(Mark One)
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended September 30, 2017
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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New Jersey
(State or other jurisdiction of
incorporation or organization)
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22-1899798
(I.R.S. Employer
Identification No.)
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3565 Piedmont Road, NE
Atlanta, Georgia
(Address of principal executive offices)
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30305
(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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COMMON STOCK, PAR VALUE $.001 PER SHARE
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THE NASDAQ STOCK MARKET, LLC
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
ý
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Emerging growth company
o
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PAGE
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•
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Department of Defense and veteran health services, approximately
62%
of our current business base;
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•
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Human services and solutions, approximately
34%
of our current business base; and
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•
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Public health and life sciences, approximately
4%
of our current business base.
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•
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high barriers for entry into the selected markets in which we serve;
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•
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specialized credentials and licenses held by a substantial component of our employee base;
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•
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prime contractor position in contracts representing
95%
of our revenue;
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•
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strong past performance record, as evidenced by our VA customer scoring the highest in overall satisfaction in the J.D. Power National Pharmacy Study over the past eight years; and
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•
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targeted expansion in critical national priority markets with Federal budget stability.
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Name
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Age
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Positions
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Zachary C. Parker
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60
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President, Chief Executive Officer and Director
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Kathryn M. JohnBull
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58
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Chief Financial Officer
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Kevin Wilson
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52
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President, DLH Solutions, Inc.
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Helene Fisher
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53
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President, Danya International, LLC.
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•
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increased competition for acquisitions may increase the costs of our acquisitions;
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•
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non-discovery or non-disclosure of material liabilities during the due diligence process, including omissions by prior owners of any acquired businesses or their employees in complying with applicable laws or regulations, or their inability to fulfill their contractual obligations to the federal government or other customers; and
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•
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acquisition financing may not be available on reasonable terms or at all.
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•
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Executive and employee options to purchase
1.99 million
shares of common stock,
1.33 million
of which are vested and immediately exercisable. The weighted average exercise price of the outstanding stock options is
$3.83
per share.
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•
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Warrants issued to Wynnefield Capital to purchase
53,619
shares of common stock with an exercise price of
$3.73
per share.
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•
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require certain supermajority votes; and
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•
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establish certain advance notice procedures for nomination of candidates for election as directors and for shareholders' proposals to be considered at shareholders' meetings.
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($ in thousands)
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|||
Location
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Approximate Square Feet
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Approximate Annual Lease Expense
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Expiration Date
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Corporate Headquarters
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3565 Piedmont Road, NE, Building 3, Suite 700
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12,275
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$306
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4/30/2024
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Atlanta, GA 30305
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National Capital Region Office
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8737 Colesville Road, Suite 1100
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22,400
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$623
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4/30/2020
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Silver Spring, MD 20910
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FISCAL YEAR 2017
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LOW
|
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HIGH
|
||||
1st Quarter
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|
$
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4.47
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$
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7.38
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2nd Quarter
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$
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4.61
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$
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6.72
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3rd Quarter
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$
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4.10
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$
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6.36
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4th Quarter
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$
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5.33
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$
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6.49
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FISCAL YEAR 2016
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LOW
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HIGH
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||||
1st Quarter
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$
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1.89
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$
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4.47
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2nd Quarter
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$
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2.50
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$
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4.38
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3rd Quarter
|
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$
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3.51
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$
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5.32
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4th Quarter
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$
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4.32
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$
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5.72
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Equity Compensation Plan Information
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|||||||||
Plan Category
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(a)
Number of Securities
to be issued
upon exercise of
outstanding options,
warrants and rights
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(b)
Weighted Average
exercise price of
outstanding options,
warrants and rights
(or fair value at
date of grant)
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(c)
Number of securities
remaining available for
future issuances under
equity compensation
plans (excluding securities
reflected in column (a))
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||||
Equity Compensation Plans Approved by Security Holders:
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Employee stock options
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1,993,500
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$
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3.83
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506,250
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($ in thousands)
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||||||||
Period
|
|
Total Number
of Shares Purchased |
|
Average Price
Paid Per Share |
|
Total Number of
Shares Purchased As Part of Publicly Announced Programs |
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Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program
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|||||||||||
July 2017
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|
—
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$
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—
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—
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$
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77
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|
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August 2017
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—
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$
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—
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—
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$
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77
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September 2017
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—
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$
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—
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—
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$
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77
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Fourth Quarter Total
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—
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$
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—
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—
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$
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77
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•
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Department of Defense and veteran health services, approximately
62%
of our current business base;
|
•
|
Human services and solutions, approximately
34%
of our current business base; and
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•
|
Public health and life sciences, approximately
4%
of our current business base.
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Year Ended
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Change in
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|||||||||||||||||
Consolidated Statement of Operations:
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September 30, 2017
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September 30, 2016
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$
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% of Rev
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|||||||||||||
Revenue
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$
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115,662
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100.0
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%
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$
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85,602
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100.0
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%
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$
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30,060
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—
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%
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Direct expenses
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89,812
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77.7
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%
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67,776
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79.2
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%
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22,036
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(1.5
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)%
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|||
Gross margin
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25,850
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22.3
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%
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17,826
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20.8
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%
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8,024
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1.5
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%
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|||
General and administrative expenses
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17,466
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15.1
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%
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12,518
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14.6
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%
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4,948
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0.5
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%
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|||
Depreciation and amortization
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1,754
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1.5
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%
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1,244
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1.5
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%
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510
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—
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%
|
|||
Income from operations
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6,630
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5.7
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%
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4,064
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4.7
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%
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2,566
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|
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1.0
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%
|
|||
Interest expense
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|
(1,228
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)
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(1.1
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)%
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(823
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)
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(1.0
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)%
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(405
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)
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(0.1
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)%
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|||
Acquisition cost
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—
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—
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%
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(795
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)
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(0.9
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)%
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795
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0.9
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%
|
|||
Other income (expense), net
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(1,228
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)
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(1.1
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)%
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(1,618
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)
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(1.9
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)%
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|
390
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|
|
0.8
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%
|
|||
Income before income taxes
|
|
5,402
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4.6
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%
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2,446
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2.9
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%
|
|
2,956
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|
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1.7
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%
|
|||
Income tax expense (benefit), net
|
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2,114
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1.8
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%
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(938
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)
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(1.1
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)%
|
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3,052
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2.9
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%
|
|||
Net income
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$
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3,288
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2.8
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%
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$
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3,384
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4.0
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%
|
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$
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(96
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)
|
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(1.2
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)%
|
|
|
|
|
|
|
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|||||||||
Net income per share-basic
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|
$
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0.29
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$
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0.34
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$
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(0.05
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)
|
|
|
|||
Net income per share-diluted
|
|
$
|
0.27
|
|
|
|
|
$
|
0.30
|
|
|
|
|
$
|
(0.03
|
)
|
|
|
•
|
Acquisition expenses are excluded in the prior year period. We believe that excluding these expenses allow for improved comparability of results from period to period.
|
•
|
Equity compensation is excluded because it is non-cash in nature. We believe that excluding this expense allows for improved comparability of results from period to period.
|
|
|
Twelve Months Ended
|
||||||||||
|
|
September 30,
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||
Net income
|
|
$
|
3,288
|
|
|
$
|
3,384
|
|
|
$
|
(96
|
)
|
(i) Interest and other (income) expense (net):
|
|
|
|
|
|
|
||||||
(i)(a) Interest and other expense
|
|
1,228
|
|
|
823
|
|
|
405
|
|
|||
(i)(b) Acquisition expenses
|
|
—
|
|
|
795
|
|
|
(795
|
)
|
|||
(ii) Provision for taxes
|
|
2,114
|
|
|
(938
|
)
|
|
3,052
|
|
|||
(iii) Depreciation, amortization, and loss on fixed assets
|
|
1,754
|
|
|
1,244
|
|
|
510
|
|
|||
(iv) G&A expenses - equity grants
|
|
662
|
|
|
466
|
|
|
196
|
|
|||
Adjusted EBITDA
|
|
$
|
9,046
|
|
|
$
|
5,774
|
|
|
$
|
3,272
|
|
|
|
|
|
|
|
|
|
|
($ in Millions)
|
||||||||
|
|
As of September 30, 2017
|
||||||||
Lender
|
|
Arrangement
|
|
Loan Balance
|
|
Interest *
|
|
Maturity Date
|
||
Fifth Third Bank
|
|
Secured term loan $25 million ceiling (a)
|
|
$
|
19.7
|
|
|
LIBOR + 3.0%
|
|
05/01/21
|
Fifth Third Bank
|
|
Secured revolving line of credit $10 million ceiling (b)
|
|
$
|
—
|
|
|
LIBOR + 3.0%
|
|
05/01/18
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||
Contractual obligations
|
|
|
|
Next 12
|
|
2-3
|
|
4-5
|
|
More than 5
|
||||||||||
(Amounts in thousands)
|
Ref
|
Total
|
|
Months
|
|
Years
|
|
Years
|
|
Years
|
||||||||||
Debt Obligations
|
|
$
|
19,688
|
|
|
$
|
3,750
|
|
|
$
|
7,500
|
|
|
$
|
8,438
|
|
|
$
|
—
|
|
Facility leases
|
|
3,693
|
|
|
929
|
|
|
1,567
|
|
|
652
|
|
|
545
|
|
|||||
Equipment operating leases
|
|
77
|
|
|
38
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|||||
Total Obligations
|
|
$
|
23,458
|
|
|
$
|
4,717
|
|
|
$
|
9,106
|
|
|
$
|
9,090
|
|
|
$
|
545
|
|
(a)
|
(1) Financial Statements
|
(a)
|
(2) Financial Statement Schedule
|
(a)
|
(3) Exhibits
|
Exhibit No.
|
|
Description
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
||
#
|
||
#
|
||
#
|
||
|
||
#
|
||
#
|
||
|
||
|
||
|
||
|
||
#
|
||
|
||
#
|
||
#
|
||
|
||
*
|
||
*
|
||
*
|
||
*
|
||
*
|
||
101.0
|
*
|
The following financial information from the DLH Holdings Corp. Annual Report on Form 10-K for the fiscal year ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Cash Flows; (iv) the Consolidated Statements Of Shareholders' Equity and, (v) the Notes to the Consolidated Financial Statements.
|
|
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|
|
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|
DLH HOLDINGS CORP.
|
||
|
|
|
|
/s/ ZACHARY C. PARKER
|
|
|
By:
|
|
Zachary C. Parker
Chief Executive Officer
(Principal Executive Officer)
|
Signature
|
Capacity
|
Date
|
|
|
|
/s/ FREDERICK G. WASSERMAN
|
Chairman of the Board
|
December 12, 2017
|
Frederick G. Wasserman
|
|
|
|
|
|
/s/ FRANCES MURPHY
|
Director
|
December 12, 2017
|
Frances Murphy
|
|
|
|
|
|
/s/ MARTIN J. DELANEY
|
Director
|
December 12, 2017
|
Martin J. Delaney
|
|
|
|
|
|
/s/ WILLIAM H. ALDERMAN
|
Director
|
December 12, 2017
|
William H. Alderman
|
|
|
|
|
|
/s/ AUSTIN J. YERKS III
|
Director
|
December 12, 2017
|
Austin J. Yerks III
|
|
|
|
|
|
/s/ ELDER GRANGER
|
Director
|
December 12, 2017
|
Elder Granger
|
|
|
|
|
|
/s/ JAMES P. ALLEN
|
Director
|
December 12, 2017
|
James P. Allen
|
|
|
|
|
|
/s/ ZACHARY C. PARKER
|
Chief Executive Officer, President and Director
|
December 12, 2017
|
Zachary C. Parker
|
|
|
|
|
|
/s/ KATHRYN M. JOHNBULL
|
Chief Financial Officer and Principal Accounting Officer
|
December 12, 2017
|
Kathryn M. JohnBull
|
|
|
|
Page
|
|
|
F-2
|
|
Consolidated Statements of Operations for the years ended September 30, 2017 and 2016
|
|
F-3
|
Consolidated Balance Sheets as of September 30, 2017 and 2016
|
|
F-4
|
Consolidated Statements of Cash Flows for the years ended September 30, 2017 and 2016
|
|
F-5
|
Consolidated Statements of Changes in Shareholders' Equity for the years ended September 30, 2017 and 2016
|
|
F-6
|
Notes to Consolidated Financial Statements
|
|
F-7
|
|
|
Year Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Revenue
|
|
$
|
115,662
|
|
|
$
|
85,602
|
|
Direct expenses
|
|
89,812
|
|
|
67,776
|
|
||
Gross margin
|
|
25,850
|
|
|
17,826
|
|
||
General and administrative expenses
|
|
17,466
|
|
|
12,518
|
|
||
Depreciation and amortization
|
|
1,754
|
|
|
1,244
|
|
||
Income from operations
|
|
6,630
|
|
|
4,064
|
|
||
Interest expense
|
|
(1,228
|
)
|
|
(823
|
)
|
||
Acquisition cost
|
|
—
|
|
|
(795
|
)
|
||
Income before income taxes
|
|
5,402
|
|
|
2,446
|
|
||
Income tax expense (benefit), net
|
|
2,114
|
|
|
(938
|
)
|
||
Net income
|
|
$
|
3,288
|
|
|
$
|
3,384
|
|
|
|
|
|
|
||||
Earnings per share - basic
|
|
$
|
0.29
|
|
|
$
|
0.34
|
|
Earnings per share - diluted
|
|
$
|
0.27
|
|
|
$
|
0.30
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding
|
|
|
|
|
||||
Basic
|
|
11,345
|
|
|
9,966
|
|
||
Diluted
|
|
12,352
|
|
|
11,220
|
|
|
|
|
|
|
||||
|
|
September 30,
2017 |
|
September 30,
2016 |
||||
ASSETS
|
|
|
|
|
|
|||
Current assets:
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
$
|
4,930
|
|
|
$
|
3,427
|
|
Accounts receivable
|
|
11,911
|
|
|
6,637
|
|
||
Other current assets
|
|
598
|
|
|
542
|
|
||
Total current assets
|
|
17,439
|
|
|
10,606
|
|
||
Equipment and improvements, net
|
|
1,391
|
|
|
644
|
|
||
Deferred taxes, net
|
|
9,639
|
|
|
11,415
|
|
||
Goodwill and other intangible assets, net
|
|
41,116
|
|
|
42,304
|
|
||
Other long-term assets
|
|
139
|
|
|
105
|
|
||
Total assets
|
|
$
|
69,724
|
|
|
$
|
65,074
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|
|||
Debt obligations - current
|
|
$
|
3,601
|
|
|
$
|
3,560
|
|
Derivative financial instruments, at fair value
|
|
306
|
|
|
204
|
|
||
Accrued payroll
|
|
3,723
|
|
|
3,616
|
|
||
Accounts payable, accrued expenses, and other current liabilities
|
|
10,895
|
|
|
7,136
|
|
||
Total current liabilities
|
|
18,525
|
|
|
14,516
|
|
||
Total long term liabilities
|
|
15,344
|
|
|
18,782
|
|
||
Total liabilities
|
|
33,869
|
|
|
33,298
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
|
||||
Common stock, $.001 par value; authorized 40,008 shares; issued and outstanding 11,767 at September 30, 2017 and 11,148 at September 30, 2016
|
|
12
|
|
|
11
|
|
||
Additional paid-in capital
|
|
82,687
|
|
|
81,897
|
|
||
Accumulated deficit
|
|
(46,844
|
)
|
|
(50,132
|
)
|
||
Total shareholders’ equity
|
|
35,855
|
|
|
31,776
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
69,724
|
|
|
$
|
65,074
|
|
|
|
Year Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
3,288
|
|
|
$
|
3,384
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,724
|
|
|
1,244
|
|
||
Amortization of debt financing costs as interest expense
|
|
268
|
|
|
289
|
|
||
Change in fair value of derivative financial instruments
|
|
102
|
|
|
27
|
|
||
Stock based compensation expense
|
|
662
|
|
|
465
|
|
||
Loss on retirement of equipment
|
|
31
|
|
|
3
|
|
||
Deferred taxes, net
|
|
1,776
|
|
|
(1,108
|
)
|
||
Changes in operating assets and liabilities
|
|
|
|
|
||||
Accounts receivable
|
|
(5,274
|
)
|
|
(3,351
|
)
|
||
Other current assets
|
|
(56
|
)
|
|
(113
|
)
|
||
Accounts payable, accrued payroll, accrued expenses and other current liabilities
|
|
3,945
|
|
|
5,106
|
|
||
Other long term assets/liabilities
|
|
58
|
|
|
94
|
|
||
Net cash provided by operating activities
|
|
6,524
|
|
|
6,040
|
|
||
|
|
|
|
|
||||
Investing activities
|
|
|
|
|
||||
Acquisition net of cash acquired
|
|
(250
|
)
|
|
(32,241
|
)
|
||
Purchase of equipment and improvements
|
|
(1,064
|
)
|
|
(498
|
)
|
||
Net cash used in investing activities
|
|
(1,314
|
)
|
|
(32,739
|
)
|
||
|
|
|
|
|
||||
Financing activities
|
|
|
|
|
||||
Net (repayments) borrowings on senior debt
|
|
(3,750
|
)
|
|
23,437
|
|
||
Repayments of capital lease obligations
|
|
(86
|
)
|
|
(94
|
)
|
||
Payment of deferred financing costs
|
|
—
|
|
|
(1,333
|
)
|
||
Proceeds from issuance of stock
|
|
—
|
|
|
2,521
|
|
||
Proceeds from stock option exercise
|
|
129
|
|
|
37
|
|
||
Net cash provided by (used in) financing activities
|
|
(3,707
|
)
|
|
24,568
|
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
1,503
|
|
|
(2,131
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
3,427
|
|
|
5,558
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
4,930
|
|
|
$
|
3,427
|
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
|
||||
Cash paid during the period for interest
|
|
$
|
883
|
|
|
$
|
454
|
|
Cash paid during the period for income taxes
|
|
$
|
337
|
|
|
$
|
124
|
|
Non-cash equity consideration for acquisition
|
|
$
|
—
|
|
|
$
|
2,500
|
|
Warrants issued in connection with subordinated debt
|
|
$
|
—
|
|
|
$
|
177
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|||||||||||
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Total Shareholders' Equity
|
|||||||||||||
BALANCE, September 30, 2015
|
|
9,551
|
|
|
$
|
10
|
|
|
$
|
76,375
|
|
|
$
|
(53,516
|
)
|
|
$
|
22,869
|
|
Directors stock grants
|
|
117
|
|
|
—
|
|
|
376
|
|
|
—
|
|
|
376
|
|
||||
Expense related to employee stock
|
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
||||
Issuance of stock for acquisition
|
|
670
|
|
|
1
|
|
|
2,499
|
|
|
—
|
|
|
2,500
|
|
||||
Exercise of stock options
|
|
89
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
37
|
|
||||
Exercise of stock warrants
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Rights offering net of expense offsets
|
|
710
|
|
|
—
|
|
|
2,520
|
|
|
—
|
|
|
2,520
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,384
|
|
|
3,384
|
|
||||
BALANCE, September 30, 2016
|
|
11,148
|
|
|
$
|
11
|
|
|
$
|
81,897
|
|
|
$
|
(50,132
|
)
|
|
$
|
31,776
|
|
Directors stock grants
|
|
103
|
|
|
—
|
|
|
521
|
|
|
|
|
521
|
|
|||||
Expense related to employee stock
|
|
—
|
|
|
—
|
|
|
141
|
|
|
|
|
141
|
|
|||||
Exercise of stock options
|
|
516
|
|
|
1
|
|
|
128
|
|
|
—
|
|
|
129
|
|
||||
Net Income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,288
|
|
|
3,288
|
|
||||
BALANCE, September 30, 2017
|
|
11,767
|
|
|
$
|
12
|
|
|
$
|
82,687
|
|
|
$
|
(46,844
|
)
|
|
$
|
35,855
|
|
|
|
|
|
(in thousands)
|
|
||||||||
|
|
|
September 30,
|
|
September 30,
|
||||||||
|
Ref
|
|
|
2017
|
|
|
|
2016
|
|
||||
Billed receivables
|
|
|
|
$
|
11,862
|
|
|
|
|
$
|
5,265
|
|
|
Unbilled receivables
|
|
|
|
49
|
|
|
|
|
1,372
|
|
|
||
Total accounts receivable
|
|
|
|
11,911
|
|
|
|
|
6,637
|
|
|
||
Less: Allowance for doubtful accounts
|
(a)
|
|
|
—
|
|
|
|
|
—
|
|
|
||
Accounts receivable, net
|
|
|
|
$
|
11,911
|
|
|
|
|
$
|
6,637
|
|
|
|
|
|
|
(in thousands)
|
|
||||||||
|
|
|
September 30,
|
|
September 30,
|
||||||||
|
Ref
|
|
|
2017
|
|
|
|
2016
|
|
||||
Prepaid insurance and benefits
|
|
|
|
$
|
240
|
|
|
|
|
$
|
168
|
|
|
Other receivables and prepaid expenses
|
|
|
|
358
|
|
|
|
|
374
|
|
|
||
Other current assets
|
|
|
|
$
|
598
|
|
|
|
|
$
|
542
|
|
|
|
|
|
|
(in thousands)
|
|
||||||||
|
|
|
September 30,
|
|
September 30,
|
||||||||
|
Ref
|
|
|
2017
|
|
|
|
2016
|
|
||||
Furniture and equipment
|
|
|
|
$
|
331
|
|
|
|
|
$
|
638
|
|
|
Computer equipment
|
|
|
|
715
|
|
|
|
|
202
|
|
|
||
Computer software
|
(a)
|
|
|
1,108
|
|
|
|
|
309
|
|
|
||
Leasehold improvements
|
|
|
|
66
|
|
|
|
|
38
|
|
|
||
Total fixed assets
|
|
|
|
2,220
|
|
|
|
|
1,187
|
|
|
||
Less accumulated depreciation and amortization
|
|
|
|
(829
|
)
|
|
|
|
(543
|
)
|
|
||
Equipment and improvements, net
|
(b)
|
|
|
$
|
1,391
|
|
|
|
|
$
|
644
|
|
|
|
|
|
|
|
(in thousands)
|
|||||||||||||||
|
|
|
|
|
||||||||||||||||
|
Ref
|
|
Goodwill
|
|
Customer Relationships
|
|
Non Compete
|
|
Trade Name
|
|
Total
|
|||||||||
Gross Balance as of September 30, 2016
|
|
|
$
|
34,745
|
|
|
$
|
7,247
|
|
|
$
|
1,370
|
|
|
$
|
—
|
|
|
43,362
|
|
Measurement period adjustment
|
|
|
(8,756
|
)
|
|
9,379
|
|
|
(890
|
)
|
|
517
|
|
|
250
|
|
||||
Adjusted Gross Balance at September 30, 2017
|
|
|
$
|
25,989
|
|
|
$
|
16,626
|
|
|
$
|
480
|
|
|
$
|
517
|
|
|
43,612
|
|
|
|
|
|
|
(in thousands)
|
||||||||||||||||
|
Ref.
|
|
Goodwill
|
|
Customer Relationships (a)
|
|
Non Compete Agreement (a)
|
|
Trade Name (a)
|
|
Total
|
||||||||||
Accumulated amortization at September 30, 2016
|
|
|
$
|
—
|
|
|
$
|
(993
|
)
|
|
$
|
(65
|
)
|
|
$
|
—
|
|
|
$
|
(1,058
|
)
|
Prior period amortization adjustment
|
|
|
—
|
|
|
300
|
|
|
45
|
|
|
(21
|
)
|
|
324
|
|
|||||
Current period amortization
|
|
|
—
|
|
|
(1,662
|
)
|
|
(48
|
)
|
|
(52
|
)
|
|
(1,762
|
)
|
|||||
Total accumulated amortization
|
|
|
—
|
|
|
(2,355
|
)
|
|
(68
|
)
|
|
(73
|
)
|
|
(2,496
|
)
|
|||||
Net balance at September 30, 2017
|
|
|
$
|
25,989
|
|
|
$
|
14,271
|
|
|
$
|
412
|
|
|
$
|
444
|
|
|
$
|
41,116
|
|
Estimated amortization expense for future years:
|
|
(in thousands)
|
||
Year 1
|
|
$
|
1,762
|
|
Year 2
|
|
1,762
|
|
|
Year 3
|
|
1,762
|
|
|
Year 4
|
|
1,762
|
|
|
Year 5
|
|
1,762
|
|
|
Thereafter
|
|
6,317
|
|
|
|
|
$
|
15,127
|
|
|
|
|
(in thousands)
|
||||||
|
|
|
September 30,
|
|
September 30,
|
||||
|
Ref
|
|
2017
|
|
2016
|
||||
Bank term loan
|
(a)
|
|
$
|
19,688
|
|
|
$
|
23,438
|
|
Less unamortized debt issuance costs
|
|
|
(961
|
)
|
|
(1,222
|
)
|
||
Net bank debt obligation
|
|
|
18,727
|
|
|
22,216
|
|
||
Less current portion of bank debt obligations
|
|
|
(3,601
|
)
|
|
(3,560
|
)
|
||
Long term portion of bank debt obligation
|
|
|
$
|
15,126
|
|
|
$
|
18,656
|
|
|
|
|
(in thousands)
|
||||||
|
|
|
Twelve Months Ended
|
||||||
|
|
|
September 30,
|
||||||
|
Ref
|
|
2017
|
|
2016
|
||||
Interest expense
|
(a)
|
|
$
|
(883
|
)
|
|
$
|
(454
|
)
|
Amortization of deferred financing costs as interest expense
|
(b)
|
|
(268
|
)
|
|
(289
|
)
|
||
Change in fair value of derivative financial instruments
|
|
|
(102
|
)
|
|
(27
|
)
|
||
Other income (expense), net
|
|
|
25
|
|
|
(53
|
)
|
||
Interest expense, net
|
|
|
$
|
(1,228
|
)
|
|
$
|
(823
|
)
|
|
|
|
(in thousands)
|
||||||
|
|
|
Period Ended
|
||||||
|
|
|
September 30,
|
||||||
|
Ref
|
|
2017
|
|
2016
|
||||
Unrecognized expense for DLH employees
|
(a)
|
|
$
|
299
|
|
|
$
|
18
|
|
Unrecognized expense for non-employee directors
|
(b)
|
|
—
|
|
|
24
|
|
||
Total unrecognized expense
|
|
|
$
|
299
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
(in years)
|
|
|
|||
|
|
|
|
|
|
|
Weighted
|
|
|
|||
|
|
|
|
|
Weighted
|
|
Average
|
|
(in thousands)
|
|||
|
|
|
(in thousands)
|
|
Average
|
|
Remaining
|
|
Aggregate
|
|||
|
|
|
Number of
|
|
Exercise
|
|
Contractual
|
|
Intrinsic
|
|||
|
Ref
|
|
Shares
|
|
Price
|
|
Term
|
|
Value
|
|||
Options outstanding, September 30, 2015
|
|
|
2,324
|
|
|
$1.40
|
|
6.8
|
|
$
|
3,649
|
|
Granted
|
(a)
|
|
25
|
|
|
$2.80
|
|
|
|
|
|
|
Canceled
|
|
|
(123
|
)
|
|
$1.40
|
|
|
|
|
|
|
Options outstanding, September 30
, 2016
|
|
|
2,226
|
|
|
$1.40
|
|
5.8
|
|
$
|
7,581
|
|
Granted
|
(a)
|
|
400
|
|
|
$5.94
|
|
|
|
|
||
Exercised
|
|
|
(632
|
)
|
|
$1.28
|
|
|
|
|
||
Options outstanding, September 30, 2017
|
|
|
1,994
|
|
|
$3.83
|
|
6.4
|
|
$
|
8,489
|
|
|
September 30,
|
||||
|
2017
|
|
2016
|
||
Risk free interest rate
|
2.46
|
%
|
|
1.01
|
%
|
Contractual term
|
10 years
|
|
|
10 years
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
Expected lives
|
10 years
|
|
|
10 years
|
|
Expected volatility
|
144
|
%
|
|
106
|
%
|
Fair value per option
|
$0.93 - $1.47
|
|
$2.55
|
Risk free interest rate
|
1.63
|
%
|
Contractual term
|
5 years
|
|
Dividend yield
|
—
|
%
|
Expected lives
|
5 years
|
|
Expected volatility
|
147
|
%
|
Fair value per warrant
|
$5.71
|
|
Beginning Balance
|
|
Realized/Unrealized
|
|
Purchases and
|
|
Ending Balance
|
|
|
Change in Unrealized (gains) losses for liabilities held at
|
||||||||||
|
October 1, 2016
|
|
(Gains) Losses
|
|
Settlements
|
|
September 30, 2017
|
|
|
September 30, 2017
|
||||||||||
Warrant issued to acquire common stock
|
$
|
204
|
|
|
$
|
102
|
|
|
$
|
—
|
|
|
$
|
306
|
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
|
|
|
Year Ended
|
||||||
|
|
|
September 30,
|
||||||
|
|
|
2017
|
|
2016
|
||||
Numerator:
|
|
|
|
|
|
||||
Net income
|
|
|
$
|
3,288
|
|
|
$
|
3,384
|
|
Denominator:
|
|
|
|
|
|
||||
Denominator for basic net income per share - weighted-average outstanding shares
|
|
|
11,345
|
|
|
9,966
|
|
||
Effect of dilutive securities:
|
|
|
|
|
|
||||
Stock options and restricted stock
|
|
|
1,007
|
|
|
1,254
|
|
||
Denominator for diluted net income per share - weighted-average outstanding shares
|
|
|
12,352
|
|
|
11,220
|
|
||
|
|
|
|
|
|
||||
Net income per share-basic
|
(a)
|
$
|
0.29
|
|
|
$
|
0.34
|
|
|
Net income per share-diluted
|
(a)
|
$
|
0.27
|
|
|
$
|
0.30
|
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||
Contractual obligations
|
|
|
|
Next 12
|
|
2-3
|
|
4-5
|
|
More than 5
|
||||||||||
(Amounts in thousands)
|
Ref
|
Total
|
|
Months
|
|
Years
|
|
Years
|
|
Years
|
||||||||||
Debt obligations
|
|
$
|
19,688
|
|
|
$
|
3,750
|
|
|
$
|
7,500
|
|
|
$
|
8,438
|
|
|
$
|
—
|
|
Facility leases
|
|
$
|
3,693
|
|
|
$
|
929
|
|
|
$
|
1,567
|
|
|
$
|
652
|
|
|
$
|
545
|
|
Equipment operating leases
|
|
77
|
|
|
38
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|||||
Total Contractual Obligations
|
|
$
|
23,458
|
|
|
$
|
4,717
|
|
|
$
|
9,106
|
|
|
$
|
9,090
|
|
|
$
|
545
|
|
|
|
Year Ended
|
||||||
|
|
September 30,
|
||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
||||
Deferred income tax asset (liability):
|
|
|
|
|
||||
Net operating loss carry forwards and tax credits
|
|
$
|
10,786
|
|
|
$
|
12,387
|
|
AMT credit carryforward
|
|
316
|
|
|
231
|
|
||
Stock based compensation
|
|
236
|
|
|
172
|
|
||
Fixed and intangible assets
|
|
(3,243
|
)
|
|
(2,580
|
)
|
||
Accrued expenses
|
|
1,303
|
|
|
918
|
|
||
Other items, net
|
|
241
|
|
|
287
|
|
||
Net deferred tax asset
|
|
$
|
9,639
|
|
|
$
|
11,415
|
|
|
|
Year Ended
|
||||||
|
|
September 30,
|
||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
||||
Current expense (benefit)
|
|
$
|
338
|
|
|
$
|
170
|
|
Deferred expense (benefit)
|
|
1,776
|
|
|
(1,108
|
)
|
||
Total expense (benefit)
|
|
2,114
|
|
|
(938
|
)
|
|
|
Year Ended
|
||||||
|
|
September 30,
|
||||||
(amounts in thousands)
|
|
2017
|
|
2016
|
||||
Federal statutory rate
|
|
$
|
1,837
|
|
|
$
|
831
|
|
State taxes, net
|
|
260
|
|
|
71
|
|
||
Other permanent items
|
|
17
|
|
|
(86
|
)
|
||
Change in valuation allowance
|
|
—
|
|
|
(1,754
|
)
|
||
|
|
$
|
2,114
|
|
|
$
|
(938
|
)
|
|
|
2017 Quarters
|
||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
Revenue
|
|
$
|
26,111
|
|
|
$
|
29,905
|
|
|
$
|
29,256
|
|
|
$
|
30,390
|
|
Gross margin
|
|
5,811
|
|
|
6,401
|
|
|
6,385
|
|
|
7,253
|
|
||||
Income from operations
|
|
889
|
|
|
1,839
|
|
|
1,753
|
|
|
2,149
|
|
||||
Other income (expense), net
|
|
(364
|
)
|
|
(255
|
)
|
|
(269
|
)
|
|
(340
|
)
|
||||
Income before income taxes
|
|
525
|
|
|
$
|
1,584
|
|
|
1,484
|
|
|
1,809
|
|
|||
Income tax expense(benefit)
|
|
201
|
|
|
$
|
605
|
|
|
539
|
|
|
769
|
|
|||
Net income
|
|
$
|
324
|
|
|
$
|
979
|
|
|
$
|
945
|
|
|
$
|
1,040
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.03
|
|
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
|
2016 Quarters
|
||||||||||||||
|
|
First
|
|
Second
|
|
Third (1)
|
|
Fourth
|
||||||||
Revenue
|
|
$
|
16,559
|
|
|
$
|
16,934
|
|
|
$
|
24,989
|
|
|
$
|
27,120
|
|
Gross margin
|
|
2,917
|
|
|
3,224
|
|
|
5,456
|
|
|
6,229
|
|
||||
Income from operations
|
|
382
|
|
|
689
|
|
|
1,668
|
|
|
1,325
|
|
||||
Other expense
|
|
(575
|
)
|
|
(127
|
)
|
|
(374
|
)
|
|
(542
|
)
|
||||
Income (loss) before income taxes
|
|
(193
|
)
|
|
562
|
|
|
1,294
|
|
|
783
|
|
||||
Income tax expense(benefit) (2)
|
|
(77
|
)
|
|
225
|
|
|
518
|
|
|
(1,604
|
)
|
||||
Net income (loss)
|
|
$
|
(116
|
)
|
|
$
|
337
|
|
|
$
|
776
|
|
|
$
|
2,387
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
0.08
|
|
|
$
|
0.23
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.20
|
|
/s/ WithumSmith+Brown, PC
|
|
WithumSmith+Brown, PC
|
|
/s/ Zachary C. Parker
Zachary C. Parker
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Kathryn M. JohnBull
Kathryn M. JohnBull
Chief Financial Officer
(Principal Accounting Officer)
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
|
|
|
/s/ ZACHARY C. PARKER
Zachary C. Parker
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ KATHRYN M. JOHNBULL
Kathryn M. JohnBull
Chief Financial Officer
(Principal Accounting Officer)
|