What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-14 · 324 added, 379 removed, 508 unchanged (58% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance of $ 435,212 and $ 490,311 as of

September 30, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowance of $ 510,212 as of

March 31, 2024 and December 31, 2023, respectively

Unbilled services

13 unchanged sentences

Long-term debt – current portion

Long-term debt – related party – current portion

Finance lease obligations – current portion

15 unchanged sentences

authorized 75,000,000 shares,

5,256,177 and 5,256,177 shares issued and outstanding as of September 30, 2023

5,315,581 and 5,315,581 shares issued and outstanding as of March 31, 2024

and December 31, 2023, respectively

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

Software product, net

Service and other, net

Total revenues, net

Cost of revenues:

Service and other

Total cost of revenues

5 unchanged sentences

Total selling, general and administrative expenses

Income (loss) from operations

Income from operations

Other expense:

1 unchanged sentence

Total other expense

Loss before taxes

Benefit for income taxes

Net loss per common share:

Weighted average shares:

Income before taxes

Provision for income taxes

Net income per common share – basic and fully diluted

Weighted average shares outstanding:

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Stockholders’

Balance at July 1, 2023

Cash dividend

Balance at September 30, 2023

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Stock

Stockholders’

Balance at July 1, 2022

Share-based compensation

Stock compensation issued for services

Balance at September 30, 2022

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Preferred Stock

2 unchanged sentences

Balance at January 1, 2024

Cash dividend

Share-based compensation

Balance at September 30, 2023

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022

Balance at March 31, 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2023

Preferred Stock

3 unchanged sentences

Share-based compensation

Stock compensation issued for services

Balance at September 30, 2022

Balance at March 31, 2023

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

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

Deferred income taxes

2 unchanged sentences

Amortization of right of use assets

Bad debt expense

Provision for bad debts

Share-based compensation

4 unchanged sentences

Prepaid expenses and other current assets

Deposits and other assets

Accounts payable

Accrued expenses

Income tax payable

Accrued interest

1 unchanged sentence

Operating lease obligations

Net cash provided by operating activities

Cash flows from investing activities:

Net cash provided by (used in) operating activities

Cash flows used in investing activities:

Purchase of property and equipment

Acquisition of assets

Net cash used in investing activities

Cash flows from financing activities:

Payment of cash dividend

Cash flows used in financing activities:

Payment of long-term debt

1 unchanged sentence

Net cash used in financing activities

Net (decrease) increase in cash

Net increase (decrease) in cash

Cash, beginning of period

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the nine months ended September 30, 2023:

On September 29, 2022, the Company entered into an operating lease for equipment with Digital Fortress, Inc.

For the three months ended March 31, 2024:

For the three months ended March 31, 2023:

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 $ 115,313 .

On October 12, 2022, the Company entered into an operating lease for equipment and space with Cologix USA, Inc.

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 $ 114,480 .

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 period ended September 30, 2023.

For the nine months ended September 30, 2022:

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

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 Note 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.

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

These shares have not been issued and, as such, only the value of the shares have been recorded to additional paid-in capital.

The shares will be recorded when the shares have actually been issued.

See accompanying notes to the unaudited condensed consolidated financial statements.

15 unchanged sentences

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

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced.

Since then, COVID-19 coronavirus has spread globally.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S.

Government imposed travel restrictions on travel between the United States, Europe, and certain other countries.

The impact of this pandemic has been, and will likely continue to be, extensive in many aspects of society, which has resulted, and will likely continue to result, in significant disruptions to the global economy as well as businesses and capital markets around the world.

Currently, the Company’s operations have not been materially affected by the ongoing outbreak of the coronavirus disease 2019 (COVID-19).

The ultimate disruption which may be caused by the outbreak is uncertain;

however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows.

Possible areas that may be affected include, but are not limited to, disruption to the Company’s customers and revenue, labor workforce, inability of customers to pay outstanding accounts receivable due and owing to the Company as they limit or shut down their businesses, customers seeking relief or extended payment plans relating to accounts receivable due and owing to the Company, unavailability of products and supplies used in operations, and the decline in value of assets held by the Company, including property and equipment.

However, we currently do not expect a significant impact on our results of operations in the future due to COVID-19.

We currently do not expect a significant impact on our results of operations in the future due to Russia’s invasion of Ukraine, as we have minimal business in Russia and Ukraine, both directly and indirectly.

However, following the invasion, the U.S.

and other countries imposed significant sanctions against the Russian government and many Russian companies and individuals.

Although the Company does not have significant operations in Russia, the sanctions could impact the Company’s business in other countries and could have a negative impact on the Company’s future revenue and that of its customers, either of which could adversely affect the Company’s business and financial results.

We currently also do not expect a significant impact on our results of operations in the future due to Israel-Hamas war, as we have minimal business in that region of the world, both directly and indirectly.

Although the Company does not have significant operations in this region, this war could impact the Company’s business in other countries and could have a negative impact on the Company’s future revenue and that of its customers, either of which could adversely affect the Company’s business and financial results.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2023, the results of operations for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 2024, the results of operations for the three months ended March 31, 2024 and 2023 and cash flows for the three months ended March 31, 2024 and 2023.

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

1 unchanged sentence

The December 31, 2023 consolidated balance sheet included herein was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K.

Accordingly, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.

The accompanying unaudited condensed consolidated financial statements include the accounts of SilverSun and its wholly owned subsidiaries.

1 unchanged sentence

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

6 unchanged sentences

The Company has not experienced any losses in such accounts.

Accounts Receivable and Allowance for Doubtful Accounts

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consist primarily of invoices for maintenance and professional services.

9 unchanged sentences

The Company utilizes this individual approach for its trade receivables and unbilled services as each customer does not share similar risks.

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

1 unchanged sentence

These indicators may include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors.

No impairment losses were identified or recorded for the three or nine months ended September 30, 2023 and 2022.

The Company completed its impairment analysis as of March 31, 2024.

No impairment losses were identified or recorded for the three months ended March 31, 2024 and 2023.

Capitalization of Proprietary Developed Software

17 unchanged sentences

Factors the Company considers important, which may cause impairment include, among others, significant changes in the manner of use of the acquired asset, negative industry or economic trends, and significant underperformance relative to historical or projected operating results.

No impairment losses were identified or recorded for the three and nine months ended September 30, 2023 and 2022.

No impairment losses were identified or recorded for the three months ended March 31, 2024 and 2023, respectively.

Revenue Recognition

8 unchanged sentences

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.

Service revenue is recognized when 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.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

Components of revenue:

For the Three Months Ending

September 30,

Software revenue

2 unchanged sentences

Ancillary service revenue

For the Nine Months Ending

September 30,

Software revenue

Professional consulting

Maintenance revenue

Ancillary service revenue

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

Unbilled Services

3 unchanged sentences

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

As of September 30, 2023, there was $ 354,558 in deferred maintenance revenues, $ 506,787 in deferred support service revenues and $ 2,490,893 in deposits for future consulting services.

As of December 31, 2022, there was $ 460,709 in deferred maintenance, $ 472,266 in deferred support services, and $ 2,824,115 in deposits for future consulting services.

As of March 31, 2024, there was $ 787,825 in deferred maintenance and support services and $ 2,848,545 in deposits for future consulting services.

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.

The following table represents the roll-forward of the deferred revenue for the three months ended March 31, 2024 and the year ended December 31, 2023:

Deferred Maintenance

and Support Services

March 31, 2024

Future Consulting

March 31, 2024

Deferred Maintenance

and Support Services

December 31, 2023

Future Consulting

December 31, 2023

Balance at beginning of period

Cash received

Revenue recognized

Balance at end of period

Deposits for future consulting increased as a result of our increase in customer deposits as a result of increase in business.

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

2 unchanged sentences

Commission expense is included in selling and marketing expenses in the accompanying unaudited condensed consolidated statements of operations.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at September 30, 2023 and December 31, 2022, as defined in ASC 852 “ Financial Instruments ”, does not differ materially, except for the items discussed below, from the aggregate carrying values of its financial instruments recorded in the accompanying unaudited condensed consolidated balance sheets.

The Company estimates that the fair value of all financial instruments at March 31, 2024 and December 31, 2023, as defined in ASC 852 “ Financial Instruments ”, does not differ materially, except for the items discussed below, from the aggregate carrying values of its financial instruments recorded in the accompanying unaudited condensed consolidated balance sheets.

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

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

The carrying amounts reported in the unaudited condensed consolidated balance sheets as of September 30, 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.

The carrying amounts reported in the unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 for cash, accounts receivable, and accounts payable approximate the fair value because of the immediate or short-term maturity of these financial instruments.

For 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.

2 unchanged sentences

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 14).

On October 13, 2023, SilverSun Technologies, Inc.

(the “Company”) terminated the Agreement and Plan of Merger 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 condensed statement of operations in Other Expense.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred charges represent expenses related to the transactions contemplated by the A&R Investment Agreement (see Note 13), and these costs will be deferred until, and charged at, such time that the expenses are consumed and charged to expense, which, if the transactions contemplated by the A&R Investment Agreement are consummated, would be at the time such transactions are consummated.

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

16 unchanged sentences

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentrations

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

At September 30, 2023 and December 31, 2022, the Company had cash on deposit of $ 5,709,344 and $ 7,050,862 , respectively, in excess of the federally insured limits of $ 250,000 .

As of September 30, 2023, no one customer represented more than 10% of the total accounts receivable and unbilled services.

At March 31, 2024 and December 31, 2023, the Company had cash on deposit of $ 5,303,136 and $ 4,904,148 , respectively, in excess of the federally insured limits of $ 250,000 .

As of March 31, 2024, no one customer represented more than 10% of the total accounts receivable and unbilled services.

As of December 31, 2023, no one customer represented more than 10% of the total accounts receivable and unbilled services.

For the nine months ended September 30, 2023 and 2022, the Company’s top ten customers accounted for 9 % ($ 3,506,819 ) and 8 % ($ 2,449,875 ), respectively, of total revenues.

For the three months ended March 31, 2024 and 2023, the Company’s top ten customers accounted for 12 % ($ 1,774,413 ) and 10 % ($ 1,329,501 ), respectively, of total revenues.

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

For the nine months ended September 30, 2023 and 2022 purchases from one supplier through a “channel partner” agreement were approximately 14 % and 14 % of cost of revenues, respectively.

For the three months ended March 31, 2024 and 2023 purchases from one supplier through a “channel partner” agreement were approximately 15 % and 14 % of cost of revenues, respectively.

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

As of September 30, 2023, a legal firm represented approximately 54 % of total accounts payable and one supplier represented approximately 11 % of total accounts payable.

As of March 31, 2024, a legal firm represented approximately 51 % of total accounts payable and one supplier represented approximately 18 % of total accounts payable.

For the year ended December 31, 2023, one supplier represented approximately 23 % of total accounts payable.

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

As of September 30, 2023, the Company believes it has no significant risk related to its concentration of credit risk related to accounts receivable.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

As of March 31, 2024, the Company believes it has no significant risk related to its concentration of credit risk related to accounts receivable.

Property and Equipment

13 unchanged sentences

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.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes (Continued)

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.

9 unchanged sentences

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

There were no liabilities for uncertain tax positions at September 30, 2023 and December 31, 2022.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

There were no liabilities for uncertain tax positions at March 31, 2024 and December 31, 2023.

Fair Value Measurement

11 unchanged sentences

The Company’s goodwill and intangibles are measured at fair-value using Level 3 inputs at acquisition, as discussed in Notes 6 and 11.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock-Based Compensation

4 unchanged sentences

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

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

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – NET INCOME (LOSS) PER COMMON SHARE

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

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

For the three and nine months ended September 30, 2023 and 2022, the average market prices for the periods ended are less than the exercise price of all the outstanding stock options, therefore, the inclusion of the stock options would be anti-dilutive.

In addition, for the three and nine months ended September 30, 2023 and 2022, since the Company had a net loss, the effect of common stock equivalents is anti-dilutive, and, as such, common stock equivalents have been excluded from the calculation.

September 30, 2023

September 30, 2022

Basic net loss per share computation:

Weighted-average common shares outstanding

Basic net loss per share

Diluted net loss per share computation:

Net loss per above

Weighted-average common shares outstanding

Total adjusted weighted-average shares

Diluted net loss per share

September 30, 2023

September 30, 2022

Basic net loss per share computation:

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 recently issued accounting pronouncements had or are expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.

NOTE 3 – NET INCOME PER COMMON SHARE

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

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

March 31, 2024

March 31, 2023

Basic net income per share computation:

Weighted-average common shares outstanding

Basic net loss per share

Diluted net loss:

Basic net income per share

Diluted net income per share computation:

Net income per above

Weighted-average common shares outstanding

Total adjusted weighted-average shares

Diluted net loss per share

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

September 30, 2023

September 30, 2022

Stock options

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

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

September 30, 2023

September 30, 2022

Diluted net income per share

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

March 31, 2024

March 31, 2023

Stock options

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

Total potential dilutive securities not included in income per share

SILVERSUN TECHNOLOGIES, INC.

2 unchanged sentences

NOTE 4 – ALLOWANCE FOR EXPECTED CREDIT LOSSES

Trade receivables and unbilled services with customers are financial assets analyzed by the Company under the expected credit loss model.

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.

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, for the most part, utilizes this individual approach for its trade receivables and unbilled services as each customer does not share similar risks.

Roll-forward of Allowance for Doubtful Accounts

The following table represents the roll-forward of the allowance for doubtful accounts for the nine months ended September 30, 2023 and the year ended December 31, 2022:

September 30, 2023

The following table represents the roll-forward of the allowance for doubtful accounts for the three months ended March 31, 2024 and the year ended December 31, 2023:

March 31, 2024

December 31, 2023

4 unchanged sentences

Property and equipment is summarized as follows:

September 30, 2023

March 31, 2024

December 31, 2023

3 unchanged sentences

Property and equipment, net

Depreciation and amortization expense related to these assets for the three and nine months ended September 30, 2023 were $ 75,310 and $ 253,380 , respectively, as compared to $ 96,713 and $ 291,720 for the three and nine months ended September 30, 2022.

Depreciation and amortization expense related to these assets for the three months ended March 31, 2024 and 2023 were $ 66,936 and $ 92,541 .

Property and equipment under finance leases (included in Note 8) are summarized as follows:

September 30, 2023

March 31, 2024

December 31, 2023

8 unchanged sentences

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

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

The purchase price for the Acquired Assets was $ 1,335,000 , $ 500,000 of which was paid in cash and $835,000 of which was paid through the issuance of a four-year $ 835,000 promissory note dated January 1, 2022, paying interest at the rate of 3.25 % per annum (see Note 11).

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

The NEO3 Note is due in 36 months from the closing date and bears interest at a rate of two percent ( 2.0 %) per annum.

Monthly payments including interest are $ 2,148 .

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

The components of intangible assets are as follows:

September 30, 2023

March 31, 2024

December 31, 2023

3 unchanged sentences

accumulated amortization

Amortization expense related to the above intangible assets for the three and nine months ended September 30, 2023 was $ 161,961 and $ 485,883 , respectively, as compared to $ 193,042 and $ 569,864 for the three and nine months ended September 30, 2022.

Amortization expense related to the above intangible assets for the three months ended March 31, 2024 and 2023 was $ 209,288 and $ 161,961 .

The Company expects future amortization expense to be the following:

Remainder of 2024

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”).

This long-term debt is considered related party debt as a holder is a current employee of the Company.

The Prairie Tech Notes bear interest at a rate of 4 % per annum.

Prairie Tech Note 1 had a term of one (1) year and was 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 had a term of three (3) years and was 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 repaid the outstanding balance of $ 103,333 and accrued interest.

At September 30, 2023 and December 31, 2022, the outstanding balances on the PT Notes were $- 0 - and $ 103,333 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 September 30, 2023 and December 31, 2022, the outstanding balances on the CMS Note were $ 4,861 and $ 48,249 , respectively.

NOTE 7 – LONG-TERM DEBT

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

1 unchanged sentence

Monthly payments including interest are $ 4,031 .

At September 30, 2023 and December 31, 2022, the outstanding balances on the BSS Note were $ 106,348 and $ 140,748 , respectively.

At March 31, 2024 and December 31, 2023, the outstanding balances on the BSS Note were $ 83,127 and $ 94,766 , respectively.

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

2 unchanged sentences

Monthly payments including interest are $ 3,724 .

At September 30, 2023 and December 31, 2022, the outstanding balances on the CTS Note were $ 25,892 and $ 58,741 , respectively.

At March 31,2024 and December 31, 2023, the outstanding balances on the CTS Note were $ 3,717 and $ 14,832 , respectively.

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

2 unchanged sentences

Monthly payments including interest are $ 12,889 .

At September 30, 2023 and December 31, 2022, the outstanding balances on the PSI Note were $ 102,344 and $ 215,863 , respectively.

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

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

At March 31, 2024 and December 31, 2023, the outstanding balances on the PSI Note were $ 25,714 and $ 64,125 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – LONG-TERM DEBT (Continued)

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 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 would 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.

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).

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 was an annual payment, was due and paid on January 1, 2023.

and thereafter, payments will be made quarterly in twelve equal installments.

At September 30, 2023 and December 31, 2022, the outstanding balances on the DTSI Note was $ 521,875 and $ 835,000 , respectively (see Note 11).

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 March 31, 2024 and December 31, 2023, the outstanding balances on the DTSI Note were $ 417,500 and $ 469,688 , respectively.

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 .

At September 30, 2023 and December 31, 2022, the outstanding balance on the NEO3 Note was $ 33,889 and $ 52,559 , respectively.

Total long-term and related party debt balances at September 30, 2023 and December 31, 2022 were $ 795,209 and $ 1,454,493 , respectively, of which $ 413,861 and $ 783,479 was classified as current portion at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2023, future payments of long-term debt are as follows:

As of March 31, 2024 and December 31, 2023 the outstanding balances on the NEO3 Note were $ 21,286 and $ 27,604 , respectively.

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”).

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 March 31, 2024 and December 31, 2023 the outstanding balance on the JCS Note was $ 1,025,000 and $ 1,025,000 , respectively.

Total long-term debt balances at March 31, 2024 and December 31, 2023 were $ 1,576,344 and $ 1,696,015 , respectively, of which $ 732,623 and $ 701,749 was classified as current portion at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024, future payments of promissory notes are as follows over each of the next three fiscal years:

Remainder of 2024

5 unchanged sentences

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

The weighted average interest rate as of September 30, 2023 was 7.2 % and the following weighted-average lease term:

September 30, 2023

The weighted average interest rate as of March 31, 2024 was 7.3 % and the following weighted-average lease term:

March 31, 2024

December 31, 2023

Weighted average remaining lease term

At September 30, 2023 future payments under finance leases are as follows:

September 30, 2023

At March 31, 2024 future payments under finance leases are as follows:

March 31, 2024

Remainder of 2024

6 unchanged sentences

The Company leases space in four different locations and also has an equipment lease rental with monthly payments ranging from $ 3,022 to $ 10,471 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 period ended September 30, 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 period ended September 30, 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 period ended September 30, 2023.

On January 3, 2024, the Company extended its lease for its main office 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 for operating leases as of September 30, 2023 and December 31, 2022 are as follows:

September 30, 2023

The asset and liability were valued using a weighted average interest rate of 4.77 %.

The Company's weighted average remaining lease term for operating leases as of March 31, 2024 and December 31, 2023 are as follows:

March 31, 2024

December 31, 2023

Weighted average remaining lease term

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – OPERATING LEASE LIABILITY (Continued)

The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2023:

Remainder 2024

4 unchanged sentences

Long-term operating lease liabilities

Total rent expense under operating leases for the three and nine months ended September 30, 2023 was $ 106,790 and $ 319,870 , respectively, as compared to $ 85,706 and $ 297,919 for the three and nine months ended September 30, 2022, respectively.

Total rent expense under operating leases for the three months ended March 31, 2024 and 2023 was $ 107,331 and $ 82,666 , respectively.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY

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.

Stock Repurchase Program

5 unchanged sentences

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

As of September 30, 2023, no repurchases have been made.

As of March 31, 2024, no repurchases have been made.

Issuance of Common Stock

In December 2023, the Company issued 59,404 shares of common stock upon the exercise of stock options.

Stock Options

5 unchanged sentences

Treasury yield in effect at the time of grant.

There were no stock options granted for the nine months ended September 30, 2023.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – EQUITY (Continued)

A summary of the status of the Company’s stock option plans for the nine months ended September 30, 2023 and the year ended December 31, 2022 and changes during the periods are presented below (in number of options):

There were no stock options granted for the three months ended March 31, 2024 and 2023.

A summary of the status of the Company’s stock option plans for the three months ended March 31, 2024 and the year ended December 31, 2023 and changes during the periods are presented below (in number of options):

Exercise Price

1 unchanged sentence

Options granted

Options exercised (1)

Options canceled/forfeited

2 unchanged sentences

Options canceled/forfeited

Outstanding options at September 30, 2023

For the three and nine months ended September 30, 2023, the Company recorded share-based compensation expense of $- 0 - and $ 41,497 , respectively, as compared to $ 44,185 and $ 136,075 for the three and nine months ended September 30, 2022.

As of September 30, 2023 and December 31, 2022, the unamortized compensation expense for stock options was $- 0 - and $ 41,497 , respectively.

NOTE 11 – BUSINESS COMBINATIONS

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

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

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.

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

Outstanding options at March 31, 2024

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.

For the three months ended March 31, 2024, the Company recorded share-based compensation expense of $- 0 - as compared to $ 41,497 for the three months ended March 31, 2023.

As of March 31, 2024 and December 31, 2023, there were no outstanding stock options and the unamortized compensation expense for stock options was $- 0 - and $- 0 -, respectively.

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – BUSINESS COMBINATIONS (Continued)

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

NOTE 11 – BUSINESS COMBINATIONS

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”).

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

The Note will be amortized as follows:

At March 31, 2024 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 its 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:

Cash consideration

4 unchanged sentences

Net assets acquired

The Company’s unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 include the actual results of DTS, and as such, pro forma results are not required.

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 2023, 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 three months ended March 31, 2023 as if the acquisitions occurred on January 1, 2023.

For the three months ended March 31, 2023, operating expenses have been increased for the amortization expense of expected definite lived intangible assets and interest on the notes payable.

Three Months Ended

Cost of revenues

Operating expenses

Income before taxes

Basic and diluted income per common share

For the three months ended March 31, 2023, there is $ 47,319 of estimated amortization expense and $ 10,860 of estimated interest expense included in the pro-forma results for JCS.

The Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2024 include the actual results of JCS, and, as such, no pro forma results are required.

NOTE 12 – INCOME TAXES

3 unchanged sentences

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 $ 5,700,000 as of September 30, 2023, which is subject to limitations under Section 382 of the Internal Revenue Code.

The Company has federal net operating loss (“NOL”) carryforwards of approximately $ 5,700,000 as of March 31, 2024, which is subject to limitations under Section 382 of the Internal Revenue Code.

These carryforward losses are available to offset future taxable income and a portion begin to expire in the year 2026 to 2034.

1 unchanged sentence

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

The Company had approximately $ 1,342,000 and $ 1,106,000 in deferred tax assets at September 30, 2023 and December 31, 2022, respectively.

The increase in the deferred tax asset is due to tax benefit, which will increase our NOL carryforward.

For the three and nine months ended September 30, 2023, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the three and nine months ended September 30, 2023, the Company recorded tax benefits of $ 456,121 and $ 285,849 , respectively, as compared to tax benefits of $ 7,061 and $ 20,253 for the three and nine months ended September 30, 2022, respectively.

These increase in the tax benefits are primarily the result of the losses income before taxes for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022, primarily as a result of the write-off of expenses associated with the termination of the Agreement and Plan of Merger dated as of September 29, 2022 (see Note 14).

NOTE 13 – RELATED PARTY TRANSACTIONS

At September 30, 2023 and December 31, 2022, certain long-term debt is considered a related party liability as a holder of Prairie Tech is current employee of the Company.

As of September 30, 2023 and December 31, 2022, the outstanding balances of this debt were $- 0 - and $ 103,333 , respectively.

The Company had approximately $ 1,374,000 and $ 1,444,000 in deferred tax assets at March 31, 2024 and December 31, 2023, respectively.

For the three months ended March 31, 2024, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate.

For the three months ended March 31, 2024, the Company recorded a tax provision of $ 69,539 as compared to a tax provision of $ 74,791 for the three months ended March 31, 2023.

SILVERSUN TECHNOLOGIES, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 – MERGER

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

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

On October 13, 2023, SilverSun Technologies, Inc.

(the “Company”) terminated the Agreement and Plan of Merger dated as of September 29, 2022 and amended on each of October 20, 2022;

December 21,2022;

March 13, 2023;

April 28, 2023;

July 11, 2023;

and September 6, 2023, by and among the Company, Rhodium Enterprises Acquisition Corp., a Delaware corporation and direct wholly owned subsidiary of the Company, Rhodium Enterprises Acquisition LLC, a Delaware limited liability company and direct wholly owned subsidiary of the Company, and Rhodium Enterprises, Inc., a Delaware corporation (“Rhodium”), (as amended, the “Merger Agreement”).

NOTE 15 – SUBSEQUENT EVENT

On November 13, 2023, the Company entered into an asset purchase agreement to acquire certain assets of JCS Computer Resource Corporation (“JCS”).

The purchase price for the Acquired Assets was $ 1,325,000 , $ 278,489 of which was paid in cash, customer deposits related to prepaid time from clients in the amount of $ 21,511 and $ 1,025,000 of which was paid through the issuance of a three-year $ 1,025,000 promissory note dated November 9, 2023, paying interest at the rate of 4.25 % per annum.

NOTE 13 – SUBSEQUENT EVENTS

Jacobs Private Equity II, LLC ( “ JPE ” )

As previously disclosed on a Current Report on Form 8-K filed on December 4, 2023, on December 3, 2023, the Company entered into an Investment Agreement (the “ Original Investment Agreement ”), with JPE, a Delaware limited liability company, and the other investors party thereto (collectively with JPE, the “Investors”), providing for, among other things, an aggregate investment by the Investors of $ 1,000,000,000 in cash in the Company (collectively, the “Equity Investment”) and a spin-off of the Company’s existing business to its legacy stockholders (the “Spin-Off”).

As previously disclosed on a Current Report on Form 8-K filed on April 15, 2024, on April 14, 2024, the Company entered into an Amended and Restated Investment Agreement (the “ A&R Investment Agreement ”) with JPE (on behalf of itself and on behalf of each of the other Investors) amending and restating the Original Investment Agreement.

Pursuant to the A&R Investment Agreement, among other amendments to the Original Investment Agreement, the Spin-Off will not occur, and the Company’s existing business will continue to be owned by the Company.

The Company’s stockholders as of the date that is one day prior to the closing of the Equity Investment will be entitled to receive an aggregate cash dividend of $ 17,400,000 (amended from the aggregate cash dividend of $ 2,500,000 contemplated by the Original Investment Agreement), to be paid from proceeds received by the Company from the Equity Investment, and SilverSun’s existing operations will be retained.

The other material terms of the other transactions contemplated by the Original Investment Agreement, including the Equity Investment, are not affected by the amendments contained in the A&R Investment Agreement.

The transactions contemplated by the A&R Investment Agreement, which have been approved by the Company’s board of directors, are subject to approval by the Company’s stockholders at a special meeting to be held May 30, 2024, and other customary closing conditions.

The Company filed a Definitive Proxy Statement for the special stockholders’ meeting with the SEC on April 30, 2024.

As previously disclosed, prior to the closing of the Equity Investment, the Company will amend and restate its certificate of incorporation to, among other things, effect an 8:1 reverse stock split with respect to the Company’s common stock.

In addition, certain board designation rights of JPE that were contemplated to be included in the Original Investment Agreement will instead be included in amendments to the Company’s certificate of incorporation.

The descriptions of the A&R Investment Agreement and the related Exhibits contained herein are qualified in their entirety by reference to the A&R Investment Agreement and the Exhibits thereto, copies of which are filed as Exhibit 2.5 to this Quarterly Report on Form 10-Q and incorporated by reference herein.

April Voting and Support Agreement

On April 14, 2024, concurrently with the execution and delivery of the A&R Investment Agreement, Mark Meller, the Company’s chief executive officer, and certain of his affiliates, in their capacities as stockholders of the Company, entered into a voting and support agreement (the “April Voting and Support Agreement”) pursuant to which such stockholders have agreed, among other things, to vote in favor of the approval of the Equity Investment and the other transactions contemplated by the A&R Investment Agreement, the amendment to the Company’s certificate of incorporation contemplated by the A&R Investment Agreement, and any equity incentive plan proposed by JPE pursuant to the A&R Investment Agreement, and to take, and refrain from taking, certain other actions in connection with the transactions, in each case, on the terms set forth in the April Voting and Support Agreement.

Concurrently with the execution and delivery of the A&R Investment Agreement on April 14, 2024, Mr.

Meller entered into an amended and restated letter agreement with the Company (the “A&R Meller Letter Agreement”) and an offer letter with the Company (the “ Meller Offer Letter ”).

Pursuant to the A&R Meller Letter Agreement, the Amended and Restated Employment Agreement, dated as of February 4, 2016 by and between Mark Meller and the Company (the “ Meller Employment Agreement ”) will be terminated and liquidated as of immediately prior to the closing of the Equity Investment.

Subject to certain conditions, upon termination of the Meller Employment Agreement the Company will pay a lump sum cash severance payment to Mark Meller in an amount up to $ 3,000,000 to be paid no later than the second regularly scheduled payroll date following the closing of the Equity Investment.

This payment will be in full satisfaction of all of the Company’s obligations under the Meller Employment Agreement.

Pursuant to the Meller Offer Letter, Mr.

Meller will serve as President, SilverSun Technologies for a term commencing on the closing of the Equity Investment through September 14, 2028.

He will receive an initial annual base salary of $ 1,120,000 , less all applicable withholdings and deductions.

Subject to his continued employment, his annual base salary will increase by 10% on each of (i) the later of September 14, 2024 and the closing of the Equity Investment, (ii) September 14, 2025 and (iii) every subsequent anniversary of September 14, 2025 for the remainder of

SILVERSUN TECHNOLOGIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – SUBSEQUENT EVENT- JACOBS PRIVATE EQUITY II, LLC ( “ JPE ” ) (Continued)

Meller’s employment is terminated without “cause” (as defined in the Meller Offer Letter), then Mr.

Meller will receive a lump sum cash payment, subject to the execution and non-revocation of a release of claims by Mr.

Meller, equal to three times his average annual base salary over the prior five-year period, minus $100.

The Meller Offer Letter also provides that Mr.

Meller will be subject to restrictive covenants consisting of perpetual confidentiality and non-disparagement, as well as noncompetition and non-solicitation of employees and customers during employment and for the two years thereafter.

The descriptions of the April Voting and Support Agreement, the Meller Employment Agreement and the Meller Offer Letter and the related Exhibits contained herein are qualified in their entirety by reference to the April Voting and Support Agreement, the Meller Employment Agreement and the Meller Offer Letter and the Exhibits thereto, copies of which are filed as Exhibit 2.6, 10.1 and 10.2 to this Quarterly Report on Form 10-Q and incorporated by reference herein.

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

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Our core business is divided into the following practice areas:

ERP (Enterprise Resource Management) and Accounting Software

We are a value-added reseller for a number of industry-leading ERP applications.

We are a Sage Software Authorized Business Partner and Sage Certified Gold Development Partner.

We believe we are among the largest Sage partners in North America, with a sales and implementation presence complemented by a scalable software development practice for customizations and enhancements.

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

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

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

Enterprise Resource Planning Software

Substantially all our initial sales of ERP financial accounting solutions consist of pre-packaged software and associated services to customers in the United States.

The Company resells ERP software published by Sage Software, including Sage Intacct, Acumatica and other providers for the financial accounting requirements of small- and medium-sized businesses focused on manufacturing, distribution, and professional services, and the delivery of related services from the sales of these products, including installation, implementation, support and training.

The programs perform and support a wide variety of functions related to accounting, including financial reporting, accounts payable and accounts receivable, and inventory management.

We provide end-user technical support services through our support/help desk.

Our product and technology consultants assist customers calling with questions about product features, functions, usability issues, and configurations.

The support/help desk offers services in a variety of ways, including prepaid services, time and materials billed as utilized and annual support contracts.

Customers can communicate with the support/help desk through e-mail, telephone, and fax channels.

Standard support/help desk services are offered during normal business hours five (5) days per week.

Value-Added Services for ERP

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A significant portion of our services revenue comes from continuing to work with existing customers as their business needs change, upgrading from one version of software to another, or providing additional software solutions to help them manage their business and grow their revenue.

We have a dedicated help desk team that fields hundreds of calls every week.

Our custom programming department builds specialized software packages as well as “off the shelf” enhancements and time and billing software.

The support/help desk offers services in a variety of ways, including prepaid services, time and materials billed as utilized and annual support contracts.

Customers can communicate with the support/help desk through e-mail, telephone, and fax channels.

Standard support/help desk services are offered during normal business hours five (5) days per week.

IT Managed Network Services and Business Consulting

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SGEN, LLC., ESC, Inc., 2000 SOFT, Inc., Productive Tech Inc., The Macabe Associates, Oates & Co;

Pinsight Technology, Inc.;

Info Sys Management, Inc., Nellnube, Inc., Partners in Technology Inc., Prairie Technology Solutions Group, Inc., Computer Management Services, LLC, Business Software Solutions, PeopleSense, Inc., and more recently Dynamic Tech Services, Inc.

and NEO3, LLC.

Additionally, it is our intention to continue to increase our business by seeking additional opportunities through potential acquisitions, revenue sharing arrangements, partnerships or investments.

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and (v) the activities of competitors.

During the first nine months of 2023, the Company continued to expand its customer base and growth trend which we believe will provide a basis for future growth.

Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022.

During the first three months of 2024, the Company continued to expand its customer base and growth trend which we believe will provide a basis for future growth.

Results of Operations for the Three Months Ended March 31, 2024 and 2023.

Our strategy is to grow our business through organic growth of our software applications, technology solutions and managed services, as well as expansion through acquisitions.

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

During the nine months ended September 30, 2023 the Company continued to expand its customer base, which we believe provides a basis for future growth.

Revenues increased 22.2% to $39.8 million for the nine months ended September 30, 2023 as compared to $32.6 million for the corresponding period in 2022.

During the three months ended March 31, 2024 the Company continued to expand its customer base, which we believe provides a basis for future growth.

Revenues increased 10% to $14.4 million for the three months ended March 31, 2024 as compared to $13.1 million for the corresponding period in 2023.

Our Acumatica and Sage product revenue continues to grow, and we are excited about the opportunity for growth with our Sage Intacct product.

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

However, we currently do not expect a significant impact on our results of operations in the future due to COVID-19.

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

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

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

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

On October 13, 2023, SilverSun Technologies, Inc.

terminated the Agreement and Plan of Merger (see Note 14 to Notes to Condensed Consolidated Financial Statements).

As previously disclosed on a Current Report on Form 8-K filed on December 4, 2023, on December 3, 2023, the Company entered into an Investment Agreement (the “Original Investment Agreement”), with JPE, a Delaware limited liability company, and the other investors party thereto (collectively with JPE, the “Investors”), providing for, among other things, an aggregate investment by the Investors of $1,000,000,000 in cash in the Company (collectively, the “Equity Investment”) and a spin-off of the Company’s existing business to its legacy stockholders (the “Spin-Off”).

On April 14, 2024, the Company entered into an Amended and Restated Investment Agreement (the “A&R Investment Agreement”) with JPE (on behalf of itself and on behalf of each of the other Investors) amending and restating the Original Investment Agreement.

The Company’s stockholders as of the date that is one day prior to the closing of the Equity Investment will be entitled to receive an aggregate cash dividend of $17,400,000 (amended from the aggregate cash dividend of $2,500,000 contemplated by the Original Investment Agreement), to be paid from proceeds received by the Company from the Equity Investment, and SilverSun’s existing operations will be retained.

On April 18, 2024, the Company filed its Preliminary Proxy Statement with the SEC for the Special Meeting of shareholders.

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

For the three and nine months ended September 30, 2023, revenues increased $2,506,095 (23.0%) and $7,229,187 (22.2%) to $13,423,254 and $39,808,263, respectively, as compared to $10,917,159 and $32,579,076, respectively, for the three and nine months ended September 30, 2022.

This increase is mostly attributed to an increase in professional consulting revenues as well as an increase in software revenue.

Software revenues increased $367,974 (14.8%) and $1,595,280 (20.3%) to $2,850,462 and $9,470,811 for the three and nine months ended September 30, 2023, respectively, as compared to $2,482,488 and $7,875,531 for the three and nine months ended September 30, 2022, respectively, primarily because of an increase in our ERP software sales, especially for Acumatica and Sage Intacct.

Service revenue increased $2,138,121 (25.3%) and $5,633,907 (22.8%) to $10,572,792 and $30,337,452 for the three and nine months ended September 30, 2023, respectively, as compared to $8,434,671 and $24,703,545 for the three and nine months ended September 30, 2022.

This increase is mainly attributed to the increase in professional services, especially for our Acumatica, Sage 100, and Sage Intacct products, as well as an increase in revenue in our hosting services.

Recruiting in 2021 and 2022 was a difficult challenge, but our efforts to increase our consulting staff with additional resources, as well as system improvements, has yielded a positive result in our financial performance.

Results of Operations for the Three Months Ended March 31, 2024 and 2023 (Continued).

For the three months ended March 31, 2024, revenues increased $1,307,817 (10.0%) to $14,435,555 as compared to $13,127,738 for the three months ended March 31, 2023.

This increase is mostly attributed to an increase in professional consulting revenues as well as increases in software revenue and subscription income.

Software revenues increased $157,672 (4.7%) to $3,480,001 for the three months ended March 31, 2024 as compared to $3,322,329 for the three months ended March 31, 2023, primarily because of an increase in our ERP software sales, especially for Sage Intacct and Acumatica.

Service and other revenue increased $1,150,145 (11.7%) to $10,955,554 for the three months ended March 31, 2024 as compared to $9,805,409 for the three months ended March 31, 2023.

Recruiting continues to be a difficult challenge, but our efforts to increase our consulting staff with additional resources, as well as system improvements, have yielded a positive result in our financial performance.

We have also utilized some outside contractors to assist in projects because of our growth.

Gross profit for the three and nine months ended September 30, 2023 increased $921,664 (20.8%) and $2,632,234 (19.8%) to $5,350,233 and $15,892,938, respectively, as compared to $4,428,569 and $13,260,704 for the three and nine months ended September 30, 2022.

For the three months ended September 30, 2023, the overall gross profit percentage was 39.9% as compared to 40.6% for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, the overall gross profit percentage was 39.9% as compared to 40.7% for the nine months ended September 30, 2022.

The gross profit attributed to software revenues increased $210,829 (23.8%) and $689,251 (22.5%) to $1,096,097 and $3,756,710, respectively, for the three and nine months ended September 30, 2023 as compared to $885,268 and $3,067,459 for the three and nine months ended September 30, 2022, due mostly to the increased volume of software sold.

For the three months ended September 30, 2023, the gross profit percentage on software revenue was 38.5% as compared to 35.7% for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, the gross profit percentage on software revenue was 39.7% as compared to 38.9% for the nine months ended September 30, 2022.

The gross profit attributed to services increased $710,835 (20.1%) and $1,942,983 (19.1%) to $4,254,136 and $12,136,228 for the three and nine months ended September 30, 2023 as compared to $3,543,301 and $10,193,245 for the three and nine months ended September 30, 2022.

This increase is attributed to revenue increases in professional services and application hosting.

For the three months ended September 30, 2023, the gross profit percentage on service revenue was 40.7% as compared to 42.0% for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, the gross profit percentage on service revenue was 40.2% as compared to 41.3% for the nine months ended September 30, 2022.

Gross profit for the three months ended March 31, 2024 increased $299,927 (5.6%) to $5,657,487 as compared to $5,357,560 for the three months ended March 31, 2023.

For the three months ended March 31, 2024, the overall gross profit percentage was 39.2% as compared to 40.8% for the three months ended March 31, 2023.

The gross profit attributed to software revenues decreased $108,876 (7.8%) to $1,281,178 for the three months ended March 31, 2024 as compared to $1,390,054 for the three months ended March 31, 2023, due lower software revenues in Human Capital Management practice and lower margins on third party software that are incorporated into the vendors’ price list for which we get a lower margin.

For the three months ended March 31, 2024, the gross profit percentage on software revenue was 36.8% as compared to 41.8% for the three months ended March 31, 2023.

The gross profit attributed to services and other increased $408,803 (10.3%) to $4,376,309 for the three months ended March 31, 2024 as compared to $3,967,506 for the three months ended March 31, 2023.

This increase is attributed to revenue increases in managed services and application hosting as well as a n increase in subscription income.

For the three months ended March 31, 2024, the gross profit percentage on service revenue was 39.9% as compared to 40.5% for the three months ended March 31, 2023.

Operating expenses

Selling and marketing expenses increased $211,676 (10.5%) and $903,133 (16.0%) to $2,228,526 and $6,548,697, respectively, for the three and nine months ended September 30, 2023 as compared to $2,016,850 and $5,645,564 for the three and nine months ended September 30, 2022.

This increase is primarily due to increased salary increases, new personnel, higher commissions to employees as a result of the increased revenues, as well as increased travel expenses associated with attendance at trade shows and conferences.

General and administrative expenses increased $253,269 (11.3%) and $484,959 (7.0%) to $2,497,891 and $7,441,703, respectively, for the three and nine months ended September 30, 2023 as compared to $2,244,622 and $6,956,744 for the three and nine months ended September 30, 2022.

This increase in expenses for the three months ended September 30, 2023 is a result of salary increases and increases in accrued compensation and state excise taxes offset partially by a decrease in credit card fees.

For the nine months ended September 30, 2023, general and administrative expenses increased primarily as a result of salary increases and increased accrued compensation, travel and entertainment, professional and license fees offset partially by a decrease in credit card fees, lower rent and recruitment expenses.

Share-based compensation decreased $44,185 (100%) and $94,578 (69.5%) for the three and nine months ended September 30, 2023 to $-0- and $41,497, respectively, as compared to $44,185 and $136,075 for the three and nine months ended September 30, 2022.

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

Depreciation and amortization expense decreased $44,161 (18.4%) and $131,108 (17.7%) to $196,361 and $607,785 for the three and nine months ended September 30, 2023 as compared to $240,522 and $738,893 for the three and nine months ended September 30, 2022.

This decrease is primarily due to the lower amortization of intangible assets as a result of certain intangible assets being fully amortized.

Selling and marketing expenses increased $166,713 (7.7%) to $2,345,416 for the three months ended March 31, 2024 as compared to $2,178,703 for the three months ended March 31, 2023.

This increase is primarily due to increased salary increases, new personnel, as well as increased travel expenses associated with attendance at trade shows and conferences.

General and administrative expenses increased $283,878 (11.1%) to $2,843,906 for the three months ended March 31, 2024 as compared to $2,560,028 for the three months ended March 31, 2023.

This increase in expenses for the three months ended March 31, 2024 is a result of salary increases and increases in employee benefits, such as medical and 401k match, as well as an increase in license fees.

Share-based compensation decreased to $-0- for the three months ended March 31, 2024 as compared to $41,497 for the three months ended March 31, 2023 as share-based compensation has been fully amortized.

Depreciation and amortization expense increased $32,684 (15.7%) to $240,479 for the three months ended March 31, 2024 as compared to $207,795 for the three months ended March 31, 2023.

Higher amortization as a result of the JCS asset purchase was partially offset by lower depreciation as a result of certain assets being fully depreciated.

Income (loss) from operations

As a result of the above, for the three and nine months ended September 30, 2023, the Company had net income from operations of $427,455 and $1,253,256, respectively, as compared to losses from operations of $117,610 and $216,572 for the three and nine months ended September 30, 2022.

Other Expense

For the three and nine months ended September 30, 2023, the Company incurred other expense of $2,936,107 related to the terminated the Agreement and Plan of Merger dated as of September 29, 2022 (Notes 14 and Note 2 – Deferred Charges).

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 condensed statement of operations in Other Expense.

Loss Before Taxes

As a result of the above, for the three and nine months ended September 30, 2023, the Company had losses before taxes of $2,566,299 and $1,775,175, respectively, as compared to losses before of $141,298 and $282,912 for the three and nine months ended September 30, 2022.

As a result of the above, for the three months ended March 31, 2024, the Company had net income from operations of $227,686 as compared to net income from operations of $369,537 for the three months ended March 31, 2023.

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

Liquidity and Capital Resources

While our Company has not been significantly impacted because of the economic uncertainty nor from the impact of COVID-19, the potential negative impact on our business, in the future, is impossible to determine at this point, although it is likely that we could suffer negative consequences as many companies go out of business or decrease their technology spending.

The uncertainty on the economy continues to create uncertainty for the Company in the coming months and quarters.

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

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

Management continues to monitor developments, explore various cost-cutting measures, and explore other sources of funding, but there is no guarantee we will be successful in doing so.

Management will continue to monitor developments, explore various cost-cutting measures, and explore other sources of funding, but there is no guarantee we will be successful in doing so.

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

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Management also explores opportunities to increase its business and profitability by entering into collaboration agreements, buying assets, and acquiring companies in the business software and information technology consulting and other markets with solid revenue streams and established customer bases that generate positive cash flow.

At September 30, 2023, future payments of long-term debt are as follows:

At March 31, 2024, future payments of promissory notes are as follows over each of the next four fiscal years:

Remainder of 2024

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

Liquidity and Capital Resources (continued)

The Company’s working capital was $487,090 at September 30, 2023 as compared to $2,946,349 at December 31, 2022 mostly due to lower deferred charges, lower prepaid expenses and other current assets and cash offset partially by the decrease in deferred revenues.

During the nine months ended September 30, 2023, the Company had a net decrease in cash of $1,129,113.

The Company’s working capital was $555,974 at March 31, 2024 as compared to $273,762 at December 31, 2023 mostly due to an increase in deferred charges and unbilled services offset partially by an increase in deferred revenues.

During the three months ended March 31, 2024, the Company had a net increase in cash of $136,271.

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

Cash used in operating activities:

Operating activities for the nine months ended September 30, 2023 provided $817,723 of cash as compared to $1,127,302 of cash for the same period in 2022.

The decrease in cash provided by operating activities is primarily due changes in accounts payable and deferred revenues offset partially by the improvement in cash from operations, excluding the non-cash items, such as depreciation, amortization, and share-based compensation as well as the change in deferred charges.

Cash provided by (used) in operating activities:

Operating activities for the three months ended March 31, 2024 provided $365,512 of cash as compared to using $783,062 of cash for the same period in 2023.

The increase in cash provided by operating activities is primarily due to the decrease in accounts receivable as well as increases in accounts payable and deferred revenues.

Cash used in investing activities:

Investing activities for the nine months ended September 30, 2023 used cash of $74,907 as compared to using $188,741 cash for the same period in 2022, primarily as a result of lower acquisition costs for new businesses.

Investing activities for the three months ended March 31, 2024 used cash of $60,524 as compared to using $4,979 of cash for the same period in 2023, primarily as a result of increase in the purchases of equipment.

Cash used in financing activities:

Financing activities for the nine months ended September 30, 2023 used cash of $1,871,929 as compared to using cash in the amount of $520,520 for the same period in 2022.

The increase in cash used is a result of the cash dividend paid to shareholders in August 2023.

Financing activities for the three months ended March 31, 2024 used cash of $168,717 as compared to using cash in the amount of $344,813 for the same period in 2023.

The decrease in cash used is a result of the lower payments of long-term debt.

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

For the nine months ended September 30, 2023, inflation has impacted the Company’s profitability, as it has resulted in increased costs necessary to recruit and retain personnel.

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

For the three months ended March 31, 2024, inflation has impacted the Company’s profitability, as it has resulted in increased costs necessary to recruit and retain personnel.

The Company has returned marketing and trade show schedules, and the higher costs of travel and meals will also have a negative impact on the Company’s profitability.

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

Off Balance Sheet Arrangements

During the nine months ended September 30, 2023 and for fiscal 2022, we did not engage in any material off-balance sheet activities or have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

During the three months ended March 31, 2024 and for fiscal 2023, we did not engage in any material off-balance sheet activities or have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements