UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30 , 1996 Commission file number: 1-10245 RCM TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) Nevada 95-1480559 (State of Incorporation) (IRS Employer Identification No.) 2500 McClellan Avenue, Suite 350, Pennsauken, New Jersey 08109-4613 (Address of principal executive offices) (609) 486-1777 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASS 4,872,776 Common Stock, $.05 par value Outstanding as of June 5, 1996 1
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION <TABLE> <CAPTION> <S> <C> Item 1 - Consolidated Financial Statements Page Consolidated Balance Sheets as of April 30, 1996 (Unaudited) and October 31, 1995 (Audited) 3 Unaudited Consolidated Statements of Income for the Six Month Periods Ended April 30, 1996 and 1995 5 Unaudited Consolidated Statements of Income for the Three Month 6 Periods Ended April 30, 1996 and 1995 Unaudited Consolidated Statement of Changes in Shareholders' Equity for the Six Month Period Ended April 30, 1996 7 Unaudited Consolidated Statements of Cash Flows for the Six Month Periods Ended April 30, 1996 and 1995 8 Notes to Unaudited Consolidated Financial Statements 10 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 PART II - OTHER INFORMATION ITEM 1 - Legal Proceedings 16 ITEM 4 - Submission of Matters to a Vote of Security Holders 16 ITEM 6 - Exhibits and Reports on Form 8-K 17 SIGNATURES 18 </TABLE> 2
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 30, 1996 and October 31, 1995 ASSETS <TABLE> <CAPTION> 1996 1995 ---- ---- (Unaudited) (Audited) Current assets <S> <C> <C> Cash and cash equivalents $ 70,078 $ 297,550 Accounts receivable, net of allowance for doubtful accounts of $35,000 in 1996 and $15,000 in 1995 12,007,509 5,133,662 Prepaid expenses and other current assets 744,004 671,662 ------- ------- Total current assets 12,821,591 6,102,874 ---------- --------- Property and equipment, at cost Equipment and leasehold improvements 1,650,262 1,208,317 Less: accumulated depreciation and amortization 1,174,634 763,966 --------- ------- 475,628 444,351 ------- ------- Other assets Deposits 95,269 43,074 Intangible assets (net of accumulated amortization of $233,329 and $73,492 in 1996 and 1995, respectively) 9,592,906 3,711,256 --------- --------- 9,688,175 3,754,330 --------- --------- Total assets $22,985,394 $10,301,555 =========== =========== </TABLE> The accompanying notes are an integral part of these financial statements. 3
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - CONTINUED April 30, 1996 and October 31, 1995 LIABILITIES AND SHAREHOLDERS' EQUITY <TABLE> <CAPTION> 1996 1995 ---- ---- (Unaudited) (Audited) Current liabilities <S> <C> <C> Note payable - bank $3,093,218 $914,435 Current maturities of long-term debt 77,887 111,945 Accounts payable and accrued expenses 606,880 340,072 Accrued payroll 2,437,641 1,182,934 Taxes other than income taxes 720,534 205,494 Income taxes payable 577,924 --------- --------- Total current liabilities 7,514,084 2,754,880 --------- --------- Long term liabilities Note payable 20,090 Income taxes payable 673,716 ------- ------ 673,716 20,090 ------- ------ Shareholders' equity Preferred stock, $1.00 par value; 5,000,000 shares authorized; no shares issued or outstanding Common stock, $0.05 par value; 40,000,000 shares authorized; 4,872,776 and 3,255,024 shares issued in 1996 and 1995, respectively 243,639 162,751 Additional paid-in capital 17,218,214 10,916,692 Treasury stock, at cost 62,800 shares ( 62,821) ( 62,821) Accumulated deficit ( 2,601,438) ( 3,490,037) ----------- ---------- 14,797,594 7,526,585 ---------- --------- Total liabilities and shareholders' equity $22,985,394 $10,301,555 ========== ========== </TABLE> The accompanying notes are an integral part of these financial statements. 4
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Six Months Ended April 30, <TABLE> <CAPTION> 1996 1995 ---- ---- <S> <C> <C> Revenues $23,562,110 $12,972,928 ---------- ---------- Operating costs and expenses Cost of services 19,298,075 10,667,153 Selling, general and administrative 3,082,700 1,741,901 Depreciation and amortization 132,470 62,818 ------- ------ 22,513,245 12,471,872 Operating income 1,048,865 501,056 --------- ------- Other income (expense) Interest expense ( 51,089) ( 13,492) Other, net 73,418 ------ ------ ( 51,089) 59,926 ------ ------ Income before income taxes 997,776 560,982 Income taxes 109,177 54,243 ------- ------ Net income $888,599 $506,739 ======= ======= Net income per share $.24 $.17 === === </TABLE> The accompanying notes are an integral part of these financial statements 5
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended April 30, <TABLE> <CAPTION> 1996 1995 ---- ---- <S> <C> <C> Revenues $13,785,626 $6,280,172 ---------- --------- Operating costs and expenses Cost of services 11,312,200 5,124,759 Selling, general and administrative 1,931,739 863,790 Depreciation and amortization 80,453 31,409 ------ ------ 13,324,392 6,019,958 ---------- --------- Operating income 461,234 260,214 ------- ------- Other Income (expense) Interest expense ( 26,249) ( 7,343) Other, net 51,846 ------ ------ ( 26,249) 44,503 ------ ------ Income before income taxes 434,985 304,717 Income taxes 48,249 26,993 ------ ------ Net income $386,736 $277,724 ======= ======= Net income per share $.09 $.05 === === </TABLE> The accompanying notes are an integral part of these financial statements. 6
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Six Months Ended April 30, 1996 (Unaudited) <TABLE> <CAPTION> Additional Common Stock Paid-in Accumulated Treasury Shares Amount Capital Deficit Stock ------ ------ ------- ------- ----- <S> <C> <C> <C> <C> <C> Balance, October 31, 1995 3,255,024 $ 162,751 $10,916,692 ($3,490,037) ($ 62,821) Exercise of Stock Options 6,800 340 4,473 Issuance of Common Stock in connection with acquisitions 1,334,327 66,716 5,310,881 Sale of Common Stock 276,625 13,832 986,168 Net Income 888,599 ------- ------ ------- ------- ------ Balance, April 30, 1996 4,872,776 $ 243,639 $17,218,214 ($2,601,438) ($ 62,821) =========== =========== =========== ============ ========== </TABLE> The accompanying notes are an integral part of these financial statements 7
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended April 30, (Unaudited) <TABLE> <CAPTION> 1996 1995 ---- ---- Cash flows from operating activities: <S> <C> <C> Net income $888,599 $506,739 ------- ------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 132,470 62,818 Provision for losses on accounts receivable 20,000 ( 6,821) Changes in assets and liabilities: Accounts receivable (1,222,227) 561,597 Prepaid expenses and other current assets 178,503 ( 273,875) Accounts payable and accrued expenses ( 192,456) 151,595 Accrued payroll ( 9,283) ( 198,083) Billings in excess of costs and estimated earnings ( 55,694) Taxes other than income taxes 268,855 ( 48,127) Income taxes payable ( 431,314) ( 67,623) ------- ------ Total adjustments (1,255,452) 125,787 --------- ------- Net cash provided by (used in) operating activities ( 366,853) 632,526 ------- ------- </TABLE> The accompanying notes are an integral part of these financial statements 8
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED Six Months Ended April 30, (Unaudited) <TABLE> <CAPTION> 1996 1995 ---- ---- Cash flows from investing activities: <S> <C> <C> Increase in Intangible assets ( 587,337) ($ 10,000) Property and equipment acquired ( 46,835) ( 51,337) Increase in deposits ( 30,546) 2,584 Cash paid for acquisitions, net of cash acquired ( 621,500) ------- ------ Net cash used in investing activities ( 1,286,218) ( 58,753) --------- ------ Cash flows from financing activities: Sale of common stock 1,000,000 Exercise of stock options 4,813 Net borrowings under short term debt arrangements 460,966 Repayments of long term debt ( 40,180) ( 36,433) ------ ------ Net cash provided by (used in) financing activities 1,425,599 ( 36,433) --------- ------ Net increase (decrease) in cash and cash equivalents ( 227,472) 537,340 Cash and cash equivalents at beginning of period 297,550 2,534,073 ------- --------- Cash and cash equivalents at April 30, $ 70,078 $ 3,071,413 ============= =========== Supplemental cash flow information: Cash paid for: Interest expense $ 51,089 $ 13,492 Income taxes $ 135,000 $ 137,781 </TABLE> The accompanying notes are an integral part of these financial statements. 9
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. General The accompanying consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). This Report on Form 10-Q should be read in conjunction with the Company's annual report on Form 10-K for the year ended October 31, 1995. Certain information and footnote disclosures which are normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations. The information reflects all normal and recurring adjustments which, in the opinion of Management, are necessary for a fair presentation of the financial position of the Company and its results of operations for the interim periods set forth herein. The results for the six months ended April 30, 1996 are not necessarily indicative of the results to be expected for the full year. 2. Stock Split The Board of Directors, with stockholder approval, amended the Company's Articles of Incorporation to effect a one-for-five reverse split of common stock whereby each five shares of common stock were exchanged for one share of common stock. The amendment had no effect on the number of authorized shares and the par value of the common stock. Where fractional shares resulted from the reverse split, the Company issued such additional fraction of a share as is necessary to increase the fractional share to a full share. All references in the financial statements to weighted average number of shares outstanding, earnings per share amounts and stock option data has been restated to reflect the reverse split. 3. Income per Share Income per share is based on the weighted average number of common shares outstanding during the periods stated. For the six months ended April 30, 1996 and 1995, the weighted average number of shares outstanding was 3,776,035 and 2,914,072, respectively. 4. Sale of Common Stock On February 5, 1996, the Company issued and sold 276,625 shares of common stock to Limeport Investments, L.L.C. in a Private Placement transaction for $1,000,000 ($3.615 per share). The purchase price was based on a twenty percent discount to the twenty day average closing price prior to the purchase of the shares. The shares are restricted securities, however, the Company has agreed to register such shares by filing a shelf registration statement by February 15, 1997. The President of the Company, Leon Kopyt, has been granted certain voting rights over these shares as long as they remain owned by Limeport Investments, L.L.C.. 10
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 5. Acquisitions During the six months ended April 30, 1996, the Company acquired two businesses in the staffing services industry. These acquisitions, which are described below, have been accounted for as purchases and, accordingly, the results of operations of the acquired companies have been included in the consolidated results of operations of the Company from the date of acquisition. On March 11, 1996, the Company acquired all of the outstanding shares of The Consortium, a speciality provider of information technology and health care personnel servicing private sector and government clients in the greater metropolitan New York region. The consideration paid to the former shareholders of The Consortium consisted of 1.3 million restricted shares of its common stock, valued at $5,000,000, (based upon the average closing price of the Company's common stock for the 20 trading days immediately preceding the closing date) in exchange for all of the outstanding capital stock of The Consortium. The company has agreed to file a shelf registration statement by February 15, 1997, permitting the sale of $600,000 in value of securities during the period April 1997 through March 1998. Thereafter, the remainder of these shares are subject to significant restrictions on resale through March 11, 1999. The cost in excess of net assets acquired of $4,851,500 is included in the Company's Consolidated Balance Sheet as "Intangible Assets" and is being amortized over a 40 year period. On May 1, 1996, the Company acquired The Consortium of Maryland, Inc. ("Consort MD"), a specialty provider of information technology personnel services to major U.S. Corporations in the greater metropolitan Washington, D.C. region. Consort MD was not related or affiliated with The Consortium. The acquisition was completed through a merger transaction (the "Merger") pursuant to which Consort MD was merged with and into a newly-created subsidiary of the Company, which then concurrently changed its name to "The Consortium of Maryland, Inc." The Merger consideration paid to the former shareholder of Consort MD at the closing consisted of $621,500 cash and 34,327 restricted shares of the Company's common stock valued at $377,597 (based upon the average closing bid price of the Company's common stock for the 20 trading days immediately preceding the closing date). Additional merger consideration will be paid to the former shareholder of Consort MD consisting of additional shares of stock and cash having a value equal to the tangible net worth of the Consort MD as of the Merger date. As of the date of this report, the tangible net worth has not been determined. It is anticipated that this amount will be paid by June 15, 1996. The Company has agreed to file a registration statement by May 1, 1998 permitting the sale of the restricted shares. 11
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 5. Acquisitions - Continued The following unaudited results of operations have been prepared assuming the acquisitions had occurred as of the beginning of the periods presented. Those results are not necessarily indicative of results of future operations nor of results that would have occurred had the 1996 acquisitions been consummated as of the beginning of the periods presented. <TABLE> <CAPTION> Six Months Ended April 30, 1996 1995 -------------- --------- <S> <C> <C> Revenues $ 35,538,000 $ 28,480,000 Net income $ 1,301,500 $ 979,000 Income per share $ .28 $ .23 </TABLE> 6. Shareholder Rights Plan On March 14, 1996, the Board of Directors of the Company declared a dividend distribution of one Common Share Purchase Right ("Right") for each outstanding share of common stock of the Company. Each Right entitles stockholders to buy one share of common stock at an exercise price of $3.00. The Rights will be exercisable only if a person or group acquires 15% or more of the Company's common stock or announces a tender offer the consummation of which would result in ownership by a person or group of 15% or more of the common stock. The Company will be entitled to redeem the rights at one cent per Right at any time before a 15% or greater position has been acquired. The dividend distribution was made on April 1, 1996, payable to shareholders of record at the close of the business on that date. The Rights expire April 1, 2006. 12
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources During the six months ended April 30, 1996, working capital increased $1,960,000. This was due primarily to the increased levels of profitability of the Company and the private placement of common stock for $1,000,000. At April 30, 1996, the Company had outstanding borrowings under its credit facility of $3,093,218 as compared to $914,435 as of October 31, 1995, an increase of $2,178,783. The Company, at April 30, 1996, had $673,716 in long term liabilities and held $70,000 in cash along with $2,906,782 of loan availability on its $6,000,000 line of credit. (Increased to $10,000,000 on May 29, 1996). In 1996, operating activities used $366,853 of cash compared to cash provided by operating activities of $632,526 in 1995. The decrease of $999,379 was primarily attributable to increased levels of accounts receivable during the six months ended April 30, 1995 compared to the six months ended April 30, 1995. Cash used for investing activities totaled $1,286,218 in 1996 compared to $58,753 in 1995. The increase was primarily attributable to cash payments for acquisitions and related intangible assets. Cash provided by financing activities was $1,425,599 in 1996 compared to a use of cash of $36,433 in 1995. The increase was attributable to the private placement of common stock for $1,000,000 and the proceeds from short term borrowings. On May 29, 1996, the Company and its subsidiaries entered into an amended and restated agreement with Mellon Bank, N.A. for providing a credit facility in the maximum amount of $10,000,000. The agreement expires on June 30, 1998. The credit facility is collateralized by accounts receivable, contract rights and furniture and fixtures with unlimited guarantees from the Company. The credit facility requires the subsidiaries and the Company to meet certain objectives with respect to financial ratios and earnings. Credit facility advances are to be used to meet cash flow requirements for the subsidiaries as well as operating expenses for the Company. Advances to the Company in excess of its operating expenses must have prior bank approval. The Company believes its present credit facility will sufficiently support its operations and those of its subsidiaries. Borrowing under the credit facility is based on 85% of accounts receivable on which not more than ninety days have elapsed since the date of invoicing. The interest rate charged is the prime rate of the bank (effective rate of 8.25% and 8.75% at April 30, 1996 and October 31, 1995, respectively). The bank charges a fee of .25% per annum on the unused portion of the credit facility. The Company's liquidity and capital resources may be effected in the future as the Company continues to grow through an aggressive acquisition strategy. The Company does not currently have material commitments for capital expenditures and does not anticipate entering into any such commitments during the next twelve months. The Company continues to evaluate acquisitions of various businesses which are complementary to its current operations. The Company's current commitments consist primarily of lease obligations for office space. The Company believes that its capital resources are sufficient to meet its obligations incurred in the normal course of business for at least the next twelve months. 13
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Results of Operations Six Months Ended April 30, 1996 Compared to April 30, 1995 Summary. Revenues, gross profit, operating income and net income of the Company for the 1996 period increased $10.6 million (81.6%), $2.0 million (85.7%), $.5 million (109.3%), and $.4 million (75.3%), respectively, compared with 1995. These improvements were primarily due to the acquisitions of Cataract, Inc. (August 30, 1995) and The Consortium (March 11, 1996). As a result of the aforementioned acquisitions, the Company is able to spread its fixed expenses over a larger revenue base, as well as, management's ability to control expenses during a period of revenue growth. Results of operations for the six months ended April 30, 1996 reflected a net income of $888,599 ($.24 per share) as compared to $506,739 ($.17 per share) for the six months ended April 30, 1995. Cost of services increased by $8.6 million to $19.3 million or 80.7% for the six months ended April 30, 1996 compared to $10.7 million for the six months ended April 30, 1995. This increase resulted from increased sales in 1996. Gross profit increased by 2.0 million to 4.3 million, or 85.7% for the six months ended April 30, 1996 compared to the six months ended April 30, 1995. Gross profit as a percentage of revenues was 18.1% for 1996 and 17.7% for 1995. The increased gross profit percentages resulted from improved pricing margins. Selling, general and administrative expenses (SG&A) increased 1.3 million to 3.1 million or 13.1% of revenues for the six months ended April 30, 1996 as compared to 13.4% of revenues for the six months ended April 30, 1995. The increased SG&A was principally attributable to the aforementioned acquisitions. The decreased SG&A as a percentage of revenues was attributable to continuing implementation of Company efforts to increase operational efficiencies and the ability to spread fixed administrative expenses over a larger revenue base. Depreciation and amortization increased by $69,652 to $132,470 for the six months ended April 30, 1996, compared to $62,818 for the six months ended April 30, 1995. This increase was attributable to the amortization of intangible assets incurred with the aforementioned acquisitions. Interest expense increased by $37,597 to $51,089 for the six months ended April 30, 1996, compared to $13,492 for the six months ended April 30, 1995. This increase was attributable to funds required for acquisitions as well as the refinancing of acquired companies working capital debt and term debt to more favorable terms and conditions available under the Company's line of credit facility. Income tax expense increased by $54,934 to $109,177 for the six months ended April 30, 1996, compared to $54,243 for the six months ended April 30, 1995. This increase was attributable to the higher level of profitability for 1996. 14
RCM TECHNOLOGIES, INC. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Results of Operations Three Months Ended April 30, 1996 compared to April 30, 1995 Summary. Revenues, gross profit, operating income and net income of the Company for the 1996 period increased $7.5 million (120.0%), 1.3 million (114.1%), $.2 million (77.3%), and $.1 million (39.3%), respectively, compared with 1995. These improvements were primarily due to the acquisitions of Cataract, Inc. (August 30, 1995) and The Consortium (March 11, 1996). Results of operations for the three months ended April 30, 1996 reflected a net income of $386,736 ($.09 per share) as compared to $277,724 ($.05 per share) for the three months ended April 30, 1995. Cost of services increased by 6.2 million to $11.3 million or 120.7% for the three months ended April 30, 1996 compared to 5.1 million for the three months ended April 30, 1995. This increase resulted from increased sales in 1996. Gross profit increased by 1.3 million to 2.4 million, or 114.1% for the three months ended April 30, 1996 compared to 1.2 million for the three months ended April 30, 1995. Gross profit as a percentage of revenues was 17.9% for 1996 and 18.4% for 1995. Selling, general and administrative expenses (SG&A) increased 1.1 million to 1.9 million or 14.1% of revenues for the three months ended April 30, 1996. The increased SG&A was principally attributable to the aforementioned acquisitions. The increased SG&A as a percentage of revenues (1996-14.1%; 1995-13.8%) was attributable to one time charges incurred in connection with the reverse stock split and the implementation of a shareholder rights plan. Depreciation and amortization increased by $49,044 to $80,453 for the three months ended April 30, 1996, compared to $31,409 for the three months ended April 30, 1995. This increase was attributable to the amortization of intangible assets incurred with the aforementioned acquisitions. Interest expense increased by $18,906 to $26,249 for the three months ended April 30, 1996, compared to $7,343 for the three months ended April 30, 1995. This increase was attributable to funds required for acquisitions as well as the refinancing of acquired companies working capital and term debt to more favorable terms and conditions available under the Company's line of credit facility. Other, net consisted principally of interest income for the three months ended April 30, 1995. Interest income declined to $-0- for the three months ended April 30, 1996. This decline resulted from the increased working capital requirements necessary to support $12,007,509 of accounts receivable at April 30, 1996. Income tax expense increased by $21,256 to $48,249 for the three months ended April 30, 1996, compared to $26,993 for the three months ended April 30, 1995. This increase was attributable to the higher level of profitability for 1996. 15
PART II OTHER INFORMATION Item 1. Legal Proceedings Other than as reported in Part I, Item 3 - "Legal Proceedings" of the Company's Annual Report on Form 10-K for the year ended October 31, 1995, there have been no material developments to any of the matters that require reporting under this Item. Item 4. Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Shareholders on March 29, 1996. The following actions were taken: 1.) The following directors were elected to serve on the Board of Directors until the expiration of their respective terms and until their respective successors shall be elected and qualified. Tabulated voting results were as follows: <TABLE> <CAPTION> <S> <C> <C> Leon Kopyt (Class C) (For 13,250,328; Withheld 963,386) Stanton Remer (Class C) (For 13,283,747; Withheld 929,967) Norman S. Berson (Class A) (For 13,282,947; Withheld 930,767) Robert B. Kerr (Class B) (For 13,282,847; Withheld 930,867) Woodrow B. Moats, Jr. (Class B) (For 13,283,747; Withheld 929,967) </TABLE> Each nominee as a Class A, Class B and Class C director was elected to serve a term expiring at the Company's Annual Meeting in 1997, 1998 and 1999, respectively, or until his successor has been elected and qualified. 2.) Amendment of the Articles of Incorporation to effect a reverse split of the Company's issued and outstanding common stock on the basis that each five (5) shares then outstanding will be converted into one (1) share. Votes For - 12,519,738; Votes Against - 1,357,123 3.) Amendment of the Articles of Incorporation to authorize the Board of Directors to issue up to 5,000,000 shares of preferred stock having such rights, privileges, designations and preferences as may be determined by the Board of Directors. Votes For - 8,368,576; Votes Against - 1,736,989 4.) Amendment of the Articles of Incorporation to permit the shareholders to adopt, amend or repeal the Company's Bylaws in the same manner as amendments to the Articles of Incorporation. Votes For - 10,547,395; Votes Against - 3,020,289 5.) Approval of Grant Thornton, LLP as the independent auditing firm for the Company for the fiscal year ending October 31, 1996. Votes For - 13,916,486; Votes Against - 157,344 Item 5. Other Information None. 16
PART II OTHER INFORMATION - CONTINUED Item 6. Exhibits and Reports on Form 8-K (a) Exhibits <TABLE> <CAPTION> <S> <C> <C> ( 2 ) Stock Purchase Agreement, dated April 23, 1996, between RCM Technologies, Inc., Sort Acquisition Corp., The Consortium of Maryland, Inc. and Peter Kaminsky. (11) Computation of earnings per share. (27) Financial Data Schedule. (10.1) Registration Rights Agreement, dated May 2, 1996, between RCM Technologies, Inc. and Peter Kaminsky. (10.2) Escrow Agreement, dated May 2, 1996, between RCM Technologies, Inc. and Peter Kaminsky and Norman S. Berson, as escrow agent. (10.3) Standstill and Shareholders Agreement, dated May 2, 1996, between RCM Technologies, Inc. and Peter Kaminsky. (10.4) Employment Agreement, dated May 2, 1996, between The Consortium of Maryland, Inc. and Peter Kaminsky. </TABLE> (b) Reports on Form 8-K A report on Form 8-K was filed with the Securities & Exchange Commission on March 20, 1996 relating to the acquisition of The Consortium, pursuant to which The Consortium, through an exchange of all its outstanding shares of stock with the Registrant, became a wholly-owned subsidiary of the Registrant. A report on Form 8-K was filed with the Securities & Exchange Commission on March 22, 1996 relating to the Stockholder Rights Plan approved by the Board of Directors on March 14, 1996. 17
RCM TECHNOLOGIES, INC. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RCM Technologies, Inc. (Registrant) Date: June 05, 1996 By:/s/ Leon Kopyt -------------- Leon Kopyt Chairman, President, Chief Executive Officer and Director Date: June 05, 1996 By:/s/ Stanton Remer ----------------- Stanton Remer Chief Financial Officer, Treasurer, Secretary and Director 18