What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-10 compared with 2020-08-12 · 201 added, 109 removed, 537 unchanged (37% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30 , 2020

September 30, 2020

December 31, 2019

47 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Software product, net

6 unchanged sentences

Share-based compensation expenses

Impairment of intangible assets

Depreciation and amortization expenses

9 unchanged sentences

Income from discontinued operations

Gain on sale of discontinued operations

Provision for income taxes

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Preferred Stock

3 unchanged sentences

Share-based compensation

Balance at June 30, 2020

FOR THE SIX MONTHS ENDED JUNE 30, 2019

Balance at September 30, 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

Preferred Stock

2 unchanged sentences

Balance at January 1, 2019

Cancellation of Series B stock

Share-based compensation

Balance at June 30, 2019

Balance at September 30, 2019

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30 , 2020

FOR THE THREE MONTHS ENDED SEPTEMBER 30 , 2020

Preferred Stock

1 unchanged sentence

Stockholders’

Balance at April 1, 2020

Balance at July 1, 2020

Share-based compensation

Balance at June 30, 2020

FOR THE THREE MONTHS ENDED JUNE 30 , 2019

Balance at September 30, 2020

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

Preferred Stock

1 unchanged sentence

Stockholders’

Balance at April 1, 2019

Balance at July 1, 2019

Cancellation of the Series B stock

Share-based compensation

Balance at June 30, 2019

Balance at September 30, 2019

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

7 unchanged sentences

Amortization of right of use assets

Bad debt expense

Bad debt (recovery) expense

Share-based compensation

Impairment of intangible asset

Changes in assets and liabilities:

13 unchanged sentences

Acquisition of business

Proceeds from sale of EDI practice, net of fees

Software development costs

Escrow accounts receivable

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

Net cash provided by investing activities of continuing operations

Cash flows from financing activities:

11 unchanged sentences

Net cash provided by discontinued operations

Net decrease in cash

Net (decrease) increase in cash

Cash, beginning of period

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30 , 2020 AND 2019

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the six months ended June 30, 2020:

For the nine months ended September 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 six months ended June 30, 2019:

On July 1, 2020 the Company entered into an operating lease in Phoenix, Arizona.

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $103,451.

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.

For the nine months ended September 30, 2019:

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

4 unchanged sentences

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

On September 6, 2019, the Company filed a Certificate of Elimination of Certificate of Designations (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware.

The Certificate of Withdrawal eliminated the Company’s Series B Preferred Stock, par value $.001 per share (the “Series B Preferred”), from the Company’s Certificate of Incorporation.

Prior to filing the Certificate of Elimination, Mark Meller, the Company’s Chief Executive Officer and Chairman and owner of the only share of Series B Preferred, cancelled the only share of Series B Preferred issued and outstanding.

On August 26, 2019 the Company sold the EDI practice and $1,150,000 of the proceeds were put in an escrow receivable account (see Note 14).

See accompanying notes to the unaudited condensed consolidated financial statements.

23 unchanged sentences

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 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.

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 September 30, 2020, the results of operations for the three and nine months ended September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019.

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

16 unchanged sentences

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 and six months ended June 30, 2020 and 2019.

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

No impairment losses were identified or recorded for the three and nine months ended September 30, 2020.

There were $236,860 in impairment losses recorded for the three and nine months ended September 30, 2019.

Revenue Recognition

6 unchanged sentences

In determining the transaction price, the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Software product revenue is recognized when the product is delivered to the customer and the Company’s performance obligation is fulfilled.

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Software product revenue is recognized when the product is delivered to the customer and the Company’s performance obligation is fulfilled.

Service revenue is recognized when the professional consulting, maintenance or other ancillary services are provided to the customer.

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 June 30,

For the Six Months Ending June 30,

For the Three Months Ending

September 30,

For the Nine Months Ending

September 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 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 September 30, 2020, there was $176,487 in deferred maintenance, $135,467 in deferred support services, and $1,565,681, 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 condensed consolidated statements of operations.

Commission expense is included in selling and marketing expenses in the accompanying unaudited 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 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.

At September 30, 2020 and December 31, 2019, the Company had cash on deposit of $6,264,341 and $8,016,900, respectively, in excess of the federally insured limits of $250,000.

As of September 30, 2020, no 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 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.

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

For the nine months ended September 30, 2020 and 2019, the Company’s top ten customers accounted for 11% ($3,157,125) and 11% ($3,094,620), respectively, of total revenues.

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

For the nine months ended September 30, 2020 and 2019, purchases from one supplier through a “channel partner” agreement were approximately 16% 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 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 June 30, 2020, the Company believes it has no significant risk related to its concentration of accounts receivable.

As of September 30, 2020 and December 31, 2019, one supplier represented approximately 32% and 15% of total accounts payable respectively.

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

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

Accounts Receivable

20 unchanged sentences

federal and state jurisdictions.

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

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

SILVERSUN TECHNOLOGIES, INC.

36 unchanged sentences

We do not expect the adoption of this standard to have a significant impact on our financial position and results of operations.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In 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).

The update simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately recognized from the primary contract.

The guidance also includes targeted improvements to the disclosures for convertible instruments and earnings per share.

ASU 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.

The Company is evaluating the impact of the adoption on its consolidated financial statements.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.

NOTE 3 – NET (LOSS) INCOME PER COMMON SHARE

1 unchanged sentence

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.

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.

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

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

For the three and nine months ended September 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.

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

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

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

September 30, 2020

September 30, 2019

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

10 unchanged sentences

Diluted net income (loss) per share

June 30, 2020

June 30, 2019

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – NET (LOSS) INCOME PER COMMON SHARE (Continued)

September 30, 2020

September 30, 2019

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

9 unchanged sentences

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

September 30, 2020

September 30, 2019

Stock options

1 unchanged sentence

Total potential dilutive securities not included in loss per share

June 30, 2020

June 30, 2019

September 30, 2020

September 30, 2019

Stock options

3 unchanged sentences

Property and equipment is summarized as follows:

June 30 , 2020

September 30, 2020

December 31, 2019

3 unchanged sentences

Property and equipment, net

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.

Depreciation and amortization expense related to these assets was $74,846 and $240,479, respectively for the three and nine months ended September 30, 2020 as compared to $91,622 and $252,734 for the three and nine months ended September 30, 2019.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PROPERTY AND EQUIPMENT (Continued)

Property and equipment under finance leases are summarized as follows:

June 30, 2020

September 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:

June 30 , 2020

September 30, 2020

December 31, 2019

4 unchanged sentences

accumulated amortization

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.

Amortization expense related to the above intangible assets for the three and nine months ended September 30, 2020 was $104,211 and $288,157, respectively as compared to $86,487 and $286,173 for the three and nine months ended September 30, 2019.

Impairment on tangible assets were $0 for the three and nine months ended September 30, 2020 and $236,860 for the three and nine months ended September 30, 2019, respectively.

The Company expects future amortization expense to be the following:

5 unchanged sentences

Monthly payments including interest are $10,645.

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

At September 30, 2020 and December 31, 2019, the outstanding balance on the PTI Note was $0 and $73,899, 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, SWK acquired certain assets of Info Sys Management, Inc.

3 unchanged sentences

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)

At September 30, 2020 and December 31, 2019 the outstanding balance on the ISM Note was $562,342 and $710,420 respectively.

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

3 unchanged sentences

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.

At September 30, 2020 and December 31, 2019 the outstanding balance on the Nellnube Note was $224,936 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 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:

At September 30, 2020 and December 31, 2019 the outstanding balance on the PIT Note was $78,622 and $121,968 respectively.

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

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 subject to a downward adjustment.

At September 30, 2020 the outstanding balance on the PT notes were $310,000.

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

Remainder of 2020

5 unchanged sentences

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

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)

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.

4 unchanged sentences

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.

On May 5, 2020, the SBA issued additional guidance, whereby they extended the safe harbor date until first May 14, 2020, and then subsequently extended to May 18, 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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – FINANCE LEASE OBLIGATIONS

2 unchanged sentences

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

June 30, 2020

September 30, 2020

Weighted average remaining lease term

Weighted average interest rate

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

At September 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 June 30, 2020 are as follows:

June 30 , 2020

Weighted average remaining lease term

Weighted average discount rate

SILVERSUN TECHNOLOGIES, INC.

2 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 June 30, 2020:

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

September 30, 2020

Weighted average remaining lease term

Weighted average discount rate

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 unaudited condensed consolidated balance sheet as of September 30, 2020:

Remainder 2020

4 unchanged sentences

Long-term operating lease liabilities

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.

Total rent expense under operating leases for the three and nine months ended September 30, 2020 was $134,147 and $397,416 as compared to $100,764 and $315,235 for the three and nine months ended September 30, 2019.

NOTE 9 – EQUITY

6 unchanged sentences

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

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

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

On September 6, 2019, the Company filed a Certificate of Elimination of Certificate of Designations (the “Certificate of Elimination”) with the Secretary of State of the State of Delaware.

The Certificate of Withdrawal eliminated the Company’s Series B Preferred Stock, par value $.001 per share (the “Series B Preferred”), from the Company’s Certificate of Incorporation.

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 six months ending June 30, 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 nine months ending September 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 June 30, 2020

Outstanding options at September 30, 2020

Vested Options:

June 30, 2020:

September 30, 2020:

December 31, 2019:

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.

As of September 30, 2020, the unamortized compensation expense for stock options was $0.

The following table summarizes the warrants transactions:

5 unchanged sentences

Outstanding and Exercisable December 31, 2019

Outstanding and Exercisable June 30, 2020

Outstanding and Exercisable September 30, 2020

SILVERSUN TECHNOLOGIES, INC.

7 unchanged sentences

The allocation of the purchase price to customer list with an estimated life of fifteen years and goodwill, which is deductible for tax purposes, has been based on an independent valuation.

On July 31, 2020, the Company acquired certain assets of Prairie Technology Solutions Group, LLC, (“PT”) pursuant to an Asset Agreement for cash of $185,000 and the issuance of three promissory notes each in the amount of $103,333.

Note 1 is due on the one- year anniversary of the closing date.

Note 2 is due on the two-year anniversary of the closing date and Note 3 is due on the three-year anniversary of the closing date.

Each note bears an interest rate of four percent (4%) per annum.

Payments are due annually including interest.

Upon completion of an independent valuation, the allocation of the purchase price to customer lists will be modified with the excess purchase consideration being allocated to goodwill.

The Company expects this acquisition to create synergies by combining operations and expanding geographic market share and product offerings.

The following summarizes the purchase price allocation for the prior year’s acquisition:

The following summarizes the purchase price allocation for the prior year’s acquisition and the preliminary purchase price allocation for the current year acquisition:

PT (preliminary)

Cash consideration

1 unchanged sentence

Customer List

Deposits and other assets

Accounts receivable

Operating lease right-of-use asset

Total assets acquired

Liabilities acquired

Deferred revenue

Operating lease liability

Net assets acquired

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.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – BUSINESS COMBINATION (Continued)

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the PT acquisition occurred on January 1, 2019, nor is the financial information indicative of the results of future operations.

The following table represents the unaudited consolidated pro forma results of operations for the three and nine months ended September 30, 2020 and 2019 as if the PT acquisition occurred on January 1, 2019.

Operating expenses have been increased for the amortization expense associated with the estimated fair value adjustment as of September 30, 2019 of expected definite lived intangible assets and interest on the notes payable.

Three Months Ended

September 30, 2020

Three Months Ended

September 30, 2019

Cost of revenues

Operating expenses

Income (loss) before taxes

Net income (loss)

Basic and diluted income per common share

Nine Months Ended

September 30, 2020

Nine Months Ended

September 30, 2019

Cost of revenues

Operating expenses

Loss before taxes

Basic and diluted income per common share

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

The three months ended September 30, 2020 pro-forma results above include one month of results of PT.

The nine months ended September 30, 2020 pro-forma results above include seven months of PT.

For the three months ending September 30, 2020, there is $6,118 of estimated amortization expense and $1,033 of estimated interest expense included in the PT pro-forma results.

For the nine months ending September 30, 2020, there is $42,829 of estimated amortization expense and $7,231 of estimated interest expense included in the PT pro-forma results.

For the three months ending September 30, 2019, there is $18,355 of estimated amortization expense and $3,099 of estimated interest expense included in the PT pro-forma results.

For the nine months ending September 30, 2019, there is $55,066 of estimated amortization expense and $9,297 of estimated interest expense included in the PT pro-forma results.

For the three and nine months ended September 30, 2020, the PT operations had a net income before taxes of $0 which represented two months operations that was included in the Company’s Condensed Unaudited Consolidated Statement of Income.

This consisted of $193,463 in revenues, $106,405 in cost of revenues, and $87,058 in operating expenses.

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 June 30, 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 September 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.

The foregoing amounts are management’s estimates and the actual results could differ from those estimates.

Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products.

The inability to obtain new profitable contracts could reduce estimates of future profitability, which could affect the Company’s ability to realize the deferred tax assets.

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 11 – INCOME TAXES (Continued)

The foregoing amounts are management’s estimates and the actual results could differ from those estimates.

Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products.

The inability to obtain new profitable contracts could reduce estimates of future profitability, which could affect the Company’s ability to realize the deferred tax assets.

Income tax provision (benefit) from continuing operations:

Six Months Ended

Nine Months Ended

September 30,

State and local

3 unchanged sentences

Total provision (benefit)

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

For the nine months ended September 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 six months ended June 30, 2020 was $78,382.

The benefit from continuing operations for the nine months ended September 30, 2020 was $46,904.

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 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.

As of September 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

6 unchanged sentences

There was also an adjustment to the Working Capital and an additional $162,868 was added to the gain on the sale of Mapadoc which was recognized in 2019 and paid in February 2020.

On August 31, 2020, the Company received the second half of the escrow agreement ($575,000), per the agreement.

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 14 – DISCONTINUED OPERATIONS

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

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

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

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

Mapadoc Income Statement for the three and nine months ended September 30, 2019

3 Months Ending September 30, 2019

9 Months Ending September 30, 2019

Software product, net

8 unchanged sentences

Income from discontinued operations

Gain from sale of discontinued operations

Provision for income taxes

1 unchanged sentence

NOTE 15 – SUBSEQUENT EVENTS

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

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.

On October 1, 2020, the Company entered into an At Market Issuance Sales Agreement (the “2020 At Market Agreement”) with a sales agent (the “Sales Agent”) under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $3,489,499 from time to time through the Sales Agent.

Sales of the Company’s common stock through the Sales Agent, if any, will be made by any method that is deemed an “at the market” offering as defined by the U.S.

Securities and Exchange Commission.

The Company will pay to the Sales Agent a commission rate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the Sales Agent under the 2020 At Market Agreement.

The Company has not issued any common stock pursuant to the 2020 At Market Agreement.

On October 1, 2020, the Company acquired certain assets of Computer Management Services, LLC (“CMS”) pursuant to an Asset Purchase Agreement.

In consideration for the acquired assets, the Company paid $470 in cash and issued a promissory note to CMS in the principal aggregate amount of $170,000.

The CMS Note is due in 36 months from the closing date and bears interest at a rate of two (2%) percent per annum.

Monthly payments including interest are $4,869.

On October 12, 2020, Ms.

Christine Dye informed the Board of Directors of Silversun Technologies, Inc.

(the “Company”) that she was resigning from her position as Chief Financial Officer of the Company, effective as of November 13, 2020 (the “CFO Transition”).

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