x
|
Annual report pursuant to
section 13 or 15(d) of the Securities Exchange Act of 1934.
|
o
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
|
Delaware
|
20-0101495
|
|
(State
or other jurisdiction
of
incorporation or organization)
|
(IRS
Employer
Identification
number)
|
|
100
Eagle Rock Avenue, East Hanover, NJ
|
07936
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
Non-accelerated filer ¨
|
Smaller reporting
company x
|
PART
I
|
3
|
|
Item
1.
|
Business
|
3
|
Item
1A.
|
Risk
Factors
|
12
|
Item
1B.
|
Unresolved
Staff Comments
|
22
|
Item
2.
|
Properties
|
22
|
Item
3.
|
Legal
Proceedings
|
23
|
PART
II
|
23
|
|
Item
5.
|
Market
For Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
23
|
Item
6.
|
Selected
Financial Data
|
23
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
24
|
Item 7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
32
|
Item
8.
|
Financial
Statements and Supplementary Data
|
32
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
32
|
Item 9A.
|
Controls
and Procedures
|
33
|
Item 9B.
|
Other
Information
|
34
|
PART
III
|
34
|
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
34
|
Item
11.
|
Executive
Compensation
|
38
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
41
|
Item
13.
|
Certain
Relationships and Related Transactions
|
42
|
Item
14.
|
Principal
Accounting Fees and Services
|
42
|
PART
IV
|
43
|
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
43
|
|
·
|
role
as a full life-cycle solution
provider;
|
|
·
|
ability
to provide strategic guidance and ensure that business requirements are
properly supported by technology;
|
|
·
|
ability
to provide solutions that integrate people, improve process and integrate
technologies;
|
|
·
|
full
range of service offerings relating to data warehousing, business
intelligence, strategy and data
quality;
|
|
·
|
perspective
regarding the accuracy of data and our data purification
process;
|
|
·
|
best
practices methodology, process and
procedures;
|
|
·
|
experience
in architecting, recommending and implementing large and complex data
warehousing and business intelligence
solutions;
|
|
·
|
understanding
of data management solutions;
|
|
·
|
ability
to consolidate inefficient environments into robust, scalable, reliable
and manageable enterprise
solutions;
|
|
·
|
end-to-end
process review and design capabilities;
and
|
|
·
|
significant
large-scale merger experience, from both the operational and strategic
perspectives, in the Financial Services
Industry.
|
|
·
|
enhance
our brand and mindshare;
|
|
·
|
continue
growth both organically and via
acquisition;
|
|
·
|
increase
our geographic coverage;
|
|
·
|
expand
our client relationships;
|
|
·
|
introduce
new and creative service offerings;
and
|
|
·
|
leverage
our strategic alliances.
|
|
·
|
Change
Management Consulting - Assist clients with implementing project
management governance and best practices for large scale change
initiatives, including consolidations, conversions, integration of new
business processes and systems
applications.
|
|
·
|
Integration
Management, Mergers and Acquisitions - Work with clients to implement best
practices for mergers and acquisitions. Support all aspects of the
integration process from initial assessment through implementation
support.
|
|
·
|
Acquisition
Readiness - Work with clients to better prepare them for large scale
acquisitions in the financial services domain. This includes building best
practices, mapping and gapping and implementing a strategic roadmap to
integrate multiple companies.
|
|
·
|
Process
Improvement (Lean, Six Sigma) - Provide a full array of products and
services in support of Lean and Six Sigma, including training, process
improvement, project management and implementation
support.
|
|
·
|
Regulatory
Compliance (The Health Insurance Portability and Accountability Act of
1996, Basel II) - Work with clients to analyze, design and implement
operational control, procedures and business intelligence that will align
the organization to meet new regulatory
requirements.
|
|
·
|
Project
Management (PMO) - Setting up an internal office at a client location,
staffed with senior/certified project managers that act in accordance with
the policies and procedures identified in CSI Best Practices for Project
Management.
|
|
·
|
Request
For Proposal Creation and Responses - Gather user and technical
requirements and develop Requests For Proposals (RFP) on behalf of our
clients. Respond to client RFPs with detailed project plans, solutions and
cost.
|
|
·
|
Data
Warehousing and Business Intelligence Strategic Planning - Helping clients
develop a strategic roadmap to align with a data warehouse or business
intelligence implementation. These engagements are focused on six
strategic domains that have been identified and documented by CSI:
Business Case, Program Formulation, Organizational Design, Program
Methodologies, Architecture and Operations and
Servicing.
|
|
·
|
Information
Management Strategy & Roadmap – Helping clients develop a roadmap to
leverage and integrate enterprise information. The solution can support a
business intelligence/data warehouse solution, rationalization of a
complex environment, sunsetting of old applications and migration to new
applications.
|
|
·
|
Information
Management Software Selection – Evaluation, analysis and recommendation of
appropriate software tools for deploying business
intelligence/data warehousing solutions. Gather business and technical
requirements and measure those requirements against the capabilities of
available tools in the current marketplace. Software evaluated and
recommended include reporting, ad-hoc query, analytics, extract, transform
and load processes (ETL), data profiling, database and data
modeling.
|
|
·
|
Business
Intelligence, Architecture and Implementation - Develop architecture plans
and install all tools required to implement a business intelligence
solution, including enterprise reporting, ad-hoc reporting, analytical
views and data mining. Solutions are typically developed using tools such
as Cognos, Business Objects, MicroStrategy, SAS and Crystal
Reports.
|
|
·
|
Business
Intelligence Competency Center - Set up an internal office at a client
location, staffed with a mix of senior business intelligence developers
and business intelligence architects that will implement best practices,
policies, procedures, standards and provide training and mentoring to
further increase the use of the data warehouse and facilitate the business
owners embracing of the business intelligence
solution.
|
|
·
|
Analytics
and Dashboards - Identify and document dashboard requirements. These
requirements are typically driven by Key Performance Indicators (KPIs)
identified by upper management. Architect a supporting database structure
to support the identified hierarchies, drill-downs and slice and dice
requirements, implement a dashboard tool, provide training and
education.
|
|
·
|
Business
Performance Management - Leveraging a new or existing business
intelligence implementation to monitor and manage both business process
and IT events through key performance
indicators.
|
|
·
|
Data
Mining - Implementing data mining tools that extract implicit, previously
unknown, and potentially useful information from data. These tools
typically use statistical and visualization techniques to discover and
present knowledge in a form which is easily comprehensible. Business
intelligence tools will answer questions based on information that has
already been captured (history). Data mining tools will discover
information and project information based on historic
information.
|
|
·
|
Proof
of Concepts and Prototypes - Gather requirements, design and implement a
small scale business intelligence implementation called a Proof of
Concept. The Proof of Concept will validate the technology and/or business
case, as well as “sell” the concept of business intelligence to
management.
|
|
·
|
Outsourcing
- Development of new reports offsite and redeployment of reports in new
technologies in support of technology
consolidation.
|
|
·
|
Training
and Education - Provide formal classroom training for Business Objects
software products. Provide training in data warehousing and business
intelligence methodologies and best practices, as well as technology tool
training, including business intelligence tools such as Cognos and
MicroStrategy.
|
|
·
|
Data
Warehousing and Data Mart Design, Development and Implementation - Design,
development and implementation of custom data warehouse solutions. These
solutions are based on our methodology and best practices which include
six sigma type tools used in the requirements gathering and warehouse
building process.
|
|
·
|
Proof
of Concepts and Prototypes - Gather requirements, design and implement a
small scale data warehouse that is called a Proof of Concept. The Proof of
Concept will validate the technology and/or business case, as well as
“sell” the concept of data warehousing to
management.
|
|
·
|
Extract,
Transformation and Loading (ETL) - Design, development and implementation
of data integration solutions with particular expertise and best practices
for integrating ETL tools with other data warehouse
tools.
|
|
·
|
Outsourcing
- Implementing and supporting a client data warehouse solution at a CSI
location.
|
|
·
|
Enterprise
Information Architecture - Leveraging our Information, Process and
Infrastructure (IPI) Diagrams to create a “snapshot” of the current
information flow and desired information flow throughout the
enterprise.
|
|
·
|
Data
Quality Center of Excellence - Set up an internal office at a client
location, staffed with a mix of senior data quality developers and data
quality architects that will implement best practices, policies,
procedures, standards and provide training and mentoring to further
increase the level of data quality throughout the enterprise and increase
the awareness and importance of data quality as it pertains to decision
making.
|
|
·
|
Data
Quality/Cleansing/Profiling - Leveraging profiling as an automated data
analysis process that significantly accelerates the data analysis process.
Leveraging our best practices to identify data quality concerns and
provide rules to cleanse and purify the
information.
|
|
·
|
Data
Migrations and Conversions - Design, development and implementation of
custom data migrations. These solutions are based on our methodology and
best practices.
|
|
·
|
Application
Development - Custom application development or integration to support
data management or data warehouse initiatives. This may include
modification of existing enterprise applications to capture additional
information required in the warehouse or may be a standalone application
developed to facilitate improved integration of existing
information.
|
|
·
|
Infrastructure
Management and Support - An infrastructure must be in place to support any
data warehouse or data management initiative. This may include servers,
cables, disaster recovery or any process and procedure needed to support
these types of initiatives.
|
|
·
|
Advertising and
Sponsorships: Through advertising and sponsorship programs within
the leading industry publications, we obtain new business leads and
further increase our brand awareness. Throughout the year, we sponsor
publications and newsletters published by DM Review, The Business
Intelligence Network, The Data Warehousing Institute and iSix Sigma. Most
of these sponsorships include web banner advertising and registration
vehicles to promote CSI white papers and best practices
research.
|
|
·
|
Web Site Promotion: Our
website (www.csiwhq.com) provides a comprehensive view of our service
offerings and promotes our subject matter expertise via white papers,
articles and industry presentations. We are currently promoting our
website through internet search engine advertising, direct marketing and
through reciprocity from partner
sites.
|
|
·
|
Trade Show and Conference
Participation: Our participation in trade shows and conferences has
helped our position within our industry. There are a number of trade shows
and conferences within our target industry that provide significant
exposure to prospective customers, business and trade media and industry
analysts, as well as collaborative networking with technology partners. As
with most trade show events, the higher the level of sponsorship, the
greater exposure and benefits received, such as the location of our booth,
banner and advertising space, and position on the conference
agenda.
|
|
·
|
Web Seminars:
Participation in web seminars provides exposure to new sales prospects and
affords us the opportunity to demonstrate our subject matter expertise. We
plan to perform approximately 15 web seminars in
2010.
|
|
·
|
Thought Leadership: We
continually demonstrate our thought leadership by writing and promoting
our white papers via our web site and through direct mail. CSI Deleeuw is
the sponsor of the Financial Services ISixSigma portal and monthly
articles by our consultants are published in the iSix Sigma financial
services channel. We intend to continue all our publishing activities,
including blogs, by-line articles and expert web channels where our
experts respond to end-user
questions.
|
|
·
|
Sponsorships of Vendor
Marketing Activities: We expect that joint marketing
activities with leading software vendors should also stimulate new
business prospect generation. This participation also enhances the
market perception of CSI as experts in individual product areas by
co-sponsoring and participating in vendor marketing activities. We are
invited to write white papers and articles for vendors such as Microsoft,
Business Objects and SAP as well as new product launch seminars with
Business Objects.
|
|
·
|
Expanded Direct Sales
Activities: We are continually updating and increasing our direct
contact programs for lead generation, cross selling and up-selling. We
conduct direct sales activities, such as email and direct mail campaigns,
telemarketing, networking and attending partnership functions to generate
leads for direct sales opportunities. In addition, we have developed a
number of best practices service offerings which encompass selection,
deployment, implementation, maintenance and knowledge transfer. In some
cases, these service offerings include methodologies and best practices
for integrating several vendor technology platforms resulting in cross
selling and up selling opportunities when
applicable.
|
|
·
|
Vendor Relations: We
are continually identifying key vendor relationships. With the ability to
leverage our 20 year history, we intend to continue to forge and maintain
relationships with technical, service and industry vendors. We have
solidified and continue to develop strategic relationships with technology
vendors in the data warehousing and business intelligence arena. These
relationships designate our status as a systems integration and/or
reseller which authorizes us to provide consulting services and to resell
select vendor software. We employ certified consultants in our vendor
partner technology platforms. We maintain vendor independence by
consistently evaluating the respective vendors’ technologies in our lab
located at our headquarters in East Hanover, New Jersey. We
regularly attend vendor partnership events, including partner summits and
user group meetings, in support of our partnership programs. We currently
maintain relationships with the
following:
|
SAP
|
We
are an SAP partner focusing on Business Objects
integration.
|
|
Database
Vendors:
|
||
Oracle
|
We
are part of the Oracle Partner Program (OPP) as a Certified Solution
Provider (CSP). We also employ certified Oracle professionals and our
partnership allows us to utilize Oracle support channels for technical
advisement.
|
|
Microsoft
|
We
are a Gold Microsoft Certified Solution Provider. We maintain the required
number of Microsoft certified professionals to hold this
designation.
|
|
Business
Intelligence Vendors:
|
||
SAP
|
We
are a partner focusing on integration of the Business Objects suite of
products. We employ and maintain a staff of professionals that are
certified in the vendor’s technology.
|
|
Oracle
|
We
are a Systems Integration and Reseller Partner. We employ and maintain a
staff of professionals that are certified in the vendor’s
technology.
|
|
Cognos
|
We
are a Systems Integration and Reseller Partner. We employ and maintain a
staff of professionals that are certified in the vendor’s
technology.
|
|
Informatica
|
We
are a Systems Integration and Reseller
Partner.
|
|
·
|
Accenture
|
|
·
|
Cap
Gemini Ernst & Young
|
|
·
|
IBM
Global Services
|
|
·
|
Fujitsu
|
|
·
|
Bearing
Point
|
|
·
|
Answerthink
|
|
·
|
Hitachi
Consulting
|
|
·
|
Hewlett
Packard
|
|
·
|
Business
Edge
|
|
·
|
our ability to finance our
operations on acceptable terms, either through the raising of capital, the
incurrence of convertible or other indebtedness or through strategic
financing partnerships;
|
|
·
|
our ability to retain members
of our management team and our
employees;
|
|
·
|
our ability to retain existing
clients or attract new
clients;
|
|
·
|
our ability to adapt to the
rapid technological change constantly occurring in the areas in which we
provide services;
|
|
·
|
our ability to offer pricing
for services which is acceptable to
clients;
|
|
·
|
our ability to pay our
debts;
|
|
·
|
the competition that may arise
in the future; and
|
|
·
|
identifying suitable
acquisition candidates and integrating new
acquisitions.
|
|
·
|
obtain
additional contracts for projects similar in scope to those previously
obtained from our clients;
|
|
·
|
be
able to retain existing clients or attract new
clients;
|
|
·
|
provide
services in a manner acceptable to
clients;
|
|
·
|
offer
pricing for services which is acceptable to clients;
or
|
|
·
|
broaden
our client base so that we will not remain largely dependent upon a
limited number of clients that will continue to account for a substantial
portion of our revenues.
|
|
·
|
A
portion of our cash flow must be used to pay interest on our indebtedness,
and therefore is not available for use in our
business;
|
|
·
|
Our
indebtedness increases our vulnerability to changes in general economic
and industry conditions;
|
|
·
|
Our
ability to obtain additional financing for working capital, capital
expenditures, general corporate purposes or other purposes could be
impaired;
|
|
·
|
Our
failure to comply with restrictions contained in the terms of our
borrowings could lead to a default which could cause all or a significant
portion of our debt to become immediately payable;
and
|
|
·
|
If
we default, the loans will become due and we may not have the funds to
repay the loans, and we could discontinue our business and investors could
lose all their money.
|
|
·
|
failure
to pay interest, principal payments or other fees when
due;
|
|
·
|
failure
to maintain a minimum of $400,000 of working
capital;
|
|
·
|
failure
to pay taxes when due unless such taxes are being contested in good
faith;
|
|
·
|
breach
by us of any material covenant or term or condition of the notes or any
agreements made in connection
therewith;
|
|
·
|
default
on any indebtedness to which we or our subsidiaries are a party which has
a material adverse effect;
|
|
·
|
breach
by us of any material representation or warranty made in the notes or in
any agreements made in connection
therewith;
|
|
·
|
attachment
is made or levy upon collateral securing the Access Capital debt which is
valued at more than $25,000 and is not timely
mitigated;
|
|
·
|
any
lien created under the notes and agreements is not valid and perfected
having a first priority interest;
|
|
·
|
assignment
for the benefit of our creditors, or a receiver or trustee is appointed
for us;
|
|
·
|
bankruptcy
or insolvency proceeding instituted by or against us and not dismissed
within 45 days;
|
|
·
|
the
inability to pay debts as they become due or cease business
operations;
|
|
·
|
sale,
assignment, transfer or conveyance of any assets except as
permitted;
|
|
·
|
a
person or group becomes a beneficial owner of 20% on a fully diluted basis
of the outstanding voting equity interest or the present directors cease
to be the majority on the Board of
Directors;
|
|
·
|
indictment
or threatened criminal indictment, or commencement of threatened
commencement of any criminal or civil proceeding against us or any
executive officer; and
|
|
·
|
take
any action which would be prohibited under the provisions of any
subordination agreement or make any payment on subordinated debt that any
person was not entitled to receive under the provisions of the applicable
subordination agreement.
|
|
·
|
our
clients' perceptions of our ability to add value through our
services;
|
|
·
|
pricing
policies of our competitors;
|
|
·
|
our
ability to accurately estimate, attain and sustain engagement revenues,
margins and cash flows over increasingly longer contract
periods;
|
|
·
|
the
use of globally sourced, lower-cost service delivery capabilities by our
competitors and our clients; and
|
|
·
|
general
economic and political conditions.
|
|
·
|
engage
in more extensive research and
development;
|
|
·
|
undertake
more extensive marketing campaigns;
|
|
·
|
adopt
more aggressive pricing policies;
and
|
|
·
|
make
more attractive offers to our existing and potential employees and
strategic partners.
|
|
·
|
the
extent to which our solutions and services achieve market
acceptance;
|
|
·
|
the
level of revenues from current and future solutions and
services;
|
|
·
|
the
expansion of operations;
|
|
·
|
the
costs and timing of product and service developments and sales and
marketing activities;
|
|
·
|
the
costs related to acquisitions of technology or businesses;
and
|
|
·
|
competitive
developments.
|
|
·
|
delay
or prevent a change in the control;
|
|
·
|
impede
a merger, consolidation, takeover or other transaction involving us;
or
|
|
·
|
discourage
a potential acquirer from making a tender offer or otherwise attempting to
obtain control of us.
|
|
·
|
a
substantial portion of our available cash could be used to consummate the
acquisitions and/or we could incur or assume significant amounts of
indebtedness;
|
|
·
|
losses
resulting from the on-going operations of these acquisitions could
adversely affect our cash flow; and
|
|
·
|
our
stockholders could suffer significant dilution of their interest in our
common stock.
|
|
·
|
Control
of the market for the security by one or a few broker-dealers that are
often related to the promoter or
issuer;
|
|
·
|
Manipulation
of prices through prearranged matching of purchases and sales and false
and misleading press releases;
|
|
·
|
"Boiler
room" practices involving high pressure sales tactics and unrealistic
price projections by inexperienced sales
persons;
|
|
·
|
Excessive
and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
|
|
·
|
The
wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the
inevitable collapse of those prices with consequent investor
losses.
|
|
·
|
quarterly
variations in operating results and achievement of key business
metrics;
|
|
·
|
changes
in earnings estimates by securities analysts, if
any;
|
|
·
|
any
differences between reported results and securities analysts' published or
unpublished expectations;
|
|
·
|
announcements
of new contracts or service offerings by us or our
competitors;
|
|
·
|
market
reaction to any acquisitions, divestitures, joint ventures or strategic
investments announced by us or our
competitors;
|
|
·
|
demand
for our services and products;
|
|
·
|
shares
being sold pursuant to Rule 144 or upon exercise of warrants;
and
|
|
·
|
general
economic or stock market conditions unrelated to our operating
performance.
|
High
|
Low
|
|||||||
2009
by Quarter
|
||||||||
January
1 - March 31
|
$
|
0.06
|
0.01
|
|||||
April
1 - June 30
|
$
|
0.07
|
0.03
|
|||||
July
1 - September 30
|
$
|
0.06
|
0.03
|
|||||
October
1 - December 31
|
$
|
0.06
|
0.02
|
|||||
2008
by Quarter
|
||||||||
January
1 - March 31
|
$
|
0.19
|
0.10
|
|||||
April
1 - June 30
|
$
|
0.14
|
0.07
|
|||||
July
1 - September 30
|
$
|
0.10
|
0.03
|
|||||
October
1 - December 31
|
$
|
0.07
|
0.01
|
For the year ended December 31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
$
|
% of total
revenues
|
$
|
% of total
revenues
|
|||||||||||||
Strategic
consulting
|
$ | 9,143,320 | 37.8 | % | $ | 5,332,784 | 27.0 | % | ||||||||
Business
intelligence and data warehousing
|
11,576,737 | 47.8 | % | 11,076,398 | 56.1 | % | ||||||||||
Data
management
|
2,095,983 | 8.7 | % | 2,340,657 | 11.9 | % | ||||||||||
Reimbursable
expenses
|
1,184,738 | 4.9 | % | 719,956 | 3.6 | % | ||||||||||
Other
|
193,425 | 0.8 | % | 273,791 | 1.4 | % | ||||||||||
$ | 24,194,203 | 100.0 | % | $ | 19,743,586 | 100.0 | % |
Lender
|
Type of facility
|
Outstanding as of
March 23, 2010 (not
including interest) (all
numbers approximate)
|
Remaining
Availability (if
applicable)
|
|||||||
Access
Capital, Inc.
|
Line
of Credit
|
$ | 2,284,215 | $ | 579,329 | |||||
TAG
Virgin Islands, Inc. investors
|
Long-term
debt
|
$ | 500,000 | $ | 0 | |||||
TAG
Virgin Islands, Inc. investors
|
Series
A and B Convertible Preferred Stock
|
$ | 3,900,000 | $ | 0 | |||||
Glenn
Peipert
|
Related
party note payable
|
$ | 93,225 | $ | 0 | |||||
TOTAL
|
$ | 6,777,440 | $ | 579,329 |
|
·
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our
assets;
|
|
·
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
|
|
·
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition or disposition of our assets that could have a
material effect on the financial
statements.
|
Name
|
Year
First Elected
as Director
or Officer
|
Age
|
Positions Held
|
|||
Lori
Cohen
|
2009
|
52
|
Chief
Executive Officer and Director
|
|||
Scott
Newman
|
2004
|
50
|
Chief
Strategy Officer and Chairman
|
|||
William
Hendry
|
2006
|
49
|
Vice
President, Chief Financial Officer, Secretary and
Treasurer
|
|||
Bryan
Carey
|
2007
|
52
|
Senior
Vice President - Strategic Consulting and Managing Director, CSI DeLeeuw
division
|
|||
Glenn
Peipert
|
2004
|
49
|
Director
|
|||
Lawrence
K. Reisman*
|
2004
|
51
|
Director
|
|||
Thomas
Pear**
|
2006
|
57
|
Director
|
Name
and
Principal
Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards(s)
|
Non-Equity
Incentive Plan
Compensation
|
Non-
Qualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
|
Total
|
|||||||||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||||||||||||||||||||||||||||
Lori
Cohen
|
2009
|
276,633 | 47,178 | 13,753 | (2) | 337,564 | ||||||||||||||||||||||||||||
Chief
Executive Officer
|
2008
|
235,927 | 18,999 | 18,859 | (2) | 273,785 | ||||||||||||||||||||||||||||
Scott
Newman
|
2009
|
303,833 | 174,894 | 31,280 | (1) | 510,007 | ||||||||||||||||||||||||||||
Chief
Strategy Officer
|
2008
|
375,000 | 46,765 | (1) | 421,765 | |||||||||||||||||||||||||||||
Bryan
Carey
|
||||||||||||||||||||||||||||||||||
Senior
Vice
|
2009
|
250,000 | 86,601 | 13,889 | (2) | 350,490 | ||||||||||||||||||||||||||||
President,
Managing Director DeLeeuw Associates
|
2008
|
250,000 | 21,072 | 14,762 | (2) | 285,834 |
(1)
|
Amounts
shown reflect payments related to medical, dental and life insurance, car
payments, 401(k) contributions and country club dues paid by the
Company.
|
(2)
|
Amounts
shown reflect payments related to medical, dental and life insurance, car
payments and 401(k) contributions by the
Company.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares, Units or
Other
Rights
That
Have Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
have not
Vested
($)
|
|||||||||||||||||||||||||||
(a)
|
(b)
|
I
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||||||||||
Lori
Cohen
|
300,000 | — | — | 2.475 |
3/29/2014
|
— | — | — | — | |||||||||||||||||||||||||||
150,000 | 0.83 |
11/16/2015
|
||||||||||||||||||||||||||||||||||
150,000 | 0.25 |
10/10/2016
|
||||||||||||||||||||||||||||||||||
Scott
Newman
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Bryan
Carey
|
33,333 | — | — | 3.00 |
5/28/2014
|
— | — | — | — | |||||||||||||||||||||||||||
125,000 | — | — | 0.83 |
11/16/2015
|
— | — | — | — | ||||||||||||||||||||||||||||
150,000 | — | — | 0.25 |
10/10/2016
|
— | — | — | — | ||||||||||||||||||||||||||||
166,666 | 83,334 | — | 0.30 |
5/10/2017
|
— | — | — | — |
Name
|
Fees
Earned or
Paid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||||||||
Frederick
Lester
|
2,250 | — | — | — | — | — | 2,250 | |||||||||||||||||||||
Thomas
Pear
|
7,500 | 7,500 | — | — | — | — | 15,000 | |||||||||||||||||||||
Lawrence
K. Reisman
|
7,750 | 7,500 | — | — | — | — | 15,250 |
|
*
|
In
the event that Lori Cohen’s employment is terminated other than with good
cause, Ms. Cohen will receive a lump sum payment of 3 months salary
without incentives.
|
|
*
|
In
the event that Scott Newman’s employment is terminated other than with
good cause, Mr. Newman will receive a lump sum payment of 35,000 at the
date of termination.
|
Name and Address of
Beneficial Owner(1)(2)
|
Amount of
Common Stock
Beneficially
Owned
|
Percentage of
Outstanding
Common Stock
Beneficially Owned
|
||||||
Lori
Cohen (3)
|
606,166 | * | ||||||
Scott
Newman(4)
|
19,655,413 | 15.9 | % | |||||
Glenn
Peipert(5)
|
10,450,394 | 8.4 | % | |||||
William
Hendry(6)
|
210,000 | * | ||||||
Bryan
Carey (7)
|
474,999 | * | ||||||
Lawrence
K. Reisman (8)
|
429,535 | * | ||||||
Thomas
Pear (9)
|
383,735 | * | ||||||
Matthew
J. Szulik
|
73,049,991 | 45.6 | % | |||||
All
directors and officers as a group (7 persons)
|
32,210,242 | 25.7 | % |
*
|
Represents
less than 1% of the issued and outstanding Common
Stock.
|
(1)
|
Each
stockholder, director and executive officer has sole voting power and sole
dispositive power with respect to all shares beneficially owned by him,
unless otherwise indicated.
|
(2)
|
All
addresses are c/o Conversion Services International, Inc., 100 Eagle Rock
Avenue, East Hanover, New Jersey
07936.
|
(3)
|
Ms.
Cohen is the Company’s Chief Executive Officer and Director. Consists of
an option to purchase 300,000 shares of Common Stock granted on March 29,
2004, and expiring on March 29, 2014, at an exercise price of $2.475 per
share. Consists of an option to purchase 150,000 shares of Common Stock
granted on November 16, 2005, and expiring on November 16, 2015, at an
exercise price of $0.83 per share. Consists of an option to purchase
150,000 shares of Common Stock granted on October 10, 2006, and expiring
on October 10, 2016, at an exercise price of $0.25 per
share.
|
(4)
|
Mr.
Newman is the Company’s Chief Strategy Officer and Chairman of the
Board.
|
(5)
|
Mr.
Glenn Peipert is a Director of the Company. Includes an option to purchase
250,000 shares of Common Stock granted on November 16, 2005, and expiring
on November 16, 2010, at an exercise price of $0.83 per
share.
|
(6)
|
Mr.
William Hendry is the Company’s Vice President, Chief Financial Officer,
Secretary and Treasurer. Consists of an option to purchase 30,000 shares
of Common Stock granted on May 28, 2004, and expiring on May 28, 2014, at
an exercise price of $3.00 per share.
Consists of an option to purchase 30,000 shares
of Common Stock granted on November 16, 2005, and expiring on November 16,
2015, at an exercise price of $0.83 per share. Consists of an option to
purchase 150,000 shares of Common Stock granted on October 10, 2006, and
expiring on October 10, 2016, at an exercise price of $0.25 per
share.
|
(7)
|
Mr.
Carey is the Company’s Senior Vice President and Managing Director, CSI
DeLeeuw. Consists of an option to purchase 33,333 shares of Common Stock
granted on May 28, 2004, and expiring on May 28, 2014, at an exercise
price of $3.00 per share.
Consists of an option to purchase 125,000 shares
of Common Stock granted on November 16, 2005, and expiring on November 16,
2015, at an exercise price of $0.83 per share. Consists of an option to
purchase 150,000 shares of Common Stock granted on October 10, 2006, and
expiring on October 10, 2016, at an exercise price of $0.25 per share.
Consists of an option to purchase 166,666 shares of Common Stock granted
on May 10, 2007, and expiring on May 10, 2017, at an exercise price of
$0.30 per share and does not include an option to purchase 83,334 shares
of Common Stock which vest on May 10,
2010.
|
(8)
|
Mr.
Reisman is a Director. Consists of an option to purchase 30,000
shares of Common Stock granted on May 28, 2004, and expiring on May 28,
2014, at an exercise price of $3.00 per share. Consists of an option to
purchase 20,000 shares of Common Stock granted on November 16, 2005, and
expiring on November 16, 2015, at an exercise price of $0.83 per share.
Consists of an option to purchase 25,000 shares of Common Stock granted on
October 10, 2006, and expiring on October 10, 2016, at an exercise price
of $0.25 per share. Includes 24,178 shares granted in October 2007,
142,857 shares granted in October 2008, and 187,500 shares granted in
October 2009 in connection with the annual director
compensation.
|
(9)
|
Mr.
Pear is a Director. Consists of an option to purchase 25,000 shares of
Common Stock granted on October 10, 2006, and expiring on October 10,
2016, at an exercise price of $0.25. Includes 24,178 shares granted in
October 2007, 142,857 shares granted in October 2008, and 187,500 shares
granted in October 2009 in connection with the annual director
compensation.
|
December
31, 2009
|
December
31, 2008
|
|||||||
Audit
Fees
|
$ | 130,063 | $ | 141,200 | ||||
Audit
Related Fees
|
7,475 | - | ||||||
Tax
Fees
|
31,342 | 45,500 | ||||||
All
Other Fees
|
15,376 | 17,500 | ||||||
$ | 184,256 | $ | 204,200 |
·
|
filed
herewith
|
/s/
Friedman LLP
|
|
East
Hanover, New Jersey
|
|
March
26, 2010
|
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 96,957 | $ | 338,240 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $108,001 and
$260,205 as of December 31, 2009 and 2008, respectively
|
3,912,021 | 3,440,810 | ||||||
Accounts
receivable from related parties, net of allowance for doubtful accounts of
$26,407 and $7,024 as of December 31, 2009 and 2008,
respectively
|
236,233 | 284,028 | ||||||
Prepaid
expenses
|
124,764 | 140,493 | ||||||
TOTAL
CURRENT ASSETS
|
4,369,975 | 4,203,571 | ||||||
PROPERTY
AND EQUIPMENT, at cost, net
|
36,887 | 68,536 | ||||||
OTHER
ASSETS
|
110,494 | 306,778 | ||||||
Total
Assets
|
$ | 4,517,356 | $ | 4,578,885 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Line
of credit
|
$ | 2,541,900 | $ | 2,349,920 | ||||
Accounts
payable and accrued expenses
|
1,964,513 | 1,503,145 | ||||||
Short
term notes payable
|
- | 1,384,811 | ||||||
Deferred
revenue
|
240,606 | 159,177 | ||||||
Related
party note payable
|
92,236 | 102,796 | ||||||
TOTAL
CURRENT LIABILITIES
|
4,839,255 | 5,499,849 | ||||||
Long-term
debt, net of current portion
|
500,000 | - | ||||||
Total
Liabilities
|
5,339,255 | 5,499,849 | ||||||
Convertible
preferred stock, $0.001 par value, $100 stated value, 20,000,000 shares
authorized.
|
||||||||
Series
A convertible preferred stock, 19,000 shares issued and outstanding at
December 31, 2009 and 2008, respectively
|
1,488,332 | 1,108,332 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Common
stock, $0.001 par value, 300,000,000 shares authorized; 122,295,838 and
119,594,463 issued and outstanding at December 31, 2009 and 2008,
respectively
|
122,296 | 119,594 | ||||||
Series
B convertible preferred stock, 20,000 shares issued and outstanding at
December 31, 2009 and 2008, respectively
|
1,352,883 | 1,352,883 | ||||||
Additional
paid in capital
|
68,260,325 | 68,575,918 | ||||||
Treasury
stock, at cost, 1,145,382 shares in treasury as of December 31, 2009 and
2008
|
(423,869 | ) | (423,869 | ) | ||||
Accumulated
deficit
|
(71,621,866 | ) | (71,653,822 | ) | ||||
Total
Stockholders' Deficit
|
(2,310,231 | ) | (2,029,296 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 4,517,356 | $ | 4,578,885 |
2009
|
2008
|
|||||||
REVENUE:
|
||||||||
Services
|
$ | 20,720,057 | $ | 16,409,181 | ||||
Related
party services
|
2,095,983 | 2,340,658 | ||||||
Reimbursable
expenses
|
1,184,738 | 719,956 | ||||||
Other
|
193,425 | 273,791 | ||||||
24,194,203 | 19,743,586 | |||||||
COST
OF REVENUE:
|
||||||||
Services
|
14,232,615 | 11,832,715 | ||||||
Related
party services
|
1,847,984 | 2,151,157 | ||||||
Reimbursable
expenses
|
1,270,279 | 864,250 | ||||||
17,350,878 | 14,848,122 | |||||||
GROSS
PROFIT
|
6,843,325 | 4,895,464 | ||||||
OPERATING
EXPENSES
|
||||||||
Selling
and marketing
|
3,028,003 | 3,262,546 | ||||||
General
and administrative
|
2,759,233 | 3,592,309 | ||||||
Goodwill
& intangibles impairment
|
- | 6,857,125 | ||||||
Depreciation
and amortization
|
106,033 | 264,996 | ||||||
5,893,269 | 13,976,976 | |||||||
INCOME
(LOSS) FROM OPERATIONS
|
950,056 | (9,081,512 | ) | |||||
OTHER
INCOME (EXPENSE)
|
||||||||
Equity
in earnings (losses) from investments
|
(103,298 | ) | 21,045 | |||||
Loss
on extinguishment of debt
|
- | (664,372 | ) | |||||
Interest
expense, net
|
(814,802 | ) | (1,104,927 | ) | ||||
(918,100 | ) | (1,748,254 | ) | |||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
31,956 | (10,829,766 | ) | |||||
INCOME
TAX BENEFIT
|
- | 363,400 | ||||||
NET
INCOME (LOSS)
|
31,956 | (10,466,366 | ) | |||||
Accretion
of issuance costs associated with convertible preferred
stock
|
(380,000 | ) | (380,000 | ) | ||||
Dividends
on convertible preferred stock
|
(180,000 | ) | (217,081 | ) | ||||
NET
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (528,044 | ) | $ | (11,063,447 | ) | ||
Basic
and diluted loss per share attributable to common
stockholders
|
$ | (0.00 | ) | $ | (0.10 | ) | ||
Weighted
average common shares used to compute loss per common
share:
|
||||||||
Basic
and diluted
|
120,123,905 | 115,358,271 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Retained
|
Total
|
||||||||||||||||||||||||||||||
Common
|
Capital
|
Treasury
|
Series B
|
Series B
|
Paid-in
|
Earnings
|
Stockholders'
|
|||||||||||||||||||||||||
Shares
|