QXO, Inc. 10-K

Item 9A. Controls and Procedures (a) Evaluation of Disclosure and Control Procedures As of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the company in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. (b) Management ’ s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934). The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements. As of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of its principal executive officer and principal financial officer, the effectiveness of the Company’s internal control over financial reporting. This evaluation was conducted using the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013. Based upon that evaluation, the Company’s management concluded that its internal control over financial reporting was effective as of December 31, 2023. Pursuant to the rules of the SEC, the Company’s management’s report on internal control over financial reporting is furnished with this Annual Report on Form 10-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or Securities Exchange Act of 1934. This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding the Company's internal control over financial reporting. The Company’s management’s report on internal control over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits the Company to provide only the Company’s management’s report on internal control over financial reporting in this Annual Report on Form 10-K. (c) Changes to Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during our fourth quarter ended December 31, 2023, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 45 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance 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 13, 2024: Name Age Position Officer and/or Director Since Mark Meller 64 Chairman, President, Chief Executive Officer and Director 2003 Joseph Macaluso 72 Chief Financial Officer 2021 Stanley Wunderlich 76 Director 2011 Kenneth Edwards 65 Director 2021 John Schachtel 62 Director 2017 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 March 13, 2024) Board Size: Total Number of Directors 4 Male Female Non-Binary Gender Undisclosed Part I: Gender Identity Number of directors base on gender identity 4 Part II: Demographic Background African American or Black 1 Asian Hispanic or Latinx Native Hawaiian or Pacific Islander White 3 Two or More Race or Ethnicities LGBTQ+ 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 Mr. Mark Meller has been the President and Director of the Company since September 15, 2003 and was further appointed Chief Executive Officer on September 1, 2004. He became Chairman of the Board on May 10, 2009. Mr. Meller is currently the President, Chief Executive Officer and Chairman of the Board of Directors. From September 2003 through January 2015, he was Chief Financial Officer of the Company. From October 2004 until February 2007, Mr. Meller was the President, Chief Executive Officer, Chief Financial Officer and Director of Deep Field Technologies, Inc. From December 15, 2004 until September 2009, Mr. Meller was the President, Chief Executive Officer, Chief Financial Officer and Director of MM2 Group, Inc. From August 29, 2005 until August 2006, Mr. Meller was the President, Chief Executive Officer and Chief Financial Officer of iVoice Technology, Inc. From 1988 until 2003, Mr. Meller was Chief Executive Officer of Bristol Townsend and Co., Inc., a New Jersey based consulting firm providing merger and acquisition advisory services to middle market companies. From 1986 to 1988, Mr. Meller was Vice President of Corporate Finance and General Counsel of Crown Capital Group, Inc, a New Jersey based consulting firm providing advisory services for middle market leveraged buy-outs (LBO’s). Prior to 1986, Mr. Meller was a financial consultant and practiced law in New York City. He is a member of the New York State Bar. 46 Table of Contents Mr. Meller has a B.A. from the State University of New York at Binghamton and a J.D. from the Boston University School of Law. In evaluating Mr. Meller’s specific experience, qualifications, attributes and skills in connection with his appointment to our board, we took into account his experience in the industry and his knowledge of running and managing the Company. Joseph Macaluso, Chief Financial Officer Joseph Macaluso has over 30 years of experience in financial management. Mr. Macaluso has served as Chairman of the Audit Committee and a Director of the Company since 2015 before becoming its Chief Financial Officer on January 4, 2021. Mr. Macaluso has been the Principal Accounting Officer of Tel-Instrument Electronics Corp., a developer and manufacturer of avionics test equipment for both the commercial and military markets since 2002. Previously, he had been involved in companies in the medical device and technology industries holding positions including Chief Financial Officer, Treasurer and Controller. Mr. Macaluso has a Bachelor of Science degree in Accounting from Fairfield University. Stanley Wunderlich, Director Mr. Stanley Wunderlich has over 40 years of experience on Wall Street as a business owner and consultant. Mr. Wunderlich is a founding partner and has been Chairman and Chief Executive Officer of Consulting for Strategic Growth 1, specializing in investor and media relations and the formation of capital for early-growth stage companies both domestic and international, from 2000 through the present. Since 1987, he has been the Chief Executive Officer of Consulting for Strategic Growth 1, Ltd. Mr. Wunderlich has a bachelor’s degree from Brooklyn College. In evaluating Mr. Wunderlich’s experience, qualifications, attributes and skills in connection with his appointment to our Board, we took into account his experience in finance and investor relations. Kenneth Edwards, Director Mr. Edwards combines over 40 years of experience in the accounting and finance industry. Previously, he has been involved with a few certified public accounting firms as well as companies in various other industries holding positions including Partner, Managing Director, Chief Financial Officer and Senior Vice-President of Finance. Ken currently serves as Chief Financial Officer of Edison Learning, Inc., an Education Management Company. Ken joined Edison Learning, Inc. in September 2017. From July 2016 to September 2017, he was Managing Director for CFO Strategies, LLC, a company involved in outsourced CFO and Controller services. From July 1981 to July 1993 and from October 2000 to June 2016, he was with several public accounting firms (Coopers & Lybrand, BDO Seidman, Edwards & Company and Cohn Reznick) in various roles until his retirement from Cohn Reznick as an Audit Partner in June 2016. During the period from July 1993 to July 1997, he served as Senior Vice President of Finance for Home State Holdings, Inc., an insurance holding company that focused on property and casualty insurance, and from July 1997 to September 2000 as Chief Financial Officer for Menu Direct, Inc. a specialty food manufacturer. Ken is currently a member of the Advisory Board of Robert Wood Johnson University Hospital, located at Somerset New Jersey. He previously served as a Director and Treasurer for the Urban League of Morris Country and as a Director and Chairperson for the Hope Chest Scholarship Foundation. He has an undergraduate accounting degree from Goshen College. The Board believes that Mr. Edwards’ extensive experience as a CPA makes him well-qualified to help guide the Audit Committee of the Board. The Board has determined that Mr. Edwards meets the current independence and experience requirements contained in the listing standards of The Nasdaq Capital Markets and is an audit committee financial expert as defined in Securities and Exchange Commission regulations. John Schachtel, Director On March 27, 2017, Mr. Schachtel was appointed to the Board. Since May 2017, Mr. Schachtel has been the Executive Vice President and Chief Operating Officer of Regional Management Corp., one of the leading consumer finance installment loan companies in the United States. Prior to assuming his current position, Mr. Schachtel was the Chief Operating Officer of OneMain Financial Holdings, Inc. and served 11 years as the Executive Vice President, Northeast & Midwest Division for OneMain Financial Holdings, Inc. Mr. Schachtel has a Bachelor of Science degree from Northwestern University and an MBA in Finance from New York University. In evaluating Mr. Schachtel’s specific experience, qualifications, attributes and skills in connection with his appointment to Board, we took into account his expertise in general management, finance, corporate governance and strategic planning, as well as his experience in operations and mergers and acquisitions. 47 Table of Contents Family Relationships There are no family relationships among any of our directors or executive officers. Board Composition and Director Independence Our board of directors consists of four members: Mr. Mark Meller, Mr. Stanley Wunderlich, Mr. Kenneth Edwards, and Mr. John Schachtel. The directors will serve until our next annual meeting and until their successors are duly elected and qualified. The Company defines “independent” as that term is defined in Rule 5605(a)(2) of the Nasdaq listing standards. In making the determination of whether a member of the board is independent, our board considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption “ Certain Relationships and Related-Party Transactions ”. The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, our board affirmatively determined that Mr. Wunderlich, Mr. Edwards, and Mr. Schachtel have qualified as independent and that they have no material relationship with us that might interfere with his or her exercise of independent judgment. Board Committees The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Currently, the Audit Committee consists of Mr. Kenneth Edwards, Mr. Stanley Wunderlich and Mr. John Schachtel. Mr. Edwards, Chairman of the Audit Committee, may be deemed a financial expert as defined in Item 407(d)(5) of Regulation S-K. The Audit Committee operates pursuant to a written charter (the “ Audit Committee Charter ”), a current copy of which is publicly available on the investor relations portion of the Company’s website at www.silversuntech.com. Currently, the Compensation Committee consists of Mr. Stanley Wunderlich and Mr. John Schachtel. Mr. Schachtel serves as Chairman. The Compensation Committee operates pursuant to a written charter, a current copy of which is publicly available on the investor relations portion of our website. Currently, the Nominating and Corporate Governance Committee consists of Mr. Kenneth Edwards, Mr. Stanley Wunderlich and Mr. John Schachtel. Mr. Wunderlich serves as Chairman. The Nominating and Corporate Governance Committee operates pursuant to a written charter, a current copy of which is publicly available on the investor relations portion of our website. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a). Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the fiscal year ended December 31, 2023, including those reports that we have filed on behalf of our directors and Section 16 officers, no director, Section 16 officer, beneficial owner of more than 10% of the outstanding common stock, or any other person subject to Section 16 of the Exchange Act, failed to file with the SEC on a timely basis during the fiscal year ended December 31, 2023, except (i) as previously disclosed by the Company, (ii) Joseph Macaluso filed a Form 4 on December 13, 2023, which was delinquent, in connection with his cashless exercise of options, the earliest of which occurred on March 29, 2021, (iii) John Schachtel filed a Form 4 on December 13, 2023, which was delinquent, in connection with a stock option grant on October 14, 2021, (iv) Stanley Wunderlich filed a Form 4 on December 13, 2023, which was delinquent, in connection with a stock option grant on October 14, 2021, and (v) Stanley Wunderlich filed a Form 4 on December 29, 2023, which was delinquent, in connection with his cashless exercise of stock options on October 14, 2021. Code of Ethics The Company has adopted a Code of Ethics for adherence by its Chief Executive Officer, Chief Financial Officer, and Controller to ensure honest and ethical conduct; full, fair and proper disclosure of financial information in the Company’s periodic reports filed pursuant to the Securities Exchange Act of 1934; and compliance with applicable laws, rules, and regulations. Any person may obtain a copy of our Code of Ethics by mailing a request to the Company at the address appearing on the front page of this Annual Report on Form 10-K. 48 Table of Contents Involvement in Certain Legal Proceedings To the best of our knowledge, none of our directors or executive officers has, during the past ten years: ● been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; ● been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; ● been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; ● been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or ● been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission. Item 11. Executive Compensation The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2023 and 2022. Name and Position(s) Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total Compensation ($) Mark Meller 2023 $ 1,120,092 $ - $ - $ - $ - $ - $ - $ 1,120,092 President, Chief Executive Officer, and Director 2022 $ 1,026,650 $ - $ - $ - $ - $ - $ - $ 1,026,650 Joseph Macaluso, 2023 $ 238,943 $ 55,628 $ - $ - $ - $ - $ - $ 294,571 Chief Financial Officer 2022 $ 228,516 $ 45,150 $ - $ - $ - $ - $ - $ 273,666 49 Table of Contents Mark Meller, Chief Executive Officer The Company’s Chief Executive Officer and President has had an Employment Agreement with the Company since September 15, 2003. On February 4, 2016 (the “Effective Date”), the Company entered into an amended and restated employment agreement (the “Meller Employment Agreement”) with Mark Meller, pursuant to which Mr. Meller will continue to serve as the Company’s President and Chief Executive Officer. The Meller Employment Agreement was entered into by the Company and Mr. Meller primarily to extend the term of Mr. Meller’s employment. The term of the Meller Employment Agreement runs through September of 2023 (the “Term”) and shall automatically renew for additional periods of one year unless otherwise terminated in accordance with the employment agreement. The Company will pay Mr. Meller an annual salary of $565,000 per annum, with a ten percent (10%) increase on September 1 and every anniversary of such date for the duration of the Term beginning September 15, 2003. On November 11, 2021, the Company and Mark Meller executed an amendment to Mr. Meller’s employment agreement to extend his term of employment through September 14, 2028. Other than the foregoing extension, the terms of Mr. Meller’s employment agreement remain unchanged. Concurrently with the execution of the Investment Agreement, SilverSun and Mark Meller entered into a letter agreement pursuant to which the Meller SilverSun Employment Agreement will be terminated and liquidated as of immediately prior to Closing, and Silver Sun will pay to Mr. Meller a lump sum termination payment equal to the lessor of (i) $3.0 million and (ii) 300% of the average annual amount paid by the Company or any parent or subsidiary thereof to Mr. Meller and included in his gross income for services rendered in each of the five calendar years immediately prior to closing, less $100, which is the amount that he is entitled to receive under the Meller SilverSun Agreement for certain terminations of his employment within three years following a change of control. Potential Payments upon Termination or Change in Control The Meller Employment Agreement provides for a severance payment to Mr. Meller of three hundred percent (300%), less $100,000 of his gross income for services rendered to the Company in each of the five prior calendar years should his employment be terminated following a change in control (as defined in the Meller Employment Agreement). Grants of Plan-based Awards Table for Fiscal Year 2023 There were no stock option grants for the year ended December 31, 2023. Outstanding Plan-based Awards at December 31, 2023 The Company had no outstanding equity awards to the executives named above at the end of the most recently completed fiscal year. Options Exercised During Fiscal Year 2023 Name # of Shares Exercised Exercise Price Value Realized on Exercise Joseph Macaluso 8,370 $ 6.53 $ 27,421 Joseph Macaluso 11,630 $ 5.90 $ 45,566 Clawback Policy The Company has adopted a clawback policy that states that, in the event that the Company is required to prepare an accounting restatement, it will recover incentive-based compensation received by any current or former executive officer that was based upon the attainment of a financial reporting measure that was erroneously awarded during the three-year period preceding the date that the restatement was required. 50 Table of Contents Director Compensation The following Director Compensation Table sets forth the compensation of our directors for the fiscal year ending on December 31, 2023. Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Stanley Wunderlich 12,000 - - - - - 12,000 Kenneth Edwards 20,000 - - - - - 20,000 John Schachtel 18,000 - - - - - 18,000 We pay only our independent directors for their service on our board of directors. Mr. Wunderlich is paid $1,000 per month, payable quarterly for his service as a member of the board and as Chairman of the Nominating and Governance Committee. Mr. Edwards was paid $1,667 per month, payable quarterly for his service as a member of the board and as Chairman of the Audit Committee. Mr. Schachtel is paid $1,500 per month, payable quarterly for his service as a member of the board and as Chairman of the Compensation Committee. Director Agreements On July 26, 2011, we entered into a director agreement with Stanley Wunderlich, pursuant to which Mr. Wunderlich was appointed to the Board effective July 26, 2011. On August 3, 2011 the Company entered into an amended and restated director agreement (the “Amended Agreement”). The term of the Amended Agreement is one year from August 3, 2011. The Amended Agreement may, at the option of the Board, be automatically renewed on such date that Mr. Wunderlich is re-elected to the Board. In connection with a recapitalization of the Company in 2012, Mr. Wunderlich and the Company agreed to amend the Amended Director Agreement to (i) change the Stipend to $1,000 per month, payable quarterly; (ii) to forego the issuance of any warrants due to Wunderlich under the Amended Agreement; and (iii) to cancel the future issuance of any warrants due to Mr. Wunderlich under the Amended Agreement. To date no warrants have been issued pursuant to this agreement. On March 27, 2017, we entered into a director agreement (“Schachtel Director Agreement”) with John Schachtel, pursuant to which Mr. Schachtel was appointed to the Board effective March 27, 2017 (the “Effective Date”). The Schachtel Director Agreement may, at the option of the Board, be automatically renewed on such date that Mr. Schachtel is re-elected to the Board. Under the Schachtel Director Agreement, Mr. Schachtel is to be paid a stipend of one thousand five hundred dollars ($1,500) (the “Stipend”) per month, payable quarterly. Additionally, Mr. Schachtel shall receive warrants (the “Warrants”) to purchase such number of shares of the Company’s Common Stock, as shall equal (the “Formula”) (A) $20,000 divided by (B) the closing price of the Common Stock on the date of grant of the Warrant. The exercise price of the Warrant shall be the closing price on the date of the grant of such Warrant (the “Grant Date”) plus $0.01. The Warrant shall be fully vested upon receipt thereof (the “Vesting Date”). The warrants have expired and no warrants had been issued. On January 4, 2021, we entered into a director agreement (“Edwards Director Agreement”) with Kenneth Edwards, pursuant to which Mr. Edwards was appointed to the Board effective January 4, 2021 (the “Effective Date”). The Edwards Director Agreement may, at the option of the Board, be automatically renewed on such date that Mr. Edwards is re-elected to the Board. Under the Edwards Director Agreement, Mr. Edwards is to be paid a stipend of $1,667 per month (the “Stipend”). 51 Table of Contents Pay versus Performance Table The following table shows the total compensation for the named executive officers as set forth in the Summary Compensation Table, the compensation “actually paid” (“CAP”) to the NEOs, the Company’s total shareholder return (“TSR”), and our net income (loss) for the years ended December 31, 2023 and 2022. 2023 Pay vs. Performance Table Fiscal Year Summary compensation table total for PEO (1) Compensation actually paid to PEO (1)(3) Average summary compensation table total for non-PEO NEOs (2) Average compensation actually paid to non-PEO NEOs (2)(4) Value of initial fixed $100 investment based on total shareholder return (3)(5) Net loss 2023 $ 1,120,092 1,120,092 294,571 294,571 610 $ (1,070,095 ) 2022 $ 1,026,650 $ 1,026,650 $ 273,666 $ 273,666 $ 120 $ (282,219 ) (1) In the table above, our PEO is Mark Meller. (2) In the table above, our only non-PEO NEO is Joseph Macaluso. (3) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. (4) The SEC rules require that certain adjustments be made to the Summary Compensation Table (“SCT”) totals to determine CAP, as reported in the Pay versus Performance table above. The following table details the applicable adjustments that were made to determine CAP: (5) Cumulative TSR is calculated based on the value of an initial fixed investment of $100 in our common stock as of December 31, 2020. Executives SCT total ($) Deduct grant date fair value of stock awards & option awards ($) Add year-end fair value of uninvested equity granted in the year ($) Add year- over-year change in fair value of outstanding and unvested equity granted in prior years ($) Add fair value as of vesting date of equity awards granted and vested in the year ($) Add year- over-year change in fair value of equity awards granted in prior years that vested in the year ($) Deduct fair value at the end of the prior year of equity awards that failed to meet vesting conditions in the year ($) 2023 PEO 1,120,092 - - - - - - Non-PEO NEOs (average) 294,571 - - - - - - 2022 PEO 1,026,650 - - - - - - Non-PEO NEOs (average) 273,666 - - - - - - 52 Table of Contents Relationship Between Compensation Actually Paid and Performance Measures CAP for the PEO and NEO’s is primarily wage-based, and changes in the value of the unvested and vested material are not significant. The compensation is based upon contractual requirements as well as industry standards. While the Company reviews performance measures in order to align executive compensation with Company performance, all of those Company measures are not presented in the Pay Versus Performance table above. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation actually paid (which, for all purposes hereof, shall be as computed in accordance with SEC rules) for a particular year. The increase in the Company’s TSR reflects management’s efforts to increase shareholder value, however, the Company’s stock price is very volatile and may not be an indicator of future performance. The increase in the Company’s TSR reflects management’s efforts to increase shareholder value, however, the higher stock price at December 31, 2023 is a result of the announcement on December 3, 2023, that the Company. entered into the Investment Agreement with J PE and the other investors party thereto (collectively with JPE, the “Investors”), providing for an aggregate investment by the Investors of $1,000,000,000 in cash in the Company (collectively, the “Equity Investment”). Following the closing of the Equity Investment, JPE will be the controlling stockholder of the Company and Mr. Brad Jacobs, who controls JPE, will become Chairman and Chief Executive Officer of the Company (see Form 8-K filed with Securities and Exchange Commission on December 4, 2023. Item 12. 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 13, 2024 by (a) each stockholder who is known to us to own beneficially 5% or more of our outstanding Common Stock; (b) all directors; (c) our executive officers, and (d) all executive officers and directors as a group. 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 13, 2024. 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 13, 2024 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. Unless otherwise identified, the address of our directors and officers is c/o SilverSun Technologies, Inc. at 120 Eagle Rock Ave, Suite 330, East Hanover, NJ 07936. Number of Shares of Common Stock Beneficially Owned Percentage of Ownership of Common Stock (1) Officers and Directors Mark Meller Chief Executive Officer, President and Chairman 2,006,534 (2) 37.75 % Stanley Wunderlich Director 1,500 * Officers and Directors as a Group 2,008,034 (7) 37.78 % * denotes less than 1% (1) Based on 5,315,581 shares of Common Stock outstanding as of March 13, 2024. 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. (2) Includes 800,000 shares owned by Sharieve Meller Family Trust, Sharieve is Mr. Meller’s wife. Mr. Meller disclaims beneficial ownership of these shares. Also includes 800,000 shares owned by the Mark M. Meller Family Trust. Mr. Meller beneficially owns 406,534 shares. 53 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information as of December 31, 2023 with respect to compensation plans (including individual compensation arrangements) under which our common shares are authorized for issuance, aggregated as follows: All compensation plans previously approved by security holders; and All compensation plans not previously approved by security holders Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance (a) (b) (c) Equity compensation plans approved by security holders - $ - 1,056,670 Equity compensation plans not approved by security holders. - $ - - Total - $ - 1,056,670 2019 Equity and Incentive Plan The Company adopted the 2019 Equity and Incentive Plan (the “2019 Plan”) to order provide long-term incentives for employees and non-employees to contribute to the growth of the Company and attain specific performance goals. The 1,236,700 shares available under the 2019 Plan represent approximately 23% of the Company’s 5,315,581 currently outstanding shares (the “Share Reserve”). 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 13, 2024, the Company has issued 158,420 options. In December 2023, the option holders received 59,404 shares of common stock and surrendered 158,420 shares of common stock underlying the option in a cashless exercise of the outstanding stock options in payment of the exercise price. The cashless exercise was based on the market price of the average of the closing trading price of the Issuer's common stock on the 5 trading days ending prior to the date of exercise. (see Note 10 to Notes to the Consolidated Financial Statements). Item 13. Certain Relationships and Related Transactions, and Director Independence At December 31, 2023 and December 31, 2022, certain long-term debt is considered a related party liability as holders, including Prairie Tech, are current employees of the Company. As of December 31, 2023 and December 31, 2022, the outstanding balances of this debt were $-0- and $103,333 respectively. Please see “Board Composition and Director Independence” under “Item 10. Directors, Executive Officers and Corporate Governance,” for information regarding director independence. Item 14. Principal Accountant Fees and Services The following table sets forth fees billed to the Company by the Company’s independent auditors for (i) services rendered for the audit of the Company’s annual financial statements and the review of the Company’s quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance. Services 2023 2022 Audit Fees $ 179,551 $ 213,988 Audit - Related Fees 66,703 61,773 Tax fees 76,958 40,867 All Other Fees - - Total $ 323,212 $ 316,628 Prior to engaging our accountants to perform a particular service, our Audit Committee obtains an estimate for the service to be performed. All the services described above were approved by the Audit Committee in accordance with its procedures. 54 Table of Contents PART IV Item 15. Exhibits (a) Exhibit No. Description 2.1 Asset Purchase Agreement, dated March 11, 2015, by and among SWK Technologies, Inc., 2000Soft, Inc. d/b/a Accounting Technology Resources and Karen Espinoza McGarrigle (incorporated by reference to Exhibit 2.1 on the Company’s current report on Form 8-K filed with the SEC on March 17, 2015). 2.2 Form of Asset Purchase Agreement, dated July 6, 2015, by and among SWK Technologies, Inc., ProductiveTech, Inc. a New Jersey corporation John McPoyle and Kevin Snyder (incorporated herein by reference to Exhibit 2.1 on Form 8-K, filed with the SEC on July 10, 2015). 2.2 Form of Asset Purchase Agreement, dated May 18, 2018, by and among SWK Technologies, Inc., InfoSys Management, Inc. and three individuals (incorporated herein by reference to Exhibit 2.1 on the Company’s Form 8-K, filed with the SEC on May 24, 2018). 2.3 Form of Asset Purchase Agreement, dated May 18, 2018, by and among Secure Cloud Services, Inc., SilverSun Technologies, Inc., Nellnube, Inc. and Info Sys Management, Inc. (incorporated herein by reference to Exhibit 2.2 on the Company’s Form 8-K, filed with the SEC on May 24, 2018). 2.4 Asset Purchase Agreement, dated August 26, 2019, by and among SilverSun Technologies, Inc. SWK Technologies, Inc., and SPS Commerce, Inc. (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on August 27, 2019). 2.5 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). 3.1 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). 3.2 By-laws of iVoice, Inc., a New Jersey corporation (incorporated herein by reference to Exhibit 3.2 of the Registrant’s Form 10-QSB for the period ended March 31, 2003). 3.3 Fourth Amended and Restated Certificate of incorporation of SilverSun Technologies, Inc., (incorporated herein by reference to Exhibit 3.1 on Form 8-K, dated June 27, 2011, filed with the SEC on June 30, 2011). 3.4 Amendment to the Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 on Form 8-K, dated June 27, 2011, filed with the SEC on June 30, 2011). 3.5 Certificate of Elimination of Series B Preferred Stock (incorporated herein by reference to Exhibit 3.1 on Form 8-K, dated September 13, 2019). 4.1 iVoice Acquisition 1, Inc. 5% Convertible Debenture due March 20, 2005 issued to Elma S. Foin (incorporated herein by reference to Exhibit 4.2 of the registration statement on Form SB-2, filed with the SEC on December 22, 2003). 4.2 iVoice Acquisition 1, Inc. 5% Convertible Debenture due March 20, 2005 issued to Darryl A. Moy (incorporated herein by reference to Exhibit 4.3 of the registration statement on Form SB-2, filed with the SEC on December 22, 2003). 4.3 iVoice Acquisition 1, Inc. 5% Convertible Debenture due March 20, 2005 issued to Henry Tyler (incorporated herein by reference to Exhibit 4.4 of the registration statement on Form SB-2, filed with the SEC on December 22, 2003). 4.4 SilverSun Technologies, Inc. 7.5% Secured Convertible Debenture, for a value of $600,000, due December 30, 2007 to YA Global (f/k/a/ Cornell Capital Partners, LP). 4.5 SilverSun Technologies, Inc. 7.5% Secured Convertible Debenture, for a value of $1,159,047, due December 30, 2007 to YA Global (f/k/a/ Cornell Capital Partners, LP). 4.6 Certificate of Designation of Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 4.1 on Form 8-K, dated May 4, 2011, filed with the SEC on May 12, 2011). 4.7 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). 4.8 $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). 4.9* Description of Securities 10.1 Employment Agreement, dated January 1, 2003, between iVoice Acquisition 1, Inc. and Jerome Mahoney (incorporated herein by reference to Exhibit 10.8 of the Registration Statement on Form SB-2 filed on November 25, 2003). 10.2 Employment Agreement, dated September 15, 2003, between SilverSun Technologies, Inc. and Mark Meller (incorporated herein by reference to Exhibit 10.9 of the Registration Statement on Form SB-2 filed on November 25, 2003). 55 Table of Contents 10.3 Equity Line of Credit Agreement dated January 24, 2003 between Cornell Capital Partners, LP, and iVoice Acquisition 1, Inc. (incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003, filed with the SEC on May 12, 2003). 10.4 Registration Rights Agreement dated January 24, 2003 between Cornell Capital Partners, LP, and iVoice Acquisition 1, Inc. (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003, filed with the SEC on May 12, 2003). 10.5 Stock Purchase Agreement dated January 24, 2003 between iVoice Acquisition 1, Inc. and listed Buyers (incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003, filed with the SEC on May 12, 2003). 10.6 Placement Agreement dated January 24, 2003 between iVoice Acquisition 1, Inc. and Cornell Capital Partners LP. (incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003, filed with the SEC on May 12, 2003). 10.7 Termination Agreement dated December 30, 2005 between YA Global (f/k/a/ Cornell Capital Partners, LP). and SilverSun Technologies, Inc. 10.8 Escrow Agreement dated December 30, 2005 between David Gonzalez, Esq. And SilverSun Technologies, Inc. 10.9 Securities Purchase Agreement dated December 30, 2005 between YA Global (f/k/a/ Cornell Capital Partners, LP). and SilverSun Technologies, Inc. 10.10 Investor Rights Agreement dated December 30, 2005 between YA Global (f/k/a/ Cornell Capital Partners, LP). and SilverSun Technologies, Inc. 10.11 Amended and Restated Security Agreement dated December 30, 2005 between YA Global (f/k/a/ Cornell Capital Partners, LP). and SilverSun Technologies, Inc. 10.12 Securities Purchase Agreement dated May 6, 2009 by and among SilverSun Technologies, SWK Technologies, Inc., Jeffrey D. Roth and Jerome R. Mahoney (incorporated herein by reference to Exhibit 10.1 on Form 10-K, dated May 9, 2009, filed with the SEC on May 26, 2009). 10.13 Termination Settlement Agreement dated May 6, 2009 by and among SilverSun Technologies, SWK Technologies, Inc., Jeffrey D. Roth and Jerome R. Mahoney (incorporated herein by reference to Exhibit 10.2 on Form 10-K, dated May 9, 2009, filed with the SEC on May 26, 2009). 10.14 Promissory notes, dated April 11, 2011 among SilverSun Technologies, Inc and accredited investors (incorporated herein by reference to Exhibit 10.1 on Form 8-K, dated April 11, 2011, filed with the SEC on April 15, 2011). 10.15 Form of Preferred Stock Purchase Agreement (incorporated by reference to Exhibit 10.2 on the Company’s current report on Form 8-K filed with the SEC on May 12, 2011). 10.16 Amended Agreement by and between the Company and Mr. Stanley Wunderlich (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on August 3, 2011). 10.17 Form of Warrant (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the SEC on August 3, 2011). 10.18 Loan and Security Agreement by and between the Company, its subsidiary SWK Technologies, Inc and a commercial lender (incorporated herein by reference to Exhibit 10.18 of the Annual Report on Form 10-K for the period ended December 31, 2011, filed with the SEC on March 29, 2012). 10.19 Audit Committee Charter (incorporated herein by reference to Exhibit 10.19 of the Annual Report on Form 10-K for the period ended December 31, 2011, filed with the SEC on March 29, 2012). 10.20 Form of Purchase Agreement, dated June 14, 2012, by and among SWK Technologies, the Company’s wholly-owned subsidiary, Neil Wolf, Esq., not individually, but solely in his capacity as Trustee-Assignee of the Trust Agreement and Assignment for the Benefit of the Creditors of Hightower, Inc., Hightower, Inc., and the Stockholders of Hightower, Inc. (incorporated by reference to Exhibit 2.1 on the Company’s current report on Form 8-K filed with the SEC on June 20, 2012). 10.21 Promissory Note, dated March 11, 2015, issued in favor of 2000Soft, Inc. d/b/a Accounting Technology Resources, a California corporation (incorporated by reference to Exhibit 10.2 on the Company’s current report on Form 8-K filed with the SEC on March 17, 2015). 10.22 Form of Promissory Note, dated July 6, 2015, issued in favor of ProductiveTech, Inc., a New Jersey corporation (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on July 10, 2015) 10.23 Amended and Restated Employment Agreement, dated February 4, 2016, between Mark Meller and Silversun Technologies, Inc. (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on February 5, 2016). 10.24 Form of $1,000,000 Convertible Promissory Note, dated May 18, 2018, issued in favor of Info Sys Management, Inc. (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on May 24, 2018). 56 Table of Contents 10.25 Form of $400,000 Convertible Promissory Note, May 18, 2018, issued in favor of Info Sys Management, Inc. (incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on May 24, 2018). 10.26 Form of Employment Agreement, dated May 18, 2018 by and between SWK Technologies, Inc. and Brian James O’Reilly (incorporated herein by reference to Exhibit 10.3 on Form 8-K, filed with the SEC on May 24, 2018). 10.27 Form of Escrow Agreement, dated August 26, 2019, by and among SWK Technologies, Inc., SPS Commerce, Inc. 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) 10.28 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). 10.29 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). 10.30 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). 10.31 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). 10.32 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). 10.33 Asset Purchase Agreement, dated November 13, 2023 by and between SWK Technologies, Inc., and JCS Computer Resource Corporation (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on November 15, 2023). 10.34 Form of $1,025,000 Promissory Note, dated November 13, 2023, issued in favor of JCS Computer Resource Corporation, (incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on November 15, 2023). 10.35 Investment Agreement (including all Exhibits thereto), dated December 3, 2023, by and among SilverSun Technologies, Inc. Jacobs Private equity II, LLC and the other Investors party thereto (incorporated herein by reference to Exhibit 2.1 on Form 8-K, filed with the SEC on December 4, 2023 and the Definitive Proxy Statement filed with the SEC on February 13, 2024). 10.36 Voting and Support Agreement, dated December 3, 2023, by and between Jacobs Private Equity II, LLC, Mark Meller, Sharieve Meller family Trust and Mark Meller Family Trust (incorporated herein by reference to Exhibit 10.1 on Form 8-K, filed with the SEC on December 4, 2023). 10.37 Certificate of Elimination for Series A Preferred Stock filed with Delaware Secretary of State on December 1, 2023 (incorporated by reference to Exhibit 3.1 on Form 8-K, filed with the SEC on December 4, 2023). 10.38 Meller Letter Agreement, dated December 3, 2023, by and between SilverSun Technologies, Inc. and Mark Meller (incorporated herein by reference to Exhibit 10.2 on Form 8-K, filed with the SEC on December 4, 2023). 14.1 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). 21.1 * List of Subsidiaries 23.1 * Consent of Independent Registered Public Accounting Firm 31.1 * Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herein. 31.2 * Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herein. 32.1 * Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herein. 32.2 * Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herein. 97.1* SilverSun Technologies, Inc. Compensation Recovery Policy 101.INS * Inline XBRL Instance Document 101.SCH * Inline XBRL Taxonomy Extension Schema 101.CAL * Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF * Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB * Inline XBRL Taxonomy Extension Label Linkbase 101.PRE * Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith Item 16. Form 10-K Summary None. 57 Table of Contents SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SILVERSUN TECHNOLOGIES, INC. Date: March 14, 2024 By: /s/ Mark Meller Mark Meller Principal Executive Officer Date: March 14, 2024 By: /s/ Joseph Macaluso Joseph Macaluso Principal Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s / Mark Meller Principal Executive Officer March 14, 2024 Mark Meller /s/ Stanley Wunderlich Director March 14, 2024 Stanley Wunderlich /s/ Kenneth Edwards Director March 14, 2024 Kenneth Edwards /s/ John Schachtel Director March 14, 2024 John Schachtel /s/ Joseph Macaluso Principal Financial Officer March 14, 2024 Joseph Macaluso 58 Table of Contents PART F/S INDEX TO FINANCIAL STATEMENTS AUDITED FINANCIAL STATEMENTS Page (s) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 688 ) F-2 CONSOLIDATED FINANCIAL STATEMENTS: Balance Sheets F-3 Statements of Operations F-4 Statements of Stockholders’ Equity F-5 Statements of Cash Flows F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8 F-1 Table of Contents 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 sheets of SilverSun Technologies, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, 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. 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. 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. 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. 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. Critical Audit Matters Critical audit matters 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 our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2004. Marlton, New Jersey March 14, 2024 F-2 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 6,143,298 $ 8,008,633 Accounts receivable, net of allowance of $ 510,212 and $ 490,311 2,968,875 2,232,960 Unbilled services 194,407 367,165 Deferred charges 735,908 1,516,895 Prepaid expenses and other current assets 1,753,849 1,573,615 Total current assets 11,796,337 13,699,268 Property and equipment, net 503,347 711,314 Operating lease right-of-use assets, net 521,866 328,562 Intangible assets, net 4,918,849 4,265,353 Goodwill 1,139,952 1,139,952 Deferred tax assets, net 1,443,902 1,106,065 Deposits and other assets 171,448 187,553 Total assets $ 20,495,701 $ 21,438,067 LIABILITIES & STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,563,248 $ 3,272,555 Accrued expenses 2,654,920 2,432,703 Accrued interest 24,507 23,757 Long term debt – current portion 701,749 680,146 Long term debt – related party - current portion - 103,333 Finance lease obligations – current portion 154,336 214,990 Operating lease liabilities – current portion 262,733 268,345 Deferred revenue 3,161,082 3,757,090 Total current liabilities 11,522,575 10,752,919 Long term debt - net of current portion 994,266 671,014 Finance lease obligations - net of current portion 247,117 401,453 Operating lease liabilities - net of current portion 259,133 60,217 Total liabilities 13,023,091 11,885,603 Commitments and Contingencies (see Note 14) Stockholders’ equity: Preferred Stock, $ 0.001 par value; authorized 1,000,000 shares Series A Preferred Stock, $ 0.001 par value; authorized 2 shares no shares issued and outstanding - - Common stock, $ 0.00001 par value; authorized 75,000,000 shares 5,315,581 and 5,256,177 issued and outstanding as of December 31, 2023 and 2022, respectively 53 53 Additional paid-in capital 9,419,242 10,429,001 Accumulated deficit ( 1,946,685 ) ( 876,590 ) Total stockholders’ equity 7,472,610 9,552,464 Total liabilities and stockholders’ equity $ 20,495,701 $ 21,438,067 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2023 December 31, 2022 Revenues: Software product, net $ 14,110,773 $ 11,781,362 Service and other, net 40,406,168 33,203,914 Total revenues, net 54,516,941 44,985,276 Cost of revenues: Product 8,512,767 7,077,804 Service and other 24,390,365 19,946,736 Total cost of revenues 32,903,132 27,024,540 Gross profit 21,613,809 17,960,736 Operating expenses: Selling and marketing expenses 8,852,739 7,745,265 General and administrative expenses 10,217,157 9,471,625 Share-based compensation expenses 41,497 180,260 Depreciation and amortization expenses 828,157 948,965 Total selling, general and administrative expenses 19,939,550 18,346,115 Income (loss) from operations 1,674,259 ( 385,379 ) Other expense: Interest expense, net ( 55,666 ) ( 89,024 ) Deal costs ( 2,986,107 ) - Total other expense ( 3,041,773 ) ( 89,024 ) Loss before taxes ( 1,367,514 ) ( 474,403 ) Benefit for income taxes 297,419 192,184 Net loss $ ( 1,070,095 ) $ ( 282,219 ) Basic and diluted net loss per common share Basic ( 0.20 ) ( 0.05 ) Diluted ( 0.20 ) ( 0.05 ) Weighted average shares outstanding: Basic 5,259,595 5,167,081 Diluted 5,259,595 5,167,081 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Series A Preferred Stock Series B Preferred Stock Common Stock Class A Additional Paid-in Accumulated Total Stockholders’ Shares Amount Shares Amount Shares Amount Capital (Deficit) Equity Balance at January 1, 2022 - $ - - $ - 5,136,177 $ 52 $ 9,951,142 $ ( 594,371 ) $ 9,356,823 Stock compensation issued for outside services - - - - 120,000 1 297,599 - 297,600 Share-based compensation - - - - - - 180,260 - 180,260 Net loss - - - - - - - ( 282,219 ) ( 282,219 ) Balance at December 31, 2022 - $ - - $ - 5,256,177 $ 53 $ 10,429,001 $ ( 876,590 ) $ 9,552,464 Dividend payment - - - - - ( 1,051,256 ) - ( 1,051,256 ) Shares issued for cashless exercise of stock options - - - - 59,404 * * - - Share-based compensation - - - - - - 41,497 - 41,497 Net loss - - - - - - - ( 1,070,095 ) ( 1,070,095 ) Balance at December 31, 2023 - $ - - $ - 5,315,581 $ 53 $ 9,419,242 $ ( 1,946,685 ) $ 7,472,610 * Less than $1 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 1,070,095 ) $ ( 282,219 ) Adjustments to reconcile net loss to net cash provided by operating activities: Deferred income taxes ( 337,837 ) ( 115,107 ) Depreciation and amortization 328,894 386,847 Amortization of intangibles 671,504 732,552 Amortization of right of use assets 126,337 636,428 Bad debt provision 19,901 160,000 Share-based compensation 41,497 180,260 Changes in assets and liabilities: Accounts receivable ( 755,816 ) ( 466,101 ) Unbilled services 172,758 ( 82,947 ) Deferred charges 780,987 ( 1,219,295 ) Prepaid expenses and other current assets ( 180,234 ) ( 316,130 ) Deposits and other assets 16,105 3,252 Accounts payable 1,290,693 1,234,530 Accrued expenses 222,217 689,555 Income tax payable - ( 69,614 ) Accrued interest 750 ( 5,027 ) Deferred revenues ( 617,519 ) 1,207,836 Operating lease obligations ( 126,337 ) ( 636,428 ) Net cash provided by operating activities 583,805 2,038,392 Cash flows from investing activities: Purchase of property and equipment ( 120,927 ) ( 38,742 ) Acquisition of assets ( 278,489 ) ( 150,000 ) Net cash used in investing activities ( 399,416 ) ( 188,742 ) Cash flows from financing activities: Payment of cash dividend ( 1,051,256 ) - Payment of long-term debt ( 680,145 ) ( 316,138 ) Payment of long-term debt – related party ( 103,333 ) ( 108,309 ) Payment of finance lease obligations ( 214,990 ) ( 230,687 ) Net cash used in financing activities ( 2,049,724 ) ( 655,134 ) Net (decrease) increase in cash ( 1,865,335 ) 1,194,516 Cash, beginning of year 8,008,633 6,814,117 Cash, end of year $ 6,143,298 $ 8,008,633 Supplemental Schedule of Cash Flow Information: During the year, cash was paid for the following: Income taxes $ 300,732 $ 94,141 Interest $ 57,020 $ 40,193 The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: For the Year Ended December 31, 2023 On September 29, 2022, the Company entered into an operating lease for equipment with Digital Fortress, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 109,840 . On October 12, 2022, the Company entered into an operating lease for equipment and space with Cologix USA, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 106,471 . On June 2, 2023, the Company entered into an operating lease to extend its lease for its Arizona office with Exeter 17319 DE, LLC. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 108,330 during the year ended December 31, 2023. On January 3, 2024, the Company extended its lease for its main office in East Hanover, NJ for the two years ended April 30, 2026. Monthly base rent will be $ 10,258 for the first year and $ 10,471 for the second year. Accordingly, operating lease right of use assets and operating lease liabilities were recognized for the extension in the amount of $ 236,872 during the year ended December 31, 2023. On November 13, 2023, the Company entered into an asset purchase agreement with JCS Computer Resource Corporation (“JCS”) to acquire certain assets of JCS for cash of $ 278,489 , prepaid time from clients in the amount of $ 21,511 and the issuance of a promissory note in the amount of $ 1,025,000 (the “JCS Note”) for a total of $ 1,325,000 . The JCS Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 4.25 %) per annum. For the Year Ended December 31, 2022: On January 1, 2022, the Company entered into an asset purchase agreement with Dynamic Tech Services, Inc (“DTSI”) to acquire certain assets of DTSI. 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 7 and 11). 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. F-7 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 1 – DESCRIPTION OF BUSINESS SilverSun Technologies, Inc. (“SilverSun”) (together with SWK, SCS, CCDC and SilverSun Technology Holdings, 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-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”). Additionally, we have our own development staff building software solutions for time and billing, and various ERP enhancements. Our value-added services focus on consulting and professional services, specialized programming, training, and technical support. We have a dedicated network services practice that provides managed services, cybersecurity, application hosting, disaster recovery business continuity, cloud migration and other services. Our customers are nationwide, with concentrations in the New York/New Jersey metropolitan area, Arizona, Southern California, North Carolina, Georgia, Washington, and Illinois. The Company is publicly traded on the NASDAQ Capital Market under the symbol “SSNT”. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation 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 (“GAAP”). All significant inter-company transactions and accounts have been eliminated in consolidation. Use of Estimates 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. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist primarily of invoices for maintenance and professional services. Full payment for software ordered by customers is primarily due in advance of ordering from the software supplier. Payments for maintenance and support plan renewals are due before the beginning of the maintenance period. Terms under our professional service agreements are generally 50% due in advance and the balance on completion of the services. The Company maintains an allowance for bad debt estimated by considering a number of factors, including the length of time the amounts are past due, the Company’s previous loss history and the customer’s current ability to pay its obligations. Accounts are written off against the allowance when deemed uncollectable. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense when received. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326-20-30-2, Financial Instruments – Credit Losses , requiring a reporting entity to use a pooled approach to estimate expected credit losses for financial assets with similar risk characteristics. If a financial asset does not share similar risk characteristics with other financial assets held by the reporting entity, the allowance for credit losses should be determined on an individual basis. Similar risk characteristics for trade receivables may include customer credit rating, trade receivable aging category (e.g., 30-90 days past due), industry, geographical location of the customer, product line, and other factors that may influence the likelihood of the customer not being able to pay for the goods or services. The Company utilizes this individual approach for its trade receivables and unbilled services as each customer does not share similar risks. F-8 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accounts Receivable and Allowance for Credit Losses (continued) Trade receivables and unbilled services with customers are financial assets analyzed by the Company under the expected credit loss model. To measure expected credit losses, trade receivables are grouped based on shared risk characteristics (i.e., the relevant industry sector and customer's geographical location) and days past due (i.e., delinquency status), while considering the following, if appropriate: ● Customers in the same geographical location share similar risk characteristics associated with the macroeconomic environment of their region. ● The expected credit loss rate is likely to increase as receivables move to older aging buckets. The Company used the following aging categories to estimate the risk of delinquency status: (i) 0 days past due; (ii) 1-30 days past due; (iii) 31-60 days past due; (iv) 61-90 days past due; and (v) over 90 days past due. Goodwill Goodwill is the excess of acquisition cost of an acquired entity over the fair value of the identifiable net assets acquired. Goodwill is not amortized but tested for impairment annually or whenever indicators of impairment exist. 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, 2023. No impairment losses were identified or recorded for the years ended December 31, 2023 and 2022. Capitalization of proprietary developed software 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. Once technological feasibility has been determined, a portion of the costs incurred in development, including coding, testing and quality assurance, are capitalized until available for general release to clients, and subsequently reported at the lower of unamortized cost or net realizable value. Amortization is calculated on a solution-by-solution basis and is over the estimated economic life of the software. Amortization commences when a solution is available for general release to clients. Business Combinations We account for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets and assumed liabilities at their acquisition date fair values. The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to business combinations are included prospectively beginning with the date of acquisition and transaction costs related to business combinations are recorded within general and administrative expenses. Definite Lived Intangible Assets and Long-lived Assets Purchased intangible assets are recorded at fair value using an independent valuation at the date of acquisition and are amortized over the useful lives of the asset using the straight-line amortization method. The Company assesses potential impairment of its intangible assets and other long-lived assets when there is evidence that recent events or changes in circumstances have made recovery of an asset’s carrying value unlikely. 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 and recorded for the years ended December 31, 2023 and 2022, respectively . F-9 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition The Company has elected the significant financing component practical expedient in accordance with ASC 606. 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; and ● 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. Most of our service revenue is based on time arrangements which require the client to pay based on the number of hours worked at agreed-upon rates. We recognize revenues for these arrangements based on hours incurred and contracted rates utilizing a right-to-invoice practical expedient because we have a right to consideration for services completed to date. For all performance obligations related to contracts with a duration for less than one year, the Company has elected to apply the optional exemption provided in ASC Topic 606 and, therefore, is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period. With respect to professional, maintenance, and ancillary services revenue that are included in deferred revenue, these revenues are earned and recognized over the contractual or stated period, which generally ranges three to 12 months. Deferred revenue also includes deposits for future consulting, which are recognized when earned and billed to customer. Maintenance and subscription revenue is recognized on a gross basis when the Company primarily acts as the principal in these transactions. Maintenance and subscription revenue is recognized on a net basis when the Company primarily acts as an agent in a transaction. Shipping and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in cost of revenues. Components of revenue: For the Year Ended December 31 2023 2022 Professional Consulting $ 18,647,579 $ 13,124,812 Maintenance Revenue 5,203,221 4,993,114 Software Revenue 14,110,773 11,781,362 Ancillary Service Revenue 16,555,368 15,085,988 $ 54,516,941 $ 44,985,276 Unbilled Services The Company recognizes revenue on its professional services as those services are performed. Unbilled services (contract assets) represent the revenue recognized but not yet invoiced. F-10 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Revenues Deferred revenues consist of maintenance on proprietary products (contract liabilities), customer telephone support services (contract liabilities) and deposits for future consulting services which will be earned as services are performed over the contractual or stated period, which generally ranges from three to twelve months. As of December 31, 2023, there was $ 943,011 in deferred maintenance and support services, and $ 2,218,071 in deposits for future consulting services. As of December 31, 2022, there was $ 932,975 in deferred maintenance and support services, and $ 2,824,115 in deposits for future consulting services. The following table represents the roll-forward of the deferred revenue for the year ended December 31, 2023 and 2022: Deferred Maintenance and Support Services December 31, 2022 Deposits for Future Consulting December 31, 2022 Deferred Maintenance and Support Services December 31, 2023 Deposits for Future Consulting December 31, 2023 Balance at beginning of period $ 689,850 $ 1,785,733 $ 932,975 $ 2,824,115 Cash received 1,516,563 4,700,621 1,925,174 5,314,942 Revenue recognized ( 1,273,438 ) ( 3,662,239 ) ( 1,915,138 ) ( 5,920,986 ) Balance at end of period $ 932,975 $ 2,824,115 $ 943,011 $ 2,218,071 Deposits for future consulting decreased as a result of our increase in consulting revenues as a result of our efforts to increase our consulting staff with additional resources, as well as system improvements, which has yielded a positive result in our financial performance. We have also utilized some outside contractors to assist in projects because of our growth. Commissions Sales commissions relating to service revenues are considered incremental and recoverable costs of obtaining a project with our customer. These commissions are calculated based on estimated revenue to be generated over the life of the project. These costs are deferred and expensed as the service revenue is earned. Commission expense is included in selling and marketing expenses in the accompanying consolidated statements of operations. Fair Value of Financial Instruments The Company estimates that the fair value of all financial instruments at December 31, 2023 and December 31, 2022, 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. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The carrying amounts reported in the consolidated balance sheets as of December 31, 2023 and December 31, 2022 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. 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. F-11 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) On October 13, 2023, the Company terminated the Agreement and Plan of Merger with Rhodium dated as of September 29, 2022. The Merger Agreement was terminated by the Company pursuant to Section 7.02(a) of the Merger Agreement which provides that the Merger Agreement may be terminated, and the transactions contemplated thereby abandoned by either the Company or Rhodium at any time before the effective time of the first merger contemplated by the Merger Agreement, by written notice from the terminating party to the other party if the closing under the Merger Agreement has not occurred on or before September 30, 2023. As a result, the Company charged to expense all previously deferred deal related expenses in the amount of $ 2,986,107 . These expenses are recorded as Deal Costs in the accompanying consolidated statement of operations in Other Expense. Leases The Company accounts for its leases in accordance with ASC 842, Leases . The Company leases office space and equipment. The Company concludes on whether an arrangement is a lease at inception. This determination as to whether an arrangement contains a lease is based on an assessment as to whether a contract conveys the right to the Company to control the use of identified property, plant or equipment for period of time in exchange for consideration. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes these lease expenses on a straight-line basis over the lease term. The Company has assessed its contracts and concluded that its leases consist of finance and operating leases. Operating leases are included in operating lease right-of-use (“ROU”) assets, current portion of operating lease liabilities, and operating lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company determines an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate represents a significant judgment that is based on an analysis of the Company’s credit rating, country risk, treasury and corporate bond yields, as well as comparison to the Company’s borrowing rate on its most recent loan. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company finances purchases of hardware and computer equipment through finance lease agreements. Finance lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Concentrations The Company maintains its cash with various institutions, which exceed federally insured limits throughout the year. At December 31, 2023, the Company had cash on deposit of approximately $ 4,904,146 in excess of the federally insured limits of $ 250,000 . No one customer represented more than 10% of the total accounts receivable and unbilled services for the years ended December 31, 2023 and 2022. For the years ended December 31, 2023 and 2022, the top ten customers accounted for 9 % ($ 4,869,634 ) and 7 % ($ 3,147,258 ), respectively, of total revenues. The Company does not rely on any one specific customer for any significant portion of its revenue base . For the years ended December 31, 2023 and 2022, purchases from one supplier through a “channel partner” agreement were approximately 16 % and 15 %, respectively. This channel partner agreement is for a one-year term and automatically renews for an additional one-year term on the anniversary of the agreements effective date. For the year ended December 31, 2023, one supplier represented approximately 23 % of total accounts payable. For the year ended December 31, 2022 one supplier represented approximately 25 % of accounts payable. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable and cash. As of December 31, 2023, the Company believes it has no significant risk related to its concentration of accounts receivable. F-12 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based upon the estimated useful lives of the assets, generally three to seven years . Maintenance and repairs that do not materially add to the value of the equipment nor appreciably prolong its life are charged to expense as incurred. 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. 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: a) tax losses that can be carried forward to be utilized against profits in future years; b) expenses recognized for financial reporting purposes but disallowed in the tax return until the associated cash flow occurs; and c) valuation changes of assets which need to be tax effected for book purposes but are deductible only when the valuation change is realized. 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, 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. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date. The Company accounts for uncertainties in income taxes under ASC 740-10-50 which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10 requires that the Company determine whether the benefits of its tax positions are more-likely-than-not of being sustained upon audit based on the technical merits of the tax position. The Company recognizes the impact of an uncertain income tax position taken on its income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. The Company has federal net operating loss (“NOL”) carryforwards which are subject to limitations under Section 382 of the Internal Revenue Code. The Company files income tax returns in the U.S. federal and state jurisdictions. Tax years 2020 to 2023 remain open to examination for both the U.S. federal and state jurisdictions. Despite the Company’s belief that its tax return positions are consistent with applicable tax laws, one or more positions may be challenged by taxing authorities. Settlement of any challenge can result in no change, a complete disallowance, or some partial adjustment reached through negotiations or litigation. 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 December 31, 2023 and 2022. During the years ended December 31, 2023 and 2022 the Company did not incur any expense related to interest or penalties for income tax matters, and no such amounts were accrued as of December 31, 2023 and 2022. F-13 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Measurement FASB ASC 820, Fair Value Measurements , defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and prescribes disclosures about fair value measurements. The accounting standards define fair value and establish a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use on unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is as follows: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The Company’s current financial assets and liabilities approximate fair value due to their short-term nature and include cash, accounts receivable, accounts payable, and accrued liabilities. 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 Notes 6 and 11. Share-Based Compensation Compensation expense related to share-based transactions, including employee stock options, is measured and recognized in the financial statements based on a determination of the fair value. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. For employee stock options, the Company recognizes expense over the requisite service period on a straight-line basis (generally the vesting period of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense. Recently Adopted Authoritative Pronouncements In September 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 are 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. This standard was adopted on January 1, 2023 and did not have a significant impact on our consolidated financial position and consolidated results of operations. Recent Authoritative Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual period ending December 31, 2025. The Company is currently evaluating the timing and impacts of adoption of this ASU. No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s consolidated financial statements. F-14 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 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, 2023 and 2022 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. Year Ended December 31, 2023 Year Ended December 31, 2022 Basic net loss per share computation: Net loss $ ( 1,070,095 ) $ ( 282,219 ) Weighted-average common shares outstanding 5,259,595 5,167,081 Basic net loss per share $ ( 0.20 ) $ ( 0.05 ) Diluted net loss per share computation: Net loss per above $ ( 1,070,095 ) $ ( 282,219 ) Weighted-average common shares outstanding 5,259,595 5,167,081 Incremental shares for convertible promissory note, warrants and stock options - - Total adjusted weighted-average shares 5,259,595 5,167,081 Diluted net loss per share $ ( 0.20 ) $ ( 0.05 ) The following table summarizes securities that, if exercised, would have an anti-dilutive effect on earnings per share. Year Ended December 31, 2023 Year Ended December 31, 2022 Stock options - 158,420 Warrants - - Total potential dilutive securities not included in loss per share - 158,420 NOTE 4 – ALLOWANCE FOR EXPECTED CREDIT LOSSES Roll-forward of Allowance for Expected Credit Losses The following table represents the roll-forward of the allowance for expected credit losses for the years ended December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Balance at beginning of period $ 490,311 $ 330,311 Current period provision for expected losses 115,000 170,178 Write-offs ( 95,099 ) ( 10,178 ) Balance at end of period $ 510,212 $ 490,311 F-15 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment is summarized as follows: December 31, 2023 December 31, 2022 Leasehold improvements $ 165,701 $ 165,701 Equipment, furniture, and fixtures 3,942,502 3,821,575 4,108,203 3,987,276 Less: accumulated depreciation and amortization ( 3,604,856 ) ( 3,275,962 ) Property and equipment, net $ 503,347 $ 711,314 Depreciation and amortization expense related to these assets for the years ended December 31, 2023 and 2022 was $ 328,894 and $ 386,847 . Property and equipment under finance leases (included in Note 8) are summarized as follows: December 31, 2023 December 31, 2022 Equipment, furniture, and fixtures $ 1,256,092 $ 1,256,092 Less: accumulated amortization ( 924,313 ) ( 716,743 ) Property and equipment, net $ 331,779 $ 539,349 NOTE 6 – INTANGIBLE ASSETS Intangible assets consist of proprietary developed software, intellectual property, customer lists and acquired contracts carried at cost less accumulated amortization and customer lists acquired at fair value less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives. On January 1, 2022, the Company entered into an asset purchase agreement with 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 11). On January 19, 2022, SWK acquired the customer list of 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 . On November 13, 2023, the Company entered into an asset purchase agreement with to acquire certain assets of JCS for cash of $ 278,489 , prepaid time from clients in the amount of $ 21,511 and the issuance of a promissory note in the amount of $ 1,025,000 (the JCS Note”) for a total of $ 1,325,000 . The JCS Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 4.25 %) per annum (see Note 7). The purchase price has been allocated to customer list with an estimated life of seven years . Upon completion of an independent valuation, the allocation of the purchase price to customer lists will be modified with the excess purchase consideration being allocated to goodwill (see Note 11). F-16 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 6 – INTANGIBLE ASSETS (Continued) The components of intangible assets are as follows: December 31, 2023 December 31, 2022 Estimated Useful Lives Proprietary developed software $ 390,082 $ 390,082 5 – 7 Intellectual property, customer list, and acquired contracts 9,068,283 7,743,283 5 – 15 Total intangible assets $ 9,458,365 $ 8,133,365 Less: accumulated amortization ( 4,539,516 ) ( 3,868,012 ) $ 4,918,849 $ 4,265,353 Amortization expense related to the above intangible assets was $ 671,504 and $ 732,552 , respectively, the years ended December 31, 2023 and 2022. There was no impairment of intangible assets for the years ended December 31, 2023 and 2022, respectively. The Company expects future amortization expense to be the following: Amortization 2024 $ 837,129 2025 833,653 2026 822,451 2027 808,802 2028 664,350 thereafter 952,464 Total $ 4,918,849 The following table provides a summary of the changes in goodwill for the years ended December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Goodwill, at beginning of year $ 1,139,952 $ 1,011,952 Goodwill additions - 128,000 Goodwill deductions - - Goodwill, at end of year $ 1,139,952 $ 1,139,952 NOTE 7 – LONG-TERM AND RELATED PARTY DEBT 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. Prairie Tech Note 1 has a term of one (1) year and is subject to downward adjustment based on whether certain revenue milestones are achieved. In July 2021, the Company waived its rights to any downward adjustments on these notes, and agreed to pay the full face amount, plus interest, on those notes on the date of maturity. Prairie Tech Note 2 has a term of two (2) years and is also subject to downward adjustment based on whether certain revenue milestones are achieved. Prairie Tech Note 3 has a term of three (3) years and is not subject to a downward adjustment. 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 . On July 1, 2023, the Company paid Note 3 and accrued interest in the amount of $ 116,485 . At December 31, 2023 and December 31, 2022, the outstanding balances on the PT Notes were $- 0 - and $ 103,333 , respectively. F-17 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 7 – 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 . 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 . At December 31, 2023 and December 31, 2022, the outstanding balances on the CMS Note were $- 0 - and $ 48,249 , 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”). 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 . At December 31, 2023 and December 31, 2022, the outstanding balances on the BSS Note were $ 94,766 and $ 140,748 , respectively. 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. Monthly payments including interest are $ 3,724 . At December 31,2023 and December 31, 2022, the outstanding balances on the CTS Note were $ 14,832 and $ 58,741 , respectively. 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. Monthly payments including interest are $ 12,889 . At December 31, 2023 and December 31, 2022, the outstanding balances on the PSI Note were $ 64,125 and $ 215,863 , respectively. On January 1, 2022, SWK acquired certain assets of DTS 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). 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. As of December 31, 2023 and December 31, 2022, the outstanding balances on the DTSI Note were $ 469,688 and $ 835,000 , respectively (see Note 11). On January 19, 2022, SWK acquired the customer list of 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 . As of December 31, 2023 and December 31, 2022 the outstanding balances on the NEO3 Note were $ 27,604 and $ 52,559 , respectively. F-18 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 7 – LONG-TERM AND RELATED PARTY DEBT (Continued) On November 13, 2023, SWK acquired certain assets of JCS pursuant to an Asset Purchase Agreement for cash of $ 278,489 , prepaid time from clients in the amount of $ 21,511 and the issuance of a promissory note in the amount of $ 1,025,000 (the JCS Note”) for a total of $ 1,325,000 . The JCS Note bears interest at a rate of four and one-quarter percent ( 4.25 %) 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 JCS immediately prior to the Effective Date (the “JCS 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 JCS Customers. In the event that subscription renewal revenue received from JCS Customers during the one-year period immediately following the Effective Date is less than 95% of the subscription renewal revenue received by JCS from JCS 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). 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 November 13, 2024, after the revised principal amount of the Buyer Note is determined and thereafter, payments will be made quarterly in eight equal installments. At December 31, 2023 the outstanding balance on the JCS Note was $ 1,025,000 . At December 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, the outstanding balances of this debt were $- 0 - and $ 103,333 , respectively. Total long-term debt balances at December 31, 2023 and 2022 were $ 1,696,015 and $ 1,454,493 , respectively, of which $ 701,749 and $ 783,479 was classified as current portion at December 31, 2023 and 2022, respectively. At December 31, 2023, future payments of promissory notes are as follows over each of the next four fiscal years: 2024 $ 701,749 2025 600,403 2026 393,863 Total $ 1,696,015 NOTE 8 – FINANCE LEASE OBLIGATIONS The Company has entered into lease commitments for equipment that meet the requirements for capitalization. The equipment has been capitalized and is included in property and equipment in the accompanying consolidated balance sheets. The related obligations are based upon the present value of the future minimum lease payments with the following: December 31, 2023 December 31, 2022 Weighted average remaining lease terms 2.92 3.44 Weighted average interest rates 7.15 % 7.31 % At December 31, 2023, future payments under finance leases are as follows: 2024 $ 176,686 2025 115,080 2026 115,080 2027 47,949 Total minimum lease payments 454,795 Less amounts representing interest ( 53,342 ) Present value of net minimum lease payments 401,453 Less current portion ( 154,336 ) Long-term finance lease obligation $ 247,117 F-19 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 9 – OPERATING LEASE LIABILITIES 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 September 2026. On September 29, 2022, the Company entered into an operating lease for equipment with Digital Fortress, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 109,840 during the year ended December 31, 2023. On October 12, 2022, the Company entered into an operating lease for equipment and space with Cologix USA, Inc. Accordingly, operating lease right of use assets and operating lease liabilities were recognized in the amount of $ 106,471 during the year ended December 31, 2023. On June 2, 2023, the Company entered into an operating lease to extend its lease for its Arizona office with Exeter 17319 DE, LLC. Accordingly, operating lease right of use assets and operating lease liabilities were recognized for the extension in the amount of $ 108,330 during the year ended December 31, 2023. On January 3, 2024, the Company extended its lease for two years ended April 30, 2026. Monthly base rent will be $ 10,258 for the first year and $ 10,471 for the second year. Accordingly, operating lease right of use assets and operating lease liabilities were recognized for the extension in the amount of $ 236,872 during the year ended December 31, 2023. 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. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The asset and liability were valued using an weighted average interest rate of 4.77 %. The Company's weighted average remaining lease term and weighted average discount rate for operating leases as of December 31, 2023 and 2022 are as follows: December 31, 2023 December 31, 2022 Weighted average remaining lease term 2.13 1.19 Weighted average discount rate 4.77 % 4.77 % 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, 2023: 2024 $ 279,227 2025 196,864 2026 72,673 Total undiscounted future minimum lease payments 548,764 Less: Difference between undiscounted lease payments and discounted lease liabilities ( 26,898 ) Total operating lease liabilities $ 521,866 Less current portion ( 262,733 ) Long-term operating lease liabilities $ 259,133 Total rent expense under operating leases for the year ended December 31, 2023 was $ 413,894 as compared to $ 486,654 for the year ended December 31, 2022. Rent expense paid with cash was $ 435,491 for the year ended December 31, 2023, as compared to $ 494,429 for the year ended December 31, 2022. F-20 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 10 – EQUITY Dividends On August 4, 2023, the Board of Directors approved the payment of a $ 0.20 special cash dividend per share of Common Stock to shareholders of record August 18, 2023. The dividend was paid on August 25, 2023 . Common Stock At-The-Market Sales Program 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. Sales of the Company’s common stock through the Sales Agent, if any, will be made by any method that is deemed an “at the market” offering as defined by the SEC. The Company will pay to the Sales Agent a commission rate equal to 3.0 % of the gross proceeds from the sale of any shares of common stock sold through the Sales Agent under the 2021 At Market Agreement. Shares of common stock sold under the 2021 At Market Agreement are made pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-249238), filed with the Securities and Exchange Commission (the “SEC”) on October 2, 2020, as amended, and declared effective on October 23, 2020 (the “2020 Registration Statement”), the prospectus included in the 2020 Registration Statement and the related prospectus supplement dated February 26, 2021. In June 2021, 65,452 shares of Common Stock were issued and sold generating $ 722,116 , excluding legal expenses. In July 2021, an additional 9,548 shares of Common Stock were issued and sold generating $ 76,436 , net of legal expenses. For the years ended December 31, 2023 and 2022, the Company issued no shares under the 2021 At Market Agreement Stock Repurchase Program On October 10, 2019, the Company’s Board of Directors authorized a new stock repurchase program, under which the Company may repurchase up to $ 2 million of its outstanding common stock. Under this new stock repurchase program, the Company may repurchase shares in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company’s management. The repurchase program may be extended, suspended or discontinued at any time. The Company expects to finance the program from existing cash resources. 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 December 31, 2023, no repurchases have been made. 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 . In December 2023, the Company issued 59,404 shares of common stock upon the exercise of stock options. F-21 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 10 – EQUITY (Continued) Stock Options The Company adopted the 2019 Equity and Incentive Plan (the “2019 Plan”) to order provide long-term incentives for employees and non-employees to contribute to the growth of the Company and attain specific performance goals. The fair value of each option awarded is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on historical volatility of Common Stock. The expected life of the options granted represents the period from date of grant to expiration (5 years). The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. There were no stock options granted for the years ended December 31, 2023 and 2022. A summary of the status of the Company’s stock option plans for the fiscal years ended December 31, 2023 and 2022 and changes during the years are presented below (in number of options): Number of Options Average Exercise Price Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding options at January 1, 2022 165,620 $ 6.256 - $ - 0 - Options granted - - Options canceled/forfeited ( 7,200 ) $ 6,530 Outstanding options at December 31, 2022 158,420 $ 6.245 3.49 years $ - 0 - Options granted - - Options exercised (1) 158,420 6.245 Options canceled/forfeited - $ - Outstanding options at December 31, 2023 - $ - - $ - 0 - Vested Options: December 31, 2023: - $ - - $ - 0 - December 31, 2022: 115,025 $ 6.138 3.49 years $ - 0 - (1) Cashless exercise of outstanding stock options. The option holders received 59,404 shares of common stock and surrendered 158,420 shares of common stock underlying the option in payment of the exercise price. The cashless exercise was based on the market price of the average of the closing trading price of the Issuer's common stock on the 5 trading days ending prior to the date of exercise. Total stock compensation recognized for the year ended December 31, 2023 and 2022 was $ 41,497 and $ 180,260 , respectively. As of December 31, 2023 and 2022, the unamortized compensation expense for stock options was $- 0 - and $ 41,497 , respectively. As of December 31, 2023, there were 1,056,670 shares available for issuance under the Plan. Warrants 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. F-22 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 11 – BUSINESS COMBINATIONS On January 1, 2022, the Company entered into an asset purchase agreement with 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. The principal amount of the Note was subject to a downward adjustment in the event the Company lost 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 would 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 was 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 would 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 would 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). There was no downward adjustment necessary as measured on the one-year anniversary of the note, January 1, 2023. The Note was amortized as follows: The first payment of principal and interest due under the Note, which will be an annual payment, was due and paid on January 1, 2023, and thereafter, payments will be made quarterly in twelve equal installments. Upon completion of an independent valuation, the allocation of the purchase price was $ 1,207,000 to customer lists with the excess purchase consideration of $ 128,000 being allocated to goodwill. On November 13, 2023, SWK acquired certain assets of JCS pursuant to an Asset Purchase Agreement for cash of $ 278,489 , prepaid time from clients in the amount of $ 21,511 and the issuance of a promissory note in the amount of $ 1,025,000 (the JCS Note”) for a total of $ 1,325,000 . The Asset Purchase Agreement was recorded as a business combination under ASC 805, Business Combinations, as the assets purchased are capable of being conducted and managed for the purpose of providing a return. The JCS Note bears interest at a rate of four and one-quarter percent (4.25%) 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 JCS immediately prior to the Effective Date (the “JCS 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 JCS Customers. In the event that subscription renewal revenue received from JCS Customers during the one-year period immediately following the Effective Date is less than 95% of the subscription renewal revenue received by JCS from JCS 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). 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 November 13, 2024, after the revised principal amount of the Buyer Note is determined and thereafter, payments will be made quarterly in eight equal installments. At December 31, 2023 the outstanding balance on the JCS Note was $ 1,025,000 . Upon completion of an independent valuation, the allocation of the purchase price to customer lists will be modified with the excess purchase consideration being allocated to goodwill. The Company expects these acquisitions to create synergies by combining operations and expanding geographic market share and product offerings. The following summarizes the purchase price allocation for all prior year and current year acquisitions: 2023 Purchase JCS 2022 Purchase DTS Cash consideration $ 278,489 $ 500,000 Note payable 1,025,000 835,000 Total purchase price $ 1,303,489 $ 1,335,000 Customer list $ 1,325,000 $ 1,207,000 Goodwill - 128,000 Total assets acquired 1,325,000 1,335,000 Deferred revenue ( 21,511 ) - Net assets acquired $ 1,303,489 $ 1,335,000 F-23 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 11 – 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 of JCS Computer Resource Corporation (“JCS”) acquired November 13, 2023 occurred on January 1, 2022, 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, 2022 as if the acquisitions occurred on January 1, 2022. For the year ended December 31 2022, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable. Pro Forma Year Ended December 31, 2023 Year Ended December 31, 2022 Net revenues $ 55,655,173 $ 46,561,694 Cost of revenues 33,137,972 27,538,591 Operating expenses 20,112,520 18,509,387 (Loss) income before taxes ( 840,719 ) 191,977 Net (loss) income $ ( 685,535 ) $ 204,262 Basic and diluted (loss) income per common share $ ( 0.13 ) $ 0.04 For the year ended December 31, 2022, there is $ 189,276 of estimated amortization expense and $ 43,440 of estimated interest expense included in the pro-forma results for JCS. For the year ended December 31, 2023, there is $ 165,617 of estimated amortization expense and $ 38,010 of estimated interest expense included in the pro-forma results for JCS. NOTE 12 – INCOME TAXES The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income. The Company has federal net operating loss (“NOL”) carryforwards of approximately $ 5,800,000 as of December 31, 2023, which is subject to limitations under Section 382 of the Internal Revenue Code. These carryforward losses are available to offset future taxable income and begin to expire in the year 2026 to 2034. The foregoing amounts are management’s estimates, and the actual results could differ from those estimates. Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products. The inability to obtain new profitable contracts could reduce estimates of future profitability, which could affect the Company’s ability to realize the deferred tax assets. Significant components of the Company’s deferred tax assets and liabilities are summarized as follows: December 31, December 31, 2023 2022 Deferred tax assets: Net operating loss carry forwards $ 1,417,000 $ 1,238,000 Long lived assets 210,000 206,000 Share based payments 5,000 5,000 Accrued expenses 84,000 102,000 Allowance for doubtful accounts 135,000 122,000 Other 61,000 35,000 Deferred tax asset 1,912,000 1,708,000 Deferred tax liabilities: Long lived assets ( 128,000 ) ( 185,000 ) Deferred tax liabilities ( 128,000 ) ( 185,000 ) Net deferred tax asset 1,784,000 1,523,000 Less: Valuation allowance ( 340,000 ) ( 417,000 ) Net deferred tax asset $ 1,444,000 $ 1,106,000 F-24 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 12 – INCOME TAXES (Continued) For the year ended December 31, 2023, the Company recorded a tax benefit in the amount of $ 297,419 based on the estimated tax rate. 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. A reconciliation of the statutory income tax rate to the effective rate is as follows for the period December 31, 2023 and 2022: December 31, December 31, 2023 2022 Federal income tax rate 21 % 21 % State income tax, net of federal benefit 5 % ( 3 %) Permanent items ( 1 %) ( 8 %) Return to provision for prior year ( 8 %) 30 % Change in valuation allowance 5 % 1 % Effective income tax rate 22 % 41 % Income tax provision from continuing operations: Year Ended December 31, December 31, 2023 2022 Current: Federal $ 25,505 $ ( 105,826 ) State and local 14,913 22,410 Total current tax (benefit) provision 40,418 ( 83,416 ) Deferred: Federal ( 240,485 ) ( 78,677 ) State and local ( 97,352 ) ( 30,091 ) Total deferred tax (benefit) provision ( 337,837 ) ( 108,768 ) Total (benefit) provision $ ( 297,419 ) $ ( 192,184 ) NOTE 13 – RELATED PARTY TRANSACTIONS At December 31, 2023 and December 31, 2022, certain long-term debt is considered a related party liability as holders, including Prairie Tech, are current employees of the Company. As of December 31, 2023 and December 31, 2022, the outstanding balances of this debt were $- 0 - and $ 103,333 respectively. F-25 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 14 – COMMITMENTS AND CONTINGENCIES Contingencies Employment agreements The Company’s Chief Executive Officer and President has had an Employment Agreement with the Company since September 15, 2003. On February 4, 2016 (the “Effective Date”), the Company entered into an amended and restated employment agreement (the “Meller Employment Agreement”) with Mark Meller, pursuant to which Mr. Meller will continue to serve as the Company’s President and Chief Executive Officer. The Meller Employment Agreement was entered into by the Company and Mr. Meller primarily to extend the term of Mr. Meller’s employment. The term of the Meller Employment Agreement is for an additional 7 years through September of 2023 (the “Term”) and shall automatically renew for additional periods of one year unless otherwise terminated in accordance with the employment agreement . As of the renewal date, the Company agreed to pay Mr. Meller and annual salary of $ 565,000 with a ten percent ( 10 %) increase every year. The Meller Employment Agreement provides for a severance payment to Mr. Meller of three hundred percent (300%), less $100,000 of his gross income for services rendered to the Company in each of the five prior calendar years should his employment be terminated following a change in control (as defined in the Meller Employment Agreement) . 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. Concurrently with the execution of the Investment Agreement, SilverSun and Mark Meller entered into a letter agreement pursuant to which the Meller SilverSun Employment Agreement will be terminated and liquidated as of immediately prior to Closing, and Silver Sun will pay to Mr. Meller a lump sum termination payment equal to the lessor of (i) $3.0 million and (ii) 300% of the average annual amount paid by the Company or any parent or subsidiary thereof to Mr. Meller and included in his gross income for services rendered in each of the five calendar years immediately prior to closing, less $100, which is the amount that he is entitled to receive under the Meller SilverSun Agreement for certain terminations of his employment within three years following a change of control. NOTE 15 – RECENT EVENTS Rhodium On September 29, 2022, SilverSun entered into a definitive agreement and plan of merger (the “ Rhodium Merger Agreement ”) by and among SilverSun, Rhodium Enterprises Acquisition Corp, Rhodium Enterprises Acquisition LLC and Rhodium Enterprises, Inc., an industrial-scale digital asset technology company utilizing proprietary technologies to mine bitcoin. On October 13, 2023, SilverSun terminated the Rhodium Merger Agreement Jacobs Private Equity II, LLC ( “ JPE ” ) On December 3, 2023, SilverSun entered into an Investment Agreement (as it may be amended or supplemented, the “ Investment Agreement ”), with Jacobs Private Equity II, LLC, a Delaware limited liability company (“ JPE ”), and the other investors party thereto (the “ Other Investors ,” and together with JPE, the “ Investors ”), providing for an aggregate investment by the Investors of $ 1,000,000,000 in cash in SilverSun, including $ 900,000,000 from JPE (the “ Equity Investment ”). The Investment Agreement has been unanimously approved by the SilverSun board of directors. Following the closing (the “ Closing ”) of the Equity Investment (together with all of the other transactions contemplated by the Investment Agreement), JPE will become the controlling stockholder of SilverSun, and Brad Jacobs, the Managing Member of JPE, will become Chairman of the SilverSun board of directors and Chief Executive Officer of SilverSun. Following the Closing, SilverSun intends to pursue a business strategy of creating a tech-forward leader in the building products distribution industry. After spinning off the existing SilverSun business as described below, the remaining company, which will be renamed QXO, Inc., will be a standalone platform for acquisitions and operations in the building products distribution industry. F-26 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 15 – RECENT EVENTS (Continued) Jacobs Private Equity II, LLC ( “ JPE ” ) (Continued) At least two days prior to the Closing, SilverSun will amend and restate its certificate of incorporation (the “ Charter Amendment ” or the “ Fifth Amended and Restated Certificate of Incorporation ” ) to, among other things, effect an 8:1 reverse stock split (the “ Reverse Stock Split ”) with respect to SilverSun’s common stock, par value $ 0.00001 per share (“ SilverSun common stock ”). Upon the Closing and giving effect to the Reverse Stock Split, SilverSun will issue to the Investors, in the aggregate: (a) 1,000,000 shares of Convertible Perpetual Preferred Stock of SilverSun (the “ Convertible Preferred Stock ”) that, in the aggregate, will be convertible into approximately 219 million shares of SilverSun common stock at an initial conversion price of $ 4.566 per share (equivalent to $ 0.571 per share pre-Reverse Stock Split), subject to customary anti-dilution adjustments; and (b) warrants to purchase an additional approximately 219 million shares of SilverSun common stock (the “ Warrants ,” and together with the Convertible Preferred Stock, the “ Securities ”) at initial exercise prices of $ 4.566 per share (equivalent to $ 0.571 per share pre-Reverse Stock Split) with respect to 50% of the Warrants, $ 6.849 per share (equivalent to $ 0.856 per share pre-Reverse Stock Split) with respect to 25% of the Warrants, and $ 13.698 per share (equivalent to $ 1.712 per share pre-Reverse Stock Split) with respect to the remaining 25% of the Warrants, in each case subject to customary anti-dilution adjustments. Following the Closing, the Investors will own approximately 99.85 % of SilverSun common stock on an as-converted, as-exercised basis. The Convertible Preferred Stock will pay quarterly cash dividends equal to the greater of (a) the as-converted dividends on the underlying Company common stock for the relevant quarter and (b) 9% of the then-applicable liquidation preference per annum. Accrued and unpaid dividends for any quarter will accrete to liquidation preference for all purposes. The Convertible Preferred Stock will not be redeemable and will vote together with the Company’s common stock on an as-converted basis on all matters, except as otherwise required by law, and separately as a class with respect to certain matters implicating the rights of holders of shares of Convertible Preferred Stock. The terms of the Convertible Preferred Stock are more fully set forth in Exhibit A to the Investment Agreement filed herewith. Each Warrant will initially be exercisable at any time and from time to time from the closing date until the tenth anniversary of the Closing date, at the option of the holder thereof, into one share of Company common stock at the exercise prices described above, subject to customary anti-dilution adjustments. The terms of the Warrants are more fully set forth in Exhibit B to the Investment Agreement filed herewith. Under the terms of the Investment Agreement, SilverSun will, six days after the Closing (the “ Distribution Date ”), separate the existing SilverSun business (the “ Separation ”) into SilverSun Technologies Holdings, Inc., a Nevada corporation and currently a wholly owned subsidiary of the Company (“ SilverSun Holdings ” or “ SpinCo ”), and distribute all of the shares of SilverSun Holdings (the “ Distribution ”) to the stockholders of SilverSun as of the close of business on a record date that is expected to be one day prior to the date of Closing (the “ Record Date ”) (collectively, the “ Spin-Off ”) in accordance with a separation and distribution agreement to be executed between SilverSun and SilverSun Holdings on or prior to the Distribution Date (the “ Separation Agreement ”). Upon completion of the Distribution, each SilverSun stockholder as of the Record Date will receive eight shares of common stock, par value $ 0.00001 per share, of SilverSun Holdings (“ SilverSun Holdings common stock ”), for every share of SilverSun common stock held as of the close of business on the Record Date. SilverSun Holdings common stock will be issued in book-entry form only, which means that no physical share certificates will be issued. No fractional shares of SilverSun Holdings common stock will be issued. Also pursuant to the Investment Agreement and the Separation Agreement, SilverSun will declare a $ 2.5 million aggregate cash dividend to its stockholders of record as of the Record Date (the “ Dividend ”). The Dividend will be paid on the Distribution Date from proceeds received by SilverSun from the Equity Investment. The Charter Amendment and the transactions contemplated by the Investment Agreement (including the issuance and sale to the Investors of the Securities), among other matters, were submitted for approval at the Special Meeting of the stockholders of SilverSun held at 9:00 A.M. EST on March 14, 2024 (the “ Special Meeting ”) as discussed in the definitive proxy statement of SilverSun dated February 13, 2024 and were approved at the Special Meeting. As a result of the approval of the proposals set forth in such definitive proxy statement, eligible shareholders do not need to take any action to receive their shares of SilverSun Holdings common stock in connection with the Distribution. It is expected that their shares of SilverSun Holdings common stock will trade on the OTCQX tier of OTC Markets and that their shares of SilverSun common stock will continue to trade on The Nasdaq Capital Market. Shortly after the Closing, SilverSun is expected to change its name to QXO, Inc. Once renamed, SilverSun is expected to change the ticker symbol of its common stock to “QXO.” Until such time, SilverSun will continue to trade on The Nasdaq Capital Market under the symbol “SSNT.” F-27 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 15 – RECENT EVENTS (Continued) Jacobs Private Equity II, LLC ( “ JPE ” ) (Continued) Following the Distribution, SilverSun Holdings will operate through its direct subsidiaries SWK, SCS and CCDC and conduct the business conducted by SilverSun prior to the Distribution and the Closing under the Investment Agreement. Following the Spin-Off, the Company’s current executive officers and directors, including Mark Meller, SilverSun’s chief executive officer, are expected to continue in their current roles at SilverSun Holdings and its subsidiaries. SilverSun Holdings will apply for the public quotation of its shares on the OTCQX tier of OTC Markets, which shares will be registered pursuant to a Form 10 registration statement that has been filed with the U.S. Securities and Exchange Commission (the “ SEC ”). One day prior to the date of the Distribution, SilverSun and SilverSun Holdings will enter into an Employee Matters Agreement (the “ Employee Matters Agreement ”). The Employee Matters Agreement sets forth the terms and conditions of certain employment, compensation and benefit matters related to the Distribution beyond those covered by the Separation Agreement. One day prior to the date of the Distribution, SilverSun and SilverSun Holdings will also enter into a Tax Matters Agreement (the “ Tax Matters Agreement ”). The Tax Matters Agreement will govern the respective rights, responsibilities and obligations of SilverSun and SilverSun Holdings after the Distribution with respect to tax liabilities and benefits, tax attributes, certain indemnification rights with respect to tax matters, the preparation and filing of tax returns, the control of audits and other tax proceedings, the intended federal income tax characterization of the Separation and the Distribution and the agreed-upon reporting thereof and certain other tax matters. The Distribution will have tax consequences to SilverSun and the SilverSun stockholders that receive shares of SilverSun Holdings in the Distribution. The Investment Agreement and the transactions contemplated by the Investment Agreement have been approved by SilverSun’s board of directors. The approval of the Equity Investment, the Fifth Amended and Restated Certificate of Incorporation (including the 8:1 reverse stock split contemplated therein) and any equity incentive plan proposed by JPE were approved by the SilverSun stockholders at the Special Meeting. The transactions are also subject to the receipt of necessary antitrust approvals and the satisfaction of other customary closing conditions. Under the Investment Agreement, the Company will be subject to restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to and enter into discussions or negotiations with third parties regarding alternative acquisition proposals, subject to the exceptions set forth in the Investment Agreement. The Investment Agreement contains termination rights for both JPE and the Company, including, among others, for the Company if its board changes its recommendation to its stockholders of the Equity Investment in connection with a Superior Proposal (as defined in the Investment Agreement) to acquire the Company, and for JPE in the event of the Board changing its recommendation to its stockholders of the Equity Investment. Upon termination of the Investment Agreement in connection with a Superior Proposal and certain other circumstances described in the Investment Agreement, the Company may be obligated to pay JPE a termination fee of $ 600,000 . Under the Investment Agreement, JPE will be permitted to delay the Closing of the Equity Investment, on one or more occasions, to a date that does not exceed 12 months following the December 3, 2023 signing (subject to the continued satisfaction of closing conditions at such time). If JPE delays the Closing by more than 7 months following the signing, JPE will pay the Company the following fees on the first day of each additional month, starting with the first day of the eighth month: (a) month eight (8): $40,000, (b) month nine (9): $40,000, (c) month ten (10): $50,000, (d) month eleven (11): $50,000; and (e) month twelve (12): $50,000. Concurrently with the Closing of the Equity Investment, the Company and the Investors will enter into a Registration Rights Agreement with respect to the shares of Convertible Preferred Stock and Warrants and the shares of Company common stock issuable upon conversion or exercise thereof, which agreement will contain, among other customary provisions, the terms set forth on Exhibit C to the Investment Agreement. filed herewith In addition, concurrently with the Closing of the Equity Investment, the Company and the Investors will enter into a stockholders agreement in the form attached as Exhibit G to the Investment Agreement filed herewith. The Company and the Investors have made customary representations and warranties and covenants in the Investment Agreement. F-28 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 15 – RECENT EVENTS (Continued) Jacobs Private Equity II, LLC ( “ JPE ” ) (Continued) Beginning on the Record Date and continuing up to and including the Distribution Date, we expect that there will be two markets in SilverSun common stock: a “regular-way” market and an “ex-distribution” market. Shares of SilverSun common stock that trade on the “regular-way” market will trade with an entitlement to receive the Dividend and shares of SilverSun Holdings’ common stock in connection with the Distribution. Shares of SilverSun common stock that trade on the “ex-distribution” market will trade without an entitlement to receive the Dividend and shares of SilverSun Holdings’ common stock in the Distribution. Therefore, SilverSun shareholders that sell shares of SilverSun common stock on the “regular-way” market after the Record Date and up to and including through the Distribution Date, will be selling their right to receive the Dividend and shares of SilverSun Holdings’ common stock in connection with the Distribution. If a shareholder owns shares of SilverSun common stock as of the Record Date and sells those shares on the “ex-distribution” market, up to and including through the Distribution Date, the shareholder will still receive the Dividend and the shares of SilverSun Holdings’ common stock that they would be entitled to receive in respect of their ownership, as of the Record Date, of the shares of SilverSun common stock that they sold. The consummation of the Distribution is subject to the satisfaction or waiver by SilverSun in its sole and absolute discretion of the following conditions: ● the SEC will have declared effective SilverSun Holdings’ registration statement on Form 10 under the Securities Exchange Act of 1934, as amended, no stop order suspending the effectiveness of such registration statement on Form 10 will be in effect; and no proceedings for such purpose will be pending or threatened by the SEC; ● the information statement exhibit to the Form 10 will have been mailed or otherwise made available to the holders of SilverSun common stock as of the Record Date; ● the transfer of the SilverSun Holdings assets and the assumption of the SilverSun Holdings liabilities contemplated to be transferred from SilverSun (or the applicable subsidiary of SilverSun) to SilverSun Holdings (or the applicable subsidiary of SilverSun Holdings) on or prior to the Distribution will have occurred, and the transfer of SilverSun retained assets and assumption of the SilverSun retained liabilities contemplated to be transferred from SilverSun Holdings (or the applicable subsidiary of SilverSun Holdings) to SilverSun (or the applicable subsidiary of SilverSun) on or prior to the Distribution Date will have occurred, in each pursuant to the plan of reorganization included in the Separation Agreement and in accordance with and subject to the terms of the Separation Agreement; ● each of the other ancillary agreements contemplated by the Separation Agreement will have been duly executed and delivered by the applicable parties thereto; ● no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Separation, the Distribution or any of the transactions related thereto shall be pending or in effect; ● at least two days prior to the Closing, SilverSun shall have file with the Secretary of State of the State of Delaware, the Fifth Amended and Restated Certificate of Incorporation and had the Fifth Amended and Restated Certificate of Incorporation become effective in accordance with the laws of the State of Delaware as of 11:59 p.m., New York Time, on the date that is two (2) days prior to the Closing; ● SilverSun’s common stock, including the shares underlying the Convertible Preferred Stock and the Warrants, will have been approved for continued listing on Nasdaq and SilverSun Holdings’ common stock to be distributed to the SilverSun stockholders as of the Record Date in connection with the Distribution will have been approved for quotation on the OTCQX, subject to official notice of distribution; and ● the Equity Investment will have been consummated. F-29 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 15 – RECENT EVENTS (Continued) Jacobs Private Equity II, LLC ( “ JPE ” ) (Continued) In the Separation Agreement, SilverSun Holdings will agree to indemnify, defend and hold harmless SilverSun, each of SilverSun’s affiliates after giving effect to the Distribution and each of their respective representatives and all persons who at any time prior to the Effective Time are or have been stockholders, directors, officers, agents or employees of SilverSun Holdings or a subsidiary of SilverSun Holdings (after the Distribution) and who are not, as of immediately following the Effective Time, directors, officers or employees of SilverSun Holdings or its subsidiaries from and against all losses to the extent arising out of, relating to or resulting from, directly or indirectly: ● the SpinCo Assets, the SpinCo Liabilities or the SpinCo Business; ● any breach by SilverSun Holdings or a subsidiary (after the Distribution) of the Separation Agreement; ● any failure of SilverSun Holdings, any subsidiary of SilverSun Holdings or any other person to pay, perform or otherwise promptly discharge any SpinCo Liabilities in accordance with their terms, whether prior to, on or after the Effective Time; ● any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any subsidiary of SilverSun Holdings by SilverSun that survives following the Distribution; or ● all information contained in the Proxy Statement (as defined in the Investment Agreement), registration statement on Form 10 or the information statement exhibit to the Form 10 or the documents incorporated by reference therein (other than any information provided by JPE and as expressly set forth in the Separation Agreement), any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading. SilverSun will agree to indemnify, defend and hold harmless SilverSun Holdings, each of SilverSun Holdings’ subsidiaries, each of the respective representatives of SilverSun Holdings and its subsidiaries from and against all losses to the extent arising out of, relating to or resulting from, directly or indirectly: ● the SilverSun Retained Liabilities; ● any breach by SilverSun of the Separation Agreement; ● any failure of SilverSun or any other person to pay, perform or otherwise promptly discharge any SilverSun Retained Liabilities in accordance with their terms, whether prior to, on or after the Effective Time; or ● solely with respect to information regarding the Investors provided by or on behalf of JPE in writing to SilverSun or SilverSun Holdings expressly for inclusion in the registration statement on Form 10 or the information statement exhibit to the Form 10, any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Indemnification with respect to taxes, and the procedures related thereto, will be governed by the Tax Matters Agreement. F-30 Table of Contents SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 AND 2022 NOTE 15 – RECENT EVENTS (Continued) Jacobs Private Equity II, LLC ( “ JPE ” ) (Continued) Expenses The Separation Agreement will provide that all costs and expenses incurred prior to the Closing Date by any of SilverSun or its affiliates (other than those costs and expenses incurred by JPE) or SilverSun Holdings or any of its subsidiaries (whether or not paid on or prior to the Closing Date) relating to or in connection with the preparation, execution, delivery, printing and implementation of the Separation Agreement and any ancillary agreement, the registration statement on Form 10, the Contribution, the plan of reorganization, the Separation, the Distribution and the consummation of the transactions contemplated thereby, will be charged to and paid by SilverSun Holdings, and shall be a SpinCo Liability. All costs and expenses incurred on or after the Closing Date by SilverSun or any of its subsidiaries (other than any costs or expenses relating to SilverSun Holdings, any of its subsidiaries, or any of its or their respective directors, officers, employees, advisors or other representatives, the SpinCo Business, the SpinCo Liabilities, the SpinCo Assets, the Separation, the Distribution, the Separation Agreement, the other ancillary agreements or any of the other transactions contemplated thereby or any actions taken by or at the request or direction of or on behalf of SilverSun Holdings, its subsidiaries or its and their respective directors, officers or employees) will be borne by SilverSun, and shall be a liability of SilverSun. The termination payment in the maximum aggregate amount equal to $ 3,000,000 owed to Mark Meller as a result of the Closing under the Meller SilverSun Employment Agreement (as modified by the Meller Letter Agreement (as defined in the Investment Agreement)), will be a liability of SilverSun. Any and all other liabilities under the Meller SilverSun Employment Agreement (as modified by the Meller Letter Agreement) will be a SpinCo Liability. Except as otherwise set forth in the Separation Agreement or any ancillary agreement, each party will bear its own costs and expenses incurred after the Distribution Date. Any amount or expense to be paid or reimbursed by any party to any other party shall be so paid or reimbursed promptly after the existence and amount of such obligation is determined and written demand therefor is made. Subject to certain exceptions, under the Tax Matters Agreement: ● SilverSun Holdings generally will be responsible for (i) taxes of SilverSun, SilverSun Holdings and their respective subsidiaries for tax periods (or portions thereof) ending on or before the Distribution Date, (ii) taxes imposed on SilverSun, SilverSun Holdings, and their respective subsidiaries as a result of, in connection with or relating to the Distribution and certain related transactions, other than the first $ 1.5 million of such taxes, which will be borne by SilverSun and (iii) taxes of SilverSun Holdings and its subsidiaries for tax periods (or portions thereof) beginning after the Distribution Date; SilverSun generally will be responsible for (i) the first $1.5 million of taxes imposed on SilverSun, SilverSun Holdings and their respective subsidiaries as a result of, in connection with or relating to the Distribution and certain related transactions, and (ii) taxes of SilverSun and its subsidiaries for tax periods (or portion thereof) beginning after the Distribution Date. SilverSun Holdings will apply for the public quotation of its shares on the OTCQX tier of OTC Markets, which shares will be registered pursuant to a Form 10 registration statement that has been filed with the SEC on January 19, 2024. F-31