What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-12 compared with 2020-05-13 · 157 added, 107 removed, 489 unchanged (35% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31 , 20 20

June 30 , 2020

December 31, 2019

47 unchanged sentences

Three Months Ended

March 31, 2020

March 31, 2019

Six Months Ended

Software product, net

8 unchanged sentences

Total selling, general and administrative expenses

Loss from continuing operations

Income (loss) from continuing operations

Other income (expense):

1 unchanged sentence

Total other income (expense)

Loss from continuing operations before taxes

Income (loss) from continuing operations before taxes

Provision (benefit) for income taxes

Loss from continuing operations

Income (loss) from continuing operations

Discontinued operations

16 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2020

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Preferred Stock

3 unchanged sentences

Share-based compensation

Balance at March 31, 2020

FOR THE THREE MONTHS ENDED MARCH 3 1 , 201 9

Balance at June 30, 2020

FOR THE SIX MONTHS ENDED JUNE 30, 2019

Preferred Stock

3 unchanged sentences

Share-based compensation

Balance at March 31, 2019

Balance at June 30, 2019

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30 , 2020

Preferred Stock

Stockholders’

Balance at April 1, 2020

Share-based compensation

Balance at June 30, 2020

FOR THE THREE MONTHS ENDED JUNE 30 , 2019

Preferred Stock

Stockholders’

Balance at April 1, 2019

Share-based compensation

Balance at June 30, 2019

See accompanying notes to the unaudited condensed consolidated financial statements.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

Cash flows from operating activities:

2 unchanged sentences

Net loss from continuing operations

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:

Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:

Deferred income taxes

15 unchanged sentences

Operating lease obligations

Net cash used in operating activities of continuing operations

Net cash provided by (used in) operating activities of continuing operations

Cash flows from investing activities:

6 unchanged sentences

Payment of cash dividend

Proceeds from PPP loan

Payment of PPP loan

Payment of contingent consideration

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31 , 20 20 AND 201 9

FOR THE SIX MONTHS ENDED JUNE 30 , 2020 AND 2019

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the three months ended March 31, 2020:

For the six months ended June 30, 2020:

On January 23, 2020 the Company entered into an operating lease for equipment with VAR Technology Finance.

4 unchanged sentences

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $349,987.

For the three months ended March 31, 2019:

For the six months ended June 30, 2019:

The Company acquired certain assets of Partners in Technology, Inc.

2 unchanged sentences

Operating lease right of use assets and operating lease liabilities were recognized in the amount of $911,000 at January 1, 2019.

On April 1, 2019 the company entered into an operating lease in Lisle, IL and operating lease right of use assets and operating lease liabilities were recognized in the amount of $71,685.

The Company incurred approximately $291,936 in finance lease obligations for purchases of equipment.

See accompanying notes to the unaudited condensed consolidated financial statements.

17 unchanged sentences

Since April 19, 2017, the Company has been listed and is traded on the NASDAQ Capital Market under the symbol “SSNT”.

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization.

The ultimate disruption which may be caused by the outbreak is uncertain;

however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

Possible areas that may be affected include, but are not limited to, disruption to the Company’s customers and revenue, labor workforce, inability of customers to pay outstanding accounts receivable due and owing to the Company as they limit or shut down their businesses, customers seeking relief or extended payment plans relating to accounts receivable due and owing to the Company, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company, including property and equipment.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 2020, the results of operations for the three months ended March 31, 2020 and 2019 and cash flows for the three months ended March 31, 2020 and 2019.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 2020, the results of operations for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019.

These results are not necessarily indicative of the results to be expected for the full year.

6 unchanged sentences

All significant inter-company transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

Actual results could differ from those estimates.

Goodwill is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired.

1 unchanged sentence

These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors.

No impairment losses were identified or recorded for the three months ended March 31, 2020 and 2019.

No impairment losses were identified or recorded for the three and six months ended June 30, 2020 and 2019.

Capitalization of proprietary developed software

8 unchanged sentences

Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results.

No impairment losses were identified or recorded for the three months ended March 31, 2020 and 2019.

No impairment losses were identified or recorded for the three and six months ended June 30, 2020 and 2019.

Revenue Recognition

13 unchanged sentences

Shipping and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in cost of sales.

For the Three Months Ending March 31,

For the Three Months Ending June 30,

For the Six Months Ending June 30,

Professional Consulting

6 unchanged sentences

Deferred revenues consist of maintenance on proprietary products (contract liabilities), customer telephone support services (contract liabilities) and deposits for future consulting services which will be earned as such services are performed over the contractual or stated period, which generally ranges from three to twelve months.

As of March 31, 2020, there was $115,074 in deferred maintenance, $211,500 in deferred support services, and $2,740,026 in deposits for future consulting services.

As of June 30, 2020, there was $129,605 in deferred maintenance, $257,516 in deferred support services, and $1,930,750, in deposits for future consulting services.

As of December 31, 2019, there was $145,977 in deferred maintenance, $159,165 in deferred support services, and $1,701,841 in deposits for future consulting services.

2 unchanged sentences

These costs are deferred and expensed as the service revenue is earned.

Commission expense is included in selling and marketing expenses in the accompanying consolidated statements of operations.

Commission expense is included in selling and marketing expenses in the accompanying condensed consolidated statements of operations.

Cash and Cash Equivalents

5 unchanged sentences

The Company maintains its cash with various institutions, which exceed federally insured limits throughout the year.

At March 31, 2020 and December 31, 2019, the Company had cash on deposit of $5,831,539 and $8,016,900, respectively, in excess of the federally insured limits of $250,000.

As of March 31, 2020, no one customer represented more than 10% of the total accounts receivable and unbilled services.

At June 30, 2020 and December 31, 2019, the Company had cash on deposit of $6,087,520 and $8,016,900, respectively, in excess of the federally insured limits of $250,000.

As of June 30, 2020, one customer represented 10% of the total accounts receivable and unbilled services.

As of December 31, 2019, one customer represented 14% of the total accounts receivable and unbilled services.

For the three months ended March 31, 2020 and 2019, the Company’s top ten customers accounted for 14% ($1,445,088) and 16% ($1,466,856), respectively, of total revenues.

For the six months ended June 30, 2020 and 2019, the Company’s top ten customers accounted for 12% ($2,433,153) and 12% ($2,267,328), respectively, of total revenues.

The Company does not rely on any one specific customer for any significant portion of its revenue.

3 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

For the three months ended March 31, 2020 and 2019, purchases from one supplier through a “channel partner” agreement were approximately 16% and 19% of cost of revenues, respectively.

For the six months ended June 30, 2020 and 2019, purchases from one supplier through a “channel partner” agreement were approximately 14% and 20% of cost of revenues, respectively.

This channel partner agreement is for a one year term and automatically renews for an additional one year term on the anniversary of the agreements effective date.

As of March 31, 2020 and December 31, 2019, one supplier represented approximately 14% and 15% of total accounts payable respectively.

As of June 30, 2020 and December 31, 2019, one supplier represented approximately 23% and 15% of total accounts payable respectively.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable, cash and escrow accounts receivable.

As of March 31, 2020, the Company believes it has no significant risk related to its concentration of accounts receivable.

As of June 30, 2020, the Company believes it has no significant risk related to its concentration of accounts receivable.

Accounts Receivable

6 unchanged sentences

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation.

Property and equipment is stated at cost, net of accumulated depreciation and amortization.

Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets, generally three to seven years.

11 unchanged sentences

federal and state jurisdictions.

There were no liabilities for uncertain tax positions at March 31, 2020 and December 31, 2019.

There were no liabilities for uncertain tax positions at June 30, 2020 and December 31, 2019.

SILVERSUN TECHNOLOGIES, INC.

43 unchanged sentences

Diluted income per common share is based on net income, divided by the weighted average number of common shares outstanding during the period, including common share equivalents, such as outstanding option and warrants to the extent they are dilutive.

As of March 31, 2020 and 2019, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options and warrants, therefore, the inclusion of the stock options and warrants would be anti-dilutive.

In addition, since the effect of common stock equivalents is anti-dilutive with respect to losses, the convertible promissory notes have also been excluded from the Company’s computation of loss per common share for continuing operations for the periods ended March 31, 2020 and 2019.

Therefore, basic and diluted income (loss) per common share for continuing operations for the periods ended March 31, 2020 and 2019 are the same.

March 31 , 20 20

March 31 , 201 9

For the three and six months ended June 30, 2020 and 2019, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options and warrants, therefore, the inclusion of the stock options and warrants would be anti-dilutive.

Therefore, basic and diluted income (loss) per common share for continuing operations for the six months ended June 30, 2020 and three and six months ended June 30, 2019 are the same.

For the three months ended June 30, 2020 convertible promissory notes have been included in the Company’s computation of income per common share for continuing operations.

June 30, 2020

June 30, 2019

Basic net income (loss) from continuing operations per share computation:

1 unchanged sentence

Weighted-average common shares outstanding

Basic net income (loss) per share

Diluted net income (loss) from continuing operations per share computation:

Net income (loss) per above

Interest on Convertible debt

Net income (loss)

Weighted-average common shares outstanding

Incremental shares for convertible promissory notes

Total adjusted weighted-average shares

Diluted net income (loss) per share

June 30, 2020

June 30, 2019

Basic net income (loss) from continuing operations per share computation:

Net loss from continuing operations

Weighted-average common shares outstanding

Basic net loss per share

Diluted net income (loss) from continuing operations per share computation:

Net loss per above

Net income (loss) per above

Net income (loss)

Weighted-average common shares outstanding

Incremental shares for convertible promissory notes

Total adjusted weighted-average shares

Diluted net loss per share

Diluted net income (loss) per share

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings (loss) per share.

June 30, 2020

June 30, 2019

Stock options

1 unchanged sentence

Total potential dilutive securities not included in loss per share

June 30, 2020

June 30, 2019

Stock options

Convertible promissory notes

Total potential dilutive securities not included in loss per share

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

March 31 , 20 20

June 30 , 2020

December 31, 2019

3 unchanged sentences

Property and equipment, net

Depreciation and amortization expense related to these assets for the three months ended March 31, 2020 and 2019 was $84,563 and $74,386, respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PROPERTY AND EQUIPMENT (Continued)

Depreciation and amortization expense related to these assets was $81,070 and $165,633, respectively for the three and six months ended June 30, 2020 as compared to $86,726 and $161,112 for the three and six months ended June 30, 2019.

Property and equipment under finance leases are summarized as follows:

March 31 , 20 20

June 30, 2020

December 31, 2019

2 unchanged sentences

Property and equipment, net

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – INTANGIBLE ASSETS

2 unchanged sentences

The components of intangible assets are as follows:

March 31 , 20 20

June 30 , 2020

December 31, 2019

4 unchanged sentences

accumulated amortization

Amortization expense related to the above intangible assets was $91,973 and $99,843, respectively, the three months ended March 31, 2020 and 2019.

Amortization expense related to the above intangible assets for the three and six months ended June 30, 2020 was $91,974 and $183,946, respectively as compared to $99,844 and $199,687 for the three and six months ended June 30, 2020 and 2019.

The Company expects future amortization expense to be the following:

Remainder of 2020

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – CONVERTIBLE DEBT AND LONG-TERM DEBT, RELATED PARTY

NOTE 6 – CONVERTIBLE DEBT AND LONG-TERM DEBT, RELATED PARTY AND PPP LOAN

On July 6, 2015, SWK acquired certain assets of ProductiveTech Inc.

(“PTI”) pursuant to an Asset Purchase Agreement for cash of $500,000 and a promissory note for $600,000 (the “PTI Note”).

The PTI Note is due in 60 months from the closing date and bears interest at a rate of two and one half (2.5%) percent.

The PTI Note is due in 60 months from the closing date and bears interest at a rate of two and one half (2.5%) percent per annum.

Monthly payments including interest are $10,645.

At March 31, 2020 and December 31, 2019, the outstanding balance on the PTI Note was $42,360 and $73,899, respectively.

At June 30, 2020 and December 31, 2019, the outstanding balance on the PTI Note was $10,623 and $73,899, respectively.

On May 31, 2018, SWK acquired certain assets of Info Sys Management, Inc.

2 unchanged sentences

Monthly payments including interest are $17,528.

The ISM Note has an optional conversion feature where the holder may, at its sole and exclusive option, elect to convert, at any time and from time to time, until payment in full of the ISM Note, all of the outstanding principal amount of the ISM Note, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s Common Stock, (“Common Stock”) at per share price equal to $4.03, a price equal to the average closing price of its Common Stock for the five (5) trading days immediately preceding the issuance date of the ISM Note (the “Fixed Conversion Price”).

At March 31, 2020 and December 31, 2019 the outstanding balance on the ISM Note was $661,306 and $710,420 respectively.

The ISM Note has an optional conversion feature whereby the holder may, at its sole and exclusive option, elect to convert, at any time and from time to time, until payment in full of the ISM Note, all of the outstanding principal amount of the ISM Note, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s Common Stock, (“Common Stock”) at per share price equal to $4.03, a price equal to the average closing price of its Common Stock for the five (5) trading days immediately preceding the issuance date of the ISM Note (the “Fixed Conversion Price”).

At June 30, 2020 and December 31, 2019 the outstanding balance on the ISM Note was $611,948 and $710,420 respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – CONVERTIBLE DEBT AND LONG-TERM DEBT, RELATED PARTY AND PPP LOAN (Continued)

On May 31, 2018, Secure Cloud Services acquired certain assets of Nellnube, Inc.

2 unchanged sentences

Monthly payments including interest are $7,011.

The Nellnube Note has an optional conversion feature where the holder may, at its sole and exclusive option, elect to convert, at any time and from time to time, until payment in full of the Nellnube Note, all of the outstanding principal amount of the Nellnube Note, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s Common Stock, (“Common Stock”) at per share price equal to $4.03, a price equal to the average closing price of its Common Stock for the five (5) trading days immediately preceding the issuance date of the Nellnube Note (the “Fixed Conversion Price”).

At March 31, 2020 and December 31, 2019 the outstanding balance on the Nellnube Note was $264,523 and $284,168 respectively.

The Nellnube Note has an optional conversion feature whereby the holder may, at its sole and exclusive option, elect to convert, at any time and from time to time, all of the outstanding principal amount of the Nellnube Note, plus accrued interest, into shares (the “Conversion Shares”) of the Company’s Common Stock, (“Common Stock”) at per share price equal to $4.03 (the “Fixed Conversion Price”).

At June 30, 2020 and December 31, 2019 the outstanding balance on the Nellnube Note was $244,779 and $284,168 respectively.

On January 1, 2019, SWK acquired certain assets of Partners in Technology, Inc.

2 unchanged sentences

Monthly payments including interest are $4,984.

At March 31, 2020 and December 31, 2019 the outstanding balance on the PIT Note was $107,570 and $121,968 respectively.

At March 31, 2020, future payments of long term debt are as follows:

At June 30, 2020 and December 31, 2019 the outstanding balance on the PIT Note was $93,133 and $121,968 respectively.

At June 30, 2020, future payments of long term debt are as follows:

Remainder of 2020

On April 9, 2020, SWK Technologies, Inc.

(“SWK”), a wholly-owned subsidiary of SilverSun Technologies, Inc.

(the “Company”), issued a promissory note (the “Note”) to JPMorgan Chase Bank, N.A., in the principal aggregate amount of $3,150,832 (the “PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The PPP Loan had a two-year term and an interest at a rate of 0.98% per annum.

Monthly principal and interest payments were deferred for six months after the date of disbursement.

The PPP Loan could be prepaid at any time prior to maturity with no prepayment penalties.

Beginning seven months from the date of the PPP Loan SWK was required to make 24 monthly payments of principal and interest in the amount of $132,629.06.

Under the terms of the CARES Act, PPP loan recipients could apply for and be granted forgiveness for all or a portion of loan granted under the program.

Such forgiveness would be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

No assurance was provided that SWK would obtain forgiveness of the PPP Loan in whole or in part.

At the time the Company applied for the PPP Loan, the Company believed it qualified to receive the funds pursuant to the PPP.

However, on April 23, 2020, subsequent to the Company’s receipt of the PPP Loan, the SBA, in consultation with the Department of Treasury, issued new guidance that creates uncertainty regarding the qualification requirements for a PPP loan for public companies, and provided a safe harbor whereby a public company could repay its PPP loan without consequence by May 7, 2020.

On May 5, 2020, the SBA issued additional guidance, whereby they extended the safe harbor date until May 14, 2020, and furthermore committed to provide additional guidance relative to a public’s company ability to retain its PPP loan.

The Company reviewed the new guidance and subsequently returned the full amount of the loan on May 18, 2020.

SILVERSUN TECHNOLOGIES, INC.

5 unchanged sentences

The related obligations are based upon the present value of the future minimum lease payments with the following:

March 31 2020

June 30, 2020

Weighted average remaining lease term

Weighted average interest rate

At March 31, 2020 future payments under finance leases are as follows:

At June 30, 2020 future payments under finance leases are as follows:

Remainder of 2020

10 unchanged sentences

The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of March 31, 2020 are as follows:

March 3 1 , 20 20

The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2020 are as follows:

June 30 , 2020

Weighted average remaining lease term

4 unchanged sentences

NOTE 8 – OPERATING LEASE LIABILITY (Continued)

The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total lease liabilities recognized on the condensed consolidated balance sheet as of March 31, 2020:

Remainder 2020

4 unchanged sentences

Long-term operating lease liabilities

Total rent expense under operating leases for the three months ended March 31, 2020 and 2019 was $111,681 and $111,032, respectively.

Total rent expense under operating leases for the three and six months ended June 30, 2020 was $134,485 and $263,270 as compared to $103,438 and $260,823 for the three and six months ended June 30, 2019.

NOTE 9 – EQUITY

6 unchanged sentences

The Company expects to finance the program from existing cash resources.

As of March 31, 2020 and December 31, 2019, no repurchases have been made.

As of June 30, 2020 and December 31, 2019, no repurchases have been made.

On December 24, 2019, the Company announced the payment of a $0.50 special cash dividend per share of Common Stock payable on January 14, 2020 for an aggregate amount of $2,250,636, which was applied against paid in capital.

3 unchanged sentences

NOTE 9 – EQUITY (Continued)

A summary of the status of the Company’s stock option plans for the fiscal years ended December 31, 2019 and the three months ending March 31, 2020 and changes during the years are presented below (in number of options):

A summary of the status of the Company’s stock option plans for the fiscal years ended December 31, 2019 and the six months ending June 30, 2020 and changes during the years are presented below (in number of options):

Exercise Price

9 unchanged sentences

Options canceled/forfeited/expired

Outstanding options at March 31, 2020

Outstanding options at June 30, 2020

Vested Options:

March 31, 2020:

June 30, 2020:

December 31, 2019:

As of March 31, 2020 the unamortized compensation expense for stock options was $6,795.

As of June 30, 2020 the unamortized compensation expense for stock options was $3,396.

Unamortized compensation expense is expected to be recognized over a weighted-average period of 0.3 years.

6 unchanged sentences

Outstanding and Exercisable December 31, 2019

Outstanding and Exercisable March 31, 2020

Outstanding and Exercisable June 30, 2020

SILVERSUN TECHNOLOGIES, INC.

15 unchanged sentences

Net assets acquired

The Company’s unaudited condensed consolidated financial statements for the three months ending March 31, 2020 and 2019 include the actual results of PIT since the date of acquisition, January 1, 2019.

The Company’s unaudited condensed consolidated financial statements for the three and six months ending June 30, 2020 and 2019 include the actual results of PIT since the date of acquisition, January 1, 2019.

NOTE 11 – INCOME TAXES

The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income.

The Company has federal net operating loss (“NOL”) carryforwards of approximately $6,177,000 as of March 31, 2020, which is subject to limitations under Section 382 of the Internal Revenue Code.

The Company has federal net operating loss (“NOL”) carryforwards of approximately $6,177,000 as of June 30, 2020, which is subject to limitations under Section 382 of the Internal Revenue Code.

These carryforward losses are available to offset future taxable income and begin to expire in the year 2024 to 2033.

7 unchanged sentences

Income tax provision (benefit) from continuing operations:

Three Months Ended

Six Months Ended

State and local

3 unchanged sentences

Total provision (benefit)

For the three months ended March 31, 2020, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the six months ended June 30, 2020, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

The Federal effective rate is higher than the statutory rate primarily due to Incentive Stock Options (ISO) and 50% of meals, 100% entertainment expense which are not tax deductible.

The benefit from continuing operations for the three months ended March 31, 2020 was $89,750.

The benefit from continuing operations for the six months ended June 30, 2020 was $78,382.

The effective tax rate consists primarily of the 21% federal statutory tax rate and a blended 5% state and local tax rate.

NOTE 12 – RELATED PARTY TRANSACTIONS

As of March 31, 2020 and December 31, 2019, long term debt and long term convertible debt are considered related party liabilities as holders are current employees of the Company, see Note 6.

As of June 30, 2020 and December 31, 2019, long term debt and long term convertible debt issued in conjunction with various acquisitions are considered related party liabilities as holders are current employees of the Company, see Note 6.

NOTE 13 – SALE OF EDI PRACTICE

On August 26, 2019 the Company entered into and closed that certain Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SPS Commerce, Inc., as buyer (“Buyer” or “SPS”), and SWK, as seller (the “Seller”), pursuant to which the Buyer has agreed to acquire from the Seller certain assets (all intellectual property and accounts receivable) related to the MAPADOC business, which was the EDI practice.

On August 26, 2019 the Company entered into that certain Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SPS Commerce, Inc., as buyer (“Buyer” or “SPS”), and SWK, as seller (the “Seller”), pursuant to which the Buyer has agreed to acquire from the Seller certain assets (all intellectual property and accounts receivable) related to the MAPADOC business, which was the EDI practice.

In consideration for the Acquired Assets (as defined in the Asset Purchase Agreement), at closing, SPS:

8 unchanged sentences

NOTE 14 – DISCONTINUED OPERATIONS

The financial results of our EDI Practice (“Mapadoc”) through March 31, 2019 are presented as discontinued operations.

The financial results of our EDI Practice (“Mapadoc”) through June 30, 2019 are presented as discontinued operations.

The following table presents the financial results of “Mapadoc.”

Mapadoc Income Statement for the three months ended March 31, 2019

March 31, 2019

Mapadoc Income Statement for the three and six months ended June 30, 2019

3 Months Ending June 30, 2019

6 Months Ending June 30, 2019

Software product, net

10 unchanged sentences

Income from discontinued operations

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 – SUBSEQUENT EVENTS

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization.

The ultimate disruption which may be caused by the outbreak is uncertain;

however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

On April 9, 2020, SWK Technologies, Inc.

(“SWK”), a wholly-owned subsidiary of SilverSun Technologies, Inc.

The PPP Loan has a two-year term and bears interest at a rate of 0.98% per annum.

Monthly principal and interest payments are deferred for six months after the date of disbursement.

The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties.

Beginning seven months from the date of the PPP Loan SWK is required to make 24 monthly payments of principal and interest in the amount of $132,629.06.

The Note evidencing the PPP Loan contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or Lender, or breaching the terms of the PPP Loan documents.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from SWK, or filing suit and obtaining judgment against SWK.

Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the program.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities.

No assurance is provided that SWK will obtain forgiveness of the PPP Loan in whole or in part.

At the time the Company applied for the PPP Loan, the Company believed it qualified to receive the funds pursuant to the PPP.

It still believes so.

The Company will review the new guidance at the time of issuance and determine whether it remains eligible for the PPP Loan at that time.

On July 31, 2020, the Company acquired certain assets of Prairie Technology Solutions Group, LLC (“Prairie Tech”) pursuant to an Asset Purchase Agreement.

In consideration for the acquired assets, the Company paid $185,000 in cash and issued three promissory notes to Prairie Tech (“Prairie Tech Note 1”, “Prairie Tech Note 2” and “Prairie Tech Note 3”), each in the principal aggregate amount of $103,333 (collectively the “Prairie Tech Notes”).

The Prairie Tech Notes bear interest at a rate of 4% per annum.

Prairie Tech Note 1 has a term of one (1) year and is subject to downward adjustment based on whether certain revenue milestones are achieved.

Prairie Tech Note 2 has a term of two (2) years and is also subject to downward adjustment based on whether certain revenue milestones are achieved.

Prairie Tech Note 3 has a term of three (3) years and is not be subject to a downward adjustment.

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