What changed in this filing

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Item 1. Financial Statements

2020-11-16 compared with 2020-08-14 · 459 added, 560 removed, 992 unchanged (51% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

and cash equivalents

current assets

Cash and cash equivalents

Accounts receivable

Other current assets

Total current assets

Other assets:

Property and equipment, net

Intangible assets, net

Acquired goodwill

Operating lease right of use asset, net

Deferred income tax assets, net

Total other assets

current assets

and equipment, net

lease right of use asset, net

income tax assets, net

accrued expenses

lease liability

Loan, current portion

Consideration

payable –

current liabilities

Line of credit

Accounts payable

Other accrued expenses

Operating lease liability

Paycheck Protection Program Loan

Convertible notes

Consideration payable –

Debenture Liability

Dividend payable

Total current liabilities

term liabilities:

lease liability, net

Loan, net of current portion

long term liabilities

Operating lease liability, net

Economic Injury Disaster Loan

Short term Loans

Total long term liabilities

Total liabilities

Stockholders’

Preferred stock, $0.01 par value;

1,000,000 authorized, 424,938 issued and outstanding as

of June 30, 2020 and December 31, 2019.

Common stock, $0.01 par value;

100,000,000 shares authorized, 5,163,265 and 2,522,095 issued

and outstanding as of June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated deficit

stock, $0.01 par value;

1,000,000 authorized, 424,938 issued and outstanding as of September 30, 2020 and December 31, 2019.

stock, $0.01 par value;

100,000,000 shares authorized, 5,737,001 and 2,522,095 issued and outstanding as of September 30,

2020 and December 31, 2019, respectively

paid-in capital

(45,156,263 )

(40,512,017 )

Accumulated other comprehensive income (loss)

Total stockholders’

Total liabilities and stockholders’

other comprehensive income (loss)

stockholders’

liabilities and stockholders’

accompanying notes to the unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

June 30, 2019

Cost of revenue

Operating expenses

Selling, General and administration

Depreciation and amortization

Operating expenses

Operating Income (loss)

Interest expenses

Impairment on goodwill and Intangibles

Changes in fair value of warrant liability

Income (loss) before income taxes

Income tax benefit(expenses)

Income (loss) after income taxes

Net income attributable to non-controlling interest

Net Income (loss) attributable to the Company

Dividend on preferred stock

Net Income (loss) attributable to common stock holders

Other comprehensive income (loss), net of tax

Foreign exchange translation

Total Comprehensive Income (loss)

Basic income (loss) per share

Diluted income (loss) per share

Basic weighted average number of common shares outstanding

Diluted weighted average number of common shares outstanding

Months Sep 30,2020

Months Sep 30,2019

Months Sep 30,2020

Months Sep 30,2019

General and administration

and amortization

Income (loss)

benefit (expenses)

in fair value of warrant liability

(loss) before income taxes

tax benefit (expenses)

(loss) after income taxes

income attributable to non-controlling interest

Income (loss) attributable to the Company

on preferred stock

Income (loss) attributable to common stock holders

comprehensive income (loss), net of tax

exchange translation

Comprehensive Income (loss)

(loss) per share

income (loss) per share

Basic weighted

average number of common shares outstanding

weighted average number of common shares outstanding

accompanying notes to the unaudited condensed consolidated financial statements.

HOLDINGS, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS’

Preferred Stock

Par Value at $0.01

Additional paid-in capital

Foreign Currency Translation Reserve

Retained earnings

OF CHANGES IN STOCKHOLDER EQUITY

Value at $0.01

paid-in capital

Currency Translation Reserve

stockholders’

Balance at Dec 31, 2018

at Dec 31, 2018

$ (34,478,253 )

Net Loss for the period

Other comprehensive income (loss)

Shares Issued towards earnouts

Exercise of Warrants (PIPE series A&B)

Stock Compensation expenses

Balance at June 30, 2019

Loss for the period

comprehensive income (loss)

Issued towards earnouts

of Warrants (PIPE series A&B)

Compensation expenses

at September 30, 2019

$ (37,872,197 )

Balance at December 31, 2019

at December 31, 2019

$ (40,512,017 )

Net Loss for the period

Other comprehensive income (loss)

Stock Compensation expenses

Shares Issued for Extinguishment of liability

Rights Issue of Shares

Balance at June 30, 2020

Loss for the period

comprehensive income (loss)

Compensation expenses

Issued for Extinguishment of liability

Issue of Shares

at September 30, 2020

$ (45,156,263 )

accompanying notes to the unaudited condensed consolidated financial statements.

HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flow from operating activities

Net Income (Loss)

Adjustment to reconcile comprehensive income/(loss)

to net cash used in operating activities

Depreciation and amortization

Non cash expenses

Provision for Preference dividend

Changes in fair value of warrants

Stock, option, restricted stock unit and warrant expense

Foreign exchange translation adjustment

Provision for Income taxes ( net off deferred income taxes)

Loss on sale of fixed assets

Changes in assets and liabilities:

Increase (decrease) in:

Accounts receivable

Other current assets

Increase (decrease) in:

Accounts payable and accrued expenses

Net cash provided by (used in) operating activities

Cash flow from investing activities

Purchase of fixed assets

Acquisition consideration

Net cash used in investing activities

Cash flow from financing activities

Proceeds from bank loan and convertible notes, net

Proceeds from issuance of common shares, net

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents as at beginning of the

Cash at the end of the period

flow from operating activities

Income (Loss)

to reconcile comprehensive income/(loss) to net cash used in operating activities

and amortization

for Preference dividend

in fair value of warrants

option, restricted stock unit and warrant expense

exchange translation adjustment

for Income taxes ( net of deferred income taxes)

on sale of fixed assets

in assets and liabilities:

(decrease) in:

current assets

(decrease) in:

payable and accrued expenses

cash provided by (used in) operating activities

flow from investing activities

of fixed assets

consideration

cash used in investing activities

flow from financing activities

from bank loan and convertible notes, net

from issuance of common shares, net

cash provided by financing activities

increase (decrease) in cash and cash equivalents

and cash equivalents as at beginning of the period

at the end of the period

accompanying notes to the unaudited condensed consolidated financial statements.

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a company organized under the laws of British Columbia and a wholly-owned subsidiary of the Company (“ExchangeCo”),

and Barry Kostiner, as the Company Representative, which

provides that, among other things, Merger Sub and Jay Pharma will be amalgamated and will continue as one corporation (“Amalco”),

with Amalco continuing as a direct wholly-owned subsidiary of ExchangeCo and an indirect wholly-owned subsidiary of Ameri, on

the terms and conditions set forth in the Amalgamation Agreement.

and Barry Kostiner, as the Company Representative, which provides that, among other things, Merger Sub and Jay Pharma will be

amalgamated and will continue as one corporation (“Amalco”), with Amalco continuing as a direct wholly-owned subsidiary

of ExchangeCo and an indirect wholly-owned subsidiary of Ameri, on the terms and conditions set forth in the Amalgamation Agreement.

On August 12, 2020, the Company, Jay Pharma and certain other signatories thereto entered into a tender agreement (as may be amended

from time to time, the “Tender Agreement”), which provides that, among other things, Ameri will make a tender offer

(such offer, as it may be amended or supplemented from time to time as permitted under the Tender Agreement, the “Offer”)

to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal

to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of Ameri, on the

terms and conditions set forth in the Tender Agreement.

The Tender Agreement terminates and replaces in its entirety the Amalgamation

and Going Concern

Company has incurred net losses from operations since inception.

The net loss for the six months ended June 30, 2020 was $3.6

million and the accumulated deficit was $44 million as of June 30, 2020.

The Company’s ongoing losses have had a significant

negative impact on the Company’s financial position and liquidity.

The Company has also been historically reliant on loans

from related parties, loans from third parties and sales of equity securities to fund operations, working capital and complete

acquisitions.

To increase revenues, our operating expenses are likely to continue to grow and, as a result, we will need to generate

significant additional revenues to cover such expenses.

We expect our primary sources of cash to be customer collections and external

We also continue to work on cost reductions, and we have initiated steps to reduce our overhead to improve cash savings.

We may raise additional capital through the sale of equity or debt securities or borrowings from financial institutions or third

parties or a combination of the foregoing.

Capital raised will be used to implement our business plan, grow current operations,

make acquisitions or start new vertical businesses among some of the possible uses.

The net loss for the nine months ended September 30, 2020 was

$4.6 million and the accumulated deficit was $45.1 million as of September 30, 2020.

The Company’s ongoing losses have had

a significant negative impact on the Company’s financial position and liquidity.

The Company has also been historically

reliant on loans from related parties, loans from third parties and sales of equity securities to fund operations, working capital

and complete acquisitions.

To increase revenues, our operating expenses are likely to continue to grow and, as a result, we will

need to generate significant additional revenues to cover such expenses.

We expect our primary sources of cash to be customer

collections and external financing.

We also continue to work on cost reductions, and we have initiated steps to reduce our overhead

to improve cash savings.

We may raise additional capital through the sale of equity or debt securities or borrowings from financial

institutions or third parties or a combination of the foregoing.

Capital raised will be used to implement our business plan, grow

current operations, make acquisitions or start new vertical businesses among some of the possible uses.

of the Company’s largest customers has terminated the majority of its work as a result of COVID-19.

This customer has accounted

in the past for annual revenues of between five to seven million dollars.

in the past for annual revenues of between $5 to $7 million dollars.

The impact on this quarter is a reduction of approximately

$1.5 mm in revenue.

a result of funding from the SBA as well as sales of shares, the Company has adequate cash reserves to cover expected working

capital needs over the next 12 months.

financial statements as of June 30, 2020 have been prepared under the assumption that we will continue as a going concern.

ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity

$1.5 million in revenue.

a result of funding from the Small Business Association as well as sales of securities, the Company believes it has adequate

cash reserves to cover expected working capital needs over the next 12 months.

financial statements as of September 30, 2020 have been prepared under the assumption that we will continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity

or debt securities, as well as to attain further operating efficiencies and, ultimately, to generate additional revenues.

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Additionally, this update added the following disclosure requirements:

(1) the changes in unrealized gains

and losses for the period included in other comprehensive income and loss for recurring Level 3 fair value measurements held at

the end of the reporting period;

(2) the range and weighted average of significant unobservable inputs used to develop Level 3

fair value measurements.

For certain unobservable inputs, an entity may disclose other quantitative information (such as the median

or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a

more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

2018-13 will be effective for fiscal years beginning after December 15, 2019 with early adoption permitted.

the changes in unrealized gains and losses for the period included in other comprehensive income and loss for recurring Level

3 fair value measurements held at the end of the reporting period;

(2) the range and weighted average of significant unobservable

inputs used to develop Level 3 fair value measurements.

For certain unobservable inputs, an entity may disclose other quantitative

information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative

information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop

Level 3 fair value measurements.

2018-13 will be effective for fiscal years beginning after December 15, 2019 with early

adoption permitted.

January 2017, the FASB issued ASU No.

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record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered

to Note 15 of our consolidated financial statements for additional disclosures required by ASC 842.

Refer to Note 15 of our consolidated financial statements for additional disclosures required by ASC 842.

May 2017, the FASB issued ASU 2017-09, “

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and the adoption did not have a material effect on the consolidated financial statements and related disclosures.

issued accounting pronouncements

August 2020, the FASB issued ASU 2020-06 Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity .

The amendments in Update No.

2020-06 simplify the complexity associated with applying U.S.

GAAP for certain financial instruments with characteristics of liabilities and equity.

More specifically, the amendments focus

on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within

those fiscal years.

The Company is currently in the process of determining the effect that the adoption will have on its financial

position and results of operations.

March 2020, the FASB issued ASU No.

2020-04, “

Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference

Rate Reform on Financial Reporting .”

ASU 2020-04 provides optional expedients and exceptions to account for contracts,

hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met.

The amendments

2020-04 are effective immediately, as of March 12, 2020, and may be applied prospectively to contract modifications

made and hedging relationships entered into on or before December 31, 2022.

The Company is evaluating the impact that the amendments

of this standard would have on the Company’s consolidated financial statements

December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “

Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ”).

This guidance eliminates certain exceptions to the

general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income

This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods.

The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements.

has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”)

through the date these financial statements were available to be issued and found no recent accounting pronouncements issued,

but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the

The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential

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(“Virtuoso”), a Kansas

limited liability company , pursuant to the terms of an Agreement of Merger and Plan of Reorganization,

by and among us, Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso and the sole member of Virtuoso (the “Sole

Member”) .

Virtuoso is an SAP consulting firm specialized in providing services on SAP S/4 HANA finance, enterprise

mobility and cloud migration and is based in Leawood, Kansas.

In connection with the merger,

Virtuoso’s name was changed to Ameri100 Virtuoso Inc.

The Virtuoso acquisition did not constitute a significant acquisition

for the Company for purposes of Regulation S-X.

limited liability company, pursuant to the terms of an Agreement of Merger and Plan of Reorganization, by and among us, Virtuoso

Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso and the sole member of Virtuoso (the “Sole Member”).

an SAP consulting firm specialized in providing services on SAP S/4 HANA finance, enterprise mobility and cloud migration and

is based in Leawood, Kansas.

In connection with the merger, Virtuoso’s name was changed to Ameri100 Virtuoso Inc.

acquisition did not constitute a significant acquisition for the Company for purposes of Regulation S-X.

total purchase price of $1.8 million was allocated to intangibles of $0.9 million, taking into consideration projected revenue

from the acquired list of Virtuoso customers over a period of three years, and the balance was allocated to goodwill.

earn-out payments for 2016 amounted to $0.06 million in cash and 12,408 shares of

common stock, which were delivered to the Sole Member during the twelve months ended December 31, 2017.

earn-out payments for 2016 amounted to $0.06 million in cash and 12,408 shares of common stock, which were delivered to the Sole

Member during the twelve months ended December 31, 2017.

of Ameri Arizona

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aggregate purchase price for the acquisition of Ameri Arizona was $15.8 million.

total purchase price of $15.8 million was allocated to intangibles of $5.4 million, taking into consideration projected revenue

from the acquired list of Ameri Arizona customers over a period of three years, and the balance was allocated to goodwill.

August 2018, the Company resolved the payment of all earn-out payments to the former members of Ameri Arizona pursuant to the

Ameri Arizona membership interest purchase agreement, and the Company has no further payment obligations with respect to any Ameri

Arizona earn-out.

The total purchase price of $15.8 million was

allocated to intangibles of $5.4 million, taking into consideration projected revenue from the acquired list of Ameri Arizona

customers over a period of three years, and the balance was allocated to goodwill.

In August 2018, the Company resolved the payment

of all earn-out payments to the former members of Ameri Arizona pursuant to the Ameri Arizona membership interest purchase agreement,

and the Company has no further payment obligations with respect to any Ameri Arizona earn-out.

of the date of this report, the aggregate of $1,000,000 in consideration payable by cash to Lucid Solutions Inc.

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below is the summary of the foregoing acquisitions:

Allocation of purchase price in millions of U.S.

Asset Component

Intangible Assets

Working Capital

Current Assets

Accounts Receivable

Current Liabilities

Accounts Payable

Accrued Expenses & Other Current Liabilities

Net Working Capital Acquired

Total Purchase Price

of purchase price in millions of U.S.

Expenses & Other Current Liabilities

Working Capital Acquired

Purchase Price

REVENUE RECOGNITION:

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of Revenue from Entities.

The following table disaggregates gross revenue by entity for the six months ended June 30, 2020

For the Year Ended

June 30, 2020

June 30, 2019

Ameri 100 California

Ameri 100 Arizona

Ameri 100 Canada

Ameri 100 Georgia

Bigtech Software

Ameri 100 Consulting Pvt Ltd

Ameri Partners

Total revenue

The following table disaggregates gross revenue by entity for the nine months ended September 30,

2020 and 2019:

Nine Months Ended

100 California

100 Consulting Pvt Ltd

performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards

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also included the reimbursement of out-of-pocket expenses.

the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for approximately 48% and 46% of

our total revenue, respectively.

For the six months ended June 30, 2020, five of our customers contributed 19%, 10% ,7% and 6%

of our revenue, and for the six months ended June 30, 2019, five of our customers contributed 14%,11%,9% and 6% of our revenue.

the three months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for approximately 54%

and 52% of our total revenue, respectively.

For the three months ended September 30, 2020, five of our customers contributed 23%,10%,9%,7%

and 6% of our revenue.

the nine months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for approximately 47%

of our total revenue, respectively.

INTANGIBLE ASSETS:

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Amortization expense was $1.6 million for

the six months ended June 30, 2020 and June 30, 2019.

This amortization expense relates to customer lists which expire through

the nine months ended September 30, 2020 and September 30, 2019.

This amortization expense relates to customer lists which expire

through 2022.

represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations.

The total value of the Company’s goodwill was $13.7 million as of June 30, 2020 and December 31, 2019.

The total value of the Company’s goodwill was $13.7 million as of September 30, 2020 and December 31, 2019.

per Company policy, goodwill impairment tests are conducted on an annual basis and any impairment is reflected in the Company’s

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to be issued.

the six months ended June 30, 2020 and 2019, no shares related to the issuance of common stock upon exercise of the Equity Awards

or the exchange of the 2017 Notes for common stock were considered in the calculation of diluted loss per share, as the effect

would be anti-dilutive due to net losses attributable to common stockholders for both periods.

the nine months ended September 30, 2020 and 2019, no shares related to the issuance of common stock upon exercise of the Equity

Awards or the exchange of the 2017 Notes for common stock were considered in the calculation of diluted loss per share, as the

effect would be anti-dilutive due to net losses attributable to common stockholders for both periods.

reconciliation of net loss attributable to common stockholders and weighted average shares used in computing basic and diluted

net loss per share is as follows:

For the Six Months Ended

June 30, 2020

June 30, 2019

Numerator for basic and diluted income (loss) per share:

Net income (loss) attributable to common stockholders

the Nine Months Ended

for basic and diluted income (loss) per share:

income (loss) attributable to common stockholders

$ (4,644,246 )

Numerator for diluted income (loss) per share:

Net income (loss) attributable to common stockholders - as reported

for diluted income (loss) per share:

income (loss) attributable to common stockholders - as reported

$ (4,644,246 )

Net income (loss) attributable to common stockholders - after assumed conversions of dilutive shares

income (loss) attributable to common stockholders - after assumed conversions of dilutive

$ (4,644,246 )

Denominator for weighted average common shares outstanding:

Dilutive effect of Equity Awards

Dilutive effect of 2017 Notes

Diluted shares

Income (loss) per share –

for weighted average common shares outstanding:

effect of Equity Awards

effect of 2017 Notes

(loss) per share –

INCENTIVE PLAN ITEMS:

the six months ended June 30, 2020, the Company has not granted any restricted stock units and stock options to purchase Company’s

common stock to key employees or directors out of Company’s 2015 Equity Incentive Award Plan.

The company has booked charges

of $34,642 as stock compensation expenses for the six months ended June 30 2020 and $0.5 million for the six months ended June

the nine months ended September 30, 2020, the Company has not granted any restricted stock units and stock options to purchase

Company’s common stock to key employees or directors out of Company’s 2015 Equity Incentive Award Plan.

has booked charges of $49,474 as stock compensation expenses for the nine months ended September 30, 2020 and $0.5 million

for the nine months ended September 30, 2019.

January 23, 2019, certain subsidiaries of the Company, including Ameri100 Arizona LLC, Ameri100 Georgia, Inc., Ameri100 California,

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business organization or restructure.

of June 30, 2020, the principal balance and accrued interest under the Credit Facility amounted to $2.3 million.

of September 30, 2020, the principal balance and accrued interest under the Credit Facility amounted to $3.1 million.

CONVERTIBLE NOTES:

March 7, 2017, we completed the sale and issuance of 8% Convertible Unsecured Promissory Notes (the “2017 Notes”)

for aggregate proceeds to us of $1.25 million from four accredited investors, including one of the Company’s then-directors,

Rai, and David Luci, who became a director of the Company in February 2018.

The 2017 Notes were issued pursuant to Securities

Purchase Agreements between the Company and each investor.

The 2017 Notes bear interest at 8% per annum until maturity in March

2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning

in March 2018.

From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear

default interest at the rate of 10% per annum.

During the first quarter

of 2019 the company repaid $0.25 million towards 2017 notes.

2017 Notes were convertible into shares of our common stock at a conversion price equal to $2.80.

The holders of the 2017

Notes had the right, at their option, at any time and from time to time to convert, in part or in whole, the outstanding

principal amount and all accrued and unpaid interest under the 2017 Notes into shares of the Company’s common stock at the

conversion price.

On June 3, 2020, the

Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of certain of the 2017 Notes,

amounting to $1 million.

Pursuant to the Exchange Agreement, the holder agreed to exchange the 2017 Notes for a new

convertible 1% debenture (the “

1% Debenture”), which 1% Debenture is convertible into shares of common

stock of the Company at a conversion price of $1.75 per share.

After the exchange, there are no 2017 Notes outstanding.

The principal amount of the 1% Debenture is equal to the principal amount of the 2017 Notes and the accrued interest

November 25, 2019, the Company entered into a securities purchase agreement with an institutional investor for the sale of a $1,000,000

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First Debenture accrued interest at rate of 5% and was due six (6) months from the issue date.

The First Debenture

was convertible at any time after the issue date into shares of Company’s Common Stock at a price equal to $2.725.

The First Debenture was convertible

at any time after the issue date into shares of Company’s Common Stock at a price equal to $2.725.

January 14, 2020, the Company entered into a securities purchase agreement (with the same institutional investor for the sale

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Second Debenture accrued interest at rate of 5% and was due on the same date as the First Debenture.

Debenture was convertible at any time after the issue date into shares of Company’s Common Stock at a price equal

the six months ended June 30, 2020 the holders of First Debenture and Second Debenture exercised their rights for conversion into

common shares for which the company issued 550,458 common shares.

After the conversion, there are no First Debentures or Second

Debentures outstanding.

The Second Debenture was

convertible at any time after the issue date into shares of Company’s Common Stock at a price equal to $2.725.

the nine months ended September 30, 2020 the holders of First Debenture and Second Debenture exercised their rights for conversion

into common shares for which the company issued 550,458 common shares.

After the conversion, there are no First Debentures or

Second Debentures outstanding.

June 3, 2020 Ameri entered into an Exchange Agreement with Alpha Capital Ansalt (“Alpha”), the holder of certain

8% unsecured convertible notes, which notes were originally issued on or about March 7, 2017 (the “2017 Prior Notes”).

Pursuant to such Exchange Agreement, Alpha agreed to exchange the 2017 Prior Notes for a new convertible 1% debenture (the “June

Debenture”) in the aggregate principal amount of $2,265,342.46, which June Debenture is convertible into shares of common

stock of Ameri at a conversion price of $1.75 per share.

The June Debenture is due on December 31, 2020.

As of September 30, 2020,

828,572 shares of common stock have been issued upon conversions of the June Debenture.

September 15, 2020, Ameri entered into separate Exchange Agreements with the holders of certain 7.25% secured convertible notes,

including Alpha, which notes were originally issued on or about February 24, 2020 (the “2020 Prior Notes”).

to such Exchange Agreements, the holders agreed to exchange the 2020 Prior Notes for new convertible 7.25% debentures (the “September

Debentures”

and collectively with the June Debenture, the “Convertible Debentures”) in the aggregate principal

amount of $1,002,979 which September Debentures are convertible into shares of Ameri common stock at a conversion price of $1.11

The principal amount of the September Debentures is equal to the principal amount of the 2020 Prior Notes and the accrued

interest thereon.

The September Debentures are due on the earlier of (i) the effective date of the Offer or (ii) October 31, 2020.

As of September 30, 2020, no shares of common stock have been issued upon conversions of the September Debentures.

Company determines if an arrangement contains a lease at inception.

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payments over the lease term.

Company’s principal facility is located in Suwanee, Georgia.

The Company also leases office space in various locations with

expiration dates between 2016 and 2020.

In January 2020, the Company entered into a lease agreement for its Dallas office with

expiration date 2027.

Company’s principal facility is located in Alpharetta, Georgia.

The Company also leases office space in various locations

with expiration dates between 2016 and 2020.

In January 2020, the Company entered into a lease agreement for its Dallas office

with expiration date 2027.

The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal

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Rent expense was $0.2 million and $0.25 million for the

six months ended June 30, 2020 and June 30, 2019, respectively.

nine months ended September 30, 2020 and September 30, 2019, respectively.

Company utilized a portfolio approach in determining the discount rate.

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recognized in the period incurred.

Rent expense was $0.1 million and $0.17 million for the six months ended June 30, 2020 and

June 30, 2019, respectively.

Rent expense was $0.2 million and $0.25 million for the nine months ended September 30, 2020

and September 30, 2019, respectively.

The components of lease expense were as follows:

June 30, 2020

Operating leases

Interest on lease liabilities

Total net lease cost

on lease liabilities

net lease cost

balance sheet information related to leases was as follows:

June 30, 2020

Operating leases:

Operating lease ROU assets

Current operating lease liabilities, included in current liabilities

Noncurrent operating lease liabilities, included in long-term liabilities

Total operating lease liabilities

lease ROU assets

operating lease liabilities, included in current liabilities

operating lease liabilities, included in long-term liabilities

operating lease liabilities

cash flow and other information related to leases was as follows:

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

ROU assets obtained in exchange for lease liabilities:

Operating leases

Weighted average remaining lease term (in years):

Operating leases

Weighted average discount rate:

Operating leases

future minimum payments required under the lease obligations as of June 30, 2020 are as follows:

Six Months Ending June 30,

Total lease payments

paid for amounts included in the measurement of lease liabilities:

cash flows from operating leases

assets obtained in exchange for lease liabilities:

average remaining lease term (in years):

average discount rate:

future minimum payments required under the lease obligations as of September 30, 2020 are as follows:

Months Ending September 30,

lease payments

amounts representing interest

Total lease obligations

lease obligations

FAIR VALUE MEASUREMENT:

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associated with the obligation, and calculated in accordance with the respective terms of the share purchase agreements.

financial instruments were transferred into or out of Level 3 classification during the period ended June 30, 2020 and year ended

December 31, 2019.

financial instruments were transferred into or out of Level 3 classification during the period ended September 30, 2020 and year

ended December 31, 2019.

WARRANTS OUTSTANDING:

following warrants, were outstanding as of June 30, 2020:

Exercise Price

Number Outstanding

Weighted Average Remaining Contractual life (Years)

Number Exercisable

following warrants were outstanding as of September 30, 2020:

Average Remaining Contractual life (Years)

14- PREFERRED STOCK

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for 363,611 shares of the Company’s Series A Preferred Stock, which is non-convertible and perpetual preferred stock of

We have issued 61,327 shares as preferred dividends as of June 30, 2020 and the company has 424,938 outstanding shares

preferred stock.

dividend of $106,234.50 due on April 1, 2020 has not yet been issued.

SECURED NOTE:

Effective February 27,

2020, the “Company entered into a note purchase and security agreement (the “Purchase Agreement”) with an investor

for the sale of a $1,000,000 secured promissory note (the “Note”).

The Note accrues interest at rate of 7.25% and

is due on August 31, 2020.

Company granted to the investor a security interest (the “Security Interest”) in and lien on all of Company’s

tangible and intangible assets owned now or acquired later by the Company of any nature whatsoever.

The Security Interest is a

second priority security interest, senior to all other indebtedness of the Company other than with respect to the Company’s

existing indebtedness to North Mill Capital LLC (“North Mill”) the priority of which is established pursuant to an

Intercreditor and Debt Subordination Agreement between the investor and North Mill.

We have issued 61,327 shares as preferred dividends as of September 30, 2020 and the company has 424,938 outstanding

shares preferred stock.

dividend of $217,291 has become due and has not yet been paid.

LOAN FROM PAYCHECK PROTECTION PROGRAM (PPP):

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Aid, Relief, and Economic Security Act (the “CARES Act”).

The PPP Loan, which was in the form of a promissory

note issued by the Company, matures on May 6, 2022 and bears interest at a rate of 1.00% per annum, payable monthly

commencing on November 6, 2020.

The note may be prepaid by the Company at any time prior to maturity with no prepayment

Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits,

mortgage payments, rent, utilities, and interest on other debt obligations incurred before July 12, 2020.

The Company intends

to use the entire PPP Loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the PPP

Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

The PPP Loan, which was in the form of a promissory note

issued by the Company, matures on May 6, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on November

The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Funds from the PPP

Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities,

and interest on other debt obligations incurred before July 12, 2020.

The Company intends to use the entire PPP Loan amount for

qualifying expenses.

Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying

expenses as described in the CARES Act.

LOAN FROM U.S.

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Loan”) which was in the form of a Loan Authorization and Agreement executed by the company matures 30 years from the promissory

note and bears interest at a rate of 3.75% per annum, Installment payments, including principal and interest of $731 monthly

will begin 12 months from the date of promissory note.

The balance of principal and interest will be payable 30 years from the

date of the promissory note.

EXCHANGE OF CONVERTIBLE NOTE AND PROMISSORY NOTES

June 3, 2020, the Company entered into an Exchange Agreement with the holder of certain of the 2017 Notes, which notes

were originally issued on or about March 7, 2017 amounting to $2 million.

Pursuant to the Exchange Agreement, the holder agreed

to exchange the 2017 Notes for a new convertible 1% Debenture in the aggregate principal amount of $2,265,342.46,

which 1% Debenture is convertible into shares of common stock of the Company at a conversion price of $1.75 per share.

After the exchange, there are no 2017 Notes outstanding.

The principal amount of the 1% Debenture is equal to the

principal amount of the 2017 Notes and the accrued interest thereon.

REGISTERED DIRECT OFFERING

June 2, 2020, the Company entered into a Securities Purchase Agreement with certain purchasers

named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “June 2020 Registered

Offering”), 862,500 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the

“Common Stock”), at an offering price of $2.00 per Share.

June 2020 Registered Offering resulted in gross proceeds of approximately $1.725 million before deducting the placement

agent’s fees and related offering expenses.

The Shares were offered by the Company pursuant to a prospectus supplement to

the Company’s effective shelf registration statement on Form S-3 (Registration No.

333-233260), which was initially filed

with the Securities and Exchange Commission (the “Commission”) on August 14, 2019, and was declared effective on November

Company also agreed to issue to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants”)

to purchase up to 60,375 shares of Common Stock, which represents 7.0% of the Shares sold in the June 2020 Registered Offering.

The Placement Agent’s Warrants have an exercise price of $2.20 per share, which represents 110% of the per share offering

price of the Shares.

MATERIAL AGREEMENTS:

Extension and Forbearance Agreement

May 6, 2020, the Company entered into a Maturity Extension and Forbearance Agreement (“Agreement”) with the holder

of the First Debentures.

Pursuant to the Agreement (i) the holder agreed to extend the Maturity Date of the Debentures

to from May 26, 2020 to September 30, 2020, (ii) the Company may now prepay each Debenture at any time, with accrued interest

to the date of such payment, but no other premium or penalty, and (iii) the parties changed the definition of “Permitted

Indebtedness”

in the Debentures so as to permit indebtedness issued pursuant to the Coronavirus Aid, Relief, and Economic

Security (CARES) Act or related or similar governmental programs including disaster-relief or pandemic-relief programs designed

to help businesses in the wake of the Coronavirus pandemic.

In consideration for entering into the Agreement the Company agreed

to issue to the holder a prepaid warrant (the “Prepaid Warrant”) to purchase up to 646,094 shares of the Company’s

common stock.

The Prepaid Warrant shall be exercisable, commencing on May 6, 2020 until exercised in full, at a price of

$0.001 per share, and shall also be exercisable on a cashless basis.

Amendment Agreement

May 6, 2020, the Company entered into an Amalgamation Amendment Agreement (the “Amendment”) to amend that certain

Amalgamation Agreement dated January 10, 2020, by and between Ameri Holdings, Inc., Jay Pharma Merger Sub, Inc.

Sub ”), Jay Pharma Inc.

(“Jay Pharma”), Jay Pharma ExchangeCo, Inc.

(“ExchangeCo”), and Barry

Kostiner (the “Amalgamation Agreement”).

Pursuant to the Amendment, the parties agreed that (i) at the Effective Time,

Ameri Holdings, Inc.

shall issue to the holder of a certain note issued by Jay Pharma, series B warrants (the “Series B

Warrants”) to acquire 8,100,000 shares of common stock of the company resulting from the amalgamation, and (ii) providing

for certain registration rights, pursuant to a Registration Statement on Form S-4, of the Series B Warrants and the shares issuable

upon exercise of the Series B Warrants.

The Series B Warrants shall be exercisable for a period of five years commencing on the

ninetieth (90th) day after the later of the last day of the Lock-up Period and leak-out Period (accelerated or otherwise) set

forth in the Lock-up agreement to be executed by the holders of Jay Pharma securities in connection with the Amalgamation, at

a price of $0.01 per share, and shall also be exercisable on a cashless basis.

On August 12,

2020, the Company, Jay Pharma Inc.

and certain other signatories thereto entered into a tender agreement (as may be amended from

time to time, the “Tender Agreement”), which provides that, among other things, the Company will make a tender offer

to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal

to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of the Company,

on the terms and conditions set forth in the Tender Agreement.

The Tender Agreement terminates and replaces in its entirety the

Amalgamation Agreement, dated as of January 10, 2020, as amended on May 6, 2020, previously entered into by and among the parties

note and bears interest at a rate of 3.75% per annum, Installment payments, including principal and interest of $731 monthly will

begin 12 months from the date of promissory note.

The balance of principal and interest will be payable 30 years from the date

of the promissory note.

REVISION OF PRIOR YEAR FINANCIAL STATEMENTS

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financial statements previously included in the Company’s Annual Report for the year ended December 31, 2019:

Balance Sheet

Operating lease right of use asset, net

Total Other Assets

Current Liabilities

Current portion –

lease right of use asset, net

portion –

operating lease liability

Total Current Liabilities

Current Liabilities

lease liability, net

Long-term Liabilities

Operating lease liability, net

Total Long-term Liabilities

Total Liabilities

Stockholders’

Accumulated Deficit

$ (40,508,231 )

$ (40,512,019 )

Total Stockholders’

Total Liabilities and Stockholders’

Stockholders’

Liabilities and Stockholders’

the year ended December 31, 2019

As Previously

Statement of Operations

Interest expense

Total other income (expenses)

Loss before income taxes

Net loss attributable to common stockholders

Total comprehensive loss

Comprehensive loss attributable to Company

of Operations

other income (expenses)

before income taxes

loss attributable to common stockholders

comprehensive loss

Comprehensive

loss attributable to Company

$ (6,056,963 )

$ (6,060,751 )

Basic and diluted loss per share

Statements of Cash Flows

and diluted loss per share

of Cash Flows

$ (6,029,978 )

$ (6,033,766 )

Amortization of right of use asset

Net Cash Used in Operating Activities

of right of use asset

Cash Used in Operating Activities

$ (2,453,123 )

For the year ended December

As Previously

Statement of Stockholders’

the year ended December 31, 2019

of Stockholders’

$ (6,029,978 )

$ (6,033,766 )

Accumulated deficit ending balance

deficit ending balance

$ (40,508,231 )

$ (40,512,019 )

Total stockholders’

stockholders’

equity ending balance

SUBSEQUENT EVENTS:

into a Material Definitive Agreement.

On July 31, 2020, the

Company entered into a securities purchase agreement (the “July 2020 Purchase Agreement”) with an accredited

investor (the “Investor”) providing for the issuance of (i) 373,766 shares (the “Shares”) of the Company’s

common stock, par value $0.01 (the “Common Stock”);

(ii) pre-funded warrants (the “Pre-Funded Warrants”)

to purchase up to an aggregate of 150,000 shares of Common Stock at an exercise price of $0.01 per share, subject to customary

adjustments thereunder;

and (iii) warrants (the “Unregistered Warrants”), with a term of five (5) years, to

purchase an aggregate of up to 340,448 shares of Common Stock (the “Unregistered Warrant Shares”) at an exercise price

of $1.828 per share, subject to customary adjustments thereunder.

Pursuant to the Purchase Agreement, the Investor purchased the

Securities for an aggregate purchase price of $1,000,000.

Pursuant to the July

2020 Purchase Agreement, the Shares and Pre-Funded Warrants were issued to the Investors in a registered direct offering (the

“July 2020 Registered Offering”) and registered under the Securities Act of 1933, as amended (the “Securities

Act”), pursuant to a prospectus supplement to the Company’s currently effective registration statement on Form S-3

Pursuant to the July

2020 Purchase Agreement, the Company also issued to the Investors in a concurrent private placement pursuant to an exemption

from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D

promulgated thereunder, the Unregistered Warrants.

Subject to the Company’s

prior receipt of shareholder approval under Nasdaq’s corporate governance rules, the Investor shall have the right at any

time prior to the exercise in whole or in part of the Unregistered Warrant (as to the portion not exercised) to require the Company

to repurchase the unexercised portion of the Unregistered Warrant for the sum of $0.60 per Unregistered Warrant Share,

payable in cash or shares of common stock, at the Company’s discretion.

of November 13, 2020, 908,723 shares

of common stock have been issued upon conversions of the September Debentures.

of November 13,2020, 50,224 shares of common stock have been issued upon conversions of the June Debentures

of November 13, 2020, 646,094 shares

of common stock have been issued upon exercise of the Pre-Funded Warrants.

MANAGEMENT’S

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on fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete

the three months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for 41% and 49% of our total revenue,

respectively.

For the three months ended June 30, 2019, one of our customers contributed 13% of our revenue.

For the comparable

period in 2019, two of our customers contributed 14% and 12% of our revenue.

the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for 48% and 46% of our total revenue,

respectively.

Two of our customers contributed 19% and 10% of our revenue for the six months ended June 30, 2020.

For the comparable

period in 2019, two of our customers contributed 14% and 11% of our revenue.

the three months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for 54% and 52% of our

total revenue, respectively.

For the three months ended September 30, 2019, two of our customers have contributed 23% and 10%

of our revenue.

For the comparable period in 2019, one of our customers contributed 13% of our revenue.

the nine months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for 47% and 48% of our

total revenue, respectively.

Two of our customers contributed 20% and 10% of our revenue for the nine months ended September 30,

For the comparable period in 2019, Two of our customers contributed 19% and 10% of our revenue.

continue to explore strategic alternatives to improve the market position and profitability of our product and service offerings

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from other clients related to COVID-19.

We have had no projects cancelled due to COVID-19 although we have had some new projects

We have also had clients notify us they will be slow to pay our bills and have some reduced billable hours per week

until the economy reopens further.

We are at the beginning stages of rebuilding our sales pipeline for a post-COVID economy.

One of the Company’s largest customers has terminated the majority of its work as

a result of COVID-19.

This customer has accounted in the past for annual revenues of between $5 to $7 million dollars.

on this quarter is a reduction of approximately $1.5 million in revenue.

We have had no projects cancelled due to COVID-19 although

we have had some new projects put on hold.

We have also had clients notify us they will be slow to pay our bills and have some

reduced billable hours per week until the economy reopens further.

We are at the beginning stages of rebuilding our sales pipeline

for a post-COVID economy.

of Business Activity

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to the migration of enterprises from on-premises IT infrastructure to the cloud.

new business activities in April and May, 2020:

S/4HANA transformation for a spinoff in the midstream oil and gas industry:

S/4HANA private cloud transformation for US firearm and ammunition company

go live on Hybris e-commerce implementation for lifestyle apparel and athletic company

Application Managed Services (AMS) contract with a transportation infrastructure construction and maintenance client

Application Managed Services (AMS) contract with a US manufacturer of industrial cooling equipment

a new Master Services Agreement and commenced services for water treatment provider.

new business activities in July to September 2020:

greenfield S/4HANA transformation for a leader in HVAC technology and manufacturing:

implemented and successful go-live of Ariba and Concur functionalities at the largest

American supplemental insurance company

to architect, manage, and help implement C4 solutions at a large Japanese multinational

conglomerate corporation

global template design, build and rollout of S/4HANA and other supporting SAP products

at a large tire and rubber products company based in Japan

Ameri100’s first Qualtrics EX project

a new account with SAP related billing at one of the largest chocolate manufacturers

2 SAP software transactions as a SAP certified CCP reseller –

Ameri100’s first 2 revenue generating SAP software

addition to client initiatives, the Company has invested in continued development of its internal technology expertise and business

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OF OPERATIONS

of Operations for the Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019 and for the Six Months

Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019

Cost of revenue

Operating expenses

Selling, General and administration

Depreciation and amortization

Operating expenses

Operating Income (loss)

Interest expenses

Impairment on goodwill and Intangibles

Changes in fair value of warrant liability

Income (loss) before income taxes

Income tax benefit (expenses)

Income (loss) after income taxes

Net income attributable to non-controlling interest

Net Income (loss) attributable to the Company

Dividend on preferred stock

Net Income (loss) attributable to common stock holders

Other comprehensive income (loss), net of tax

Foreign exchange translation

Total Comprehensive Income (loss)

Basic income (loss) per share

Diluted income (loss) per share

Basic weighted average number of common shares outstanding

Diluted weighted average number of common shares outstanding

for the three months ended June 30, 2020 decreased by $2.8 million, or 26%, as compared to the three months ended June 30, 2019

of Operations for the Three Months Ended September 30, 2020 Compared to the Three Months Ended September 30, 2019 and for the

Nine Months Ended September 30, 2020 Compared to the Nine Months Ended September 30, 2019

Months Sep 30,2020

Months Sep 30,2019

Months Sep 30,2020

Months Sep 30,2019

General and administration

and amortization

Income (loss)

benefit (expenses)

in fair value of warrant liability

(loss) before income taxes

tax benefit (expenses)

(loss) after income taxes

income attributable to non-controlling interest

Income (loss) attributable to the Company

on preferred stock

Income (loss) attributable to common stock holders

comprehensive income (loss), net of tax

exchange translation

Comprehensive Income (loss)

(loss) per share

income (loss) per share

Basic weighted

average number of common shares outstanding

weighted average number of common shares outstanding

for the three months ended September 30, 2020 decreased by $0.7 million, or 7%, as compared to the three months ended September

30, 2019 mainly due to loss of revenue from existing customers due to COVID-19.

the three months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for 41% and 49% of our total revenue,

respectively.

For the three months ended June 30, 2019, one of our customers contributed 13% of our revenue.

For the comparable

period in 2019, two of our customers contributed 14% and 12% of our revenue.

We derived most of our revenues from our customers

located in North America for the three months ended June 30, 2020 and June 30, 2019.

for the six months ended June 30, 2020 decreased by $3.8 million, or 22%, as compared to the six months ended June 30, 2019 mainly

due to loss of revenue from existing customers due to COVID-19.

the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for 48% and 46% of our total revenue,

respectively.

Two of our customers contributed 19% and 10% of our revenue for the six months ended June 30, 2020.

For the comparable

period in 2019, two of our customers contributed 14% and 11% of our revenue.

We derived most of our revenues from our customers

located in North America for the six months ended June 30, 2020 and June 30, 2019.

the three months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for 54% and 52% of our

total revenue, respectively.

For the three months ended September 30, 2019, two of our customers have contributed 23% and 10%

of our revenue.

For the comparable period in 2019, one of our customers contributed 13% of our revenue.

We derived most of our

revenues from our customers located in North America for the three months ended September 30, 2020 and September 30, 2019.

of the Company’s largest customers has terminated the majority of its work as a result of COVID-19.

This customer has accounted

in the past for annual revenues of between $5 to $7 million dollars.

The impact on this quarter is a reduction of approximately

$1.5 million in revenue.

for the nine months ended September 30, 2020 decreased by $4.5 million, or 15%, as compared to the nine months ended September

30, 2019 mainly due to loss of revenue from existing customers due to COVID-19.

the nine months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for 47% and 48% of our

total revenue, respectively.

Two of our customers contributed 20% and 10% of our revenue for the nine months ended September 30,

For the comparable period in 2019, two of our customers contributed 19% and 10% of our revenue.

We derived most of our revenues

from our customers located in North America for the nine months ended September 30, 2020 and September 30, 2019.

are expecting a decrease in revenue from existing clients of approximately $3.5 million, as compared to full year revenue of 2019,

during the next 12 months due to COVID-19.

gross margin was 22% for the three months ended June 30, 2020 and for the comparable period in 2019.

gross margin was 21% for the six months ended June 30, 2020, as compared to 22% for the six months ended June 30, 2019.

gross margin was 22% for the three months ended September 30, 2020 and 21% for the comparable period in 2019.

gross margin was 21% for the nine months ended September 30, 2020 and for the comparable period in 2019.

target gross margins in future periods are anticipated to be in the range of 20% to 25% based on a mix of project revenues and

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primarily include rent and communications costs.

expenses for the three months ended June 30, 2020 were $2.5 million, as compared to $3.3 million for the three months ended June

expenses for the six months ended June 30, 2020 were $5.4 million, as compared to $6.2 million for the six months ended June 30,

expenses for the three months ended September 30, 2020 were $2.4 million, as compared to $2.9 million for the three months ended

September 30, 2019.

expenses for the nine months ended September 30, 2020 were $7.8 million, as compared to $9.1 million for the nine months ended

September 30, 2019.

and Amortization

and amortization expense amounted to $0.5 million for the three months ended June 30, 2020, as compared to $0.6 million for the

three months ended June 30, 2019 and $1.1 million for the six months ended June 30, 2020 and June 30, 2019.

We capitalized the

customer lists acquired during various acquisitions, resulting in increased amortization costs.

The customer lists from each acquisition

are amortized over a period of 60 months.

and amortization expense amounted to $0.6 million for the three months ended September 30, 2020 and three months ended September

30, 2019 and $1.6 million for the nine months ended September 30, 2020 and $1.7 million for nine months ended September 30, 2019.

We capitalized the customer lists acquired during various acquisitions, resulting in increased amortization costs.

lists from each acquisition are amortized over a period of 60 months.

Income (Loss)

operating loss was $1.2 million for the three months ended June 30, 2020, as compared to $1.5 million for the three months ended

June 30, 2019.

operating loss was $2.8 million for the six months ended June 30, 2020 and for the six months ended June 30, 2019.

operating loss was $1.1 million for the three months ended September 30, 2020, as compared to $1.6 million for the three months

ended September 30, 2019.

operating loss was $3.9 million for the nine months ended September 30, 2020 and $4.3 million for the nine months ended September

expect the COVID-19 pandemic to negatively impact our operations for the remainder of the fiscal year and for the next twelve

interest expense for the three months ended June 30, 2020 was $0.37 million as compared to $0.16 million for the three months

ended June 30, 2019.

The increase in interest expenses is mainly due to new debts obtained during the year 2020 which was not

there for comparable period of 2019.

interest expense six three months ended June 30, 2020 was $0.5 million as compared to $0.3 million for the six months ended June

The increase in interest expenses is mainly due to new debts obtained during the year 2020 which was not there for comparable

period of 2019.

One of the Company’s largest customers has terminated the majority of its work as a result of COVID-19.

This customer

has accounted in the past for annual revenues of between $5 to $7 million dollars.

The impact on this quarter is a reduction of

approximately $1.5 million in revenue.

interest expense for the three months ended September 30, 2020 was $(0.1) million as compared to $0.3 million for the three months

ended September 30, 2019.

interest expense for nine months ended September 30, 2020 was $0.4 million as compared to $0.6 million for the nine months ended

September 30, 2019.

and Capital Resources

cash position was approximately $2.1 million as of June 30, 2020, as compared to $0.4 million as of December 31, 2019.

used for operating activities was $2.9 million during the six months ended June 30, 2020 and was primarily a result of net changes

in working capital requirements.

Cash used in investing activities was $0.04 million during the six months ended June 30, 2020.

Cash provided by financing activities by loans was $4.6 million during the six months ended June 30, 2020.

of June 30, 2020, we had negative working capital of $2.5 million and cash of $2.1 million.

cash position was approximately $2.8 million as of September 30, 2020, as compared to $0.4 million as of December 31, 2019.

used for operating activities was $3.9 million during the nine months ended September 30, 2020 and was primarily a result of net

changes in working capital requirements.

Cash used in investing activities was $0.04 million during the nine months ended September

Cash provided by financing activities by loans and rights issue was $6.3 million during the nine months ended September

of September 30, 2020, we had negative working capital of $2.7 million and cash of $2.8 million.

Our principal sources

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expenses are likely to continue to grow and, as a result, we will need to generate significant additional revenues to cover such

financial statements as of June 30, 2020 have been prepared under the assumption that we will continue as a going concern.

ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity

financial statements as of September 30, 2020 have been prepared under the assumption that we will continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity

or debt securities, as well as to attain further operating efficiencies and, ultimately, to generate additional revenues.

6 unchanged sentences

Credit Facility, Borrowings and Repayment of Debt

of June 30, 2020, we had approximately $2.3 million in borrowings outstanding under our senior secured credit facility

(the “Credit Facility”), which provided for up to $8 million in principal for revolving loans (the “Revolving

Loans”) for general working capital purposes.

February 27, 2020, we entered into a note purchase and security agreement with an investor for the sale of a $1,000,000 secured

promissory note, which accrues interest at rate of 7.25% and is due on August 31, 2020.

In addition, we have

an outstanding aggregate of $815,342.46 million in 1% convertible unsecured debentures (the “1% Debentures”),

of September 30, 2020, we had approximately $3.1 million in borrowings outstanding under our senior secured credit facility (the

“Credit Facility”), which provided for up to $8 million in principal for revolving loans (the “Revolving Loans”)

for general working capital purposes.

addition, we have an outstanding aggregate of $815,342.46 million in 1% convertible unsecured debentures (the “1% Debentures”),

which were issued to one of accredited investors.

The 1% Debentures bear interest at 1% per annum and are convertible at $1.75

$1.75 per share.

receivable for the period ended June 30, 2020 were $7.3 million as compared to $6.4 million as on December 31, 2019 the increase

receivable for the period ended September 30, 2020 were $7.6 million as compared to $6.4 million as on December 31, 2019 the increase

was mainly due to delay in payment by our customers due to the COVID-19 pandemic.

payable for the period ended June 30, 2020 were $4.9 million as compared to $4.7 million as on December 31, 2019.

payable for the period ended September 30, 2020 were $4.6 million as compared to $4.7 million as on December 31, 2019.

in Accounts payable is due to delay in payments to our vendors.

expenses for the period ended June 30, 2020 were $1.9 million as compared to $2.1 million as on December 31, 2019.

expenses for the period ended September 30, 2020 were $1.9 million as compared to $2.1 million as on December 31, 2019.

expenses reflect obligations associated with work that has been performed but not yet billed, and will be paid in the 4 th

It is a rotational liability associated with the gap in timing between work performed and invoices paid.

largest source of operating cash flows is cash collections from our customers.

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In May 2016, the FASB issued ASU No.

2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients .

2016-12, Revenue from Contracts with Customers (Topic 606)—

Narrow-Scope Improvements and Practical Expedients .

update clarifies the objectives of collectability, sales and other taxes, noncash consideration, contract modifications at transition,

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also included the reimbursement of out-of-pocket expenses.

the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for approximately 48% and 46% of

our total revenue, respectively.

For the six months ended June 30, 2020, five of our customers contributed 19%, 10% ,7% and 6%

of our revenue, and for the six months ended June 30, 2019, five of our customers contributed 14%,11%,9% and 6% of our revenue.

the nine months ended September 30, 2020 and September 30, 2019, sales to five major customers accounted for 47% and 48% of our

total revenue, respectively.

Two of our customers contributed 20% and 10% of our revenue for the nine months ended September 30,

For the comparable period in 2019, Two of our customers contributed 19% and 10% of our revenue.

Compensation.

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of Contingent Earn-out Consideration.

Acquisitions may include contingent consideration payments based on the

achievement of certain future financial performance measures of the acquired company.

Contingent consideration is required to

be recognized at fair value as of the acquisition date.

We estimate the fair value of these liabilities based on financial

projections of the acquired companies and estimated probabilities of achievement.

We believe our estimates and assumptions

are reasonable, however, there is significant judgment involved.

We evaluate, on a routine, periodic basis, the estimated

fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate

at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations.

Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates,

changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to

the likelihood of achieving the various earn-out criteria.

Any changes in the estimated fair value of contingent

consideration may have a material impact on our operating results.

Acquisitions may include contingent consideration payments based on the achievement

of certain future financial performance measures of the acquired company.

Contingent consideration is required to be recognized

at fair value as of the acquisition date.

We estimate the fair value of these liabilities based on financial projections of the

acquired companies and estimated probabilities of achievement.

We believe our estimates and assumptions are reasonable, however,

there is significant judgment involved.

We evaluate, on a routine, periodic basis, the estimated fair value of the contingent

consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition,

will be reflected in income or expense in the consolidated statements of operations.

Changes in the fair value of contingent consideration

obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings

estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria.

changes in the estimated fair value of contingent consideration may have a material impact on our operating results.

Currency Translation

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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-Q

Item 1. Financial Statements