|
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
(State or other jurisdiction of
incorporation or organization)
|
|
75-2837058
(I.R.S. Employer
Identification Number)
|
505 Millennium Drive, Allen, Texas
(Address of principal executive offices)
|
|
75013
(Zip code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.001 par value
|
PFSW
|
Nasdaq Capital Market
|
Large accelerated filer
|
o
|
Accelerated filer
|
x
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
x
|
|
|
Emerging Growth
|
o
|
Item 1A.
|
Risk Factors
|
•
|
causing one or more of our clients to reduce requested services, terminate services, delay payments, fail to pay us timely or even file for bankruptcy protection or shut down;
|
•
|
adversely affecting new client wins in both of our business segments and the anticipated launch dates of, and demand for, new projects;
|
•
|
reduced availability and productivity of our employees due to illness, quarantines, absenteeism, government actions, travel restrictions or other restrictions in connection with the pandemic;
|
•
|
disruption to our or our client’s supply chain and the procurement of products and ability to fulfill orders due to disruptions in our distribution centers;
|
•
|
increased operational risks as a result of remote work arrangements, including the potential effects on internal controls, as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events;
|
•
|
increased costs in response to the pandemic, including the procurement of equipment to move personnel into a work-from-home model, personal protective equipment and increased and enhanced cleaning services;
|
•
|
continued volatility in market prices for our securities; and
|
•
|
hampering our ability to access funds from financial institutions and the capital markets.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
|
|
Year
|
Salary (1)
|
Bonus (2)
|
Stock Awards (3)
|
Non-Equity Incentive Plan Compensation (4)
|
All Other Compensation (5)
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Michael C. Willoughby
|
|
2019
|
$
|
531,672
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,089
|
|
|
$
|
543,761
|
|
Chief Executive Officer and
|
|
2018
|
$
|
537,526
|
|
$
|
—
|
|
$
|
1,078,518
|
|
$
|
—
|
|
$
|
29,370
|
|
|
$
|
1,645,414
|
|
President
|
|
|
|
|
|
|
|
|
|
||||||||||||
Thomas J. Madden
|
|
2019
|
$
|
377,149
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
23,807
|
|
|
$
|
400,956
|
|
Executive Vice President -
|
|
2018
|
$
|
370,757
|
|
$
|
—
|
|
$
|
548,883
|
|
$
|
—
|
|
$
|
52,332
|
|
|
$
|
971,972
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
||||||||||||
R. Zach Thomann
|
|
2019
|
$
|
321,153
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8,056
|
|
|
$
|
329,209
|
|
Executive Vice President and
|
|
2018
|
$
|
284,507
|
|
$
|
—
|
|
$
|
271,681
|
|
$
|
109,171
|
|
$
|
22,146
|
|
|
$
|
687,505
|
|
General Manager - PFS Operations
|
|
|
|
|
|
|
|
|
|||||||||||||
C. Travis Hess
|
|
2019
|
$
|
74,320
|
|
$
|
10,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
275,989
|
|
|
$
|
360,309
|
|
Former Executive Vice President -
|
|
2018
|
$
|
336,796
|
|
$
|
—
|
|
$
|
313,023
|
|
$
|
—
|
|
$
|
24,570
|
|
|
$
|
674,389
|
|
Chief Revenue Officer and
|
|
|
|
|
|
|
|
|
|
||||||||||||
General Manager - LiveArea (6)
|
|
|
|
|
|
|
|
|
|
(1)
|
Salary represents base salary earnings. While annual base salaries as of December 31, 2018 and 2019 were $515,000 and $530,000 for Mr. Willoughby, $355,000 and $382,000 for Mr. Madden, $280,000 and $345,000 for Mr. Thomann and $325,000 and $340,000 for Mr. Hess, respectively, variances in salary amounts above reflect timing of base salary adjustments and the timing of payments made to executives under the Company’s bi-weekly payroll processing.
|
(2)
|
Represents non-performance based cash awards earned.
|
(3)
|
Represents issuance of Performance Share Awards (“Performance Shares”) and Restricted Stock Unit Awards (“RSUs” and together with Performance Shares, the “Awards”) under the Company’s 2018 Stock and Incentive Plan, as amended and restated (the “Plan”). Performance Shares are subject to three-year vesting and certain additional criteria, depending upon Award grant, including continued employment, the comparative performance (on an annual and cumulative basis) of the Company’s common stock on Nasdaq as compared to the Russell Micro Cap Index and/or achievement of certain Company performance goals. The amounts reported in this column represent the grant date fair value for these Awards as calculated in accordance with Accounting Standards Codification Topic 718. The assumptions made in calculating the grant date fair value amounts for the Awards issued in the year ended December 31, 2018 are summarized in Note 9 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019. At the maximum Awards shares, these values for the year ended December 31, 2018 for Mr. Willoughby was $1,421,376; for Mr. Madden was $733,077; for Mr. Thomann was $337,086; and for Mr.Hess was $385,681. The values for the Awards shares included in this column that were subsequently forfeited for the year ended December 31, 2018 were as follows: for Mr. Willoughby: $245,808; for Mr. Madden: $144,207; for Mr. Thomann: $5,211; and for Mr. Hess: $87,460. The amounts in this column do not necessarily correspond to the actual economic value that may be realized by the Named Executive Officers from the Awards. No such Awards were issued for the year ended December 31, 2019, as there were not enough shares left in the Company’s 2018 Stock and Incentive Plan. Should the shareholders approve a new equity plan, the Company anticipates issuing awards in 2020 to compensate for shares not awarded in 2019. Therefore, we expect to report a significantly larger amount in 2020 than we have historically awarded.
|
(4)
|
Represents performance-based cash awards earned under the Plan. No performance-based cash awards were granted in 2019. Mr. Thomann was the only Named Executive Officer to meet the performance criteria in 2018.
|
(5)
|
Represents amounts paid in respect of life insurance premiums, automobile allowance and expenses for the personal use of automobile, Company paid healthcare premiums, a severance payment for Mr. Hess and, for certain individuals, club dues and memberships.
|
(6)
|
Effective April 1, 2019, Mr. Hess and the Company agreed to his separation from the Company pursuant to a Separation Agreement.
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||||||||||
Named Executive Officer
|
|
Grant Date
|
|
Number of Securities Underlying Unexercised Options (# Exercisable)
|
|
Number of Securities Underlying Unexercised Options (# Unexercisable)
|
|
Option Exercise Price ($)
|
|
Option Expiration Date
|
|
Equity incentive plan awards: Number of unearned shares that have not vested (#) (1)
|
|
Equity incentive plan awards: Market or payout value of unearned shares that have notvested ($) (2)
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Michael C. Willoughby
|
|
3/30/2011
|
|
50,000
|
|
|
—
|
|
|
$
|
5.00
|
|
|
3/29/2021
|
|
—
|
|
|
$
|
—
|
|
|
|
|
4/9/2018
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
47,938
|
|
|
$
|
183,123
|
|
Thomas J. Madden
|
|
4/19/2010
|
|
45,000
|
|
|
—
|
|
|
$
|
4.00
|
|
|
4/18/2020
|
|
—
|
|
|
$
|
—
|
|
|
|
|
3/30/2011
|
|
65,000
|
|
|
—
|
|
|
$
|
5.00
|
|
|
3/29/2021
|
|
—
|
|
|
$
|
—
|
|
|
|
|
4/9/2018
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
22,030
|
|
|
$
|
84,155
|
|
R. Zach Thomann
|
|
9/10/2013
|
|
2,500
|
|
|
—
|
|
|
$
|
5.61
|
|
|
9/9/2023
|
|
—
|
|
|
$
|
—
|
|
|
|
|
4/9/2018
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
11,153
|
|
|
$
|
42,604
|
|
C. Travis Hess (3)
|
|
4/9/2018
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
3,320
|
|
|
$
|
12,682
|
|
(1)
|
Awards consist of Performance Share Awards (“Performance Shares”) and Restricted Stock Units (“RSUs” and collectively “the Awards”) at the maximum Awards shares under the Plan. The RSUs are subject to three-year vesting and the Performance Shares are subject to three-year vesting and certain additional criteria, depending upon Award grant, including continued employment, the comparative performance (on an annual and cumulative basis) of the Company’s common stock on Nasdaq as compared to the Russell Micro Cap Index.
|
(2)
|
Market value is computed by multiplying the number of Performance Share Awards by $3.82, which was the closing price per share of the Company’s common stock on December 31, 2019, on Nasdaq.
|
(3)
|
Effective April 1, 2019, Mr. Hess and the Company agreed to Mr. Hess' separation from the Company. Awards previously granted to Mr. Hess continued to vest though his severance period, ending March 31, 2020.
|
Named Executive Officer
|
Fees Earned or Paid in Cash
|
|
Stock Awards (1)
|
|
Option Awards (1)
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
David I. Beatson (2)(10)
|
$
|
10,000
|
|
|
$
|
120,000
|
|
|
$
|
—
|
|
|
$
|
130,000
|
|
Monica Luechtefeld (3)
|
7,500
|
|
|
120,000
|
|
|
—
|
|
|
127,500
|
|
||||
James F. Reilly (4)(10)
|
17,500
|
|
|
120,000
|
|
|
—
|
|
|
137,500
|
|
||||
Benjamin Rosenzweig (5)
|
—
|
|
|
120,000
|
|
|
—
|
|
|
120,000
|
|
||||
Peter J. Stein (6)
|
—
|
|
|
120,000
|
|
|
—
|
|
|
120,000
|
|
||||
Robert Frankfurt (7)
|
—
|
|
|
90,000
|
|
|
—
|
|
|
90,000
|
|
||||
G. Mercedes De Luca (8)
|
—
|
|
|
60,000
|
|
|
—
|
|
|
60,000
|
|
||||
Shinichi Nagakura (9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Represents aggregate grant date fair value in accordance with ASC Topic 718. See Note 9 of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for the assumptions used in calculating these amounts.
|
(2)
|
Mr. Beatson had 70,000 options and 85,754 deferred stock units outstanding as of December 31, 2019.
|
(3)
|
Ms. Luechtefeld had 30,000 options and 82,979 deferred stock units outstanding as of December 31, 2019.
|
(4)
|
Mr. Reilly had 70,000 options and 85,754 deferred stock units outstanding as of December 31, 2019.
|
(5)
|
Mr. Rosenzweig had 40,000 options and 85,754 deferred stock units outstanding as of December 31, 2019.
|
(6)
|
Mr. Stein had 30,000 options and 67,075 deferred stock units outstanding as of December 31, 2019.
|
(7)
|
Mr. Frankfurt had 25,216 deferred stock units outstanding as of December 31, 2019.
|
(8)
|
Ms. De Luca had 19,457 deferred stock units outstanding as of December 31, 2019.
|
(9)
|
Mr. Nagakura is eligible to participate in the Company’s compensation programs for non-employee Directors; however as a representative of TCI Mr. Nagakura is not permitted to receive remuneration for serving as a director of the Company. Accordingly, Mr. Nagakura received no compensation as a Director during 2019.
|
(10)
|
Mr. Beatson and Mr. Reilly each received $2,500 in additional compensation for the value of certain options that expired.
|
Name and Address of Beneficial Owner
|
|
Number of Shares
|
|
Percent (1)
|
|
|
|
|
|
|
|
transcosmos, inc. (2)
|
|
|
|
|
|
21-25-18 Shibuya, Shibuya-ku
|
|
|
|
|
|
Tokyo 150-8530 Japan
|
|
3,678,779
|
|
|
18.9%
|
Wellington Management Group, LLP (3)
|
|
|
|
|
|
280 Congress Street, Boston, MA 02210
|
|
2,526,491
|
|
|
13.0%
|
AWM Investment Company, Inc. (4)
|
|
|
|
|
|
527 Madison Avenue, New York, NY 10022
|
|
1,832,185
|
|
|
9.4%
|
Engine Capital Management, LLC (5)
|
|
|
|
|
|
1370 Broadway, New York, NY 10018
|
|
1,344,052
|
|
|
6.9%
|
Hoak & Co. (6)
|
|
|
|
|
|
3963 Maple Avenue, Dallas, TX 75219
|
|
1,000,000
|
|
|
5.1%
|
Michael C. Willoughby (7)
|
|
294,069
|
|
|
1.5%
|
Thomas J. Madden (7)
|
|
263,380
|
|
|
1.4%
|
James F. Reilly (7)
|
|
229,030
|
|
|
1.2%
|
David I. Beatson (7)
|
|
187,991
|
|
|
*
|
Benjamin Rosenzweig (7)
|
|
163,476
|
|
|
*
|
Monica Luechtefeld (7)
|
|
130,833
|
|
|
*
|
Peter J. Stein (7)
|
|
114,929
|
|
|
*
|
Robert Frankfurt (7)
|
|
43,070
|
|
|
*
|
G. Mercedes De Luca (7) (8)
|
|
37,311
|
|
|
*
|
R. Zach Thomann (7)
|
|
28,930
|
|
|
*
|
Shinichi Nagakura (7)
|
|
—
|
|
|
*
|
|
|
|
|
|
|
All directors and executive officers as a group (13 persons) (9)
|
|
1,580,851
|
|
|
8.1%
|
(1)
|
This table is based on 19,465,753 shares of Common Stock outstanding on April 27, 2020.
|
(2)
|
Based on a March 25, 2014 Form SC 13 D/A filing by transcosmos, inc.
|
(3)
|
Based on a January 28, 2020 Form SC 13 G/A filing by Wellington Management Group, LLP.
|
(4)
|
Based on a February 12, 2020 Form SC 13 G/A filing by AWM Investment Company, Inc.
|
(5)
|
Based on a March 26, 2020 Form 13D/A filing by Engine Capital Management, LLC.
|
(6)
|
Based on a December 31, 2018 Form SC 13 D filing by Hoak & Co.
|
(7)
|
Includes the following shares issuable under outstanding vested options, vested stock awards, and deferred stock units: Thomas J. Madden - 65,000; Michael C. Willoughby - 50,000; James F. Reilly - 173,608; David I. Beatson - 173,608;
|
(8)
|
G. Mercedes De Luca was appointed a Director effective May 13, 2019.
|
(9)
|
Includes 986,134 shares of Common Stock issuable under outstanding vested options, vested stock awards, and deferred stock units.
|
Plan category
|
(a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
|
(b)
Weighted- average exercise price of outstanding options, warrants and rights |
|
|||||
|
|
|
|
|
|
||||
Equity compensation plans approved by shareholders (1)
|
2,311,988
|
|
|
$
|
6.65
|
|
|
639,685
|
|
Equity compensation plans not approved by shareholders
|
—
|
|
|
|
|
—
|
|
||
Total
|
2,311,988
|
|
|
$
|
6.65
|
|
|
639,685
|
|
(1)
|
Excludes 254,228 service-based restricted stock units, 227,221 performance-based and market-based restricted stock units, and 451,989 deferred stock units.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Fee Type
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Audit fees (a)
|
|
$
|
772,000
|
|
|
$
|
816,000
|
|
Audit-related fees (b)
|
|
$
|
68,000
|
|
|
$
|
66,000
|
|
Tax fees (c)
|
|
$
|
5,000
|
|
|
$
|
6,000
|
|
All other fees
|
|
—
|
|
|
—
|
|
(a)
|
Includes fees for professional services rendered in connection with the audit of the annual financial statements and internal control review and reviews of the quarterly financial statements.
|
(b)
|
Consists of aggregate fees billed for assurance services provided in connection with reports on certain internal controls under Statement on Standards for Attestation Engagements (SSAE) No. 18.
|
(c)
|
Consists of fees billed related to tax compliance related services.
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
Exhibit
Number
|
|
Description of Exhibits
|
|
|
|
3.1
|
|
|
|
|
|
3.1.1
|
|
|
|
|
|
3.1.2
|
|
|
|
|
|
3.1.3
|
|
|
|
|
|
3.1.4
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.2.1
|
|
|
|
|
|
3.2.2
|
|
|
|
|
|
3.2.3
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.1.7
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.11
|
|
|
|
|
|
10.12*
|
|
|
|
|
|
10.12.1*
|
|
|
|
|
|
10.12.2*
|
|
|
|
|
|
10.34*
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43
|
|
|
|
|
|
10.44
|
|
|
|
|
|
10.45
|
|
|
|
|
|
10.47
|
|
|
|
|
|
10.48
|
|
|
|
|
|
10.49
|
|
|
|
|
|
10.55*
|
|
|
|
|
|
10.56*
|
|
|
|
|
|
10.57*
|
|
|
|
|
|
10.58*
|
|
|
|
|
|
10.59*
|
|
|
|
|
|
10.60*
|
|
|
|
|
|
10.61
|
|
|
|
|
|
10.62
|
|
|
|
|
|
10.63
|
|
|
|
|
|
10.64
|
|
|
|
|
|
10.66
|
|
|
|
|
|
10.67
|
|
|
|
|
|
10.70*
|
|
|
|
|
|
10.71*
|
|
|
|
|
|
10.72*
|
|
|
|
|
|
10.73*
|
|
|
|
|
|
10.74*
|
|
|
|
|
|
10.76
|
|
|
|
|
|
10.77
|
|
|
|
|
|
10.78
|
|
|
|
|
|
10.79
|
|
|
|
|
|
10.80
|
|
|
|
|
10.81
|
|
|
|
|
|
10.82
|
|
|
|
|
|
10.83
|
|
|
|
|
|
10.84*
|
|
|
|
|
|
10.85*
|
|
|
|
|
|
10.86*
|
|
|
|
|
|
10.87
|
|
|
|
|
|
21
|
|
|
|
|
|
23.1
|
|
|
|
|
|
24.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
31.3**
|
|
|
|
|
|
31.4**
|
|
|
|
|
|
32.1
|
|
|
|
|
|
101.INS
|
|
|
|
|
|
101.SCH
|
|
|
|
|
|
101.CAL
|
|
|
|
|
|
101DEF
|
|
|
|
|
|
101.LAB
|
|
|
|
|
|
101.PRE
|
|
|
By:
|
/s/Thomas J. Madden
|
|
|
Thomas J. Madden
|
|
|
Chief Financial Officer
|
|
By:
|
/s/Michael Willoughby
|
|
|
Michael Willoughby
|
|
|
Chief Executive Officer
|
|
By:
|
/s/Thomas J. Madden
|
|
|
Thomas J. Madden
|
|
|
Chief Financial Officer
|