What changed in this filing

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Item 1. Business

2022-03-29 compared with 2021-03-25 · 38 added, 18 removed, 244 unchanged (19% of the section changed)

Business Overview

We are a business application, technology and consulting company providing strategies and solutions to meet our clients’ information, technology and business management needs.

The Company is engaged in providing transformational business management applications and technologies and professional consulting services to small and medium size companies, primarily in the manufacturing, distribution and service industries.

We are executing a multi-pronged business strategy centered on cloud-based products, services, recurring revenue, customer retention and on rapidly increasing the size of our installed customer base.

The growth of our customer base is accomplished via both our traditional marketing programs and acquisitions.

After a customer is secured, our strategy is to up-sell and cross-sell, providing the customer with advanced technologies and third-party add-ons that help them digitally transform their business.

These add-on products could include application hosting, cybersecurity, warehouse management, human capital management, payment automation, sales tax compliance or any number of other products or services that we represent.

Many of these incremental products and services are billed on a subscription basis, often paying monthly for the service, which increases our monthly recurring revenue (“MRR”).

This strategy increases the average revenue per customer, which facilitates our continued growth, and reduces our cost of customer acquisition, which enhances our profitability profile.

As a business application, technology and consulting company, we provide strategies and solutions to meet our clients’ information, technology and business management needs.

Our services and technologies enable customers to manage, protect and monetize their enterprise assets whether on-premise or in the cloud.

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We have a dedicated Information Technology (“IT”) network services practice that provides managed services, cybersecurity, application hosting, disaster recovery, business continuity, cloud and other services.

Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Arizona, Southern California, North Carolina, Washington, Oregon and Illinois.

Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Arizona, Connecticut, Southern California, North Carolina, Washington, Oregon and Illinois.

Our core business is divided into the following practice areas:

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Businesses can focus on their core strengths rather than technology issues.

We adapt our solutions for virtually any type of business, from large national and international product and service providers, to small businesses with local customers.

We adapt our solutions for virtually any type of business from product and service providers to small businesses with local customers.

Our business continuity services provide automatic on-site and off-site backups, complete encryption, and automatic failure testing.

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We continue to seek out and hold preliminary discussions with various acquisition candidates.

In February 2021, the Company signed a non-binding letter of intent to acquire CT-Solution, Inc.

("CT"), a leading Indianapolis-based reseller of Sage Software solutions.

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

(“CTS”), a leading Indianapolis-based reseller of Sage Software solutions.

Over the last 20 years, CT-Solution has implemented technology applications at prominent manufacturers, distributors, and professional service organizations throughout the Midwest.

However, currently we have not entered into other any agreements or understandings for any acquisitions that management deems material.

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

(“PSI”), a leading Chicago-based reseller of Sage Software's human resource management solutions.

Over the last 18 years, PeopleSense has implemented HCM solutions to clientele spanning over half of the United States, Canada, Puerto Rico and the U.S.

Virgin Islands.

On January 1, 2022, the Company entered into an Asset Purchase Agreement with Dynamic Tech Services, Inc (“DTS”), a Georgia corporation pursuant to which SWK acquired from DTS certain assets related to the component of DTS’ operations devoted to selling and supporting Acumatica Cloud Enterprise Resource Planning solutions.

On January 22, 2022, the Company entered into an agreement to acquire certain assets of NEO3, LLC (“NEO3”), an Ohio-based company related to its Sage 100 and Acumatica operations.

Currently we have not entered into any other agreements or understandings for any acquisitions that management deems material.

Enterprise Resource Planning Software Strategy

Our ERP software strategy is focused on serving the needs of our expansive installed base of customers for our Sage 100cloud, Sage 500 ERP, and Sage BusinessWorks practices, while rapidly growing the number of customers using Sage X3 and Acumatica.

Our ERP software strategy is focused on serving the needs of our expansive installed base of customers for our Sage 100, Sage 500, and Sage BusinessWorks practices, while rapidly growing the number of customers using Sage X3 and Acumatica.

We currently have approximately 8,000 active ERP customers using one of these six solutions, including customers using certain add-on support products to these solutions.

In the past we, have focused primarily on on-premise mid-market Sage Software solutions but in the past three years have focused on larger enterprise-type offerings and cloud ERP solutions.

In the past we, have focused primarily on on-premise mid-market Sage Software solutions but in the past few years have focused on larger enterprise-type offerings and cloud ERP solutions.

This has allowed us to increase our average deal size and to keep pace with the changing trends that we see in the industry.

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Organizations implementing managed services have reported almost a 50% to 60% increase in the operational efficiency of their outsourced processes.

Enterprises have accepted outsourcing services as a means to enable them to reduce their capital expenditure (CapEx) and free up internal sources.

Enterprises have accepted outsourcing services as a means to enable them to reduce their capital expenditures (CapEx) and free up internal sources.

Newer managed services that penetrate almost all the industry domains, along with aggressive pricing in services, are being offered.

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Warehouse Management Systems

We are resellers of the Accellos Warehouse Management System (“WMS”) software published by High Jump, Inc.

We are resellers of High Jump Warehouse Edge (formerly Accellos One Warehouse Management System) (“WMS”) software published by High Jump, Inc.

(“High Jump”).

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However, the basic WMS will use a combination of item, location, quantity, unit of measure, and order information to determine where to stock, where to pick, and in what sequence to perform these operations.

The Accellos WMS software improves accuracy and efficiency, streamlines materials handling, meets retail compliance requirements, and refines inventory control.

The WMS software improves accuracy and efficiency, streamlines materials handling, meets retail compliance requirements, and refines inventory control.

Accellos also works as part of a complete operational solution by integrating seamlessly with radio frequency hardware, accounting software, shipping systems and warehouse automation equipment.

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Application Hosting

Through our wholly owned subsidiary, Secure Cloud Services, Inc., we acquired the assets of Nellnube, Inc.

to further market application hosting services throughout the country.

We provide hosting services to customers located throughout the country within our own data centers.

Product Development

We are continually looking to improve and develop new products.

Our product initiatives include various new product offerings, which are either extensions of existing products or newly conceptualized product offerings.

Our product initiatives include various new product offerings, which generally are extensions of existing products.

We are using a dual-shore development approach to keep product development costs at a minimum.

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Under these agreements, we either resell software directly to our customers or act as a sales agent for various vendors and receive commissions for our sales efforts.

We are required to enter into an annual Channel Partner Agreement with Sage Software whereby Sage Software appoints us as a non-exclusive partner to market, distribute, and support Sage 100 Cloud, Sage 500 ERP and Sage X3.

The Channel Partner Agreement is for a one-year term, and automatically renews for an additional one-year term on the anniversary of the agreement’s effective date.

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In addition to the strategic geographic benefits of this acquisition, it has provided additional revenues from its additional customers.

In February 2021, the Company signed a non-binding letter of intent to acquire certain assets CT-Solution, Inc.

("CT"), a leading Indianapolis-based reseller of Sage Software solutions.

The acquisition is expected to close in April 2021.

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

(“CTS”), a leading Indianapolis-based reseller of Sage Software solutions.

Over the last 20 years, CT-Solution has implemented technology applications at prominent manufacturers, distributors, and professional service organizations throughout the Midwest.

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

(“PSI”), a leading Chicago-based reseller of Sage Software's human resource management solutions.

Over the last 18 years, PeopleSense has implemented HCM solutions to clientele spanning over half of the United States, Canada, Puerto Rico and the U.S.

Virgin Islands.

On November 10, 2021, SWK entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Net@Work, Inc.

(“NAW”) pursuant to which NAW acquired from SWK certain assets related to the component of SWK’s business devoted to selling and supporting the Sage X3 software application published by Sage Software, Inc.

for small and middle market companies in North America.

On January 1, 2022, the Company entered into an Asset Purchase Agreement with Dynamic Tech Services, Inc (DTS”), a Georgia corporation (“DTS”) pursuant to which SWK acquired from DTS certain assets related to the component of DTS’ operations devoted to selling and supporting Acumatica Cloud Enterprise Resource Planning solutions.

On January 22, 2022, entered into an agreement to acquire certain assets of NEO3, LLC (“NEO3”), an Ohio-based company related to its Sage 100 and Acumatica operations.

Where You Can Find More Information

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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-K

Item 1. Business