What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-28 compared with 2022-03-29 · 340 added, 303 removed, 1062 unchanged (38% of the section changed)

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Directors and Executive Officers

The following table and biographical summaries set forth information, including principal occupation and business experience, about our directors and executive officers at March 25, 2022:

The following table and biographical summaries set forth information, including principal occupation and business experience, about our directors and executive officers at February 27, 2023:

Officer and/or Director Since

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John Schachtel

Board Diversity Matrix

The table below provides an enhanced disclosure regarding the diversity of the members of our Board of Directors.

Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).

Board Diversity Matrix (As of February 27, 2023)

Total Number of Directors

Gender Undisclosed

Gender Identity

Number of directors base on gender identity

Demographic Background

African American or Black

Hispanic or Latinx

Native Hawaiian or Pacific Islander

Two or More Race or Ethnicities

Did not Disclose Demographic Background

The following sets forth certain information about each of our directors and executive officers:

Mark Meller, Chief Executive Officer, President, Director

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Chief Financial Officer (1)

Christine Dye,

Chief Financial Officer (2)

On January 4, 2021, the Board of Directors of the Company (the “Board”) appointed Mr.

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Macaluso submitted his resignation from his positions as a member of the Board and Chairman of the Audit Committee of the Company

Effective November 13, 2020, Christine Dye resigned from her position as Chief Financial Officer of the Company.

To facilitate a transition of her duties, the Company and Ms.

Dye entered into a Separation Agreement, effective as of October 13, 2020 (the “Separation Agreement”).

Pursuant to the Separation Agreement, Ms.

Dye’s employment with the Company ended on November 13, 2020 and Ms.

Dye received separation payments in an aggregate gross amount of $47,400.

During 2020, Ms.

Dye earned salary of $218,500 and a bonus of $80,400 for total compensation of $298,900.

Mark Meller, Chief Executive Officer

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Grants of Plan-based Awards Table for Fiscal Year 2022

The following table sets forth information on stock options granted during or for the 2021 fiscal year to our named executive officers:

Number of Shares of Stock (#)

Exercise of Option Awards ($/Share)

Grant Date Value of Options

Joseph Macaluso

Outstanding Equity Awards at Fiscal Year-End 2021

There were no stock option grants for the year ended December 31, 2022.

Outstanding Plan-based Awards at December 31, 2022

The following table sets forth the outstanding stock option grants held by named executive officers at the end of the 2022 fiscal year.

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John Schachtel

1) On January 4, 2021, the Board appointed Mr.

Joseph Macaluso as Chief Financial Officer of the Company.

Concurrently, Mr.

Joseph Macaluso submitted his resignation from his positions as a member of the Board and Chairman of the Audit Committee of the Company.

Macaluso did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

(2) On January 4, 2021, in connection with the Resignation of Mr.

Macaluso, the Board appointed Mr.

as a member of the Board and Chairman of the Audit Committee.

Edwards will be paid $1,667 per month, payable quarterly for his service as a member of the board and as Chairman of the Audit Committee.

We pay only our independent directors for their service on our board of directors.

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of March 25, 2022 by (a) each stockholder who is known to us to own beneficially 5% or more of our outstanding Common Stock;

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of February 27, 2023 by (a) each stockholder who is known to us to own beneficially 5% or more of our outstanding Common Stock;

(b) all directors;

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Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of Common Stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of Common Stock.

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock that such person has the right to acquire within 60 days of March 25, 2022.

For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of March 21, 2022 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of February, 26 2023 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

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Bard Associates (8)

BitNile Holdings (9)

* denotes less than 1%

Based on 5,136,177 shares of Common Stock outstanding as of March 25, 2022.

Based on 5,256,177 shares of Common Stock outstanding as of February 26, 2023.

Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants but are not deemed outstanding for purposes of computing the percentage of any other person.

Includes 800,000 shares owned by Mr.

Includes 800,000 shares owned by Sharieve Meller Family Trust, Sharieve is Mr.

Meller’s wife.

Meller disclaims beneficial ownership of the shares owned by his wife.

Meller disclaims beneficial ownership of these shares.

Also includes 800,000 shares owned by the Mark M.

Meller Family Trust.

Meller beneficially owns 406,534 shares.

Includes 15,815 shares subject to currently exercisable stock options owned by Mr.

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Includes 20,000 shares subject to currently exercisable stock options owned by Mr.

Includes 20,000 shares subject to currently exercisable stock options and 4,988 stock warrants owned by Mr.

Includes 80,803 shares subject to currently exercisable stock options and warrants held by all executives and directors of the Company (including those individually named above).

Includes 20,000 shares subject to currently exercisable stock options owned by Mr.

Includes 75,815 shares subject to currently exercisable stock options held by all executives and directors of the Company (including those individually named above).

All information about Bard Associates, Inc.

is based on a Schedule 13G filed with the SEC on February 6, 2023.

All information about BitNile Holdings, is based on a Schedule 13-D filed with the SEC on January 31, 2022

Securities Authorized for Issuance Under Equity Compensation Plans

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The Share Reserve will automatically increase on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to 180,030 shares (which is the equivalent of 4.0% of the 4,500,755 shares of common stock outstanding as of September 30, 2019).

As of March 25, 2022, the Company has issued 165,620 options (see Note 9 to Notes to the Consolidated Financial Statements).

As of February 26, 2023, the Company has issued 158,420 options (see Note 9 to Notes to the Consolidated Financial Statements).

Certain Relationships and Related Transactions

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

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

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

At December 31, 2021 and December 31, 2020, certain long-term debt is considered related party liabilities holders, including Prairie, Tech and Partners in Technology, are current employees of the Company.

At December 31, 2022 and December 31, 2021, certain long-term debt is considered a related party liability as holders, including Prairie Tech and PIT, are current employees of the Company.

As of December 31, 2022 and December 31, 2021, the outstanding balances of this debt were $103,333 and $211,642, respectively.

The Company leased its Seattle, WA office space from Mary Abdian, an employee of SWK.

The lease which expires on September 30, 2018, was terminated by mutual consent on May 31, 2019 and the lease continued on a month-to-month basis with a monthly rent of approximately $2,066.

The Company ended the lease on May 31, 2020.

Total rent paid for 2020 was $10,195 under this lease.

Principal Accountant Fees and Services

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(incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on August 27, 2019).

Agreement and Plan of Merger, dated September 29, 2022, by and among SilverSun Technologies, Inc., SilverSun Acquisition Corp., SilverSun Acquisition LLC and Rhodium Enterprises, Inc.** (incorporated herein by reference to Exhibit 2.1 on Form 8-K, filed with the SEC on October 3, 2022).

Second Amended Certificate of incorporation of SilverSun Technologies, Inc., filed September 5, 2003 (incorporated herein by reference to Exhibit 3.1 of the registration statement on Form SB-2, filed with the SEC on November 25, 2003).

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Certificate of Designation of Series B Preferred Stock (incorporated herein by reference to Exhibit 4.1 on Form 8-K, dated September 23, 2011, filed with the SEC on September 27, 2011).

$835,000 January 1, 2022 Promissory Note of SWK Technologies, Inc.

issued to Dynamic Tech Services, Inc.

(incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on January 5, 2022).

Description of Securities

Employment Agreement, dated January 1, 2003, between iVoice Acquisition 1, Inc.

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and Wells Fargo Bank, National Association (incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on August 27, 2019)

Asset Purchase Agreement, dated January 1, 2022 by and between SWK Technologies, Inc., and Dynamic Tech Services, Inc.

(incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on January 5, 2022).

Consulting Agreement, dated January 1, 2022 by and between SWK Technologies, Inc., and Dynamic Tech Services, Inc.

(incorporated herein by reference to Exhibit 10.3 on Form 8-K, filed with the SEC on January 5, 2022).

Form of Separation and Distribution Agreement by and among SilverSun Technologies, Inc.

and SWK Technologies Holdings, Inc.

(incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on October 3, 2022).

Voting and Support Agreement of SilverSun Technologies, Inc.

dated September 29, 2022 (incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on October 3, 2022).

Voting and Support Agreement of Rhodium Enterprises, Inc.

dated September 29, 2022 (incorporated herein by reference to Exhibit 10.3 on Form 8-K, filed with the SEC on October 3, 2022).

Code of Ethics (incorporated by reference to Exhibit 14.1 filed with the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2003).

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Consent of Independent Registered Public Accounting Firm

Certification of Principal Executive Officer pursuant to 18 U.S.C.

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SILVERSUN TECHNOLOGIES, INC.

March 29, 2022

February 28, 2023

/s/ Mark Meller

Principal Executive Officer

March 29, 2022

February 28, 2023

/s/ Joseph Macaluso

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Principal Executive Officer

March 29, 2022

February 28, 2023

/s/ Stanley Wunderlich

March 29, 2022

February 28, 2023

Stanley Wunderlich

/s/ Kenneth Edwards

March 29, 2022

February 28, 2023

Kenneth Edwards

/s/ John Schachtel

March 29, 2022

February 28, 2023

John Schachtel

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Principal Financial Officer

March 29, 2022

February 28, 2023

Joseph Macaluso

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AUDITED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS (PCAOB ID:

CONSOLIDATED FINANCIAL STATEMENTS:

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of SilverSun Technologies, Inc.

To the Stockholders and Board of Directors of

SilverSun Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of SilverSun Technologies, Inc.

(the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of SilverSun Technologies, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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In addition, we evaluated management’s application of the Company’s accounting policy, tested the mathematical accuracy of management’s calculation of revenue and associated timing of revenue recognized in the financial statements.

/s/ Friedman LLP

/s/ Marcum llp

We have served as the Company’s auditor since 2022.

Marlton, New Jersey

February 28, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

SilverSun Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of SilverSun Technologies, Inc.

(the “Company”) as of December 31, 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Revenue recognition

Description of the Matter

As described in Note 2 to the financial statements, the Company recognizes revenue mainly from the resale of software products, maintenance, and professional consulting services.

The Company enters into contracts with customers that may include combinations of products and services, which are generally distinct and recorded as separate performance obligations.

Revenue is recognized when control of the distinct performance obligation is transferred.

For example, product revenue is recognized at a point in time while maintenance and professional consulting services revenue is recognized over time.

Auditing the Company’s revenue recognition is a critical audit matter due to the effort required to analyze the high volume of transactions, significance of the total amounts recognized as revenue, and timing of when revenue is recognized.

How We Addressed the Matter in Our Audit

Our audit procedures related to the Company’s revenue recognition included, among others, selecting a sample of recorded revenue transactions and examining customer source documents for each selection, including the contract or agreement and invoices and payment support.

/s/ Friedman LLP

We have served as the Company’s auditor from 2004 to 2022.

Marlton, New Jersey

March 29, 2022

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Unbilled services

Deferred charges

Prepaid expenses and other current assets

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Property and equipment, net

Operating lease right-of-use assets

Operating lease right-of-use assets, net

Intangible assets, net

Deferred tax assets

Deferred tax assets, net

Deposits and other assets

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Long term debt – related party - current portion

Long term convertible debt - related party - current portion

Finance lease obligations – current portion

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Long term debt - related party - net of current portion

Long term convertible debt – related party - net of current portion

Finance lease obligations net of current portion

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Total selling, general and administrative expenses

(Loss) income from operations

Loss from operations

Other income (expense)

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Gain on sale of product line

Total other income (expense), net

Income before taxes

Provision for income taxes

Net (loss) income

Basic and diluted net (loss) income per common share

Total other (expense) income, net

(Loss) income before taxes

Benefit (provision) for income taxes

Basic and diluted net loss per common share

Weighted average shares outstanding:

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Cash dividend

Share-based compensation

Balance at December 31, 2020

Cash dividend

Proceeds from sale of common stock, net of legal expenses

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Balance at December 31, 2021

Stock compensation issued for outside services

Share-based compensation

Balance at December 31, 2022

The accompanying notes are an integral part of these consolidated financial statements.

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Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash

Adjustments to reconcile net loss to net cash

provided by operating activities:

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Amortization of right of use assets

Bad debt recovery

Bad debt provision (recovery)

Share-based compensation

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Unbilled services

Deferred charges

Prepaid expenses and other current assets

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Acquisition of business

Acquisition of assets

Proceeds from sale of product line

Escrow accounts receivable

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Payment of cash dividend

Proceeds from PPP loan

Payment of PPP loan

Proceeds from issuance of stock, net of expenses

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Payment of finance lease obligations

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

Net cash (used in) provided by financing activities

Net increase in cash

Cash, beginning of year

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For the Year Ended December 31, 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.

The purchase price for the Acquired Assets was $ 1,335,000 , $ 500,000 of which was paid in cash in December 2021 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 Notes 6 and 10).

On January 22, 2022, the Company entered into an agreement to acquire certain assets of NEO3, LLC (“NEO3”).

The purchase price for the customer list was $ 225,000 , $ 150,000 of which was paid in cash and $ 75,000 of which was paid through the issuance of a three-year $75,000 promissory note dated January 22, 2022, paying interest at the rate of 2 % per annum.

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

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

For the Year Ended December 31, 2021:

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

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On November 11, 2021, the Company incurred approximately $ 62,555 in financial lease obligations for purchases of equipment.

For the Year Ended December 31, 2020:

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

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 453,379 .

On January 29, 2020 the Company entered into an operating lease in Greensboro, NC.

Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 104,296 .

On February 1, 2020 the Company entered into an operating lease in East Hanover, NJ.

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

The Company leases office space in Chicago, IL with a monthly rent of $ 582 .

The lease expired May 31, 2020.

This has been renewed for two years expiring May 31, 2022 at rate of $ 655 per month.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES (Continued):

For the Year Ended December 31, 2020 (continued):

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.

The Company also received deferred revenue in the amount of $ 51,748 and deposits of $ 32,896 .

The Company assumed office lease in Burr Ridge, IL starting at $ 2,849 per month and escalating to $ 2,929 per month by the end of the term which ends July 30, 2022.

The Company also recognized right-of-use assets and related liabilities in the amount of $ 64,863 .

On October 1, 2020, SWK acquired certain assets of Computer Management Services, LLC, (“CMS”) pursuant to an Asset Purchase Agreement for cash of $ 410 , liabilities in the form of clients deposits related to technical support in the amount of $ 50,115 and 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 .

The CMS 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 $ 4,869 .

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”).

The BSS Note is due in 60 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

Monthly payments including interest are $ 4,031 .

On December 9, 2020, the Company declared a $ 0.40 special cash dividend per share of Common Stock payable on December 28, 2020 for shareholders of record on December 28, 2020 for an aggregate amount of $ 1,800,509 .

The accompanying notes are an integral part of these consolidated financial statements.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(“CCD”) (together with SWK, SCS and SilverSun, the “Company”) is a business application, technology and consulting company providing 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”.

Our services and technologies enable customers to manage, protect and monetize their enterprise assets whether on-premises or in the “Cloud”.

As a value-added reseller of business application software, we offer solutions for accounting and business management, financial reporting, Enterprise Resource Planning (“ERP”), Human Capital Management (“HCM”), Warehouse Management Systems (“WMS”), Customer Relationship Management (“CRM”), and Business Intelligence (“BI”).

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

On August 26, 2019 SWK entered into and closed that certain asset purchase agreement (the “MAPADOC Asset Purchase Agreement”) by and among the Company, SPS Commerce, Inc., as buyer (“SPS”), and SWK as seller, pursuant to which SPS agreed to acquire from SWK substantially all of the assets related to the MAPADOC business.

The Company is publicly traded on the NASDAQ Capital Market under the symbol “SSNT”.

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The accompanying consolidated financial statements include the accounts of the “Company” and its wholly-owned subsidiaries.

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

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

Use of Estimates

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

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits.

At times balances may exceed FDIC insured limits.

The Company has not experienced any losses in such accounts.

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

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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.

The Company completed its impairment analysis as of December 31, 2022.

No impairment losses were identified or recorded for the years ended December 31, 2022 and 2021.

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Capitalization of proprietary developed software

Software development costs are accounted for in accordance with ASC 985-20, Software — Costs of Software to be Sold, Leased or Marketed .

Software development costs are accounted for in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Classification (“ASC”) ASC 985-20, Software — Costs of Software to be Sold, Leased or Marketed .

Costs associated with the planning and designing phase of software development are expensed as incurred.

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

The Company determines revenue recognition through the following 5 steps:

Identify the contract with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligation in the contract;

Recognize revenue when or as the entity satisfies a performance obligation

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

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

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

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

SILVERSUN TECHNOLOGIES, INC.

3 unchanged sentences

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

Components of revenue:

16 unchanged sentences

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at December 31, 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 consolidated balance sheets.

The Company estimates that the fair value of all financial instruments at December 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 consolidated balance sheets.

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

3 unchanged sentences

After considering such market conditions, we estimate that the fair value of debt approximates its carrying value.

Deferred Charges

The Company defers expenses until such time that the expense is consumed and charged to expense at that time.

Deferred charges represent expenses related to the merger (see Note 15) and will be charged against the proceeds when the merger is consummated.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company accounts for its leases in accordance with ASC 842, Leases .

4 unchanged sentences

The Company recognizes these lease expenses on a straight-line basis over the lease term.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leases (continued)

The Company has assessed its contracts and concluded that its leases consist of finance and operating leases.

10 unchanged sentences

Finance lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits.

At times balances may exceed FDIC insured limits.

The Company has not experienced any losses in such accounts.

Concentrations

7 unchanged sentences

For the year ended December 31, 2022, one supplier represented approximately 28 % of total accounts payable.

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

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

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

17 unchanged sentences

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in the consolidated statements of operations.

The Company accounts for income taxes using the asset and liability method described in FASB ASC 740, “Income Taxes”.

The Company accounts for income taxes using the asset and liability method described in ASC 740, Income Taxes .

Deferred tax assets arise from a variety of sources, the most significant being:

3 unchanged sentences

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as net operating loss carryforwards.

Based on ASU 2015-17, all deferred tax assets or liabilities are classified as long-term.

Based on ASU 2015-17, Classification of Deferred Taxes , all deferred tax assets or liabilities are classified as long-term.

Valuation allowances are established against deferred tax assets if it is more likely than not that the assets will not be realized.

32 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 on a non-recurring basis using Level 3 inputs, as discussed in Notes 5 and 10.

Stock-Based Compensation

5 unchanged sentences

Recently Adopted Authoritative Pronouncements

In June 2016, the FASB issued ASU No.

2016-13 Financial Instruments -Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements.

The amendment in this update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables.

This was adopted on January 1, 2021 and did not have a significant impact on our financial position and results of operations.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes - simplifying the accounting for income taxes (Topic 740), which is meant to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes.

The amendment also improves consistent application and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

This was adopted on January 1, 2021 and did not have a significant impact on our financial position and results of operations.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Authoritative Pronouncements

In August 2020, the FASB issued ASU 2020-06 , Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity ’ s Own Equity (Subtopic 815-40) .

1 unchanged sentence

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

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

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

This was adopted on January 1, 2022 and did not have a significant impact on our consolidated financial position and consolidated results of operations.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." This ASU requires contract assets and contract liabilities (e.g.

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

This ASU requires contract assets and contract liabilities (e.g.

deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, "Revenue from Contracts with Customers".

3 unchanged sentences

Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued.

The Company elected to early adopt ASU 2021-08 on January 1, 2022 and will apply to all business combinations consummated subsequent to this date.

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

This was adopted on January 1, 2022 and did not have a significant impact on our consolidated financial position and consolidated results of operations.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Authoritative Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments , which changes the way companies evaluate credit losses for most financial assets and certain other instruments.

For receivables, and other short-term financial instruments, companies will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses.

The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination.

2016-13 will be effective for the Company in the first quarter 2023.

Early adoption of the new standard is permitted;

however, the Company has not elected to early adopt the standard.

We are currently evaluating the effect that the new standard will have on our consolidated financial statements, if any.

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

NOTE 3 – NET (LOSS) INCOME PER COMMON SHARE

The Company’s basic (loss) income per common share is based on net (loss) income for the relevant period, divided by the weighted average number of common shares outstanding during the period.

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 options, warrants and convertible securities to the extent they are dilutive.

For the year ended December 31, 2021 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 year ended December 31, 2020, the average market prices for the year ended are less than the exercise price of all the outstanding stock options and warrants, therefore, the inclusion of the stock options and warrants would be anti-dilutive.

In addition, since the effect of common stock equivalents is anti-dilutive, the convertible promissory notes have also been excluded from the Company’s computation of income per common share for the year ended December 31, 2020.

NOTE 3 – NET LOSS PER COMMON SHARE

The Company’s basic loss per common share is based on net loss for the relevant period, divided by the weighted average number of common shares outstanding during the period.

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

For the years ended December 31, 2022 and 2021 since the Company had net losses, the effect of common stock equivalents is anti-dilutive, and, as such, common stock equivalents have been excluded from the calculation.

December 31, 2022

December 31, 2021

Basic net (loss) income per share computation:

Net (loss) income

Basic net loss per share computation:

Weighted-average common shares outstanding

Basic net (loss) income per share

Diluted net (loss) income per share computation:

Net (loss) income per above

Basic net loss per share

Diluted net loss per share computation:

Net loss per above

Weighted-average common shares outstanding

2 unchanged sentences

Total adjusted weighted-average shares

Diluted net (loss) income per share

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

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

Diluted net loss per share

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

2 unchanged sentences

Stock options

Convertible promissory notes

Total potential dilutive securities not included in loss per share

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 4 – PROPERTY AND EQUIPMENT

16 unchanged sentences

Amortization is computed using the straight-line method over the estimated useful lives.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 5 – INTANGIBLE ASSETS (Continued)

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).

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”).

The NEO3 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 $ 2,148 .

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

The components of intangible assets are as follows:

6 unchanged sentences

accumulated amortization

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 5 – INTANGIBLE ASSETS (Continued)

Amortization expense related to the above intangible assets was $ 732,552 and $ 531,102 , respectively, the years ended December 31, 2022 and 2021.

1 unchanged sentence

The Company expects future amortization expense to be the following:

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

The following table provides a summary of the changes in goodwill for the years ended December 31, 2022 and 2021:

December 31, 2022

December 31, 2021

Goodwill, at beginning of year

Goodwill additions

Goodwill deductions

Goodwill, at end of year

NOTE 6 – LONG-TERM AND RELATED PARTY DEBT

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

12 unchanged sentences

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

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

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

3 unchanged sentences

At December 31, 2022 and December 31, 2021, the outstanding balances of the loan were $- 0 - and $ 4,975 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

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

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

6 unchanged sentences

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

On August 4, 2022, the Company paid Note 2 and accrued interest in the amount of $ 111,924 .

At December 31, 2022 and December 31, 2021, the outstanding balances on the PT Notes were $ 103,333 and $ 206,667 , respectively.

11 unchanged sentences

Monthly payments including interest are $ 3,724 .

At December 31, 2021, the outstanding balance on the CTS Note was $ 101,781 .

At December 31,2022 and December 31, 2021, the outstanding balances on the CTS Note were $ 58,741 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 December 31, 2021, the outstanding balance on the PSI Note was $ 364,600 .

Total long-term debt balances at December 31, 2021 and 2020 were $ 968,940 and $ 1,482,343 , respectively, of which $ 402,005 and $ 545,000 was classified as current portion at December 31, 2021 and 2020, respectively.

At December 31, 2021, future payments of promissory notes are as follows over each of the next five fiscal years:

At December 31, 2022 and December 31, 2021, the outstanding balances on the PSI Note were $ 215,863 and $ 364,600 , respectively.

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

(“DTSI”) pursuant to an Asset Purchase Agreement for $ 500,000 cash and the issuance of a promissory note in the aggregate principal amount of $ 835,000 (the “DTSI Note”).

The DTSI Note bears interest at a rate of three and one-quarter percent ( 3.25 %) per annum.

The principal amount of the Note is subject to a downward adjustment in the event the Company loses any subscription renewal revenue during the one-year period immediately following the Effective Date from any persons that were customers of DTS immediately prior to the Effective Date (the “DTS Customers”).

Any such downward adjustment will be determined by calculating the percentage of loss of Acumatica subscription renewals during the one-year period immediately following the Effective Date from DTS Customers.

In the event that subscription renewal revenue received from DTS Customers during the one-year period immediately following the Effective Date is less than 95% of the subscription renewal revenue received by DTS from DTS Customers during the one-year period immediately preceding the Effective Date, the principal amount of the Note will be reduced.

The measuring period for any downward adjustment will be as of the one-year anniversary of the Effective Date.

Notwithstanding the foregoing, under no circumstances will the principal amount of the Note be reduced by reason of such downward adjustment by more than $150,000 ( i.e.

, to a principal amount below $685,000).

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

DECEMBER 31, 2022 AND 2021

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

As previously disclosed, SWK, a wholly-owned subsidiary of the Company, 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”).

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.

On April 23, 2020, the SBA, in consultation with the Department of Treasury, issued new guidance that creates uncertainty regarding the qualification requirements for a PPP Loan (the “New Guidance”).

Out of an abundance of caution and in light of the New Guidance, SWK determined to pay off the entire amount of the PPP Loan.

Accordingly, the PPP Loan was paid in full to the Lender on May 18, 2020, resulting in the full satisfaction of the Note.

Under the terms of the PPP Loan, SWK had the right to repay the Note without penalty.

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

The Note will be amortized as follows:

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

The NEO3 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 $ 2,148 .

At December 31, 2022 the outstanding balance on the NEO3 Note was $ 52,559 .

At December 31, 2022 and December 31, 2021, certain long-term debt is considered a related party liability as holders, including Prairie Tech and PIT, are current employees of the Company.

As of December 31, 2022 and December 31, 2021, the outstanding balances of this debt were $ 103,333 and $ 211,642 , respectively.

Total long-term debt balances at December 31, 2022 and 2021 were $ 1,454,493 and $ 968,940 , respectively, of which $ 783,479 and $ 402,005 was classified as current portion at December 31, 2022 and 2021, respectively.

At December 31, 2022, future payments of promissory notes are as follows over each of the next four fiscal years:

NOTE 7 – FINANCE LEASE OBLIGATIONS

12 unchanged sentences

Long-term capital lease obligation

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 8 – OPERATING LEASE LIABILITIES

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 2025.

The Company leases space in four different locations and also has an equipment lease rental with monthly payments ranging from $ 3,022 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.

5 unchanged sentences

Weighted average discount rate

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 8 – OPERATING LEASE LIABILITIES (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 consolidated balance sheet as of December 31, 2022:

18 unchanged sentences

No shares remain eligible for sale under the 2020 At Market Agreement.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 9 – EQUITY (Continued)

In April 2021, the Company entered into an At Market Issuance Sales Agreement (the “2021 At Market Agreement”) with the Sales Agent under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 3,308,842 from time to time through the Sales Agent.

5 unchanged sentences

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

For the year ended December 31, 2022, the Company issued no shares under the 2021 At Market Agreement.

For the year ended December 31, 2021, the company issued and sold a total of 468,300 shares generating $ 4,180,904 , net of legal expenses.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 9 – EQUITY (continued)

Stock Repurchase Program

6 unchanged sentences

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

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

On December 10, 2020 , the Company announced the payment of a $ 0.40 special cash dividend per share of Common Stock payable on December 28, 2020 for an aggregate amount of $ 1,800,509 which was applied against paid in capital.

Issuance of Common Stock

On September 29, 2022, the Company approved 120,000 shares of common stock in exchange for services.

The market value of these shares was $ 297,600 .

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.

3 unchanged sentences

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).

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 9 – EQUITY (Continued)

Stock Options

5 unchanged sentences

Treasury yield in effect at the time of grant.

There were no stock options granted for the year ended December 31, 2022.

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.

1 unchanged sentence

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

There were no stock options granted for the year ended December 31, 2020.

The fair value of stock options granted was $ 4.14 per option on the date of grant using the Black Scholes option-pricing model with the assumptions in the below table.

4 unchanged sentences

October 14, 2021

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 9 – EQUITY (Continued)

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

16 unchanged sentences

The remaining amount will be recognized over the next 0.25 years.

The following table summarizes the warrants transactions:

Weighted Average

Exercise Price

Average Remaining

Contractual Term

Balance, January 1, 2020

Outstanding and Exercisable December 31, 2020

Outstanding and Exercisable December 31, 2021

As of December 31, 2022, there were 1,056,670 shares available for issuance under the Plan.

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.

These warrants expired in March 2022.

SILVERSUN TECHNOLOGIES, INC.

3 unchanged sentences

NOTE 10 – BUSINESS COMBINATIONS

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

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

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

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

Payments are due annually including interest.

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

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

In consideration for the acquired assets, the Company paid $ 410 in cash and issued a promissory note to CMS in the principal aggregate amount of $ 170,000 .

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

Monthly payments including interest are $ 4,869 .

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

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”).

The BSS Note is due in 60 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

Monthly payments including interest are $ 4,031 .

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

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

19 unchanged sentences

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 10 – BUSINESS COMBINATIONS (Continued)

The following summarizes the purchase price allocation for all prior year and current year’s acquisitions:

2020 Purchase Prairie Tech

2020 Purchase CMS

2020 Purchase BSS

Cash consideration

Total purchase price

Deposits and other assets

Customer list

Operating lease right-of-use assets

Total assets acquired

Deferred revenue

Contingent liability

Operating lease liability

Net assets acquired

(Preliminary)

Cash consideration

Total purchase price

Deposits and other assets

Customer list

Operating lease right-of-use assets

Total assets acquired

Deferred revenue

Contingent liability

Operating lease liability

Net assets acquired

SILVERSUN TECHNOLOGIES, INC.

3 unchanged sentences

NOTE 10 – BUSINESS COMBINATIONS (Continued)

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisitions occurred on January 1, 2020, nor is the financial information indicative of the results of future operations.

The following table represents the unaudited consolidated pro forma results of operations for the years ended December 31, 2021 and 2020 as if the acquisitions occurred on January 1, 2020 and 2021.

Operating expenses have been increased for the amortization expense associated with the estimated fair value adjustment as of December 31, 2020 of expected definite lived intangible assets and interest on the notes payable.

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisitions of CT-Solution, Inc.

(“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 consolidated pro forma results of operations for the year ended December 31, 2021 as if the acquisitions occurred on January 1, 2021.

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

Cost of revenues

Operating expenses

Operating expenses, amortization and interest

Income before taxes

Basic and diluted income per common share

The Company’s consolidated financial statements for the years ending December 31, 2021, pro-forma results above include three months of results of CTS and four months of PSI.

For the year ended December 31, 2021, $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense is included in the pro-forma results for CTS, $ 33,126 of estimated amortization, $ 2,797 of estimated interest expense included for PSI, and $ 190,714 of estimated amortization expense and $ 27,138 of estimated interest expense is included in the pro-forma results for DTS in the pro-forma results.

For the year ended December 31, 2021, the PSI and CTS operations had a net income before taxes of $ 176,536 which represented eight months of operations of PSI and nine months of operations of CTS that were included in the Company’s Consolidated Statement of Operations.

This consisted of approximately $ 365,117 in revenues, $ 172,150 in cost of revenues and $ 16,430 in operating expenses.

For the year ended December 31, 2020, there is $ 23,683 of estimated amortization expense and $ 7,231 of estimated interest expense included in the pro-forma results for PT, $ 20,598 of estimated amortization expense and $ 2,274 ,of estimated interest expense included in the pro-forma results for CMS, $ 30,118 of estimated amortization expense and $ 3,118 of estimated interest expense included in the pro-forma results for BSS, $ 18,576 of estimated amortization expense and $ 1,407 of estimated interest expense is included in the pro-forma results for CTS, $ 99,377 of estimated amortization expense and $ 7,657 of estimated interest expense is included in the pro-forma results for PSI, and $ 190,714 of estimated amortization expense and $ 27,138 of estimated interest expense is included in the pro-forma results for DTS in the pro-forma results For the year ended December 31, 2020, PT had a net loss of $ 5,739 , CMS had net income of $ 116,074 and BSS had a net loss $ 7,463 .

For the year ended December 31, 2020, the PT, CMS & BSS operations had a net income before taxes of $ 157,515 which represented 6 months of operations of PT, three months of operations of CMS and one months of operations of BSS that were included in the Company’s Consolidated Statement of Operations.

This consisted of approximately $ 867,991 in revenues, $ 467,654 in cost of revenues and $ 242,822 in operating expenses.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

The Company’s consolidated financial statements for the year ended December 31, 2022 include the actual results of CTS, PSI and DTS, and as such, pro forma results are not required.

For the year ended December 31, 2021, there is $ 4,644 of estimated amortization expense and $ 606 of estimated interest expense included in the pro-forma results for CTS, $ 33,126 of estimated amortization expense and $ 2,797 of estimated interest expense included in the pro-forma results for PSI, and $ 190,714 of estimated amortization expense and $ 27,138 of estimated interest expense included in the pro-forma results for DTS.

For the year ended December 31, 2022, the CTI, PSI and DTS operations had a net income before taxes of $ 420,370 which represented twelve months of operations for CTI, PSI and DTS that were included in the Company’s Consolidated Statement of Operations for the year ended December 31, 2022.

This consisted of approximately $ 2,626,038 in revenues, $ 1,481,276 in cost of revenues and $ 724,392 in expenses.

NOTE 11 – INCOME TAXES

2 unchanged sentences

These carryforward losses are available to offset future taxable income and begin to expire in the year 2025 to 2033.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 11 – INCOME TAXES (Continued)

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

15 unchanged sentences

Net deferred tax asset

For the year ended December 31, 2022, the Company recorded a tax benefit in the amount of $ 192,184 based on the estimated tax rate.

The Federal effective rate is higher than the statutory rate primarily due to Incentive Stock Options (ISO), which are not tax deductible.

For the year ended December 31, 2021, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

1 unchanged sentence

The total tax provision for the year ended December 31, 2021 was $ 178,005 .

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

The Federal effective rate is higher than the statutory rate primarily due to 50% of meals, 100% entertainment expense which are not tax deductible.

The total tax provision for the year ended December 31, 2020 was $ 47,391 .

A reconciliation of the statutory income tax rate to the effective rate is as follows for the period December 31, 2022 and 2021:

13 unchanged sentences

State and local

Total current tax provision

Total current tax (benefit) provision

State and local

Total deferred tax provision (benefit)

Total provision

Total deferred tax (benefit) provision

Total (benefit) provision

NOTE 12 – RELATED PARTY TRANSACTIONS

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

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

At December 31, 2022 and December 31, 2021, certain long-term debt is considered a related party liability as holders, including Prairie Tech and PIT, are current employees of the Company.

As of December 31, 2022 and December 31, 2021, the outstanding balances of this debt were $ 103,333 and $ 211,642 , respectively.

The Company leased its Seattle, WA office space from Mary Abdian, an employee of SWK.

The lease which expires on September 30, 2018, was terminated by mutual consent on May 31, 2019 and the lease continued on a month-to-month basis with a monthly rent of approximately $ 2,066 .

The Company ended the lease on May 31, 2020.

Total rent paid for 2020 was $ 10,195 under this lease.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

13 unchanged sentences

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.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 14 – SALE OF PRODUCT LINE

2 unchanged sentences

for small and middle market companies in North America.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 14 – SALE OF PRODUCT LINE (Continued)

In consideration for the assets, NAW paid SWK $ 250,000 in cash and entered into a Revenue Share Agreement (“RSA”) with SWK.

2 unchanged sentences

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 15 – SUBSEQUENT EVENTS

On January 22, 2022, entered into an agreement to acquire certain assets of NEO3, LLC (“NEO3”).

The purchase price for the Acquired Assets was $ 225,000 , $ 150,000 of which was paid in cash and $ 75,000 of which was paid through the issuance of a three-year $75,000 promissory note dated January 22, 2022, paying interest at the rate of 2 % per annum.

NOTE 15 – MERGER

On September 29, 2022, the Company entered into a definitive agreement and plan of merger (the “Merger Agreement”) with Rhodium Enterprises, Inc.

(“Rhodium”), an industrial-scale digital asset technology company utilizing proprietary technologies to mine bitcoin.

Under the terms of the Merger Agreement, which has been unanimously approved by the Boards of Directors of both SilverSun and Rhodium, upon the consummation of the business combination, the Company will receive $ 10 million in cash and will retain 3.2 % equity in SilverSun upon consummation of the merger.

Each holder of an outstanding share of SilverSun common stock will receive:

A cash dividend of at least $1.50 per share, which equates to approximately $8.5 million in the aggregate;

A stock dividend of one share of SilverSun Technologies Holdings, Inc.

("HoldCo"), a recently formed subsidiary of SilverSun.

HoldCo's sole assets are its 100% ownership of SWK and SCS (together the "Subsidiaries"), which Subsidiaries accounted for the large majority of SilverSun's revenue in 2022.

It is expected that the capital structure of HoldCo will roughly approximate the current capital structure of SilverSun;

Following the consummation of the business combination, the business of the Subsidiaries will continue to be operated consistent with past practices.

The current management and Board of Directors of SilverSun, including Mark Meller, the Chief Executive Officer of both SilverSun and SWK, will continue in their current roles at both HoldCo and the Subsidiaries.

HoldCo will apply for public listing and the shares distributed in the stock dividend will be registered pursuant to a Form 10 that will be filed by HoldCo with the SEC (subject to regulatory and exchange regulations and approvals);

The shares of SilverSun's common stock to be retained by the current SilverSun stockholders following the consummation of the business combination will collectively represent approximately 3.2% of SilverSun's pro forma common equity ownership.

The proposed Mergers are expected to close in March or April of 2023, subject to the receipt of any applicable regulatory approvals, the approval of SilverSun's and Rhodium's respective stockholders, and other customary closing conditions.

Prior to the Mergers, SilverSun will hold a special meeting of its shareholders as of a pre-Merger record date to be determined (the “Special Meeting”).

At the Special Meeting, the SilverSun stockholders will be asked to vote on the proposals set forth in the Form S-4 Registration Statement of SilverSun (the “Form S-4”) filed on October 19, 2022, as amended on January 9, 2023 and February 14, 2023 and as may be further amended in the future.

These proposals include, but are not limited to, approval of (i) the Mergers;

(ii) the Amended and Restated Certificate of Incorporation (and the matters covered thereby including the Reverse Stock Split);

(iii) the Separation and Distribution Agreement;

(iv) the SilverSun Technologies, Inc.

2023 Omnibus Incentive Plan;

(v) the share issuances related to the Mergers requiring Nasdaq approval;

and (vi) the post-Merger board nominees.

These proposals are set forth in greater detail in the Form S-4.

The Mergers are conditioned upon the approval of the Merger Proposal, subject to terms of the Merger Agreement.

If the Merger Proposal is not approved, the other proposals (except the adjournment proposal, as described in the S-4 ) will not be presented to the shareholders for a vote.

Similarly, approval of the Merger proposal is subject to the approval of the Amended and Restated Certificate of Incorporation proposal, the Separation and Distribution

The Merger Agreement may be terminated, whether before or after obtaining the requisite vote of SilverSun shareholders, by mutual written consent of SilverSun and Rhodium.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 15 – MERGER (Continued)

The Merger Agreement may be terminated, and the transactions abandoned, by either SilverSun or Rhodium at any time before the effective time of the , by written notice from one to the other if (i) the Closing has not occurred on or before March 31, 2023 or such later date mutually agreed to by SilverSun and Rhodium (the “Termination Date”), except that the right to terminate the Merger Agreement for this reason is not available to any party who is then in material breach of the Merger Agreement;

(ii) the requisite vote of SilverSun shareholders has not been obtained by reason of the failure to obtain the required vote at the SilverSun Shareholders’ Meeting (or any adjournment or postponement of such meeting) duly convened for such purpose, except that the right to terminate the Merger Agreement for this reason shall not be available to SilverSun where the failure to obtain the requisite vote has been caused by the action or failure to act of any of the SilverSun Entities or such action or failure to act constitutes a material breach by any of the SilverSun Entities of the Merger Agreement;

or (iii) any law or order is enacted, issued, promulgated or entered by a governmental authority of competent jurisdiction (including Nasdaq) that permanently enjoins, or otherwise prohibits the consummation of the transactions, and (in the case of any order) such order has become final and non-appealable.

The Merger Agreement may be terminated, and the transactions abandoned, by SilverSun at any time before the First Effective Time, if (i) Rhodium breaches any of its representations, warranties, covenants or agreements contained in the Merger Agreement, which breach (a) would give rise to the failure to satisfy the general closing conditions or the closing conditions to the obligations of SilverSun at the Closing and (b) such breach cannot be cured by the Termination Date, or, if curable, has not been cured by Rhodium within the earlier of (A) 30 days after Rhodium’s receipt of written notice of such breach from SilverSun and (B) three business days prior to the Termination Date, subject to certain conditions;

or (ii) all of the general closing conditions and the closing conditions to the obligations of Rhodium at the Closing have been satisfied (other than any condition the failure of which to be satisfied has been principally caused by the breach of the Merger Agreement by Rhodium or any of its affiliates and conditions that, by their nature, are to be satisfied at Closing and which are, at the time of termination, capable of being satisfied) and Rhodium has failed to fulfill its obligations and agreements contained in the Merger Agreement to consummate the Closing within three business days following written notice of such satisfaction from SilverSun and SilverSun is ready, willing and able to consummate the Closing.

If the Merger Agreement is validly terminated pursuant to the termination section of the Merger Agreement, except as provided below, it shall become void and of no further force and effect, with no liability (except as provided below) on the part of any party (or any stockholder, affiliate or representative of such party), except that, if such termination results from (a) fraud or (b) the willful and material (i) failure of any party to perform its covenants, obligations or agreements contained in the Merger Agreement or (ii) breach by any party of its representations or warranties contained in the Merger Agreement, then such party shall be liable for any damages incurred or suffered by the other parties as a result of such failure or breach.

SilverSun shall pay, or cause to be paid, to Rhodium (or its designee(s)) by wire transfer of immediately available funds an amount equal to $ 5,000,000 , if the Merger Agreement is terminated by Rhodium pursuant to the unilateral termination provisions in favor Rhodium described above.

Rhodium shall pay, or cause to be paid, to SilverSun (or its designee(s)) by wire transfer of immediately available funds an amount equal to $ 5,000,000 , if the Merger Agreement is terminated by SilverSun pursuant to the unilateral termination provisions in favor of SilverSun described above.

SilverSun Technologies Holdings, Inc.

filed its Form 10 with the SEC on December 23, 2022.

The Form 10 was withdrawn on February 21, 2023 because the financial statements contained therein were stale.

SilverSun Technologies Holdings, Inc.

intends to refile a Form 10 containing updated financial statements on or about early March 2023 and expects to be able to request accelerated effectiveness of the Form 10 at its discretion.

On February 14, 2023, the Company filed Amendment 2 to Form S-4 Registration Statement with the SEC.

See business section of the Form 10-K for additional information.

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 9A. Controls and Procedures