EXHIBIT 10.1
                                                                    ------------

                              CONSULTING AGREEMENT
                              --------------------

                     Agreement ("Agreement") made as of this 30th day of
September, 2005 by and between TSR, Inc., a Delaware corporation ("TSR"), and
Ernest G. Bago ("Consultant").

                     1. Last Day of Employment; Retention as Consultant.

                               (a) Consultant hereby resigns from his employment
with TSR and its subsidiaries and Consultant's last day of employment
with TSR shall be September 30 2005 (the "Effective Date").

                               (b) On the Effective Date, TSR hereby retains
Consultant as a consultant for a term commencing on the Effective Date
and ending on May 31, 2007, unless terminated earlier in accordance with this
Agreement (the "Term"). The Consultant agrees to provide such advisory and
consulting services as TSR may reasonably request. It is agreed that such
requests shall be made by TSR's Chief Executive Officer or Vice President,
Finance and Secretary.

                               (c) The Consultant's duties shall include the
following specific matters: advice and assistance with respect to (i)
matters as to which he had responsibility prior to his resignation from his
employment, (ii) any legal disputes, claims or investigations that have arisen
or may in the future arise from matters for which he was responsible, and (iii)
effecting the transition of administrative responsibilities previously performed
by him.

                     2. Compensation.

                               (a) As full compensation for his services
hereunder, TSR will pay to Consultant compensation at the rate of Two Hundred
Thousand ($200,000) Dollars per annum, payable in equal semi-monthly
installments in arrears.

                               (b) Consultant shall be paid an amount equal to
the balance of the bonus to which he would have been entitled
based on TSR's pre-tax profits for the quarter ended August 31, 2005, in excess
of the draws previously paid to him on account of the bonus, payable within
thirty days after the filing of TSR's Quarterly Report on Form 10-Q.

                     3. Reimbursement of Expenses. TSR shall reimburse
Consultant for expenses reasonably incurred by him in connection with the
performance of his duties hereunder which have been approved in advance by TSR,
upon the submission to TSR of appropriate vouchers therefor and approval thereof
by the Treasurer of TSR. Such reimbursements shall be subject to the expense
reimbursement policies of TSR, which are in effect from time to time.

                     4. No Consideration Absent Execution of this Agreement.
Except for accrued salary through September 30, 2005 payable pursuant to the
Employment Agreement effective June 1, 2004 and the bonus payable pursuant to
Section 2(b) of this Agreement, Consultant understands and agrees that he would
not receive the monies and/or benefits specified in this Agreement, except for
his execution of this Agreement and the fulfillment of the promises contained
herein.

                     5. Resignations. Effective on the Effective Date,
Consultant hereby resigns as an employee, officer and director of TSR and its
subsidiaries. TSR and Consultant agree that the Employment Agreement between TSR
and the Consultant dated June 1, 2004 (the "Employment Agreement') is hereby
terminated as of the Effective Date, provided that (a) Consultant shall not be
entitled to any salary, bonus, severance or other benefit which he would have
been entitled to under the Employment Agreement or on termination of his
employment pursuant to the Employment Agreement, except as specifically set
forth in this Agreement, and (b) any obligations of Consultant under the
Employment Agreement which survived the termination of his employment shall
continue in effect.

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                     6. Benefits.

                               (a) Consultant shall be entitled to continue to
use the car provided to him under his Employment Agreement during the Term until
the expiration of the current lease term for the automobile (estimated October
2006). TSR shall make the lease payments through the expiration of the term of
the lease (estimated to be in October 2006) and shall pay, or reimburse upon
submission of such charges, automobile expenses, including insurance,
maintenance and lease termination payments (excluding excess mileage charges) on
the same terms as it currently pays such expenses. In addition, until such lease
termination date, TSR will continue to pay the base plan for the mobile cell
phone attached to the leased vehicle.

                               (b) Consultant shall be entitled to retain the
desktop and laptop computer and peripheral equipment that TSR has provided to
him for his use outside the office.

                               (c) TSR will offer to Consultant the right under
COBRA to continue to participate, at TSR's expense, for an 18 month period in
the health benefit program provided to employees which is currently Aetna and
executives of TSR which is currently Exec-U-Care in which he currently
participates (or any replacement thereof) which may then be in effect. No such
replacement health benefit program shall operate to reduce any benefits
currently provided to Consultant, except pursuant to a replacement health
benefit program which is generally applicable to all participants in the plan.

                     7. Termination.

                               (a) Notwithstanding any provision contained
herein to the contrary, if on or after the date hereof and prior to the end of
the Term, TSR shall have a right to terminate Consultant for "Cause" (as defined
below) then TSR shall have the right to give notice of termination of
Consultant's services hereunder as of a date to be specified in such notice and
this Agreement shall terminate as of the date so specified. Termination for
"Cause" shall mean Consultant shall (i) be indicted for a felony, (ii) commit
any material act of dishonesty affecting TSR or other act or omission to the
material detriment of TSR, or (iii) materially breach any term of this Agreement
and fail to correct such breach within ten days after written notice of TSR's
claim of commission thereof.

                               (b) If, during the Term, Consultant is unable to
perform his duties hereunder on account of illness, accident or other physical
or mental incapacity and such illness or other incapacity shall continue for a
period of six (6) consecutive months or an aggregate of one hundred and eighty
(180) days in any consecutive twelve (12) month period, TSR shall have the
right, on fifteen (15) days written notice (given after such period) to
Consultant, to terminate this Agreement. In such event, TSR shall be obligated
to pay to Consultant his compensation for the calendar month in which such
termination occurs. However, if prior to the date specified in such notice,
Consultant's illness or incapacity shall have terminated and he shall have taken
up the performance of his duties hereunder, Consultant shall be entitled to
resume his consulting services hereunder, as though such notice had not been
given.

                               (c) In the event of Consultant's death during the
Term, this Agreement shall terminate immediately, and Consultant's legal
representatives shall be entitled to receive his compensation for the calendar
month during which his death shall have occurred together with any approved
expenses as contemplated under Section 3.

                               (d) In the event that this Agreement is
terminated for "Cause" pursuant to Section 7(a), then Consultant shall be
entitled to receive only his compensation for the month in which such
termination shall take effect.

                               (e) In the event TSR terminates Consultant for
any reason other than as provided under Section 7(a), (b), or (c), then this
Agreement shall terminate upon thirty (30) days' written notice to Consultant
and TSR shall be obligated to pay to Consultant an amount equal to any unpaid,
approved expenses as contemplated under Section 3 and as severance he will
continue to be entitled to receive the compensation payable pursuant to Section
2(a) through May 31, 2007.

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                     8. Non-compete. The Maintenance of Confidence and
Non-Compete Agreement, entered into between TSR and The Consultant shall
continue to be effective notwithstanding the termination of Consultant's
employment.

                     9. TSR Confidential Information. Consultant shall hold in a
fiduciary capacity for the benefit of TSR all information, knowledge and data
relating to or concerned with its operations, sales, business and affairs,
(hereafter "Confididential Information") and he shall not, at any time
hereafter, use, disclose or divulge any such information, knowledge or data to
any person, firm or corporation other than TSR or its designees or except as may
otherwise be required in connection with the business and affairs of TSR.
Confidential Information shall not be deemed to include information which is now
or will become without any act of Consultant publicly available information

                     10. Releases.

                               (a) In consideration for the payment and benefits
to be provided to Consultant pursuant to this Agreement, Consultant, and for
Consultant's heirs, executors, administrators, trustees, legal representatives
and assigns (hereinafter referred to collectively as "Releasors"), forever
release and discharge TSR and its past, present and future, subsidiaries,
divisions, affiliates and related business entities, successors and assigns,
assets, employee benefit plans or funds, and any of its or their respective
past, present and/or future directors, officers, fiduciaries, agents, trustees,
administrators, employees and assigns, whether acting on behalf of TSR or in
their individual capacities (collectively the "Company Entities") from any and
all claims, demands, causes of action, fees and liabilities of any kind
whatsoever, whether known or unknown, which the Consultant ever had, now have,
or may have against any of the Company Entities by reason of any act, omission,
transaction, practice, plan, policy, procedure, conduct, occurrence, or other
matter up to and including the date on which the Consultant signs this Agreement
except for obligations arising under this Agreement.

                               (b) Without limiting the generality of the
foregoing, this Agreement is intended to and shall release the Company Entities
from any and all claims, whether known or unknown, which Releasors ever had, now
have, or may have against the Company Entities arising out of the Consultant's
employment and/or the Consultant's separation from that employment, including,
but not limited to: (i) the Age Discrimination in Employment Act, as amended,
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Employee Retirement Income Security Act of 1974 (excluding claims for
accrued, vested benefits under any employee benefit or pension plan of the
Company Entities subject to the terms and conditions of such plan and applicable
law), the Fair Labor Standards Act and the Family and Medical Leave Act; (ii)
any claim under the New Jersey Law Against Discrimination and the New Jersey
Conscientious Employee Protection Act; (iii) any other claim (whether based on
federal, state, or local law, statutory or decisional) relating to or arising
out of the Consultant's employment, the terms and conditions of such employment,
the termination of such employment, and/or any of the events relating directly
or indirectly to or surrounding the termination of that employment, including
but not limited to breach of contract (express or implied), wrongful discharge,
detrimental reliance, defamation, emotional distress or compensatory or punitive
damages; and (iv) any claim for attorneys' fees, costs, disbursements and/or the
like.

                               (c) Consultant acknowledges and agrees that by
virtue of the foregoing, he has waived any relief available to Consultant
(including without limitation, monetary damages, equitable relief and
reinstatement) under any of the claims and/or causes of action waived in this
Section 10. Therefore, Consultant agrees that he will not seek or accept any
award or settlement from any source or proceeding (including but not limited to
any proceeding brought by any other person or by any government agency) with
respect to any claim or right waived in this Agreement.

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                               (d) Consultant further agrees, to the maximum
extent permitted by law, that he will not sue or commence any proceeding
(judicial or administrative), or participate in any action, suit or proceeding
(unless compelled by legal process or court order), against any of the Company
Entities, with respect to any claim released by this Section 10 above. or with
respect to any actual or alleged act, omission, transaction, practice, conduct
or occurrence, including, without limitation, any disclosures made publicly or
to any federal, state or local governmental body or regulatory, administrative
or law enforcement agency or in connection with any threatened or actual
third-party litigation, at any time regarding any subject matter. Consultant
also warrants and represent that as of the date Consultant signs this Agreement,
he has not taken or engaged in any of the acts described in the foregoing
sentences. If, notwithstanding the foregoing promises, Consultant violates this
Section 10, he shall be required, to the maximum extent permitted by law, to
indemnify and hold harmless the Company Entities from and against any and all
demands, assessments, judgments, costs, damages, losses and liabilities, and
attorneys' fees and other expenses which result from, or are incident to, such
violation.

                               (e) Consultant further covenants, to the maximum
extent permitted by law, that he shall not at any time hereafter provide support
or assistance, directly or indirectly, to others in connection with any action,
suit, complaint or proceeding against or concerning TSR, any of its
subsidiaries, affiliates, or past. present or future officers or directors,
concerning any subject matter with respect to any actual or alleged act,
omission, transaction, practice, conduct or occurrence at any time, whether
before or after the Effective Date, including, without limitation, any
disclosures made publicly or to any federal, state or local governmental body or
regulatory, administrative or law enforcement agency or in connection with any
threatened or actual third-party litigation. The foregoing covenant shall not
preclude Consultant from testifying or otherwise giving evidence in a proceeding
before a court or agency or other judicial or quasi-judicial forum under
compulsion of law, nor shall it preclude Consultant from disclosing information
required to be disclosed upon request by any federal, state or local
governmental body or regulatory, administrative or law enforcement agency.

                               (f) TSR does hereby release Consultant from any
and all claims, demands, causes of action, fees and liabilities of any kind
whatsoever, whether known or unknown, which TSR ever had, now has, or may have
against Consultant by reason of any breach of the Employment Agreement by
Consultant or any claim that Consultant is obligated to return or repay any
amounts previously paid to him by TSR or any subsidiary thereof.

                               (g) Indemnification and Counsel Fees.
Notwithstanding anything herein to the contrary, Consultant does not relinquish
herein any statutory or By-Law right to indemnification for costs and fees and
charges, all such being specifically reserved by Consultant, and it is further
specifically agreed that to the extent Consultant is required to testify or give
evidence in any judicial , regulatory or other proceeding relating to TSR or any
subsidiary thereof pursuant to a subpoena or other judicial or regulatory
process or at the request of TSR, all reasonable costs of such shall be borne
and paid by TSR . The foregoing shall include reasonable attorneys fees. Further
in the event that Consultant requires the assistance of counsel in any of the
matters or proceedings described above, the choice of such counsel shall be
Consultant's decision.

                     11. Disparagement. TSR and the Consultant agree that none
of TSR or its affiliates or the officers or directors thereof on the one hand,
or the Consultant, on the other hand, will make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may, directly or indirectly, disparage or
impugn the business reputation of, or otherwise make derogatory or detrimental
statements concerning or relating to, the other. Notwithstanding the foregoing,
nothing in this Agreement shall preclude any of such persons from making
truthful statements or disclosures that are required by applicable law,
regulation or legal process.

                     12. Confidentiality. Consultant agrees not to disclose any
information regarding the existence or substance of this Agreement, except to an
attorney with whom Consultant chooses to consult regarding his consideration of
this Agreement. TSR may disclose the existence or substance of this Agreement as
it determines in good faith to be necessary and appropriate.

                     13. Independent Contractor. Consultant is and shall at all
times be an independent contractor, rather than a co-venturer, agent, employee,
or representative of TSR. Consultant shall not, and has no power to, bind TSR in
any manner.

<PAGE>

                     14. Availability. Consultant agrees to make himself
reasonably available to and cooperate with TSR in any internal investigation or
administrative, regulatory, or judicial proceeding. Consultant understand s and
agrees that his cooperation would include, but not be limited to, making himself
available to TSR upon reasonable notice for interviews and factual
investigations; appearing at TSR's request to give testimony without requiring
service of a subpoena or other legal process; volunteering to TSR pertinent
information; and turning over all relevant documents which are or may come into
his possession.

                     15. Governing Law. This Agreement shall be governed by the
laws of the State of New York without regard to the conflicts of law principles
thereof.

                     16. Amendment and Modification. This Agreement may be
modified, amended or supplemented only by an instrument in writing signed by all
of the parties hereto.

                     17. Remedies. Consultant acknowledges that a material
breach of his covenants contained in this Agreement will cause irreparable
damage to TSR, the exact amount of which will be difficult to ascertain, and
that the remedies at law for any such material breach will be inadequate.
According, Consultant agrees that if he breaches any of the covenants contains
in this Agreement in any material respect, in addition to any other remedy which
may be applicable at law or in equity, TSR shall be entitled to specific
performance and injunctive relief.

                     18. Waiver of Compliance. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent other
failure.

                     19. Severability. The invalidity or unenforceability of any
provision of this Agreement in any such jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in such
jurisdiction, or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law. Upon such determination that any provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this so as to effect the original intentions
of the parties as closely as possible in an acceptable manner to the end that
the transactions contemplated hereby and thereby are fulfilled to the extent
possible.

                     20. Notices. All notices, Documents and other
communications given or made pursuant hereto shall be in writing and delivered
by hand or sent by registered or certified mail (postage prepaid, return receipt
requested), facsimile or by nationally recognized overnight air courier service
and shall be deemed to have been duly given or made as of the date delivered if
delivered personally or by facsimile, or if mailed, on the third business day
after mailing (on the first business day after mailing in the case of a
nationally recognized overnight air courier service) to the parties at the
following addresses:

                               If to Ernest Bago:


                     And

                               Patrick J. Monaghan, Jr. Esq.
                               Monaghan, Monaghan, Lamb & Marchisio,LLP
                               28 W. Grand Avenue
                               Montvale, New Jersey 07645

                               If to TSR:

                               TSR, Inc.
                               400 Oser Avenue
                               Hauppauge, NY 11788

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                               with a copy to

                               Proskauer Rose LLP
                               1585 Broadway
                               New York, New York 10036-8299
                               Attention:  Steven A. Fishman, Esq.


                     21. Entire Agreement; Successors and Assigns. This
Agreement constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof, supersedes all prior agreements and undertakings,
both written and oral, and may not be modified in any way except in writing by
the parties hereto. This Agreement shall be binding upon Consultant, his heirs,
executors and administrators and upon TSR, its successors and assigns.

                     22. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                     23. Acknowledgement. Consultant acknowledges that he: (a)
has carefully read this Agreement in its entirety; (b) has had an opportunity to
consider it for a reasonable period of time, (c) is hereby advised by TSR in
writing to consult with an attorney of his choosing in connection with this
Agreement; (d) fully understand the significance of all of the terms and
conditions of this Agreement and have discussed them with his independent legal
counsel, or had a reasonable opportunity to do so; (e) have had answered to his
satisfaction any questions he has asked with regard to the meaning and
significance of any of the provisions of this Agreement; and (f) is signing this
Agreement voluntarily and of his own free will and agree to abide by all the
terms and conditions contained herein.

                     24. Acceptance of Agreement. Consultant may accept this
Agreement by signing it and returning it to TSR at the address set forth above
on or before October 10, 2005. In the event Consultant does not accept this
Agreement as set forth above, this Agreement, including but not limited to the
obligation of TSR to provide the payment(s) and other benefits referred to
herein, shall be deemed automatically null and void. This Agreement shall become
effective on the date it is signed by both parties. TSR also represents that
this Agreement has been approved by the requisite vote of its Board of Directors
without any vote by Consultant who has resigned therefrom

                     IN WITNESS WHEREOF, the parties hereto knowingly and
voluntarily executed this Agreement as of the date set forth below:


                                               /s/ Ernest Bago
                                               -----------------------------
                                               Ernest Bago


                                               TSR, Inc.


                                               By: /s/ Joseph Hughes
                                                   -------------------------
                                                   Joseph Hughes
                                                   Chief Executive Officer