015. Incorporated herein by reference
to Exhibit 10.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 31, 2015. *
|
|
Amendment to Employment Agreement between Kyle J. Loudermilk and GSE Systems, Inc., dated as of June 12, 2017. Incorporated herein
by reference to Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 1, 2016.*
|
|
|
Amendment No. 2 to Employment Agreement between Kyle Loudermilk and GSE Systems, Inc. dated as of June 12, 2017. Incorporated
herein by reference to Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on June 16, 2017.*
|
Amendment No. 3 to Employment Agreement, dated January 11, 2019, between GSE Systems, Inc. and Kyle J. Loudermilk. Incorporated
herein by reference to Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on January 11, 2019.*
|
|
Restricted Share Unit Agreement between Kyle J. Loudermilk and GSE Systems, Inc., dated as of July 1, 2015. Incorporated herein by
reference to Exhibit 10.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 31, 2015.*
|
|
|
Amendment to Restricted Share Unit Agreement between Kyle J. Loudermilk and GSE Systems, Inc., dated as of July 1, 2016.
Incorporated herein by reference to Exhibit 99.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 1, 2016.*
|
Restricted Share Unit Agreement (Cash Award) between Kyle J. Loudermilk and GSE Systems, Inc., dated as of July 1, 2016.
Incorporated herein by reference to Exhibit 99.3 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 1, 2016.*
|
|
Restricted Share Unit Agreement (Common Stock Award) between Kyle J. Loudermilk and GSE Systems, Inc., dated as of July 1, 2016.
Incorporated herein by reference to Exhibit 99.4 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 1, 2016.*
|
|
Restricted Share Unit Agreement between Emmett A. Pepe and GSE Systems, Inc., dated as of July 1, 2016. Incorporated herein by
reference to Exhibit 99.3 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on July 5, 2016.*
|
|
Restricted Share Unit Agreement between Christopher D. Sorrells and GSE Systems, Inc., dated as of August 15, 2016. Incorporated
herein by reference to Exhibit 10.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on August 19, 2016.*
|
|
Restricted Share Unit Agreement between Christopher D. Sorrells and GSE Systems, Inc., dated as of August 15, 2016. Incorporated
herein by reference to Exhibit 10.3 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on August 19, 2016.*
|
|
Restricted Share Unit Agreement (Cash Award) between Christopher D. Sorrells and GSE Systems, Inc., dated as of August 15, 2016.
Incorporated herein by reference to Exhibit 10.4 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on August 19, 2016.*
|
|
Restricted Share Unit Agreement between Bahram Meyssami and GSE Systems, Inc. dated as of December 1, 2015. Incorporated herein by
reference to Exhibit 10.2 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on May 15, 2017.*
|
|
Amendment to Restricted Share Unit Agreement between Bahram Meyssami and GSE Systems, Inc. dated as of July 1, 2016. Incorporated
herein by reference to Exhibit 10.3 of GSE Systems, Inc. Form 10-Q filed with the Securities and Exchange Commission on May 15, 2017.*
|
|
Credit and Security Agreement, by and between Citizens Bank, National Association, GSE Systems, Inc. and GSE Performance Solutions,
Inc., dated December 29, 2016. Incorporated herein by reference to Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on January 4, 2017.
|
|
Amended and Restated Credit and Security Agreement, dated as of May 11, 2018, by and among Citizens Bank, National Association, as
Bank, and GSE Systems, Inc. and GSE Performance Solutions, Inc., as Borrower. Incorporated herein by reference to Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on May 14, 2018.
|
|
Amendment and Reaffirmation Agreement, dated February 22, 2017, and effective as of December 29, 2016. Incorporated herein by
reference to Exhibit 10.36 of GSE Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 28, 2017.
|
|
Second Amendment and Reaffirmation Agreement dated as of May 25, 2018. Filed herewith.
|
|
Third Amendment and Reaffirmation Agreement dated as of February 15, 2019, by and among GSE Systems, Inc. and GSE Performance
Solutions, Inc., as Borrowers, GSE True North Consulting, LLC, Hyperspring, LLC, Absolute Consulting, Inc. and DP Engineering Ltd. Co., as Guarantors, and Citizens Bank, National Association, as Bank. Incorporated herein by reference to
Exhibit 99.1 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on February 19, 2019.
|
|
Sixth Comprehensive Amendment to Financing Documents, dated as of December 29, 2016, by and between BB&T, as Bank, and GSE
Systems, Inc. and GSE Performance Solutions, Inc., as Borrower. Incorporated herein by reference to Exhibit 99.2 of GSE Systems, Inc. Form 8-K filed with the Securities and Exchange Commission on January 4, 2017.
|
|
Form of Indemnification Agreement. Filed herewith.
|
14
|
Code of Ethics
|
Code of Ethics for the Principal Executive Officer and Senior Financial Officers. Previously filed in connection with the GSE
Systems, Inc. Form 10-K filed with the Securities and Exchange Commission on March 31, 2006 and incorporated herein by reference.
|
|
21
|
Subsidiaries.
|
List of Subsidiaries of Registrant at December 31, 2018, filed herewith.
|
|
23
|
Consent of Independent Registered Public Accounting Firm
|
|
Consent of BDO USA, LLP, filed herewith.
|
24
|
Power of Attorney
|
Power of Attorney for Directors' and Officers' Signatures on SEC Form 10-K, filed herewith.
|
|
31
|
Certifications
|
Certification of Chief Executive Officer of the Company pursuant to Securities and Exchange Act Rule 13d-14(a)/15(d-14(a), as
adopted pursuant to Section 302 and 404 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
Certification of Chief Financial Officer of the Company pursuant to Securities and Exchange Act Rule 13d-14(a)/15(d-14(a), as
adopted pursuant to Section 302 and 404 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|
32
|
Section 1350 Certifications
|
Certification of Chief Executive Officer and Chief Financial Officer of the Company pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, file herewith.
|
|
|
* Management contracts or compensatory plans required to be filed as exhibits pursuant to Item 15(b) of this report.
|
GSE Systems, Inc.
|
||
By: / s
/ Kyle J. Loudermilk
|
||
Kyle J. Loudermilk
|
||
Chief Executive Officer
|
Date: March 27, 2019
|
/s / KYLE J. LOUDERMILK
|
||
Kyle J. Loudermilk, Chief Executive Officer
|
|||
(Principal Executive Officer)
|
Date: March 27, 2019
|
/ s / EMMETT A. PEPE
|
||
Emmett A. Pepe, Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
Date: March 27, 2019
|
/ s / CHRIS SORRELLS
|
||
Chris Sorrells, Chief Operating Officer
|
Date: March 27, 2019
|
(John D. Fuller, Chairman of the Board
|
)
|
By:
|
/ s / EMMETT A. PEPE
|
|
(Jim Stanker, Chairman of the Audit Committee
|
)
|
Emmett A. Pepe
|
|||
(Suresh Sundaram, Director
|
)
|
Attorney-in-Fact
|
|||
(J. Barnie Beasley, Director
|
)
|
||||