What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-10 · 200 added, 178 removed, 691 unchanged (35% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

December 31, 2020

37 unchanged sentences

Additional paid-in capital

Retained earnings (accumulated deficit)

Accumulated deficit

Total stockholders’ equity

5 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 3020

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Software product, net

8 unchanged sentences

Total selling, general and administrative expenses

Income (loss) from operations

Other income (expense):

(Loss) income from operations

Other (expense) income:

Interest expense

Total other income (expense)

Income (loss) before taxes

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per common share:

Total other (expense) income

(Loss) income before taxes

(Benefit) provision for income taxes

Net (loss) income

Net (loss) per common share:

Fully diluted

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2021

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

(Accumulated Deficit)

Stockholders’

Balance at April 1, 2021

Balance at July 1, 2021

Share-based compensation

Issuance of common stock from a public offering, net of expenses

Balance at June 30, 2021

FOR THE THREE MONTHS ENDED JUNE 30, 2020

Cash dividend

Balance at September 30, 2021

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

Balance at September 30, 2020

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

Preferred Stock

(Accumulated Deficit)

Stockholders’

2 unchanged sentences

Issuance of common stock from a public offering, net of expenses

Cash dividend

Share-based compensation

Balance at June 30, 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2020

Balance at September 30, 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

Preferred Stock

3 unchanged sentences

Share-based compensation

Balance at June 30, 2020

Balance at September 30, 2020

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:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Deferred income taxes

2 unchanged sentences

Amortization of right of use assets

Bad debt expense

Bad debt recovery

Share-based compensation

10 unchanged sentences

Operating lease obligations

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the six months ended June 30, 2021:

For the nine months ended September 30, 2021:

On January 18, 2021, the Company incurred approximately $ 90,007 in financial lease obligations for purchases of equipment.

In February 2021, ISM converted the outstanding balance of the ISM Note in the amount of $ 479,110 into 119,004 shares of the Company’s common stock.

At June 30, 2021 and December 31, 2020, the outstanding balances on the ISM Note were $-0- and $ 512,487 respectively (see Note 6).

At September 30, 2021 and December 31, 2020, the outstanding balances on the ISM Note were $-0- and $ 512,487 respectively (see Note 6).

In February 2021, Nellnube converted the outstanding balance of the Nellnube Note in the amount of $ 191,645 into 47,602 shares of the Company’s common stock.

At June 30, 2021 and December 31, 2020, the outstanding balances on the Nellnube Note were $-0- and $ 204,995 respectively (see Note 6).

At September 30, 2021 and December 31, 2020, the outstanding balances on the Nellnube Note were $-0- and $ 204,995 respectively (see Note 6).

On April 1, 2021, SWK acquired certain assets of CT-Solution, Inc.

9 unchanged sentences

On June 18, 2021, the Company incurred approximately $ 134,097 in financial lease obligations for purchases of equipment.

For the six months ended June 30, 2020:

On August 4, 2021, the Company incurred approximately $ 58,644 in financial lease obligations for purchases of equipment.

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 .

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.

See accompanying notes to the unaudited condensed consolidated financial statements.

21 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, 2021, the results of operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

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, 2021, the results of operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020.

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

15 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, 2021 and 2020.

No impairment losses were identified or recorded for the three and nine months ended September 30, 2021 and 2020.

Capitalization of Proprietary Developed Software

13 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, 2021 and 2020.

No impairment losses were identified or recorded for the three and nine months ended September 30, 2021 and 2020.

Revenue Recognition

15 unchanged sentences

For the Three Months Ending

September 30,

Software revenue

2 unchanged sentences

Ancillary service revenue

For the Six Months Ending

For the Nine Months Ending

September 30,

Software revenue

6 unchanged sentences

Deferred Revenues

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, 2021, there was $ 184,970 in deferred maintenance, $ 395,251 in deferred support services, and $ 1,889,590 , in deposits for future consulting services.

As of December 31, 2020, there was $ 167,267 in deferred maintenance, $ 308,343 in deferred support services, and $ 1,563,631 in deposits for future consulting services.

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

As of September 30, 2021, there was $ 685,271 in deferred maintenance and deferred support service revenues and $ 1,614,919 , in deposits for future consulting services.

As of December 31, 2020, there was $ 475,610 in deferred maintenance and deferred support services, and $ 1,563,631 in deposits for future consulting services.

Sales commissions relating to service revenues are considered incremental and recoverable costs of obtaining a project with our customer.

7 unchanged sentences

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at June 30, 2021 and December 31, 2020, as defined in Financial Accounting Standards Board (“FASB”) ASC 825 “Financial Instruments”, does not differ materially, except for the items discussed below, from the aggregate carrying values of its financial instruments recorded in the accompanying unaudited condensed consolidated balance sheets.

The Company estimates that the fair value of all financial instruments at September 30, 2021 and December 31, 2020, as defined in Financial Accounting Standards Board (“FASB”) ASC 825 “Financial Instruments”, does not differ materially, except for the items discussed below, from the aggregate carrying values of its financial instruments recorded in the accompanying unaudited condensed consolidated balance sheets.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.

Considerable judgment is required in interpreting market data to develop the estimates of fair value.

The carrying amounts reported in the unaudited condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020 for cash, accounts receivable, and accounts payable approximate the fair value because of the immediate or short-term maturity of these financial instruments.

The carrying amounts reported in the unaudited condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 for cash, accounts receivable, and accounts payable approximate the fair value because of the immediate or short-term maturity of these financial instruments.

Each reporting period we evaluate market conditions including available interest rates, credit spreads relative to our credit rating and liquidity in estimating the fair value of our debt.

23 unchanged sentences

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

At June 30, 2021 and December 31, 2020, the Company had cash on deposit of $ 8,524,717 and $ 5,900,593 , respectively, in excess of the federally insured limits of $ 250,000 .

At September 30, 2021 and December 31, 2020, the Company had cash on deposit of $ 6,381,238 and $ 5,900,593 , respectively, in excess of the federally insured limits of $ 250,000 .

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

As of June 30, 2021, no one customer represented more than 10% of the total accounts receivable and unbilled services.

As of September 30, 2021, no one customer represented more than 10% of the total accounts receivable and unbilled services.

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

For the six months ended June 30, 2021 and 2020, the Company’s top ten customers accounted for 11 % ($ 2,283,248 ) and 12 % ($ 2,433,153 ), respectively, of total revenues.

For the nine months ended September 30, 2021 and 2020, the Company’s top ten customers accounted for 10 % ($ 3,037,542 ) and 11 % ($ 3,157,125 ), respectively, of total revenues.

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

For the six months ended June 30, 2021 and 2020, purchases from one supplier through a “channel partner” agreement were approximately 14 % and 14 % of cost of revenues, respectively.

For the nine months ended September 30, 2021 and 2020, purchases from one supplier through a “channel partner” agreement were approximately 14 % and 16 % 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, 2021, one supplier represented approximately 13 % of total accounts payable.

As of September 30, 2021, one supplier represented approximately 15 % of total accounts payable.

For the year ended December 31, 2020 two suppliers represented approximately 39 % of accounts payable.

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

As of June 30, 2021, the Company believes it has no significant risk related to its concentration of accounts receivable.

As of September 30, 2021, 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, 2021 and December 31, 2020.

There were no liabilities for uncertain tax positions at September 30, 2021 and December 31, 2020.

SILVERSUN TECHNOLOGIES, INC.

42 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.

For the six months ended June 30, 2021 and 2020, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options, therefore, the inclusion of the stock options would be anti-dilutive.

For the three months ended June 30, 2021, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options, therefore, the inclusion of the stock options would be anti-dilutive.

For the six months ended June 30, 2020, since the effect of common stock equivalents is anti-dilutive with respect to the loss, the convertible promissory notes have also been excluded from the Company’s computation of net loss per common share.

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 the three and six months ended June 30, 2021 since the convertible promissory notes have been converted into common stock, they have been excluded in the Company’s computation of net income (loss) per common share.

June 30, 2021

June 30, 2020

Basic net income per share computation:

For the nine months ended September 30, 2021, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options, therefore, the inclusion of the stock options would be anti-dilutive.

For the three months ended September 30, 2021, common stock equivalents have been excluded from the computation since the effect of common stock equivalents is anti-dilutive with respect to the loss.

For the nine months ended September 30, 2020, since the effect of common stock equivalents is anti-dilutive with respect to the loss, the convertible promissory notes have also been excluded from the Company’s computation of net loss per common share.

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 the three and nine months ended September 30, 2021 since the convertible promissory notes have been converted into common stock, they have been excluded in the Company’s computation of net income (loss) per common share.

September 30, 2021

September 30, 2020

Basic net (loss) income per share computation:

Net (loss) income

Weighted-average common shares outstanding

Basic net income per share

Diluted net income per share computation:

Net income per above

Basic net (loss) income per share

Diluted net (loss) income per share computation:

Net (loss) income per above

Interest on convertible debt

Net (loss) income

Weighted-average common shares outstanding

1 unchanged sentence

Total adjusted weighted-average shares

Diluted net income per share

June 30, 2021

June 30, 2020

Diluted net (loss) income per share

September 30, 2021

September 30, 2020

Basic net income (loss):

10 unchanged sentences

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

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Stock options

Total potential dilutive securities not included in income (loss) per share

Total potential dilutive securities not included in (loss) income per share

SILVERSUN TECHNOLOGIES, INC.

3 unchanged sentences

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

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Stock options

3 unchanged sentences

Property and equipment is summarized as follows:

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

Property and equipment, net

Depreciation and amortization expense related to these assets was $ 79,317 and $ 157,619 , respectively, for the three and six months ended June 30, 2021 as compared to $ 81,070 and $ 165,633 for the three and six months ended June 30, 2020.

Depreciation and amortization expense related to these assets was $ 90,921 and $ 248,540 , respectively, for the three and nine months ended September 30, 2021 as compared to $ 74,846 and $ 240,479 for the three and nine months ended September 30, 2020.

NOTE 5 – INTANGIBLE ASSETS

2 unchanged sentences

The components of intangible assets are as follows:

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

accumulated amortization

Amortization expense related to the above intangible assets for the three and six months ended June 30, 2021 was $ 131,502 and $ 251,739 , respectively, as compared to $ 91,974 and $ 183,946 for the three and six months ended June 30, 2020.

Amortization expense related to the above intangible assets for the three and nine months ended September 30, 2021 was $ 132,285 and $ 388,024 , respectively, as compared to $ 104,211 and $ 288,157 for the three and nine months ended September 30, 2020.

The Company expects future amortization expense to be the following:

10 unchanged sentences

In February 2021, ISM converted the outstanding balance of the ISM Note in the amount of $ 479,111 into 119,004 shares of the Company’s common stock.

At June 30, 2021 and December 31, 2020, the outstanding balances on the ISM Note were $-0- and $ 512,487 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the ISM Note were $-0- and $ 512,487 , respectively.

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

4 unchanged sentences

In February 2021, Nellnube converted the outstanding balance of the Nellnube Note loan in the amount of $ 191,645 into 47,602 shares of the Company’s common stock.

At June 30, 2021 and December 31, 2020, the outstanding balances on the Nellnube Note were $-0- and $ 204,995 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the Nellnube Note were $-0- and $ 204,995 , 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, 2021 and December 31, 2020, the outstanding balances on the PIT Note were $ 34,655 and $ 64,040 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the PIT Note were $ 19,852 and $ 64,040 , respectively.

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

2 unchanged sentences

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.

In July 2021, the Company waived its rights to any downward adjustments on these notes, and agreed to pay the full face amount, plus interest, on those notes on the date of maturity.

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 June 30, 2021 and December 31, 2020, the outstanding balances on the PT Notes were $ 310,000 and $ 310,000 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the PT Notes were $ 206,667 and $ 310,000 , respectively.

On July 31, 2021, the Company paid Note 1 and accrued interest in the amount of $ 107,543 .

2 unchanged sentences

Monthly payments including interest are $ 4,869 .

At June 30, 2021 and December 31, 2020, the outstanding balances on the CMS Note were $ 133,098 and $ 160,821 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the CMS Note were $ 119,133 and $ 160,821 , respectively.

On December 1, 2020, SWK acquired certain assets of Business Software Solutions (“BSS”) pursuant to an Asset Purchase Agreement for a promissory note in the aggregate principal amount of $ 230,000 (the “BSS Note”).

1 unchanged sentence

Monthly payments including interest are $ 4,031 .

At June 30, 2021 and December 31, 2020, the outstanding balances on the BSS Note were $ 208,020 and $ 230,000 respectively.

At September 30, 2021 and December 31, 2020, the outstanding balances on the BSS Note were $ 196,948 and $ 230,000 , respectively.

On April 1, 2021, SWK acquired certain assets of CT-Solution, Inc.

2 unchanged sentences

Monthly payments including interest are $ 3,724 .

At June 30, 2021, the outstanding balance on the CTS Note was $ 122,980 .

At September 30, 2021, the outstanding balance on the CTS Note was $ 112,407 .

SILVERSUN TECHNOLOGIES, INC.

6 unchanged sentences

Monthly payments including interest are $ 12,889 .

At June 30, 2021, the outstanding balance on the CTS Note was $ 437,861 .

Total convertible debt and long-term debt balances at June 30, 2021 and December 31, 2020 were $ 1,246,614 and $ 1,482,343 , respectively, of which $ 428,765 and $ 545,000 was classified as current portion at June 30, 2021 and December 31, 2020, respectively.

At June 30, 2021, future payments of long-term debt are as follows:

At September 30, 2021, the outstanding balance on the CTS Note was $ 401,322 .

Total convertible debt and long-term debt balances at September 30, 2021 and December 31, 2020 were $ 1,056,329 and $ 1,482,343 , respectively, of which $ 415,419 and $ 545,000 was classified as current portion at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021, future payments of long-term debt are as follows:

Remainder of 2021

SWK entered into a promissory note (the “Note”) with JPMorgan Chase Bank, N.A.

(the “Lender”), which provided for a loan in the amount of $ 3,150,832 (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

(the “Lender”), 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”).

At the time SWK applied for the PPP Loan, we believed that it qualified to receive funds pursuant to the then published PPP qualification and certification requirements.

7 unchanged sentences

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

June 30, 2021

September 30,

December 31, 2020

1 unchanged sentence

Weighted average interest rate

At June 30, 2021 future payments under finance leases are as follows:

June 30, 2021

At September 30, 2021 future payments under finance leases are as follows:

September 30, 2021

Remainder of 2021

13 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, 2021 are as follows:

June 30, 2021

The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of September 30, 2021 are as follows:

September 30, 2021

December 31, 2020

1 unchanged sentence

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 June 30, 2021:

Remainder 2021

4 unchanged sentences

Long-term operating lease liabilities

Total rent expense under for the three and six months ended June 30, 2021 was $ 157,509 and $ 319,323 , respectively, as compared to $ 134,485 and $ 263,270 for the three and six months ended June 30, 2020, respectively.

Total rent expense under for the three and nine months ended September 30, 2021 was $ 125,635 and $ 444,858 , respectively, as compared to $ 134,147 and $ 397,416 for the three and nine months ended September 30, 2020, respectively.

NOTE 9 – EQUITY

22 unchanged sentences

In June 2021, 65,452 shares of Common Stock were issued and sold generating $ 722,116 , excluding legal expenses.

In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $ 106,108 , excluding legal expenses.

In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $ 76,436 , net of legal expenses.

On June 21, 2021, the Company announced the payment of a $ 0.60 special cash dividend per share of Common Stock to shareholders of record July 9, 2021.

The dividend was paid on July 16, 2021 in the amount of $ 3,081,706 .

Conversion of Convertible Debt

7 unchanged sentences

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

As of June 30, 2021, no repurchases have been made.

As of September 30, 2021, no repurchases have been made.

Stock Options

6 unchanged sentences

On March 29, 2021, 99,990 stock options were granted with an exercise price of $ 6.53 per option and have a five-year term with a two-year vesting period at 50 % per annum.

During the period ended September 30, 2021, 3,000 stock options were forfeited at an exercise price of $ 6.53 .

The fair value of stock options granted was $ 4.888 per option on the date of grant using the Black Scholes option-pricing model with the following assumptions:

1 unchanged sentence

Risk-free Interest Rate

For the three and six months ended June 30, 2021, the Company recorded share-based compensation expense of $ 48,940 and $ 49,932 , respectively, as compared to $ 3,399 and $ 6,798 for the three and six months ended June 30, 2020.

As of June 30, 2021 and December 31, 2020, the unamortized compensation expense for stock options was $ 341,073 and $-0-, respectively.

Unamortized compensation expense is expected to be recognized over a weighted-average period of 1.5 years.

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – EQUITY Continued)

Stock Options (continued)

For the three and nine months ended September 30, 2021, the Company recorded share-based compensation expense of $ 48,878 and $ 98,810 , respectively, as compared to $ 3,396 and $ 10,194 for the three and nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, the unamortized compensation expense for stock options was $ 283,428 and $-0-, respectively.

Unamortized compensation expense is expected to be recognized over a weighted-average period of 1.5 years.

NOTE 10 – BUSINESS COMBINATIONS

3 unchanged sentences

The purchase price has been allocated to customer list with an estimated life of fifteen years .

At September 30, 2021 and December 31, 2020, the outstanding balances on the BSS Note were $ 196,948 and $ 230,000 , respectively.

On April 1, 2021, SWK acquired certain assets of CT-Solution, Inc.

3 unchanged sentences

The purchase price has been allocated to customer list with an estimated life of fifteen years .

At September 30, 2021, the outstanding balance on the CTS Note was $ 112,407 .

On May 1, 2021, SWK acquired certain assets of PeopleSense, Inc.

2 unchanged sentences

Monthly payments including interest are $ 12,889 .

At June 30, 2021, the outstanding balance on the CTS Note was $ 437,861 .

At September 30, 2021, the outstanding balance on the PSI Note was $ 401,322 .

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

20 unchanged sentences

(“PSI), acquired May 1, 2021, occurred on January 1, 2020, nor is the financial information indicative of the results of future operations.

The following table represents the unaudited condensed consolidated pro forma results of operations for the three and six months ended June 30, 2020 as if the acquisitions occurred on January 1, 2020.

For the three and six months ended June 30, 2020, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable.

Three Months Ended

June 30, 2021

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

For the three and nine months ended September 30, 2020, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable.

Three Months Ended

June 30, 2020

September 30, 2020

Cost of revenues

Operating expenses

Income before taxes

Basic and diluted income per common share

Six Months Ended

June 30, 2021

Six Months Ended

June 30, 2020

Income (loss) before taxes

Net income (loss)

Basic and diluted income (loss) per common share

Nine Months Ended

September 30, 2021

Nine Months Ended

September 30, 2020

Cost of revenues

3 unchanged sentences

Basic and diluted income (loss) per common share

The Company’s unaudited condensed consolidated financial statements for the three and six ended June 30, 2021 include the actual results of PT, CMS and BSS.

The Company’s unaudited condensed consolidated financial statements for the three months ended June 30, 2021 included the actual results for CTS and actual results for two months for PSI.

For three months ended June 30, 2021 pro-forma results above include two months of results for PSI.

For the six months ended June 30, 2021 pro-forma results above include three months of results of CTS and four months of PSI.

For the three months ended June 30, 2021, there is $ 8,282 of estimated amortization expense and $ 699 of estimated interest expense included for PSI in the pro-forma results.

For the six months ended June 30, 2021, $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense is included in the pro-forma results for CTS and $ 24,844 of estimated amortization and $ 2,098 of estimated interest expense included for PSI in the pro-forma results.

For the three months ended June 30, 2020, there is $ 10,149 of estimated amortization expense and $ 3,126 of estimated interest expense included in the pro-forma results for PT, $ 6,864 of estimated amortization expense and $ 5,560 ,of estimated interest expense included in the pro-forma results for CMS, $ 8,214 of estimated amortization expense and $ 1,104 ,of estimated interest expense included in the pro-forma results for BSS, $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense is included in the pro-forma results for CTS, and $ 24,845 of estimated amortization expense and $ 2,098 of estimated interest expense is included in the pro-forma results for PSI.

For the six months ended June 30, 2020, there is $ 20,298 of estimated amortization expense and $ 6,252 of estimated interest expense included in the pro-forma results for PT, $ 13,728 of estimated amortization expense and $ 11,120 ,of estimated interest expense included in the pro-forma results for CMS, $ 16,428 of estimated amortization expense and $ 2,209 of estimated interest expense included in the pro-forma results for BSS, $ 9,288 of estimated amortization expense and $ 1,212 of estimated interest expense is included in the pro-forma results for CTS, and $ 49,689 of estimated amortization expense and $ 4,196 of estimated interest expense is included in the pro-forma results for PSI.

The Company’s unaudited condensed consolidated financial statements for the three months ended September 30, 2021 include the actual results of PT, CMS, BSS CTS and PSI.

For the nine months ended September 30, 2021 pro-forma results above include six months of results of CTS and five months of PSI.

For the nine months ended September 30, 2021, $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense is included in the pro-forma results for CTS and $ 33,126 of estimated amortization and $ 2,797 of estimated interest expense included for PSI in the pro-forma results.

For the three months ended September 30, 2020, there is $ 10,149 of estimated amortization expense and $ 979 of estimated interest expense included in the pro-forma results for PT, $ 6,864 of estimated amortization expense and $ 5,457 ,of estimated interest expense included in the pro-forma results for CMS, $ 8,214 of estimated amortization expense and $ 1,105 ,of estimated interest expense included in the pro-forma results for BSS, $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense is included in the pro-forma results for CTS, and $ 24,844 of estimated amortization expense and $ 1,822 of estimated interest expense is included in the pro-forma results for PSI.

For the nine months ended September 30, 2020, there is $ 30,447 of estimated amortization expense and $ 7,231 of estimated interest expense included in the pro-forma results for PT, $ 20,592 of estimated amortization expense and $ 16,577 ,of estimated interest expense included in the pro-forma results for CMS, $ 24,642 of estimated amortization expense and $ 3,314 of estimated interest expense included in the pro-forma results for BSS, $ 13,932 of estimated amortization expense and $ 1,818 of estimated interest expense is included in the pro-forma results for CTS, and $ 74,533 of estimated amortization expense and $ 6,018 of estimated interest expense is included in the pro-forma results for PSI.

SILVERSUN TECHNOLOGIES, INC.

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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 $ 5,100,000 as of June 30, 2021, which is subject to limitations under Section 382 of the Internal Revenue Code.

The Company has federal net operating loss (“NOL”) carryforwards of approximately $ 5,400,000 as of September 30, 2021, which is subject to limitations under Section 382 of the Internal Revenue Code.

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

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Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse.

The Company had approximately $ 828,000 and $ 1.04 million in deferred tax assets at June 30, 2021 and December 31, 2020, respectively.

For the six months ended June 30, 2021, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the six months ended June 30, 2021, the Company recorded a tax provision of $ 195,017 as compared to a tax benefit from the net loss before taxes for the six months ended June 30, 2020 in the amount of $ 78,382 .

The Company had approximately $ 897,000 and $ 1.04 million in deferred tax assets at September 30, 2021 and December 31, 2020, respectively.

For the nine months ended September 30, 2021, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the nine months ended September 30, 2021, the Company recorded a tax provision of $ 126,381 as compared to a tax benefit from the net loss before taxes for the nine months ended September 30, 2020 in the amount of $ 46,904 .

NOTE 12 – RELATED PARTY TRANSACTIONS

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In February 2021, the outstanding balances of the loans were converted into common stock of the Company.

As of June 30, 2021 and December 31, 2020, the outstanding balance for the long-term convertible debt was $-0- and $ 717,482 , respectively.

At June 30, 2021 and December 31, 2020, certain long-term debt is considered related party liabilities holders are current employees of the Company.

As of June 30, 2021 and December 31, 2020, the outstanding balances of this debt were $ 344,655 and $ 374,039 , respectively.

As of September 30, 2021 and December 31, 2020, the outstanding balance for the long-term convertible debt was $-0- and $ 717,482 , respectively.

At September 30, 2021 and December 31, 2020, certain long-term debt is considered related party liabilities holders, including Prairie, Tech, Partners in Technology, Nellnube and ISM.

are current employees of the Company.

As of September 30, 2021 and December 31, 2020, the outstanding balances of this debt were $ 226,519 and $ 374,039 , respectively.

NOTE 13 – SUBSEQUENT EVENTS

Shares of common stock sold under the 2021 At Market Agreement are made pursuant to the Company’s Registration Statement on Form S-3 (File No.

333-249238), filed with the Securities and Exchange Commission (the “SEC”) on October 2, 2020, as amended, and declared effective on October 23, 2020 (the “2020 Registration Statement”), the prospectus included in the 2020 Registration Statement and the related prospectus supplement dated February 26, 2021.

In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $ 106,108 , excluding legal expenses.

On June 21, 2021 , the Company announced the payment of a $ 0.60 special cash dividend per share of Common Stock to shareholders of record July 9, 2021 .

The dividend was paid on July 16, 2021 in the amount of $ 3,081,706 .

On August 4, 2021, the Company incurred approximately $ 58,644 in financial lease obligations for purchases of equipment.

On October 14, 2021 71,630 stock options were granted to directors and officers at an exercise price of $ 5.90 per option, the closing price on October 14, 2021, and have a five-year term and are vested at time of grant.

On November 5, 2021, the Company’s Board of Directors approved a five-year extension through September of 2028 of the employment agreement with Mark Meller, the Company’s Chief Executive Officer and President under the same terms and conditions.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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Due to the growing demand for cloud-based ERP solutions, we also have in our ERP portfolio Acumatica, a browser-based ERP solution that can be offered on premise, in the public cloud, or in a private cloud.

We have recently added Sage Intacct, a cloud-based solution for core financials to our offerings of cloud-based solutions.

We develop and resell a variety of add-on solutions to all our ERP and accounting packages that help customize the installation to our customers’ needs and streamline their operations.

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Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020.

During the six months ended June 30, 2021 the Company continued to expand its customer base, which prior to Covid-19 we believed would provide a basis for future growth, as revenues increased 6.9% as compared to the same six-month period in the prior year.

The Company continues to monitor the Covid-19 situation as it pertains to the disruption of our business and growth in future quarters and will take steps, if necessary, to establish mitigation strategies to try and minimize risk of any potential downturn for shareholders as well the health, safety and wellbeing of its employees and customers.

For the three months ended June 30, 2021, revenues increased $556,264 (5.8)% to $10,229,209 as compared to $9,672,945 for the three ended June 30, 2020.

This increase is mostly attributed to an increase in recurring and service revenues partially offset by a decline in software sales.

For the six months ended June 30, 2021, revenues increased $1,356,209 (6.9%) to $21,108,677 as compared to $19,752,468 for the six months ended June 30, 2020, respectively.

Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020.

During the nine months ended September 30, 2021 the Company continued to expand its customer base, which we believe provides a basis for future growth, as revenues increased 4.4% as compared to the same nine-month period in the prior year.

The Company continues to monitor the Covid-19 situation as it pertains to the disruption of our business and that of some of our customers and growth in future quarters and will take steps, if necessary, to establish mitigation strategies to try and minimize risk of any potential downturn for shareholders as well the health, safety and wellbeing of its employees and customers.

The Company’s strategies are focused on assisting our customers in their digital transformation in this new environment.

We believe the new “work from home environment” (workforce of the future), coupled with the continued rise of E-Commerce and security and compliance could help drive our future revenues.

For the three months ended September 30, 2021, revenues decreased $49,498 (0.5%) to $10,109,654 as compared to $10,159,152 for the three ended September 30, 2020.

This decrease is mostly attributed to a decrease in software sales, offset partially by an increase recurring and service revenues.

The decrease in sales is also partially attributed to delays in business from certain customers due to supply-chain issues that have temporarily created cash flow issues within their businesses.

For the nine months ended September 30, 2021, revenues increased $1,306,712 (4.4%) to $31,218,331 as compared to $29,911,619 for the nine months ended September 30, 2020.

The increase is mostly attributed to the increase in recurring and service revenues.

Software sales decreased $165,212 (8.6%) to $1,761,485 for the three months ended June 30, 2021 as compared to $1,926,697 for the three months ended June 30, 2020 due to the timing of orders.

For the six months ended June 30, 2021, software sales increased $69,629 (1.9%) to $3,765,496 as compared to $3,695,867 for the six months ended June 30, 2020 as a result of an increase in our ERP software sales offset partially by a decrease in third party software revenues.

Service revenue increased by $721,476 (9.3%) and $1,286,580 (8.0%) to $8,467,724 and $17,3343,181 for the three and six months ended June 30, 2021, respectively, as compared to $7,746,248 and $16,056,601 for the three and six months ended June 30, 2020, respectively.

These increases are mainly attributed to increases managed services and application hosting as we continue to focus in this area due to the needs of our customers’ digital transformation and the further requirement of customers to have the ability of their organizations to work remotely, particularly during the Covid pandemic.

Gross profit for the three and six months ended June 30, 2021 increased $332,075 (8.4%) and $1,226,403 (15.7%) to $4,270,680 and $9,017,217, respectively, as compared to $3,981,605 and $7,790,814 for the three and six months ended June 30, 2020, respectively.

For the three months ended June 30, 2021, the overall gross profit percentage was 41.7% as compared to 40.7% for the three months ended June 30, 2020.

For the six months ended June 30, 2021, the overall gross profit percentage was 42.7% as compared to 39.4% for the six months ended June 30, 2020.

The gross profit attributed to software sales increased $82,435 (11.9%) and $296,614 (22.2%) to $775,967 and $1,629,924 for the three and six months ended June 30, 2021, respectively, as compared to $693,532 and $1,333,310 for the three and six months ended June 30, 2020.

This increase is due to sales of software with higher gross profits.

The gross profit attributed to services increased $249,640 (7.7%) and $929,789 (14.4%) to $3,494,713 and $7,387,293 for the three and six months ended June 30, 2021, respectively, as compared to $3,245,073 and $6,457,504 for the three and six months ended June 30, 2020, respectively.

Software sales decreased $85,678 (5.2%) to $1,553,567 for the three months ended September 30, 2021 as compared to $1,639,245 for the three months ended September 30, 2020 primarily due to the timing of orders.

For the nine months ended September 30, 2021, software sales decreased $16,049 (0.3%) to $5,319,063 as compared to $5,335,112 for the nine months ended September 30, 2020, representing a slight decrease from the prior year.

Service revenue increased by $36,180 (0.4%) and $1,322,761 (5.4%) to $8,556,087 and $25,899,268 for the three and nine months ended September 30, 2021, respectively, as compared to $8,519,907 and $24,576,507 for the three and nine months ended September 30, 2020, respectively.

These increases are mainly attributed to increases in managed services and application hosting as we continue to focus in this area due to the needs of our customers’ digital transformation and the further requirement of customers to have the ability of their organizations to work remotely, particularly during the Covid pandemic.

Gross profit for the three months ended September 30, 2021 decreased $112,683 (2.8%) to $3,939,308 as compared to $4,051,991 for the three months ended September 30, 2020.

For the three months ended September 30, 2021, the overall gross profit percentage was 39.0% as compared to 39.9% for the three months ended September 30, 2020.

Gross profit for the nine months ended September 30, 2021 increased $1,113,721 (9.4%) to $12,956,525 as compared to $11,842,804 for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, the overall gross profit percentage was 41.5% as compared to 39.6% for the nine months ended September 30, 2020.

The gross profit attributed to software sales decreased $12,632 (1.9%) to $665,309 for the three ended September 30, 2021 as compared to $677,941 for the three months ended September 30, 2020, due mostly to the slightly lower sales.

The gross profit attributed to software sales increased $283,982 (14.1%) to $2,295,233 for the nine ended September 30, 2021 as compared to $2,011,251 for the nine months ended September 30, 2020 due mostly to the increased sale of higher margin products.

The gross profit attributed to services decreased $100,051 (3.0%) to $3,273,999 for the three months ended September 30, 2021 as compared to $3,374,050 for the three months ended September 30, 2020.

This decrease is mostly due to costs associated with the learning curve of new employees, who were hired to accommodate our growth as well as higher compensation costs plus an increase in vacation and personal time off experienced during the quarter.

The gross profit attributed to services increased $829,739 (8.4%) to $10,661,292 for the nine months ended September 30, 2021 as compared to $9,831,553 for the nine months ended September 30, 2020.

This increase is attributed to revenue increases in managed services and application hosting, which provide for higher profit margins, and increases in commission and maintenance revenue for the period offset partially by costs associated with the learning curve of new employees, who were hired to accommodate our growth.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (continued).

Operating expenses

Selling and marketing expenses decreased $119,366 (6.9%) and $341,381 (9.3%) to $1,614,106 and $3,333,414 for the three and six months ended June 30, 2021, respectively, as compared to $1,733,472 and $3,674,795 for the three and six months ended June 30, 2020, respectively.

This decrease is primarily due to lower travel and entertainment expense and reduced attendance at conferences and trade shows, as we were still doing some travel in the early part of 2020, lower marketing expenses, in addition to a slight reduction in payroll related expenses as a result departmental changes for various employees, thereby reducing salary and benefit expense.

General and administrative expenses increased $212,029 (10.7%) and $420,806 (10.2%) to $2,193,277 and $4,528,195 for the three and six months ended June 30, 2021, respectively, as compared to $1,981,248 and $4,107,389 for the three and six-months ended June 30, 2020, respectively.

Selling and marketing expenses decreased $49,823 (2.8%) and $391,205 (7.2%) to $1,702,496 and $5,035,910 for the three and nine months ended September 30, 2021, respectively, as compared to $1,752,319 and $5,427,115 for the three and nine months ended September 30, 2020, respectively.

This decrease is primarily due to lower travel and entertainment expense and reduced attendance at conferences and trade shows and lower marketing expenses.

In addition, we experienced a slight reduction in payroll related expenses as a result departmental changes for various employees, thereby reducing salary and benefit expense.

General and administrative expenses increased $224,990 (11.1%) and $645,797 (10.5%) to $2,251,467 and $6,779,662 for the three and nine months ended September 30, 2021, respectively, as compared to $2,026,477 and $6,133,865 for the three and nine-months ended September 30, 2020, respectively.

This is primarily as a result of increases in payroll related expenses related to both additional personnel and departmental changes for various employees, which increased salary and benefit expense.

These increases were partially offset by lower travel and entertainment expenses.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (continued).

Operating Expenses (continued)

Share-based compensation increased $45,541 and $43,134 for the three and six months to $48,940 and $49,932 for the three and six months ended June 30, 2021 as compared to $3,399 and $6,798 for the three and six months ended June 30, 2020, respectively.

Share-based compensation increased $45,482 and $88,616 for the three and nine months to $48,878 and $98,810 for the three and nine months ended September 30, 2021 as compared to $3,396 and $10,194 for the three and nine months ended September 30, 2020, respectively.

The increase is due to the issuance of stock options at the end of March 2021.

Depreciation and amortization expense increased $37,409 and $58,920 to $210,453 and $408,499 for the three and six months ended June 30, 2021, respectively, as compared to $173,044 and $349,579 for the three and six months ended June 30, 2020.

Depreciation and amortization expense increased $47,708 and $106,628 to $226,765 and $635,264 for the three and nine months ended September 30, 2021, respectively, as compared to $179,057 and $528,636 for the three and nine months ended September 30, 2020.

This increase is primarily due to the additional amortization of intangible assets related to the new acquisitions.

Income (loss) from operations

As a result of the above, for the three months ended June 30, 2021, the Company had income from operations of $203,904 as compared to income from operations of $47,442 for the three months ended June 30, 2020.

For the six months ended June 30, 2021, the Company had net income from operations of $697,177 as compared to a loss from operations of $347,747 for the six months ended June 30, 2020.

As a result of the above, for the three months ended September 30, 2021, the Company had a loss from operations of $290,298 as compared to income from operations of $90,742 for the three months ended September 30, 2020.

For the nine months ended September 30, 2021, the Company had net income from operations of $406,879 as compared to a loss from operations of $257,006 for the nine months ended September 30, 2020.

Liquidity and Capital Resources

The negative impact of Covid-19 on the economy creates tremendous uncertainty for the Company in the coming months and quarters.

While our Company has not been significantly impacted as a result of this uncertainty, the potential negative impact on our business, in the future, is impossible to determine at this point, although it is likely that we could suffer negative consequences as many companies go out of business or decrease their technology spending.

The negative impact of Covid-19 on the economy creates uncertainty for the Company in the coming months and quarters.

The Company currently has no line of credit or other credit facility with any lender.

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In February 2021, the Company received net proceeds of $3,382,352, excluding legal expenses, from the sale of 393,300 of common stock under its Registration Statement on Form S-3 and the previously disclosed At Market Issuance Sales Agreement.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (continued).

Liquidity and Capital Resources (continued)

In April 2021, the Company entered into the “2021 At Market Agreement with H.C wainwright & Co.

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In June 2021, 65,452 shares of Common Stock were issued and sold generating $722,116 under The At Market Agreement, excluding legal expenses.

In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $106,108, excluding legal expenses.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Liquidity and Capital Resources

In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $76,436, net of legal expenses.

On June 21, 2021, the Company announced the payment of a $0.60 special cash dividend per share of Common Stock to shareholders of record July 9, 2021.

The dividend was paid on July 16, 2021 in the amount of $3,081,706.

In addition to developing new products, obtaining new customers and increasing sales to existing customers, management plans to increase its business and profitability by entering into collaboration agreements, buying assets, and acquiring companies in the business software and information technology consulting and other markets with solid revenue streams and established customer bases that generate positive cash flow.

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Monthly payments including interest are $12,889.

At June 30, 2021, future payments of long-term debt are as follows:

At September 30, 2021, future payments of long-term debt are as follows:

Remainder of 2021

During the six months ended June 30, 2021, the Company had a net increase in cash of $2,831,944.

During the nine months ended September 30, 2021, the Company had a net increase in cash of $656,820.

The Company’s principal sources and uses of funds were as follows:

Cash (used in) provided by operating activities

Operating activities for the six months ended June 30, 2021 used cash of $838,824 as compared to providing cash of $270,375 for the same period in 2020.

This increase in cash used is primarily due to increase in prepaid expenses and other current assets, mostly as a result of an amount due from a vendor of approximately $871,000 (paid in July 2021), lower accounts receivable and the change in income taxes payable offset partially by the increase in operating income for the period.

Cash provided by operating activities

Operating activities for the nine months ended September 30, 2021 provided cash of $276,644 as compared to providing cash of $247,135 for the same period in 2020.

This increase in cash provided by operating activities is primarily due to increase in operating income and change in unbilled services offset mostly by the increase in prepaid expenses and other current assets and the change in income taxes payable.

Cash (used in) provided by investing activities

Investing activities for the six months ended June 30, 2021 used cash of $217,824 as compared to providing cash of $496,142 for the same period in 2020.

For the six months ended June 30, 2021, the Company acquired PSI and paid $145,703 in cash as part of the transaction (see Note 10).

For the six months ended June 30, 2020, escrowed proceeds of $575,000 were received from the sale of the EDI practice in August 2019.

Cash provided by (used in) financing activities

Financing activities for the six months ended June 30, 2021 provided cash of $3,888,592 as compared to using cash in the amount of $2,565,888 for the same period in 2020.

The increase in cash is attributed to the received net proceeds of $4,104,468 from the sale of common stock under its Registration Statement on Form S-3 and the previously disclosed At Market Issuance Sales Agreement with a sales agent.

During the six months ended June 30, 2020, the Company paid a dividend to its shareholders which did not occur during the six months ended June 30, 2021.

Investing activities for the nine months ended September 30, 2021 used cash of $264,832 as compared to providing cash of $867,005 for the same period in 2020.

For the nine months ended September 30, 2021, the Company acquired PSI and paid $145,703 in cash as part of the transaction (see Note 10) as well as purchased $119,129 of property and equipment.

For the nine months ended September 30, 2020, escrowed proceeds of $1,150,000 were received from the sale of the EDI practice in August 2019 offset by cash used to acquired businesses for $185,000 and the purchases of property and equipment in the amount of $97,995.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (continued).

Liquidity and Capital Resources (continued)

Cash (used in) provided by financing activities

Financing activities for the nine months ended September 30, 2021 provided cash of $645,008 as compared to using cash in the amount of $2,699,946 for the same period in 2020.

The increase in cash provided is attributed to the received net proceeds of $4,180,904 from the sale of common stock under its Registration Statement on Form S-3 and the previously disclosed At Market Issuance Sales Agreement with a sales agent offset partially by a higher dividend payment to shareholders.

The Company believes that as a result of the growth in business, and the funds available from the proceeds from the sale of common stock, it has adequate liquidity to fund its operating plans for at least the next twelve months, provided, however, that the Company cannot currently quantify the uncertainty related to the recent pandemic and its effects on the business in the coming quarters.

The belief that the Company has sufficient liquidity may be incorrect as the impact of Covid-19 becomes clearer over the coming months and quarters.

There was no significant impact on the Company’s operations as a result of inflation for the six months ended June 30, 2021.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations (continued).

There was no significant impact on the Company’s operations as a result of inflation for the nine months ended September 30, 2021.

Off Balance Sheet Arrangements

During the six months ended June 30, 2021 or for fiscal 2020, we did not engage in any material off-balance sheet activities or have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

During the nine months ended September 30, 2021 or for fiscal 2020, we did not engage in any material off-balance sheet activities or have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.

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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