What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-04-04 compared with 2021-04-02 · 151 added, 376 removed, 6 unchanged (99% of the section changed)

BUSINESS (CONTINUED)

Industry Overview (Continued)

The Company’s Engineering group remains focused on areas of growth, primarily within the electric power, aerospace, marine and transportation, commercial and industrial, oil and gas, as well as biofuel industries.

Given the current composition of its customer base, the Engineering group’s performance is well balanced between its three segments.

In recent years, many electric utilities have prioritized transitioning their power generation assets to cleaner

sources of energy.

Much of this transformation is being driven by investments in renewable energy.

The Energy Information Administration (“EIA”) estimates that 38% of the United States’ electric generation capacity will be comprised of wind and solar

assets by 2050.

This expansion will require extensive investment in the nation’s transmission infrastructure to interconnect these renewable resources to the energy grid.

According to a 2020 study conducted by Princeton University’s Andlinger Center

for Energy and the Environment, existing high voltage transmission capacity will need to triple by 2050 and require an additional $2.4 trillion in investment to connect wind and solar generation assets to the broader energy grid.

Projects of this

scale will require engineering and design expertise, as well as the utilization of EPC services.

The process & industrial group has also seen growth as global industries retool and pivot their platforms to assist in the fight against COVID-19.

As an example, the demand for sanitizers has increased substantially.

This growth and anticipated future growth has led manufacturers to lean on engineering services firms and equipment suppliers to assist them in scaling their production efforts to

meet global demand.

In the health care services industry, a shortage of nurses and other medical personnel in the United States has led to increases in business activity for health care service companies, including the Company’s Specialty

Health Care group.

Due in part to an aging population and improved medical technology, the demand for selected health care professionals is expected to continue over the next several years, with an emphasis on leveraging technology to expand access

The increased adoption of telemedicine, an area in which the Specialty Health Care group has developed new service offerings, is a primary example.

In addition, public educational institutions are outsourcing their requirements for school

nurses, therapists and paraprofessionals to lower their costs and it is expected that this will continue and grow.

Each of these dynamics have been exacerbated by COVID-19.

The pandemic has also altered patterns in health care delivery, with newer

delivery models gaining traction, namely telemedicine.

Given federal and state regulatory changes as well as private insurer reimbursement methods, utilization of telemedicine services increased significantly.

Data from the Center for Disease Control

and Prevention (“CDC”) showed a 50% increase in telehealth visits in the first quarter of 2020, and represents 30% of weekly health center visits.

As the COVID-19 pandemic continues, CDC researchers stated that maintaining the expansion of telehealth

remains critical to providing access to care.

Annual telehealth revenues totaled $3 billion in 2019 within the United States.

It is expected the total addressable market opportunity will continue to expand and grow.

Expanding access to behavioral

health and mental well-being is also a priority for public health officials.

Compared with 2019, the CDC stated the proportion of children’s mental health-related emergency department visits increased by 24% and 31% for children aged 5-11 and 12-17,

respectively.

Increasing and maintaining access to proper care remains a top priority and the market opportunity for these services is expected to continue to grow.

Companies must integrate and manage computing environments consisting of multiple computing platforms, operating systems, databases and networking protocols and off-the-shelf software applications to support business

Companies also need to keep pace with new technology developments, which often rapidly render existing equipment and internal skills obsolete.

At the same time, varied factors have caused many organizations to focus on core competencies

and trim workforces in the IT management area.

Accordingly, these organizations often lack the quantity, quality and variety of IT skills necessary to design and support IT solutions.

IT managers are charged with supporting increasingly complex

systems and applications of significant strategic value, while working under budgetary, personnel and expertise constraints within their own organizations.

The Company believes its target market for IT services is among middle-market companies, which typically lack the time and technical resources to satisfy all of their IT needs internally.

These companies commonly

require sophisticated, experienced IT assistance to achieve their business objectives and often rely on IT service providers to help implement and manage their systems.

RCM is structured to provide middle-market companies a single source for their

BUSINESS (CONTINUED)

Business Strategy

RCM is dedicated to providing solutions to meet its clients’ business needs by delivering engineering, specialty health care and information technology services.

The Company’s objective is to remain a recognized

leader of specialized professional staffing, consulting services and solutions in major markets throughout North America.

The Company adapts operating strategies to achieve this objective.

The following is a discussion of the key elements of its

growth and operating strategies:

Growth Strategy

Promote Full Life Cycle Solution Capability

The Company promotes a full life cycle solution capability to its customers.

The goal of the full life cycle solution strategy is to fully address a client’s project implementation cycle at each stage of its

development and deployment.

This entails the Company working with its clients from the initial conceptualization of a project through its design and project execution, and extending into ongoing management and support of the delivered product.

RCM’s strategy is to build projects and solutions offerings selectively, utilizing its extensive resource base.

The Company believes that the effective execution of this strategy will generate improved margins on its existing resources.

The completion of this service-offering continuum is intended to afford the Company the

opportunity to strengthen long-term client relationships that will further contribute to a more predictable revenue stream.

In addition to a full life cycle solution offering, the Company continues to focus on transitioning into higher value oriented services in an effort to increase its margins on its various service lines and generate

revenue that is more sustainable.

The Company believes this transition is accomplished by pursuing additional vertical market specific solutions in conjunction or combination with longer-term based solutions, through expansion of its client

relationships and by pursuing strategic alliances and partnerships.

Achieve Internal Growth

The Company continues to promote its internal growth strategies which it designed to better serve the Company’s customers, generate higher revenue and achieve greater operating efficiencies.

Every division of the

Company continuously focuses on services and client diversification.

Business units are collaborating on penetrating and servicing accounts as sales teams are increasing their activity levels.

This enables clients to be supported by specialists in

their areas of need while RCM productivity increases.

RCM provides an orientation program in which sales managers and professionals receive relevant information about Company operations.

RCM has adopted an industry-centric approach to sales and marketing.

This initiative contemplates that clients within the same industry sectors tend to have common business challenges.

It therefore allows the Company

to present and deliver enhanced value to those clients in the vertical markets in which RCM has assembled the greatest work experience.

RCM’s consultants continue to acquire project experience that offers differentiated awareness of the business

challenges that clients in that industry are facing.

This alignment also facilitates and creates additional cross-selling opportunities.

The Company believes this strategy will lead to greater account penetration and enhanced client relationships.

Operational strategies contributing to RCM’s internal productivity include the delineation of certain new solutions practice areas in markets where its clients had historically known the Company as a contract service

The formation of these practice areas facilitates the flow of project opportunities and the delivery of project-based solutions.

BUSINESS (CONTINUED)

Growth Strategy (Continued)

Pursue Selective Strategic Acquisitions

The industries in which the Company operates continues to be highly fragmented, and the Company plans to continue to selectively assess opportunities to make strategic acquisitions as such opportunities are presented

to the Company.

The Company's acquisition strategy is designed to broaden the scope of services and technical competencies and grow its full life cycle solution capabilities.

In considering acquisition opportunities, the Company focuses principally

on companies with (i) technologies or market segments RCM has targeted for strategic value enhancement, (ii) margins that are accretive to existing margins, (iii) experienced management personnel, (iv) substantial growth prospects and (v) sellers who

desire to join the Company’s management team.

To retain and provide incentives for management of its acquired companies, the Company has generally structured a significant portion of the acquisition price in the form of multi-tiered consideration

based on growth of operating profitability of the acquired company over a two to four year period.

Operating Strategy

Develop and Maintain Strong Customer Relationships

The Company seeks to develop and maintain strong interactive customer relationships by anticipating and focusing on its customers’ needs.

The Company emphasizes a relationship-oriented approach to business, rather

than the transaction or assignment-oriented approach that the Company believes is used by many of its competitors.

This industry-centric strategy is designed to allow RCM to expand further its relationships with clients in RCM’s targeted sectors.

To develop close customer relationships, the Company’s practice managers and/or sales people regularly meet with both existing and prospective clients to identify areas of need and help design solutions and identify

the resources needed to execute their strategies.

The Company’s managers also maintain close communications with their customers during each project and on an ongoing basis after its completion.

The Company believes that this relationship-oriented

approach can result in greater customer satisfaction.

Additionally, the Company believes that by collaborating with its customers in designing business solutions, it can generate new opportunities to cross-sell additional services that the Company

has to offer.

The Company focuses on providing customers with qualified individuals or teams of experts compatible with the business needs of its customers and makes a concerted effort to follow the progress of such relationships to ensure their

continued success.

Attract and Retain Highly Qualified Consultants and Technical Resources

The Company believes it has been successful in attracting and retaining highly qualified consultants and contractors by (i) providing stimulating and challenging work assignments, (ii) offering competitive wages, (iii)

effectively communicating with its candidates, (iv) providing selective training to maintain and upgrade skills and (v) aligning the needs of its customers with appropriately skilled personnel.

The Company believes it has been successful in

retaining these personnel due in part to its use of practice managers who are dedicated to maintaining contact with, and monitoring the satisfaction levels of, the Company’s consultants and contractors while they are on assignment.

BUSINESS (CONTINUED)

RCM provides a full range of Engineering services including Project Management Engineering & Design, Engineering Analysis, Engineer-Procure-Construct, Configuration Management, Hardware/Software Validation &

Verification, Quality Assurance, Technical Writing & Publications, Manufacturing Process Planning & Improvement and 3D/BIM Integrated Design.

Engineering services are provided at the site of the client or at the Company’s own facilities.

The Company’s Engineering segment consists of three business units – Energy Services, Aerospace Services and Process and Industrial Services.

Energy Services :

Provides solutions to the utility industry, including power generation and transmission and distribution.

The group also

specializes in projects in the nuclear industry, with experience that encompasses multi-disciplined engineering and design services as well as providing technical support during design, construction and plant operational phases.

believes that the deregulation of the utilities industry and the aging of nuclear power plants offer the Company an opportunity to capture a greater share of professional services and project management requirements of the utilities

Electric utilities have prioritized transitioning their power generation assets to cleaner sources of energy.

This expansion requires large-scale investment in the nation’s transmission infrastructure to interconnect these

renewable resources to the energy grid.

Aerospace Services :

Provides engineering and technical services to the aerospace & defense industry.

According to the Congressional Budget

Office (“CBO”), the Department of Defense plans to spend over $1 trillion in procurement-related aviation expenditures over the next three decades.

Given RCM’s customer account relationships with several of the largest defense prime

contractors, the Company believes there is ample opportunity for engineering services and technical publication work, including production and procurement engineering services as well as the need for sustainment and development program

publication services.

Process and Industrial Services :

Provides engineering services to the industrial, chemical, commercial and oil and gas industries in the United States, Europe and

As the world’s industrial output rebounds from 2020’s pandemic-related weakness, the Company believes it is positioned well to take advantage.

With many companies in the chemical industry reprioritizing spending towards

decarbonization technologies, many US chemical companies are expected to place an emphasis on renewable feedstocks and new carbon recycling technologies.

The Company believes its process engineering services can play a vital role across

this multibillion-dollar opportunity.

The Company provides its engineering services through a number of delivery methods.

These include managed tasks and resources, complete project services, outsourcing, both on and off-site, and a full complement of

resourcing alternatives.

As of January 2, 2021, the Company assigned approximately 370 engineering and technical personnel to its customers.

BUSINESS (CONTINUED)

Specialty Health Care

The Company’s Specialty Health Care Group specializes in long-term and short-term staffing as well as executive search and placement solutions for many of the largest healthcare institutions and school districts across

the United States.

The segment’s portfolio of services includes, but is not limited to, the following fields:

Allied and Therapy Staffing :

Specializes in recruiting outstanding professionals across the health care industry.

Our allied health care

professionals and therapists work in schools, health systems, hospitals, nursing homes, and rehabilitation facilities.

Correctional Healthcare Staffing :

Staffing services for local, state and federal correctional facilities and provide screening, onboarding, and

employee assessments as well as employee and inmate vaccination and treatment services.

Health Information Management :

Provide healthcare organizations with experienced medical coding professionals that manage staffing shortages,

backlogs, vacation coverage and long-term coding support.

Nursing Services :

Provides nurse placement and staffing services in healthcare facilities, schools, hospitals and correctional facilities.

Physicians and Advanced Practice :

Our national locum tenens (temporary practitioner) practice specializes in placing physicians, physician

assistants and nurse practitioners.

School Services :

Provides full-time and part-time nurse employment services for school districts across the country.

The Company also offers other

health care professionals to perform school evaluations and treat students, including occupational and physical therapists, speech and language pathologists, as well as special education support services and registered behavioral

technicians to support students’ individualized education plan and behavioral health needs.

Telepractice :

RCM’s teletherapy solution is an evidence-based service delivery option for students to receive Special Education services such as Speech-Language

Therapy, Occupational Therapy, Physical Therapy, Behavioral and Mental Health services and other healthcare services through an online platform.

As the COVID-19 pandemic has demonstrated, maintaining the utilization of telemedicine remains critical to providing necessary access to care.

Expanding access to behavioral health and mental wellness services is also

a priority for many public health officials.

Compared with 2019, the CDC stated that children’s mental health-related emergency department visits increased by 24% and 31% for children aged 5-11 and 12-17, respectively.

The Company’s School Services

and Telepractice offerings are well positioned to provide solutions in these areas of priority as the market opportunity for these services is expected to continue to grow.

As of January 2, 2021, the Company assigned approximately 1,460 specialty health care services personnel to its customers.

BUSINESS (CONTINUED)

Information Technology

The Company’s IT segment is an integrated group of business units providing staff supplementation services and project solutions with physical locations in the United States, Canada and Puerto Rico primarily supporting

Financial, Technical, Manufacturing, Life Sciences and Distribution applications.

Specialization in project solutions include, but are not limited to, the following areas:

Life Sciences :

Specializes in providing innovative options to pharmaceutical, medical device and biotechnology companies in need of guidance,

support or remediation of quality, compliance or business challenges.

The group assists in staffing, solution planning and remediation needs in the areas of automation, compliance, data analytics, technical quality assurance and management,

and validation and verification.

IT Services & Solutions :

Global provider of business and technology solutions designed to improve the operational performance of our clients.

Specialties include software development, infrastructure services, and managed IT solutions.

The Company has a 40-year history of providing qualified IT candidates to customers in a timely and cost-effective manner to address their

specific business needs.

The Company offers scalable solutions that can provide emerging growth companies with a single qualified resource or an entire project team along with RCM’s project management oversight to Fortune 100 clients.

RCM’s sector knowledge coupled with technical and business process experience enable the Company to provide strategic planning, project execution and management and support services throughout the

entire project life cycle.

RCM has successfully completed multimillion-dollar projects in a variety of industry verticals using time-tested methodologies that manage strict budgets, timelines and quality metrics.

The Company believes that its ability to deliver information technology solutions across a wide range of technical platforms provides an important competitive advantage.

RCM ensures that its consultants have the

expertise and skills needed to keep pace with rapidly evolving information technologies.

The Company’s strategy is to maintain expertise and acquire knowledge in multiple technologies so it can offer its clients non-biased technology solutions best

suited to their business needs.

The Company provides its IT services through a number of flexible delivery methods.

These include management consulting engagements, project management of client efforts, project implementation of client initiatives,

outsourcing, both on and off site, and a full complement of resourcing alternatives.

As of January 2, 2021, the Company assigned approximately 230 information technology personnel to its customers.

BUSINESS (CONTINUED)

Branch Offices

The Company’s organization consists of 26 branch offices located in the United States, Canada, Puerto Rico and Serbia.

The locations and services of each of the branch offices are set forth in the table below.

UNITED STATES

Massachusetts

(1) Services provided are abbreviated as follows:

E - Engineering

HC - Specialty Health Care

IT - Information Technology

The Company is domiciled in the United States and its segments operate in the United States, Canada, Puerto Rico and Serbia.

From its headquarters locations in New Jersey, the Company provides its branch offices with centralized administrative, marketing, finance, MIS, human resources and legal support.

Centralized administrative functions

minimize the administrative burdens on branch office managers and allow them to spend more time focusing on sales and marketing and practice development activities.

Branch offices are primarily located in markets that the Company believes have strong growth prospects for the Company’s services.

The Company’s branches are operated in a decentralized, entrepreneurial manner with

most offices operating as independent profit centers.

BUSINESS (CONTINUED)

Sales and Marketing

Sales and marketing efforts are conducted at the local and national level through the Company’s network of branch offices.

Sales activities and productivity are tracked and rankings established and published.

between business units are recognized and financially encouraged.

The Company emphasizes long-term personal relationships with customers that are developed through regular assessment of customer requirements and proactive monitoring of service

The Company’s sales personnel make regular visits to existing and prospective customers.

New customers are obtained through active sales programs and referrals.

The Company encourages its employees to participate in national and

regional trade associations, local chambers of commerce and other civic associations.

The Company seeks to develop strategic partnering relationships with its customers by providing comprehensive solutions for all aspects of a customer’s

engineering, information technology and other professional services needs.

The Company concentrates on providing carefully screened professionals with the appropriate skills in a timely manner and at competitive prices.

The Company regularly

monitors the quality of the services provided by its personnel and obtains feedback from its customers as to their satisfaction with the services provided.

The Company serves Fortune 1000 companies and many middle market clients.

The Company’s relationships with these customers are typically formed at the customers’ local or regional level and from time to time, when

appropriate, at the corporate level for national accounts.

The Company’s larger recognizable customers include:

Engineering Services

Health Care Services

Life Sciences & IT Services

Al-Corn Clean Fuel

American Electric Power

Eversource Energy

Hamilton Sundstrand

Lockheed Martin

Ontario Power Generation

Pratt and Whitney

Sikorsky Aircraft

United Technologies Corporation

AMN Healthcare

Aya Healthcare

Chicago Public Schools

Cross Country

Hawaii Department of Education

New York City Board of Education

Right Sourcing

San Bernardino County

Thera Dynamic Physical Therapy

Bimbo Bakeries

Bruckner Supply Company

FlightSafety International

Ginkgo Bioworks

Johnson and Johnson

Lily del Caribe

Regeneron Pharmaceuticals

Triverus Consulting

United Health Group

Western Alliance Bank

Key Customers

The Company has established long-term relationships with many of its customers across each of its business segments.

RCM’s emphasis on client retention has resulted in repeat business from many of its largest strategic

During the fiscal year ended January 2, 2021, New York City Board of Education represented 10.6% of the Company’s revenues.

No other client accounted for 10% or more of total revenues during the year.

The Company’s five, ten and twenty

largest customers accounted for approximately 33.4%, 46.6% and 60.7%, respectively, of the Company’s revenues for the fiscal year ended January 2, 2021.

BUSINESS (CONTINUED)

Other Information

Safeguards - Business, Disaster and Contingency Planning

RCM has implemented a number of safeguards to protect the Company from various system-related risks including Redundant Telecommunications and server systems architecture, multi-tiered server and desktop backup

infrastructure, and data center physical and environmental controls.

In addition, RCM has developed disaster recovery / business continuity procedures for all offices.

Given the significant amount of data generated in the Company’s key processes including recruiting, sales, payroll and customer invoicing, RCM has established redundant procedures, functioning on a daily basis, within

the Company’s primary data center, which is a third-party Internet Data Center (“IDC”).

This redundancy should mitigate the risks related to hardware, application and data loss by utilizing the concept of live differential backups of servers and

desktops to Storage Area Network (SAN) devices on its backup LAN, culminating in offsite tape storage at an independent facility.

Controls within the data center environment ensure that all systems are proactively monitored and data is properly

Additionally, RCM has contracted and brokered strategic relationships with third-party vendors to meet its recovery objectives in the event of a system disruption.

For example, comprehensive service level agreements

for RCM’s data circuits and network devices guarantee minimal outages as well as network redundancy and scalability.

The Company’s ability to protect its data assets against damage from fire, power loss, telecommunications failures, and facility violations is critical.

To address potential cyber security threats, the Company uses a

third-party mail management service to filter all emails destined for the RCMT domain before being delivered to the corporate mail servers.

The service has also been deployed to safeguard the enterprise from malicious internet content.

The deployment

of virus, spam, and patch management controls extends from the perimeter network to all desktops and is centrally monitored and managed.

In addition to the virus and malware controls, an Intrusion Protection System (IPS) monitors and alerts on

changes in network traffic patterns as well as known hostile signatures.

The Company maintains a disaster recovery plan that outlines the recovery time / point objectives (RTO / RPO), organization structure, roles and procedures, including site addendum disaster plans for all of its key

operating offices.

Corporate IT personnel regulate the maintenance and integrity of backed-up data throughout the Company.

The IDC provides RCM with a robust data center environment with redundant HVAC, commercial power feeds, ten 2000kW diesel generator sets with five 10,000-gallon, above-ground fuel oil storage tanks to provide standby

power and dry pipe fire suppression.

In addition, the IDC provides 24x7 security staffing, closed-circuit monitors, secure-card key access, biometrics scanners, man traps, and alarmed doors.

BUSINESS (CONTINUED)

The market for engineering and IT services is highly competitive and is subject to rapid change.

As the market demand has shifted, many software companies have adopted tactics to pursue services and consulting

offerings making them direct competitors when in the past they may have been alliance partners.

Primary competitors include participants from a variety of market segments, including publicly and privately held firms, systems consulting and

implementation firms, application software firms, service groups of computer equipment companies, facilities management companies, general management consulting firms and staffing companies.

In addition, the Company competes with its clients’

internal resources, particularly where these resources represent a fixed cost to the client.

Such competition may impose additional pricing pressures on the Company.

The Company believes its principal competitive advantages in the engineering and IT services market include:

strong relationships with existing clients, a long-term track record with over 1,000 clients, a broad range

of services, technical expertise, knowledge and experience in multiple industry sectors, quality and flexibility of service, responsiveness to client needs and speed in delivering IT solutions.

Additionally, the Company competes for suitable acquisition candidates based on its differentiated acquisition model, its entrepreneurial and decentralized operating philosophy, and its strong corporate-level support

and resources.

The Company’s operating results can be affected by the seasonal fluctuations in client expenditures.

Expenditures in the Engineering and Information Technology segments can be negatively impacted during the first

quarter of the year when clients are finalizing their budgets.

Quarterly results generally fluctuate depending on, among other things, the number of billing days in a quarter and the seasonality of clients’ businesses.

The business is also affected

by the timing of holidays and seasonal vacation patterns, generally resulting in lower revenues and gross profit in the fourth quarter of each year, not considering any non-seasonal impact.

Extreme weather conditions may also affect demand in the

first and fourth quarters of the year as certain clients’ facilities are located in geographic areas subject to closure or reduced hours due to inclement weather.

The Company generally experiences an increase in its cost of sales and a corresponding

decrease in gross profit and gross margin percentage in the first and second fiscal quarters of each year as a result of resetting certain state and federal employment tax rates and related salary limitations.

Also, the Company’s Specialty Health

Care segment typically experiences a significant decline in revenues due to the substantial closure of one of its largest customers, the New York City Department of Education, and other educational institution clients during the third quarter due to

their summer recess.

Government Regulations

The Company is a consulting firm and employment service provider and is generally subject to one or more of the following types of government regulation:

(1) regulation of the employer/employee relationship between a

firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers’ compensation, (2) registration, licensing, record keeping and

reporting requirements, and (3) federal contractor compliance.

The Company believes it is in material compliance with all employee related statutes.

BUSINESS (CONTINUED)

Intellectual Property

1 unchanged sentence

name is extremely valuable and important to its business.

The Company endeavors to protect its intellectual property rights and maintain certain trademarks, trade names,

service marks and other intellectual property rights, including The Source of Smart Solutions®.

The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the

Company’s use of its proprietary rights.

As of January 2, 2021, the Company employed an administrative, sales, recruiting and management staff of approximately 215 people, including licensed engineers and certified IT specialists who, from time to time,

participate in engineering design and IT projects undertaken by the Company.

As of January 2, 2021, there were approximately 370 engineering and technical personnel, 1,460 specialty health care services personnel and 230 information technology

personnel assigned by the Company to work on client projects or assignments for various periods.

None of the Company’s employees are party to a collective bargaining agreement.

The Company endeavors to protect its intellectual property rights and maintain certain trademarks, trade names, service marks and other intellectual property rights, including The Source of Smart Solutions®. 

The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company’s use of its proprietary rights. 

As of January 1, 2022, the Company employed an administrative, sales, recruiting and management staff of approximately 250 people, including licensed engineers and certified IT specialists who, from time to time, participate in engineering design and IT projects undertaken by the Company. 

As of January 1, 2022, there were approximately 440 engineering and technical personnel, 2,950 specialty health care services personnel and 240 life sciences and information technology personnel assigned by the Company to work on client projects or assignments for various periods. 

None of the Company’s employees are party to a collective bargaining agreement. 

Access to Company Information

The Company is a Nevada corporation organized in 1971.

The address of its principal executive office is 2500 McClellan Avenue, Suite 350, Pennsauken, NJ 08109-4613.

RCM electronically files its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (“SEC”).

maintains an Internet site (http://www.sec.gov) that contains reports, proxies, information statements, and other information regarding issuers that file electronically.

8-K and all amendments to those reports filed by the Company with the SEC pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended.

These reports are available as soon as reasonably practicable after such material is

electronically filed with or furnished to the SEC.

The Company’s website is http://www.rcmt.com.

The information contained on the Company’s website, or on other websites linked to the Company’s website, is not part of this document.

herein to the Company’s website is an inactive text reference only.

The Company is a Nevada corporation organized in 1971. 

The address of its principal executive office is 2500 McClellan Avenue, Suite 350, Pennsauken, NJ 

The SEC maintains an Internet site ( http://www.sec.gov ) that contains reports, proxies, information statements, and other information regarding issuers that file electronically.

RCM makes available on its website or by responding free of charge to requests addressed to the Company’s Corporate Secretary, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed by the Company with the SEC pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended.

These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. 

The Company’s website is http://www.rcmt.com. 

The information contained on the Company’s website, or on other websites linked to the Company’s website, is not part of this document. 

Reference herein to the Company’s website is an inactive text reference only.

RCM has adopted a Code of Conduct applicable to all of its directors, officers and employees.

In addition, the Company has adopted a Code of Ethics, within the meaning of applicable SEC rules, applicable to its Chief

Executive Officer, Chief Financial Officer and Controller.

Both the Code of Conduct and Code of Ethics are available, free of charge, by sending a written request to the Company’s Corporate Secretary.

If the Company makes any amendments to either of

these Codes (other than technical, administrative, or other non-substantive amendments), or waives (explicitly or implicitly) any provision of the Code of Ethics to the benefit of its Chief Executive Officer, Chief Financial Officer or Controller, it

intends to disclose the nature of the amendment or waiver, its effective date and to whom it applies in the investor relations portion of the website, or in a report on Form 8-K filed with the SEC.

In addition, the Company has adopted a Code of Ethics, within the meaning of applicable SEC rules, applicable to its Chief Executive Officer, Chief Financial Officer and Controller.

Both the Code of Conduct and Code of Ethics are available, free of charge, by sending a written request to the Company’s Corporate Secretary.

If the Company makes any amendments to either of these Codes (other than technical, administrative, or other non-substantive amendments), or waives (explicitly or implicitly) any provision of the Code of Ethics to the benefit of its Chief Executive Officer, Chief Financial Officer or Controller, it intends to disclose the nature of the amendment or waiver, its effective date and to whom it applies in the investor relations portion of the website, or in a report on Form 8-K filed with the SEC.

 RISK FACTORS

The Company ’

s business involves a number of risks, some of which are beyond its control.

The risk and uncertainties described below are not the only ones the Company faces.

Set forth below is a discussion of the risks and uncertainties that management believes to be material to the Company.

Economic Trends

Adverse global economic conditions, when they occur, may create conditions such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and volatility in credit, equity and fixed income markets. 

Any or all of these developments can negatively affect the Company’s business, operating results or financial condition in a number of ways. 

For example, current or potential customers may be unable to fund capital spending programs, new product launches of other similar endeavors whereby they might procure services from the Company, and therefore delay, decrease or cancel purchases of services or not pay or delay paying for previously purchased services. 

In addition, these conditions may cause the Company to incur increased expenses or make it more difficult either to utilize existing debt capacity or otherwise obtain financing for operations, investing activities (including the financing of any future acquisitions), or financing activities, all of which could adversely affect the Company’s business, financial condition and results of operations.

Global Epidemics

The ongoing COVID-19 pandemic, and associated initiatives to reduce its spread, have adversely affected the Company’s business and financial position, and may continue to do so. 

The impacts described in this risk factor as relating to COVID-19 could arise in the future with respect to any other global pandemics that may occur.

Our business has been, and may continue to be, adversely impacted by the effects of the COVID-19 pandemic.

As COVID-19 continues to present various health, business and other challenges globally, including significant impacts in the United States, we are taking a variety of measures to protect the health and safety of our employees and, especially in the healthcare segment, deploying our resources, including the talents of our employees, to help the communities we serve meet and overcome the current challenges. 

However, public and private sector policies and initiatives to reduce the transmission of COVID-19, such as closures of schools, businesses and manufacturing facilities, the promotion of social distancing, the adoption of working from home by companies and institutions, and travel restrictions could continue to adversely affect demand for our services and to present challenges to us in delivering these services. 

The extent to which COVID-19 impacts operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the pandemic and the actions to contain COVID-19 or treat its impact, among others.

These impacts on our business could have an adverse effect on our liquidity position and access to capital, including our ability to access our line of credit. 

The Company can give no assurance that the line of credit will be available in the future.

These factors, in addition to delays in payment (from clients and/or clients in bankruptcy), have resulted in, and could continue to result in, significant additional bad debts in the near future.

Additionally, our operating results would be adversely affected if unexpected increases in the costs of labor and labor related costs, materials, supplies and equipment used in performing services (including the impact of potential tariffs and COVID-19) could not be passed on to our clients.

In addition, we believe that to maintain or improve our financial performance we must continue to obtain service agreements with new clients, retain and provide new services to existing clients, achieve modest price increases on current service agreements with existing clients and/or maintain internal cost reduction strategies at our various operational levels.

Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies. 

Certainly, the ongoing COVID-19 pandemic makes these objective more difficult to attain.

 RISK FACTORS (CONTINUED)

Government Regulations

Staffing firms and employment service providers are generally subject to one or more of the following types of government regulation:

(1) regulation of the employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers’

compensation;

(2) registration, licensing, record keeping and reporting requirements;

and (3) federal contractor compliance. 

Failure to comply with these regulations could result in the Company incurring penalties and other liabilities, monetary and otherwise. 

Highly Competitive Business

The staffing services and outsourcing markets are highly competitive and have limited barriers to entry. 

RCM competes in global, national, regional, and local markets with numerous temporary staffing and permanent placement companies. 

Price competition in the staffing industry is significant and pricing pressures from competitors and customers are increasing. 

In addition, there is increasing pressure on companies to outsource certain areas of their business to low cost offshore outsourcing firms. 

RCM expects that the level of competition will remain high in the future, which could limit RCM’s ability to maintain or increase its market share or profitability. 

Our inability to compete successfully with our competitors could adversely affect the Company’s business, financial condition and results of operations.

Seasonality of Business

As described in “Item 1.

Business,”

our operating results are subject to seasonal fluctuations, with reduced demand often occurring during the first quarter of the year when clients are finalizing their engineering and IT budgets, and also during periods in which there are a substantial amount of holidays and season vacations. 

In particular, one of the largest customers in our Specialty Health Care group, the New York City Department of Education, significantly reduces activity during the third quarter, when schools are closed for summer recess. 

Our operating results for any given period may fluctuate as a result of the timing of holidays, vacations and other events, and if we were to experience unfavorable performance during periods in which we would otherwise expect to have high seasonal demand, we may have limited ability to make up for such performance during periods of seasonally lower demand.

Events Affecting Significant Customers

As disclosed in “Item 1.

Business,”

the Company’s five, ten and twenty largest customers accounted for approximately 35.8%, 52.5% and 65.1%, respectively, of revenues for the fiscal year ended January 1, 2022. 

During the fiscal year ended January 1, 2022, no client accounted for 10% or more of total revenues. 

The Company’s customers may be affected by the current state of the economy or developments in the credit markets or may engage in mergers or similar transactions. 

In addition, customers may choose to reduce the business they do with RCM for other reasons or no reason. 

The Company could also be materially impacted by actions of prime contractors whereby the Company derives revenues through a subcontractor relationship. 

Should any significant customers experience a downturn in their business that weakens their financial condition or merge with another company or otherwise cease independent operation, or limit their relationship with us, it is possible that the business that the customer does with the Company would be reduced or eliminated, which could adversely affect the Company’s business, financial condition and results of operations.

 RISK FACTORS (CONTINUED)

Safety Concerns Regarding Nuclear Power Plants;

Limitations on Insurance

New and existing concerns are being expressed in public forums about the safety of nuclear generating units and nuclear fuel. 

Among other things, these concerns have led to, and are expected to continue to lead to, various proposals to regulators and governing bodies in some localities where nuclear facilities are located for legislative and regulatory changes that could lead to the shut-down of nuclear units, denial of license renewal applications, municipalization of nuclear units, restrictions on nuclear units or other adverse effects on owning and operating nuclear generating units. 

Should these concerns or proposals lead to a diminishment of or reduced growth in the nuclear power industry, the Company’s Engineering segment, which has a focus on the nuclear power industry, could be harmed, and the Company’s business, financial condition and results of operations could be materially adversely affected.

In addition, our liability insurance does not cover accidents occurring at nuclear power facilities. 

Should we be found to be responsible for such an event, we may not be able to cover relating damages, and our business would be adversely affected.

Subcontractors, Transit Accounts Receivable and Transit Accounts Payables Related to Construction Management Contracts

The Company’s Engineering segment has entered into arrangements to provide construction management and engineering services to customers under which arrangements the Company then engages subcontractors to provide the construction services. 

Ultimately, as a primary contractor, the Company is responsible for the nonperformance or negligence of its subcontractors, whom the Company requires to be adequately insured and to issue performance bonds for their assignment. 

Should a subcontractor not perform or act negligently and should there be inadequate insurance or performance bonds in place, the Company might not be able to mitigate its primary liability to the customer, and the Company’s business, financial condition and results of operations could be materially adversely affected. 

In addition, while payments to subcontractors typically are due from the Company only after the Company receives payment from the ultimate customer, the Company faces the risk that, should a customer not pay the Company, or should a subcontractor demand payment from the Company prior to the Company’s receipt of payment from its customer, the Company’s business, financial condition and results of operations could be materially adversely affected.

Dependence Upon Personnel

The Company’s operations depend on the continued efforts of its officers and other executive management. 

The loss of key officers and members of executive management may cause a significant disruption to the Company’s business.

RCM also depends on the performance and productivity of its local managers and field personnel.

The Company’s ability to attract and retain new business is significantly affected by local relationships and the quality of service rendered. 

The loss of key managers and field personnel may also jeopardize existing client relationships with businesses that continue to use the Company’s services based upon past relationships with local managers and field personnel. 

In order to fulfill the requirements of the Company’s customers, the Company must be able to recruit and retain appropriate personnel for client assignments.

 RISK FACTORS (CONTINUED)

Revolving Credit Facility and Liquidity

If the Company were unable to borrow under its Revolving Credit Facility (see “Item 7. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Liquidity and Capital Resources –

Financing Activities”), it may adversely affect liquidity, results of operations and financial condition.

The Company’s liquidity depends on its ability to generate sufficient cash flows from operations and, from time to time, borrowings under the Revolving Credit Facility with the Company’s agent lender Citizens Bank of Pennsylvania. The Company believes that Citizens Bank is liquid and is not aware of any current risk that they will become illiquid. 

At January 1, 2022, the Company had $14.2 million in borrowings under the Revolving Credit Facility outstanding and $1.9 million outstanding under letters of credit, with availability for additional borrowings under the Revolving Credit Facility of $28.9 million.

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing. 

These alternatives are:

(i) LIBOR (London Interbank Offered Rate), plus applicable margin, typically borrowed in fixed 30-day increments or (ii) the agent bank’s prime rate generally borrowed over shorter durations. 

At the option of Citizens Bank, LIBOR can be replaced with SOFR (Secured Overnight Financing Rate).

The LIBOR alternative is being phased out in 2022. 

Citizens Bank has not indicated when this switch will occur, but in any event, the Company does not believe there will be any material impact on its borrowing rate. 

The Revolving Credit Facility contains various financial and non-financial covenants. 

At January 1, 2022, the Company was in compliance with the covenants and other provisions of the Credit Facility.

Any failure to be in compliance could have a material adverse effect on liquidity, results of operations and financial condition.

Foreign Currency Fluctuations and Changes in Exchange Rates

The Company is exposed to risks associated with foreign currency fluctuations and changes in exchange rates. 

RCM’s exposure to foreign currency fluctuations relates to operations in Canada and Serbia, principally conducted through its Canadian and Serbian subsidiaries. 

Exchange rate fluctuations affect the United States dollar value of reported earnings derived from the Canadian operations as well as the carrying value of the Company’s investment in the net assets related to these operations. 

The Company does not engage in hedging activities with respect to foreign operations. 

Changes in Tax Laws

At any time, United States federal tax laws or the administrative interpretations of those laws may be changed.

As a result, changes in United States federal tax laws could negatively impact our operating results, financial condition and business operations, and adversely impact the Company’s shareholders. 

At any time, tax laws in the Company’s other jurisdictions, Canada, Puerto Rico and Serbia, may also change. 

These tax law changes may have a material impact on the Company’s income tax expense.

Workers ’

Compensation and Employee Medical Insurance

The Company self-insures a portion of the exposure for losses related to workers’

compensation and employees’

medical insurance. 

The Company has established reserves for workers’

compensation and employee medical insurance claims based on historical loss statistics and periodic independent actuarial valuations. 

Significant differences in actual experience or significant changes in assumptions may materially affect the Company’s future financial results.

 RISK FACTORS (CONTINUED)

Improper Activities of Temporary Professionals Could Result in Damage to Business Reputation, Discontinuation of Client Relationships and Exposure to Liability

The Company may be subject to claims by clients related to errors and omissions, misuse of proprietary information, discrimination and harassment, theft and other criminal activity, malpractice, and other claims stemming from the improper activities or alleged activities of temporary professionals. 

There can be no assurance that current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims.

Claims raised by clients stemming from the improper actions of temporary professionals, even if without merit, could cause the Company to incur significant expense associated with rework costs or other damages related to such claims. 

Furthermore, such claims by clients could damage the Company’s business reputation and result in the discontinuation of client relationships.

Acquisitions May Not Succeed

The Company reviews prospective acquisitions as an element of its growth strategy.

The failure of any acquisition to meet the Company’s expectations, whether due to a failure to successfully integrate any future acquisition or otherwise, may result in damage to the Company’s financial performance and/or divert management’s attention from its core operations or could negatively affect the Company’s ability to meet the needs of its customers promptly.

International Operations

The Company operates its business in Canada and, to a less significant extent, in Puerto Rico and Serbia.

For the fiscal year ended January 1, 2022, approximately 8.7% of the Company’s revenues were generated outside the United States.

There are certain risks inherent in conducting business internationally including:

the imposition of trade barriers, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivables collection, difficulties in complying with a variety of foreign laws (including without limitation the U.S.

Foreign Corrupt Practices Act), changes in legal or regulatory requirements, difficulties in staffing and managing foreign operations, complex and uncertain employment environments, political instability and potentially adverse tax consequences.

Our operations in Serbia could be adversely affected by the current conflict between Ukraine and Russia, with which Serbia has substantial ties. 

Should sanctions against Russia affect Russia in a way that causes adverse economic consequences to Serbia, or if such sanctions were to be extended to countries that might be considered to be in alignment with Russia, this could have a negative impact on our employees or operations both within and outside Serbia.

To the extent the Company experiences these risks, the business and results of operations could be adversely affected.

Management believes the RCM Technologies, Inc.

name is extremely valuable and important to its business.

The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company’s use of its proprietary rights. 

The Company’s success depends on its ability to successfully obtain and maintain, and prevent misappropriation or infringement of, its intellectual property, maintain trade secret protection, and conduct operations without violating or infringing on the intellectual property rights of third parties. 

Intellectual property litigation is expensive and time-consuming, and it is often difficult, if not impossible, to predict the outcome of such litigation. 

If the Company is involved in an intellectual property litigation, its business, financial condition and results of operations could be materially adversely affected.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business