What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-12 · 235 added, 157 removed, 657 unchanged (37% of the section changed)

50 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 3021

Software product, net

10 unchanged sentences

Other expense:

Interest expense, net

Interest expense

Total other expense

(Loss) income before taxes

Provision for income taxes

(Benefit) provision for income taxes

Net (loss) income

Net (loss) income per common share – basic and fully diluted

Weighted average shares outstanding:

Net (loss) income per common share:

Weighted average shares:

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022

FOR THE THREE MONTHS ENDED JUNE 30, 2022

Preferred Stock

1 unchanged sentence

Stockholders’

Balance at April 1, 2022

Share-based compensation

Balance at June 30, 2022

FOR THE THREE MONTHS ENDED JUNE 30, 2021

Preferred Stock

(Accumulated Deficit)

Stockholders’

Balance at April 1, 2021

Share-based compensation

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

Balance at June 30, 2021

See accompanying notes to the unaudited condensed consolidated financial statements.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022

Preferred Stock

Stockholders’

Balance at January 1, 2022

Share-based compensation

Balance at March 31, 2022

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Balance at June 30, 2022

FOR THE SIX MONTHS ENDED JUNE 30, 2021

Preferred Stock

(Accumulated Deficit)

Stockholders’

3 unchanged sentences

Share-based compensation

Balance at March 31, 2021

Balance at June 30, 2021

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

Cash flows from operating activities:

5 unchanged sentences

Amortization of right of use assets

Bad debt expense

Share-based compensation

3 unchanged sentences

Prepaid expenses and other current assets

Deposits and other assets

Accounts payable

Accrued expenses

Income tax payable

Accrued interest

2 unchanged sentences

Net cash used in operating activities

Cash flows used in investing activities:

Cash flows from investing activities:

Purchase of property and equipment

Acquisition of assets

Acquisition of business

Net cash used in investing activities

Cash flows (used in) provided by financing activities:

Proceeds from issuance of common stock, net of expenses

Cash flows from financing activities:

Proceeds from issuance of stock, net of expenses

Payment of long-term debt

6 unchanged sentences

Cash paid during period for:

See accompanying notes to the unaudited condensed consolidated financial statements.

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the three months ended March 31, 2022:

For the six months ended June 30, 2022:

On January 1, 2022, the Company entered into an asset purchase agreement with Dynamic Tech Services, Inc (“DTS”) to acquire certain assets of DTS.

3 unchanged sentences

The Company also assumed $ 73,672 of prepaid time as part of the consideration for this transaction.

For the three months ended March 31, 2021:

On April 15, 2022, the Company incurred approximately $ 494,383 in financial lease obligations for purchases of equipment.

For the six months ended June 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 $ 479,111 into 119,004 shares of the Company’s common stock (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 (see Note 6).

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.

In February 2021, Nellnube converted the outstanding balance of the Nellnube Note in the amount of $ 191,644 into 47,602 shares of the Company’s common stock.

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

(“CTS”) pursuant to an Asset Purchase Agreement for a promissory note in the aggregate principal amount of $ 130,000 (the “CTS Note”).

The CTS Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

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

(“PSI”) pursuant to an Asset Purchase Agreement for cash of $ 145,703 , customer deposits related to prepaid time from clients in the amount of $ 99,938 , and the issuance of a promissory note in the aggregate principal amount of $ 450,000 (the “PSI Note”).

The PSI Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

The Company entered into an operating lease for equipment with Atmosera, Inc.

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 90,245 .

The Company entered into an operating lease for equipment with Cologix USA, Inc.

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 18,412 .

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

See accompanying notes to the unaudited condensed consolidated financial statements.

26 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 March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021.

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, 2022, the results of operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021.

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 months ended March 31, 2022 and 2021.

No impairment losses were identified or recorded for the three and six months ended June 30, 2022 and 2021.

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 months ended March 31, 2022 and 2021.

No impairment losses were identified or recorded for the three and six months ended June 30, 2022 and 2021.

Revenue Recognition

9 unchanged sentences

Components of revenue:

For the Three Months Ended

For the Three Months Ending

Software revenue

2 unchanged sentences

Ancillary service revenue

For the Six Months Ending

Software revenue

Professional consulting

Maintenance revenue

Ancillary service revenue

Unbilled Services

3 unchanged sentences

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 March 31, 2022, there was $ 275,301 in deferred maintenance revenues, $ 364,408 in deferred support service revenues and $ 1,902,096 , in deposits for future consulting services.

As of June 30, 2022, there was $ 254,785 in deferred maintenance revenues, $ 532,060 in deferred support service revenues and $ 1,765,496 , in deposits for future consulting services.

As of December 31, 2021, there was $ 291,468 in deferred maintenance, $ 398,382 in deferred support services, and $ 1,785,733 in deposits for future consulting services.

8 unchanged sentences

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at March 31, 2022 and December 31, 2021, as defined in 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 June 30, 2022 and December 31, 2021, as defined in 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 March 31, 2022 and December 31, 2021 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 June 30, 2022 and December 31, 2021 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.

29 unchanged sentences

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

At March 31, 2022 and December 31, 2021, the Company had cash on deposit of $ 5,774,424 and $ 5,955,840 , respectively, in excess of the federally insured limits of $ 250,000 .

As of March 31, 2022, no one customer represented more than 10% of the total accounts receivable and unbilled services.

At June 30, 2022 and December 31, 2021, the Company had cash on deposit of $ 5,243,267 and $ 5,955,840 , respectively, in excess of the federally insured limits of $ 250,000 .

As of June 30, 2022, no one customer represented more than 10% of the total accounts receivable and unbilled services.

As of December 31, 2021, no one customer represented more than 10% of the total accounts receivable and unbilled services.

For the three months ended March 31, 2022 and 2021, the Company’s top ten customers accounted for 11 % ($ 1,218,890 ) and 14 % ($ 1,499,790 ), respectively, of total revenues.

For the six months ended June 30, 2022 and 2021, the Company’s top ten customers accounted for 9 % ($ 1,856,981 ) and 11 % ($ 2,283,248 ), respectively, of total revenues.

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

For the three months ended March 31, 2022 purchases from one supplier through a “channel partner” agreement were approximately 11 % of cost of revenues.

For the three months ended March 31, 2021, purchases from one supplier through a “channel partner” agreement were approximately 15 % of cost of revenues.

The channel partner agreements are for a one-year term and automatically renews for an additional one-year term on the anniversary of the agreement’s effective date.

As of March 31, 2022, one supplier represented approximately 13 % of total accounts payable.

For the six months ended June 30, 2022 and 2021 purchases from one supplier through a “channel partner” agreement were approximately 14 % and 14 % of cost of revenues, respectively.

The channel partner agreements are for a one-year term and automatically renew for an additional one-year term on the anniversary of the agreement’s effective date.

As of June 30, 2022, one supplier represented approximately 26 % of total accounts payable.

For the year ended December 31, 2021, one supplier represented approximately 24 % of total accounts payable.

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

As of March 31, 2022, the Company believes it has no significant risk related to its concentration of accounts receivable.

As of June 30, 2022, the Company believes it has no significant risk related to its concentration of credit risk related to accounts receivable.

Accounts Receivable

32 unchanged sentences

Interest and penalties related to income tax matters, if applicable, will be recognized as income tax expense.

There were no liabilities for uncertain tax positions at March 31, 2022 and December 31, 2021.

There were no liabilities for uncertain tax positions at June 30, 2022 and December 31, 2021.

Fair Value Measurement

10 unchanged sentences

The carrying value of longer-term leases and debt obligations approximate fair value as their stated interest rates approximate the rates currently available.

The Company’s goodwill and intangibles are measured at fair-value on a non-recurring basis using Level 3 inputs, as discussed in Note 5 and 10.

The Company’s goodwill and intangibles are measured at fair-value using Level 3 inputs, as discussed in Note 5 and 10.

SILVERSUN TECHNOLOGIES, INC.

30 unchanged sentences

Diluted (loss) income per common share is based on net (loss) 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 months ended March 31, 2022 and 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.

In addition, for the three months ended March 31, 2022, since the Company has a net loss, the effect of common stock equivalents is anti-dilutive, and, as such, common stock equivalents have been excluded from the calculation.

For the three months ended March 31, 2021 since the convertible promissory notes had been converted into common stock, they have been excluded in the Company’s computation of net (loss) income per common share.

March 31, 2022

March 31, 2021

For the three and six months ended June 30, 2022, 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.

In addition, for the three and six months ended June 30, 2022, since the Company has a net loss, the effect of common stock equivalents is anti-dilutive, and, as such, common stock equivalents have been excluded from the calculation.

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

June 30, 2022

June 30, 2021

Basic net (loss) income per share computation:

5 unchanged sentences

Weighted-average common shares outstanding

Incremental shares attributable to assumed conversion of stock options and warrants

Incremental shares for warrants and convertible promissory notes

Total adjusted weighted-average shares

Diluted net (loss) income per share

June 30, 2022

June 30, 2021

Basic net (loss) income per share computation:

Net (loss) income

Weighted-average common shares outstanding

Basic net (loss) income per share

Diluted net (loss) income:

Net (loss) income

Weighted-average common shares outstanding

Incremental shares for warrants

Total adjusted weighted-average shares

Diluted net (loss) income per share

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

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Stock options

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

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

June 30, 2022

June 30, 2021

Stock options

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

March 31, 2022

June 30, 2022

December 31, 2021

3 unchanged sentences

Property and equipment, net

Depreciation and amortization expense related to these assets for the three months ended March 31, 2022 and 2021 was $ 98,425 and $ 78,304 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PROPERTY AND EQUIPMENT (continued)

Depreciation and amortization expense related to these assets for the three and six months ended June 30, 2022 were $ 96,582 and $ 195,007 , respectively, as compared to $ 79,317 and $ 157,619 for the three and six months ended June 30, 2021.

Property and equipment under finance leases (included in Note 7) are summarized as follows:

March 31, 2022

June 30, 2022

December 31, 2021

8 unchanged sentences

Monthly payments including interest are $ 2,148 .

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

The purchase price has been recorded as an intangible asset with an estimated life of seven years .

On January 1, 2022 (“Effective Date”), the Company entered into an asset purchase agreement with Dynamic Tech Services, Inc (“DTS”) to acquire certain assets of DTS.

The purchase price for the Acquired Assets was $ 1,335,000 , $ 500,000 of which was paid in cash and $835,000 of which was paid through the issuance of a four-year $ 835,000 promissory note dated January 1, 2022, paying interest at the rate of 3.25 % per annum (see Note 10).

The components of intangible assets are as follows:

March 31, 2022

June 30, 2022

December 31, 2021

3 unchanged sentences

accumulated amortization

Amortization expense related to the above intangible assets was $ 190,457 and $ 120,237 for the three months ended March 31, 2022 and 2021, respectively.

The Company expects future amortization expense to be the following:

Remainder of 2022

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – INTANGIBLE ASSETS (continued)

Amortization expense related to the above intangible assets for the three and six months ended June 30, 2022 was $ 186,365 and $ 376,822 , respectively, as compared to $ 131,502 and $ 251,739 for the three and six months ended June 30, 2021.

The Company expects future amortization expense to be the following:

Remainder of 2022

NOTE 6 – LONG-TERM AND RELATED PARTY DEBT

5 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 March 31, 2022 and December 31, 2021, the outstanding balances on the ISM Note were $-0- and $- 0 -, respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the ISM Note were $-0- and $- 0 -, 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 March 31, 2022 and December 31, 2021, the outstanding balances on the Nellnube Note were $-0- and $-0-, respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the Nellnube Note were $-0- and $-0-, respectively.

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

2 unchanged sentences

The PIT Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

Monthly payments including interest are $ 4,984 .

At March 31, 2022 and December 31, 2021, the outstanding balances on the PIT Note were $-0- and $ 4,975 , respectively.

Monthly payments including interest were $ 4,984 .

At June 30, 2022 and December 31, 2021, the outstanding balances on the PIT Note were $-0- and $ 4,975 , respectively.

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

7 unchanged sentences

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

At March 31, 2022 and December 31, 2021, the outstanding balances on the PT Notes were $ 206,667 and $ 206,667 , respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the PT Notes were $ 206,666 and $ 206,666 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – LONG-TERM AND RELATED PARTY DEBT (continued)

On October 1, 2020, SWK acquired certain assets of Computer Management Services, LLC, (“CMS”) pursuant to an Asset Purchase Agreement for cash of $ 410 , clients’ deposits related to technical support in the amount of $ 50,115 , prepaid time from clients in the amount of $ 67,073 , and the issuance of a promissory note in the aggregate principal amount of $ 170,000 (the “CMS Note”) for a total of $ 287,598 .

1 unchanged sentence

Monthly payments including interest are $ 4,869 .

At March 31, 2022 and December 31, 2021, the outstanding balances on the CMS Note were $ 90,991 and $ 105,097 , respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the CMS Note were $ 76,815 and $ 105,097 , 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 March 31, 2022 and December 31, 2021, the outstanding balances on the BSS Note were $ 174,636 and $ 185,820 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – LONG-TERM AND RELATED PARTY DEBT (continued)

At June 30, 2022 and December 31, 2021, the outstanding balances on the BSS Note were $ 163,397 and $ 185,820 , respectively.

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

2 unchanged sentences

Monthly payments including interest are $ 3,724 .

At March 31, 2022 and December 31, 2021, the outstanding balance on the CTS Note was $ 91,101 and $ 101,781 , respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the CTS Note were $ 80,368 and $ 101,781 , respectively.

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

2 unchanged sentences

Monthly payments including interest are $ 12,889 .

At March 31, 2022 and December 31, 2021, the outstanding balance on the PSI Note was $ 327,694 and $ 364,600 , respectively.

At June 30, 2022 and December 31, 2021, the outstanding balances on the PSI Note were $ 290,603 and $ 364,600 , respectively.

On January 1, 2022, SWK acquired certain assets of Dynamic Tech Services, Inc.

9 unchanged sentences

The first payment of principal and interest due under the Note, which will be an annual payment, is due and payable on January 1, 2023, after the revised principal amount of the Buyer Note is determined and thereafter, payments will be made quarterly in twelve equal installments.

At March 31, 2022, the outstanding balance on the DTSI Note was $ 835,000 (see Note 10).

At June 30, 2022, the outstanding balance on the DTSI Note was $ 835,000 (see Note 10).

On January 19, 2022, SWK acquired the customer list of NEO3, LLC (“NEO3”) pursuant to an Asset Purchase Agreement for the customer list for $ 150,000 cash and the issuance of a promissory note in the aggregate principal amount of $ 75,000 (the “NEO3 Note”).

1 unchanged sentence

Monthly payments including interest are $ 2,148 .

At March 31, 2022 the outstanding balances on the NEO3 Note was $ 70,950 .

Total long-term and related party debt balances at March 31, 2022 and December 31, 2021 were $ 1,797,039 and $ 968,940 , respectively, of which $ 631,834 and $ 402,005 was classified as current portion at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022, future payments of long-term debt are as follows:

At June 30, 2022 the outstanding balance on the NEO3 Note was $ 64,851 .

Total long-term and related party debt balances at June 30, 2022 and December 31, 2021 were $ 1,717,700 and $ 968,940 , respectively, of which $ 633,436 and $ 402,005 was classified as current portion at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022, future payments of long-term debt are as follows:

Remainder of 2022

5 unchanged sentences

The equipment has been capitalized and is included in property and equipment in the accompanying unaudited condensed consolidated balance sheets.

The weighted average interest rate as of March 31, 2022 was 9.4 % and the following weighted-average lease term:

March 31, 2022

The weighted average interest rate as of June 30, 2022 was 7.03 % and the following weighted-average lease term:

June 30, 2022

December 31, 2021

Weighted average remaining lease term

At March 31, 2022 future payments under finance leases are as follows:

March 31, 2022

At June 30, 2022 future payments under finance leases are as follows:

June 30, 2022

Remainder of 2022

5 unchanged sentences

NOTE 8 – OPERATING LEASE LIABILITY

The Company leases office space in eleven different locations with monthly payments ranging from $ 744 to $ 10,279 which expire at various dates through April 2024.

The Company leases office space in five different locations and also has an equipment lease rental with monthly payments ranging from $ 1,190 to $ 10,279 which expire at various dates through April 2024.

The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities.

1 unchanged sentence

The asset and liability was valued using an weighted average interest rate of 4.77 %.

The Company's weighted average remaining lease term for operating leases as of March 31, 2022 is as follows:

March 31, 2022

The Company's weighted average remaining lease term for operating leases as of June 30, 2022 is as follows:

June 30, 2022

December 31, 2021

Weighted average remaining lease term

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 unaudited condensed consolidated balance sheet as of March 31, 2022:

Remainder 2022

4 unchanged sentences

Long-term operating lease liabilities

Total rent expense under operating leases for the three months ended March 31, 2022 and 2021 was $ 119,329 and $ 161,814 , respectively.

Total rent expense under operating leases for the three and six months ended June 30, 2022 was $ 92,884 and $ 212,213 , respectively, as compared to $ 157,509 and $ 319,323 for the three and six months ended June 30, 2021, respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – EQUITY

20 unchanged sentences

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

Conversion of Convertible Debt

In February 2021, ISM converted the outstanding balance of the loan in the amount of $ 479,111 into 119,004 shares of the Company’s common stock (see Note 6).

In February 2021, Nellnube converted the outstanding balance of the loan in the amount of $ 191,644 into 47,602 shares of the Company’s common stock (see Note 6).

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 9 – EQUITY (Continued)

Conversion of Convertible Debt

In February 2021, ISM converted the outstanding balance of the loan in the amount of $ 479,111 into 119,004 shares of the Company’s common stock (see Note 6).

In February 2021, Nellnube converted the outstanding balance of the loan in the amount of $ 191,645 into 47,602 shares of the Company’s common stock (see Note 6).

Stock Repurchase Program

5 unchanged sentences

On November 5, 2021, the Board of Directors voted to increase the authorized amount of the buyback from $2 million to $ 5 million.

As of March 31, 2022, no repurchases have been made.

As of June 30, 2022, no repurchases have been made.

Stock Options

5 unchanged sentences

Treasury yield in effect at the time of grant.

There were no stock options granted for the three months ended March 31, 2022.

As of March 31, 2022, there are 165,620 outstanding stock options with an average exercise price of $ 6.2575 .

For the three months ended March 31, 2022 and 2021, the Company recorded share-based compensation expense of $ 45,945 and $ 992 , respectively.

As of March 31,2022 and December 31, 2021, the unamortized compensation expense for stock options was $ 182,771 and $ 228,716 , respectively.

The remaining amount will be amortized over the next year for the balance at March 31, 2022, and 1.25 for the balance at December 31, 2021.

There were no stock options granted for the six months ended June 30, 2022.

A summary of the status of the Company’s stock option plans for the six months ended June 30, 2022 and the years ended December 31, 2021 and changes during the periods are presented below (in number of options):

Exercise Price

Outstanding options at January 1, 2021

Options granted

Options canceled/forfeited

Outstanding options at December 31, 2021

Options granted

Options canceled/forfeited

Outstanding options at June 30, 2022

For the three and six months ended June 30, 2022, the Company recorded share-based compensation expense of $ 45,945 and $ 91,890 , respectively, as compared to $ 48,940 and $ 49,932 for the three and six months ended June 30, 2021, respectively.

As of June 30,2022 and December 31, 2021, the unamortized compensation expense for stock options was $ 136,826 and $ 228,726 , respectively.

The unamortized balance at June 30, 2022 will be amortized over the next 9 months and 1.25 years for the balance at December 31, 2021.

As of December 31, 2021, the Company had outstanding warrants outstanding to purchase 4,988 shares of the Company’s common stock at an exercise price of $ 4.01 per share.

12 unchanged sentences

The PSI Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

At March 31, 2022, the outstanding balance on the PSI Note was $ 327,694 .

At June 30, 2022, the outstanding balance on the PSI Note was $ 327,694 .

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

The valuation showed an increase of $ 71,359 above the purchase price, which was recorded as a gain on bargain purchase in the consolidated statement of operations as the independent valuation exceeded the purchase price.

On January 1, 2022, the Company entered into an asset purchase agreement with Dynamic Tech Services, Inc (“DTS”) to acquire certain assets of DTS.

On January 1, 2022 (“Effective Date”), the Company entered into an asset purchase agreement with Dynamic Tech Services, Inc (“DTS”) to acquire certain assets of DTS.

The purchase price for the Acquired Assets was $ 1,335,000 , $ 500,000 of which was paid in cash and $ 835,000 of which was paid through the issuance of a four-year $835,000 promissory note dated January 1, 2022, paying interest at the rate of 3.25 % per annum.

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(“CTS”), acquired April 1, 2021, PeopleSense, Inc.

(“PSI), acquired May 1, 2021, and DTS, acquired January 1, 2022.

occurred on January 1, 2021, 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 months ended March 31, 2022 and 2021 as if the acquisitions occurred on January 1, 2021.

For the three months ended March 31, 2021, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable.

Three Months Ended

March 31, 2021

(“PSI), acquired May 1, 2021, and DTS, acquired January 1, 2022 occurred on January 1, 2021, 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, 2021 as if the acquisitions occurred on January 1, 2021.

For the three and six months ended June 30, 2021, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable.

June 30, 2021

Cost of revenues

Operating expenses

Income (loss) before taxes

Net income (loss)

Basic and diluted income (loss) per common share

The Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2022 include the actual results of CTS, PSI and DTS, and as such, no pro forma results are required.

For the three months ended March 31, 2021, there is $ 4,644 of estimated amortization expense and $ 631 of estimated interest expense included in the pro-forma results for CTS, $ 27,393 of estimated amortization expense and $ 2,159 of estimated interest expense included in the pro-forma results for PSI, and $ 47,679 of estimated amortization expense and $ 6,785 of estimated interest expense included in the pro-forma results for DTS.

For the three months ended March 31, 2022, the CTI, PSI and DTS operations had a net income before taxes of $ 113,626 which represented three months of operations for CTI, PSI and DTS that were included in the Company’s Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2022.

Income before taxes

Basic and diluted income per common share

The Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 include the actual results of CTS, PSI and DTS, and as such, pro forma results are not required.

For the three months ended June 30, 2021, there is $ 5,733 of estimated amortization expense and $ 808 of estimated interest expense included in the pro-forma results for PSI, and $ 47,679 of estimated amortization expense and $ 6,784 of estimated interest expense included in the pro-forma results for DTS.

For the six months ended June 30, 2021, there is $ 4,644 of estimated amortization expense and $ 631 of estimated interest expense included in the pro-forma results for CTS, $ 33,126 of estimated amortization expense and $ 2,967 of estimated interest expense included in the pro-forma results for PSI, and $ 95,358 of estimated amortization expense and $ 13,569 of estimated interest expense included in the pro-forma results for DTS.

For the three months ended June 30, 2022, the CTI, PSI and DTS operations had a net income before taxes of $ 119,519 which represented three months of operations for CTI, PSI and DTS that were included in the Company’s Unaudited Condensed Consolidated Statement of Operations for the three months ended June 30, 2022.

This consisted of approximately $ 722,101 in revenues, $ 412,394 in cost of revenues and $ 190,189 in expenses.

For the six months ended June 30, 2022, the CTI, PSI and DTS operations had a net income before taxes of $ 233,145 which represented six months of operations for CTI, PSI and DTS that were included in the Company’s Unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2022.

This consisted of approximately $ 1,354,967 in revenues, $ 755,080 in cost of revenues and $ 365,841 in expenses.

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 $ 5,400,000 as of March 31, 2022, 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 June 30, 2022, 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 2025 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 $ 989 ,000 and $ 991 ,000 in deferred tax assets at March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the three months ended March 31, 2022, the Company recorded a tax provision of $ 2,088 as compared to a tax provision of $ 128,569 for the three months ended March 31, 2021.

The Company had approximately $ 1,004 ,000 and $ 991 ,000 in deferred tax assets at June 30, 2022 and December 31, 2021, respectively.

For the three and six months ended June 30, 2022, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the three and six months ended June 30, 2022, the Company recorded tax benefits of $ 15,280 and $ 13,192 , respectively, as compared tax provisions of $ 66,448 and $ 195,017 for the three and six months ended June 30, 2021.

NOTE 12 – RELATED PARTY TRANSACTIONS

At March 31, 2022 and December 31, 2021, certain long-term debt is considered related party liabilities as holders, including Prairie, Tech and Partners in Technology, are current employees of the Company.

As of March 31, 2022 and December 31, 2021, the outstanding balances of this debt were $ 206,667 and $ 211,642 , respectively.

At June 30, 2022 and December 31, 2021, certain long-term debt is considered related party liabilities as holders, including Prairie, Tech and Partners in Technology, are current employees of the Company.

As of June 30, 2022 and December 31, 2021, the outstanding balances of this debt were $ 206,666 and $ 211,642 , respectively.

NOTE 13 – SALE OF PRODUCT LINE

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The specific products and services giving rise to transitional compensation payments under the RSA include (i) annual maintenance renewals by customers, (ii) software, cross-sell software and migration software sales to customers, (iii) consulting services performed for customers, (iv) annual managed services contracts sold to customers, (v) hosting contracts sold to customers, (vi) e-commerce projects sold to customers, and (vii) new customer referrals.

NOTE 14 – SUBSEQUENT EVENTS

On April 15, 2022, the Company incurred approximately $ 494,275 in financial lease obligations for purchases of equipment.

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

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We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented.

Our consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results.

These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented.

Our unaudited condensed consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application.

There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this report.

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.

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

Results of Operations for the Three Months Ended March 31, 2022 and 2021.

During the three months ended March 31, 2022 the Company continued to expand its customer base, which we believe provides a basis for future growth.

Revenues exceeded $11 million for the quarter, but software sales, mostly with our Acumatica solution, increased 30.3% over the first quarter of 2021.

This increase in software sales should provide a basis for increased services in the months to come.

Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021.

Our strategy is to grow our business through a combination of intra-company growth of our software applications, technology solutions and managed services, as well as expansion through acquisitions.

We have established a national presence via our internal marketing, sales programs, and acquisitions and now have ERP customers throughout most of the United States.

To remain competitive and continue to grow, we continue to invest resources in our product development, marketing, and sales capabilities, and we expect to continue to do so in the future.

During the six months ended June 30, 2022 the Company continued to expand its customer base, which we believe provides a basis for future growth.

Revenues increased 2.6% to $21.7 million for the six months ended June 30, 2022 as compared to $21.1 million for the period in 2021, despite the current economic conditions as we continue to grow our customer base.

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.

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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 March 31, 2022, revenues increased $144,376 (1.3%) to $11,023,844 as compared to $10,879,468 for the three ended March 31, 2021.

For the six months ended June 30, 2022, inflation has impacted the Company’s profitability, as it has resulted in increased costs necessary to recruit and retain personnel.

As the Company returns back to its pre-Covid marketing and trade show schedules, the higher costs of travel and meals will also have a negative impact on the Company’s profitability.

For the three months ended June 30, 2022, revenues increased $408,864 (4.0)% to $10,638,073 as compared to $10,229,209 for the three ended June 30, 2021.

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

Software sales increased $606,951 (30.3%) to $2,610,962 for the three months ended March 31, 2022 as compared to $2,004,011 for the three months ended March 31, 2021, primarily due to an increase in revenues for our Acumatica solution.

Service revenue decreased by $462,575 (5.2%) for the three months ended March 31, 2022 to $8,412,882 as compared to $8,875,457 for the three months ended March 31, 2021.

This decrease is mainly attributed to lower consulting, primarily as a result of having to train new but inexperienced employees, who were hired to accommodate our growth as well as a decrease in maintenance revenues.

Gross profit for the three months ended March 31, 2022 decreased $41,670 (0.9%) to $4,704,867 as compared to $4,746,537 for the three months ended March 31, 2021.

For the three months ended March 31, 2022, the overall gross profit percentage was 42.7% as compared to 43.6% for the three months ended March 31, 2021.

The gross profit attributed to software sales increased $232,426 (27.2%) to $1,086,383 for the three ended March 31, 2022 as compared to $853,957 for the three months ended March 31, 2021, due mostly to the increased revenues.

The gross profit attributed to services decreased $274,096 (7.0%) to $3,618,484 for the three months ended March 31, 2022 as compared to $3,892,580 for the three months ended March 31, 2021.

This decrease is mostly due to costs associated with the training of new but inexperienced 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.

For the six months ended June 30, 2022, revenues increased $553,240 (2.6%) to $21,661,917 as compared to $21,108,677 for the six months ended June 30, 2021, respectively.

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

Software sales increased $1,020,596 (57.9%) and $1,627,547 (43.2%) to $2,782,081 and $5,393,043 for the three and six months ended June 30, 2022, respectively, as compared to $1,761,485 and $3,765,496 for the three and six months ended June 30, 2021, respectively, due to the timing of orders, primarily as a result of an increase in our ERP software sales

Service revenue decreased $611,732 (7.2%) and $1,074,307 (6.2%) to $7,855,992 and $16,268,874 for the three and six months ended June 30, 2022, respectively, as compared to $8,467,724 and $17,343,181 for the three and six months ended June 30, 2021, respectively.

These decreases are mainly attributed to lower maintenance revenues and lower consulting revenues, primarily because of project delays and postponements on the part of our customers as a result of challenges within their own businesses, including employee retention and general economic conditions impacting their organizations.

Gross profit for the three and six months ended June 30, 2022 decreased $143,412 (3.4%) and $185,082 (2.1%) to $4,127,268 and $8,832,135, respectively, as compared to $4,270,680 and $9,017,217 for the three and six months ended June 30, 2021, respectively.

For the three months ended June 30, 2022, the overall gross profit percentage was 38.8% as compared to 41.7% for the three months ended June 30, 2021.

For the six months ended June 30, 2022, the overall gross profit percentage was 40.8% as compared to 42.7% for the six months ended June 30, 2021.

The gross profit attributed to software sales increased $319,841 (41.2%) and $552,267 (33.9%) to $1,095,808 and $2,182,191 for the three and six ended June 30, 2022 as compared to $775,967 and $1,629,924 for the three and six months ended June 30, 2021, due mostly to the increased volume of software sold.

The gross profit attributed to services decreased $463,253 (13.3%) and $737,349 (10.0%) to $3,031,460 and $6,649,944 for the three and six months ended June 30, 2022 as compared to $3,494,713 and $7,387,293 for the three and six months ended June 30, 2021.

This decrease is mostly due to higher costs associated with increasing pay and benefits to employees to retain and recruit their services and to address inflationary pressures in the overall economy, plus the training of new employees, who were hired to accommodate our growth, and who are not as yet as billable as our more experienced team.

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, 2022 and 2021 (continued).

Operating expenses

Selling and marketing expenses increased $56,503 (3.3%) to $1,775,811 for the three months ended March 31, 2022 as compared to $1,719,308 for the three months ended March 31, 2021.

Selling and marketing expenses increased $238,797 (14.8%) and $295,300 (8.9%) to $1,852,903 and $3,628,714 for the three and six months ended June 30, 2022 as compared to $1,614,106 and $3,333,414 for the three and six months ended June 30, 2021.

This increase is primarily due to increased attendance at trade shows and associated travel and entertainment expense, plus outside sales expenses offset partially by lower advertising expenses.

General and administrative expenses increased $306,059 (13.1%) to $2,640,977 for the three months ended March 31, 2022 as compared to $2,334,918 for the three months ended March 31, 2021.

This increase is a result of several factors, including increases in payroll expenses necessary to both retain and recruit personnel, and departmental changes for various employees which involved moving their compensation between cost of revenues and administrative expenses as well as an increase in credit card fees and state excise taxes.

These cost increases were partially offset by lower rent and utility expenses.

Share-based compensation increased $44,953 to $45,945 for the three months ended March 31, 2022 as compared to $992 for the three months ended March 31, 2021.

General and administrative expenses decreased $122,132 (5.6%) to $2,071,145 for the three months ended June 30, 2022 as compared to $2,193,277 for the three months ended June 30, 2021.

This decrease is a result of payroll and payroll-related expenses and departmental changes for various employees which involved moving their compensation between cost of revenues and administrative expenses as well as a lower rent.

These decreases were partially offset by higher excise taxes and dues and subscriptions costs.

General and administrative expenses increased $183,927 (4.1%) to $4,712,122 for the six months ended June 30, 2022 as compared to $4,528,195 for the six months ended June 30, 2021.

This increase is a result of several factors, including an increase in state excise and local taxes, dues and subscriptions, such increases partially offset by lower rent expenses.

Share-based compensation decreased $2,995 to $45,945 for the three months ended June 30, 2022 as compared to $48,940 for the three months ended June 30, 2021.

Share-based compensation increased $41,958 to $91,890 for the six months ended June 30, 2022 as compared to $49,932 for the six months ended June 30, 2021.

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

Depreciation and amortization expense increased $63,804 to $261,850 for the three months ended March 31, 2022 as compared to $198,046 for the three months ended March 31, 2021.

Depreciation and amortization expense increased $26,068 and $89,872 to $236,521 and $498,371 for the three and six months ended June 30, 2022 as compared to $210,453 and $408,499 for the three and months ended June 30, 2021.

This increase is primarily due to the additional amortization of intangible assets related to the new acquisitions and increased depreciation related to equipment purchases over the last 12 months.

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

Results of Operations for the Three Months Ended March 31, 2022 and 2021 (continued).

(Loss) income from operations

As a result of the above, for the three months ended March 31, 2022, the Company had a loss from operations of $19,716 as compared to income from operations of $493,273 for the three months ended March 31, 2021.

As a result of the above, for the three months ended June 30, 2022, the Company had a loss from operations of $79,246 as compared to income from operations of $203,904 for the three months ended June 30, 2021.

As a result of the above, for the six months ended June 30, 2022, the Company had a loss from operations of $98,962 as compared to income from operations of $697,177 for the six months ended June 30, 2021.

Liquidity and Capital Resources

The negative impact of Covid-19 on the economy creates 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, suffer from supply-chain issues or decrease their technology spending.

As such, we need to rely on our own limited resources to weather any economic downturn.

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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.

At March 31, 2022, future payments of long-term debt are as follows:

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

Liquidity and Capital Resources (continued)

At June 30, 2022, future payments of long-term debt are as follows:

Remainder of 2022

The Company’s working capital was $2,635,467 at March 31, 2022 and cash on hand at March 31, 2022 was $6,486,433.

During the three months ended March 31, 2022, the Company had a net decrease in cash of $327,684.

The Company’s working capital was $2,749,833 at June 30, 2022 and cash on hand at June 30, 2022 was $5,873,674.

During the six months ended June 30, 2022, the Company had a net decrease in cash of $940,443.

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

Cash used in operating activities:

Operating activities for the three months ended March 31, 2022 used cash of $8,246 as compared to using cash of $500,461 for the same period in 2021.

This decrease in cash used in operating activities is primarily due to the decrease in accounts receivable, decrease in deferred revenue and increase in accounts payable offset partially by the decrease in operating income.

Operating activities for the six months ended June 30, 2022 used cash of $485,308 as compared to using cash of $838,824 for the same period in 2021.

This decrease in cash used in operating activities is primarily due to the increase in prepaid expenses and other current assets, decrease in deferred revenue, and increase in accounts receivable offset partially by the decrease in operating income and increase in accounts payable.

Cash used in investing activities:

Investing activities for the three months ended March 31, 2022 used cash of $180,548 as compared to using no cash for the same period in 2021.

For the three months ended March 31, 2022, the Company paid $150,000 for the assets of NEO3 and purchases of $30,548 for property and equipment.

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

Liquidity and Capital Resources (continued)

Investing activities for the six months ended June 30, 2022 used cash of $180,549 as compared to using $217,824 cash for the same period in 2021, primarily as a result of lower purchases of property and equipment.

Cash (used in) provided by financing activities:

Financing activities for the three months ended March 31, 2022 used cash of $138,890 as compared to providing cash in the amount of $3,261,181 for the same period in 2021.

The decrease in cash provided is attributed to the received net proceeds 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 three months ended March 31, 2021.

Financing activities for the six months ended June 30, 2022 used cash of $274,586 as compared to providing cash in the amount of $3,888,592 for the same period in 2021.

The Company believes that as a result of the growth in business, and the funds on hand, 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.

For the three months ended March 31, 2022, inflation has impacted the Company’s profitability, as it has resulted in increased costs necessary to recruit and retain personnel.

For the six months ended June 30, 2022, inflation has impacted the Company’s profitability, as it has resulted in increased costs necessary to recruit and retain personnel.

As the Company returns back to its pre-Covid marketing and trade show schedules, the higher costs of travel and meals will also have a negative impact on the Company’s profitability.

Off Balance Sheet Arrangements

During the three months ended March 31, 2022 or for fiscal 2022, 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 six months ended June 30, 2022 or for fiscal 2021, 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