TSSI

Business Context and Reporting Period

This Form 8-K was filed by TSS, Inc. on August 29, 2014, reporting events occurring on that date. The filing focuses on corporate governance changes, specifically the appointment of a new Chief Financial Officer.

Key Financial Metrics

The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. This report is limited to executive compensation and appointment details.

Material Changes

The primary material change is the appointment of John K. Penver as Chief Financial Officer, effective August 29, 2014. Mr. Penver had been serving as Interim CFO since July 2, 2014.

Management Commentary, Compensation, and Risks

Employment Agreement Terms:

• Base Salary: $250,000 annually.
• Bonus: Eligible for a bonus on terms established by the Board.
• Severance:
  • 6 months' base salary if terminated without "Cause" or resigns for "Good Reason" after the first anniversary.
  • 12 months' base salary if terminated within 12 months following a "Change in Control."
  • 3 months' base salary if a "Change in Control" occurs within the first 12 months of employment and termination follows within 12 months of that event.

Equity Awards:

• Restricted Stock: 250,000 shares granted.
  • 50,000 shares vest September 29, 2014.
  • 100,000 shares vest August 29, 2015.
  • 100,000 shares vest August 29, 2016.
  • Full acceleration upon Change in Control; partial acceleration (up to 100,000 shares) upon certain terminations.
• Stock Options: 200,000 shares granted.
  • Exercise price based on the average high/low bid prices over 20 trading days following the grant date.
  • 100,000 options exercisable when stock price reaches $2.00 for 20 consecutive business days.
  • 100,000 options exercisable when stock price reaches $3.00 for 20 consecutive business days.

Approval: All independent directors approved these grants. They were not made under a stockholder-approved compensation plan.

Investor Verification Checklist

• Verify the current trading price of TSS, Inc. common stock to assess the likelihood of the stock option vesting conditions ($2.00 and $3.00 thresholds).
• Review the full Employment Agreement (Exhibit 99.2) for specific definitions of "Cause," "Good Reason," and "Change in Control."
• Confirm the dilution impact of the 250,000 restricted shares and 200,000 stock options granted.
• Check subsequent filings for any changes to the interim or permanent CFO status.