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TSR Inc. says costs of shareholder lawsuits, proxy battle led to wider loss

TSR Inc. in Hauppauge on Friday reported a

TSR Inc. in Hauppauge on Friday reported a wider third quarter loss as the provider of computer staffing and consulting services faces a dispute with major shareholders. Credit: Newsday/Steve Pfost

TSR Inc., a provider of computer staffing and consulting services, Friday reported a wider third quarter loss, citing costs associated with shareholder lawsuits and a proxy battle.

The Hauppauge company's shares closed Friday at $4.93, down more than 6 percent. Twelve months ago the stock was trading at $6.55.

In the quarter ended Feb. 28 revenue declined 1.8 percent to $14.8 million from the year-earlier period. The net loss attributable to TSR expanded to $676,000, or 34 cents per share, from $19,000, or a penny per share, in the prior year's quarter.

"A significant increase in professional and advisory fees in connection with various stockholder lawsuits and our on-going contested proxy solicitation" led to a $723,000 increase in selling, general and administrative expenses, chief executive Christopher Hughes said in a statement.

Contacted by phone, Hughes said he was unable to comment further on a range of issues, including whether a new date had been chosen for the company's annual meeting, which was postponed in November.

In July TSR founder and former chief executive Joseph F. Hughes, and his wife, Winifred M. Hughes, sold their 41.8 percent stake in the company to three institutional buyers, Manhattan-based Zeff Capital LP, Fintech Consulting LLC of Iselin, New Jersey,  and QAR Industries Inc. of Mineral Wells, Texas.

Before that sale, the couple had called on the board of TSR, chaired by their son, Christopher Hughes, to sell the company.

In October, Zeff issued a proxy challenge to replace two incumbent directors with dissident candidates and roll back an anti-takeover measure — also known as a poison pill — the company announced in August.  

In Novemer TSR rejected as "inadequate" a bid by QAR to acquire the company for $6.25 per share.

The lawsuits include one filed by Fintech in November, charging that TSR's board of directors breached its fiduciary duties by approving the poison pill and one filed by TSR in December charging that Zeff, Fintech and QAR failed to disclose they were working in concert to seize control of TSR. 

In December TSR's board announced it had hired Manhattan-based investment bank CoView Capital Inc. as part of a plan to pursue a "strategic acquisition" to maximize shareholder value.

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