silversun20210331

10-Q 1 silversun20210331_10q.htm FORM 10-Q silversun20210331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-38063

SILVERSUN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	16-1633636
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)

120 Eagle Rock Ave

East Hanover, NJ 07936

(Address of principal executive offices)

(973) 396-1720

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	SSNT	The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☒		Smaller Reporting Company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 10, 2021, there were 5,061,177 shares outstanding of the registrant’s common stock.

SILVERSUN TECHNOLOGIES, INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited):	3
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	27
Item 6.	Exhibits	27

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2021			December 31, 2020
ASSETS

Current assets:
Cash	$	9,356,136		$	6,595,416
Accounts receivable, net of allowance of $375,000		1,904,057			1,580,242
Unbilled services		510,763			52,072
Prepaid expenses and other current assets		933,049			400,820

Total current assets		12,704,005			8,628,550

Property and equipment, net		534,744			523,040
Operating lease right-of-use assets		1,245,787			1,373,720
Intangible assets, net		3,006,099			3,126,336
Goodwill		1,011,952			1,011,952
Deferred tax assets		910,615			1,039,084
Deposits and other assets		198,726			198,726

Total assets	$	19,611,928		$	15,901,408

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	1,447,079		$	1,875,115
Accrued expenses		1,352,994			1,330,786
Accrued interest		22,442			21,206
Income taxes payable		318,031			318,031
Long term debt – current portion		253,121			262,301
Long term convertible debt – current portion		-			282,699
Finance lease obligations – current portion		146,531			118,658
Operating lease liabilities – current portion		462,374			481,250
Deferred revenue		2,575,426			2,039,241

Total current liabilities		6,577,998			6,729,287

Long term debt net of current portion		472,295			502,560
Long term convertible debt net of current portion		-			434,783
Finance lease obligations net of current portion		89,450			62,316
Operating lease liabilities net of current portion		783,413			892,470

Total liabilities		7,923,156			8,621,416

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.001 par value; authorized 1,000,000 shares
Series A Preferred Stock, $0.001 par value; authorized 2 shares, no shares issued and outstanding		-			-
Common stock, $0.00001 par value; authorized 75,000,000 shares, 5,061,177 and 4,501,271 shares issued and outstanding, respectively		52			46
Additional paid-in capital		11,793,978			7,739,883
Accumulated deficit		(105,258	)		(459,937	)

Total stockholders’ equity		11,688,772			7,279,992

Total liabilities and stockholders’ equity	$	19,611,928		$	15,901,408

See accompanying notes to the unaudited condensed consolidated financial statements.

	Three Months Ended
	March 31, 2021			March 31, 2020

Revenues:
Software product, net	$	2,004,011		$	1,769,171
Service, net		8,875,457			8,310,353
Total revenues, net		10,879,468			10,079,524

Cost of revenues:
Product		1,150,054			1,129,392
Service		4,982,877			5,097,922
Total cost of revenues		6,132,931			6,227,314

Gross profit		4,746,537			3,852,210

Selling, general and administrative expenses:
Selling and marketing expenses		1,719,308			1,941,324
General and administrative expenses		2,334,918			2,126,141
Share-based compensation expenses		992			3,399
Depreciation and amortization expenses		198,046			176,536
Total selling, general and administrative expenses		4,253,264			4,247,400

Income (loss) from operations		493,273			(395,190	)

Other (expense) income:
Other income		-			5,725
Interest income (expense)		(10,025	)		7,600
Total other income (expense)		(10,025	)		13,325

Income (loss) before taxes		483,248			(381,865	)

Provision (benefit) for income taxes		128,569			(89,750	)

Net income (loss)	$	354,679		$	(292,115	)


Net income (loss) per common share – basic and fully diluted	$	0.07		$	(0.06	)
Weighted average shares outstanding:
Basic		4,765,292			4,501,271
Diluted		4,766,702			4,501,271

	Series A Preferred Stock				Series B Preferred Stock				Common Stock Class A				Additional Paid in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance at January 1, 2021		-	$	-		-	$	-		4,501,271	$	46	$	7,739,883	$	(459,937	)	$	7,279,992

Issuance of common stock in exchange for convertible debt				-		-		-		166,606		2		670,755		-			670,757
Issuance of common stock from a public offering, net of expenses		-		-		-		-		393,300		4		3,382,348		-			3,382,352
Share-based compensation		-		-		-		-		-		-		992		-			992
Net income		-		-		-		-		-		-		-		354,679			354,679

Balance at March 31, 2021		-	$	-		-	$	-		5,061,177	$	52	$	11,793,978	$	(105,258	)	$	11,688,772

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net income (loss)	$	354,679		$	(292,115	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Deferred income taxes		128,469			(263,000	)
Depreciation and amortization		78,304			84,563
Amortization of intangibles		120,237			91,973
Amortization of right of use assets		127,933			117,663
Bad debt expense		-			5,574
Share-based compensation		992			3,399

Changes in assets and liabilities:
Accounts receivable		(323,815	)		(423,476	)
Unbilled services		(458,691	)		(271,762	)
Prepaid expenses and other current assets		(532,229	)		72,688
Accounts payable		(428,036	)		(409,953	)
Accrued expenses		22,208			(127,360	)
Income tax payable		-			173,000
Accrued interest		1,236			187
Deferred revenues		536,185			1,059,617
Operating lease obligations		(127,933	)		(117,663	)
Net cash used in operating activities		(500,461	)		(296,665	)

Cash flows from investing activities:
Purchase of property and equipment		-			(47,012	)
Escrow accounts receivable		-			575,000
Net cash provided by investing activities		-			527,988

Cash flows from financing activities:
Payment of cash dividend		-			(2,250,636	)
Proceeds from issuance of stock, net of expenses		3,382,352			-
Payment of long-term debt		(39,445	)		(45,937	)
Payment of long-term convertible debt		(46,725	)		(68,759	)
Payment of finance lease obligations		(35,001	)		(43,209	)
Net cash provided by (used in) financing activities		3,261,181			(2,408,541	)


Net increase (decrease) in cash		2,760,720			(2,177,218	)

Cash, beginning of period		6,595,416			8,658,401

Cash, end of period	$	9,356,136		$	6,481,183

Cash paid during period for:
Interest	$	9,614		$	8,487
Income taxes	$	-		$	25,250

	For the Three Months Ending March 31,
	2021		2020
Software revenue	$	2,004,011	$	1,769,171
Professional Consulting		3,512,313		3,521,680
Maintenance Revenue		1,852,673		1,698,476
Ancillary Service Revenue		3,510,471		3,090,197
	$	10,879,468	$	10,079,524

	Three Months Ended		Three Months Ended
	March 31, 2021		March 31, 2020
Basic net income (loss) per share computation:
Net income (loss)	$	354,679	$	(292,115	)
Weighted-average common shares outstanding		4,765,292		4,501,271
Basic net income (loss) per share	$	0.07	$	(0.06	)
Diluted net income (loss) per share computation:
Net income (loss)		354,679		(292,115	)
Weighted-average common shares outstanding		4,765,292		4,501,271
Incremental shares attributable to assumed conversion of stock options and Warrants		1,410		-
Total adjusted weighted-average shares		4,766,702		4,501,271
Diluted net income (loss) per share	$	0.07	$	(0.06	)

	Three Months March 31, 2021		Three Months March 31, 2020
Stock options		99,990		22,280
Warrants		-		4,988
Convertible promissory notes		-		229,963

Total potential dilutive securities not included in income (loss) per share		99,990		257,231

	March 31, 2021			December 31, 2020
Leasehold improvements	$	98,831		$	165,701
Equipment, furniture and fixtures		3,057,130			2,900,252
		3,155,961			3,065,953
Less: Accumulated depreciation and amortization		(2,621,217	)		(2,542,913	)

Property and equipment, net	$	534,744		$	523,040

	March 31, 2021			December 31, 2020			Estimated Useful Lives
Proprietary developed software	$	390,082		$	390,082		5 –7
Intellectual property, customer list, and acquired contracts		5,340,612			5,340,612		5 –15
Total intangible assets	$	5,730,694		$	5,730,694
Less: accumulated amortization		(2,724,595	)		(2,604,358	)
	$	3,006,099		$	3,126,336

	Amortization
Remainder of 2021	$	323,885
2022		374,478
2023		311,365
2024		311,365
2025		304,508
2026		289,927
Thereafter		1,090,571

Total	$	3,006,099

Remainder of 2021	$	222,857
2022		210,229
2023		197,564
2024		46,918
2025		47,848
Total	$	725,416

	March 31, 2021
Remainder of 2021	$	118,556
2022		91,281
2023		40,036
2024		2,783
Total minimum lease payments		252,656
Less amounts representing interest		(16,675	)
Present value of net minimum lease payments		235,981
Less current portion		(146,531	)
Long-term finance lease obligation	$	89,450

Dividend Yield			Risk-free Interest Rate		Volatility			Life

	0.00	%	0.89	%		101.36	%	5 years

	SILVERSUN TECHNOLOGIES, INC.


Dated: May 11, 2021	By:	/s/ Mark Meller
		Mark Meller
		Principal Executive Officer


Dated: May 11, 2021	By:	/s/ Joseph P. Macaluso
		Joseph P. Macaluso
		Principal Financial Officer and Principal Accounting Officer

	March 31, 2021			December 31, 2020
Weighted average remaining lease term		1.59			1.31
Weighted average interest rate		4.66	%		5.6	%

Remainder 2021	$	391,645
2022		425,489
2023		356,844
2024		141,457
2025		20,510
Total undiscounted future minimum lease payments		1,335,945
Less: Difference between undiscounted lease payments and discounted lease liabilities		(90,158	)
Total operating lease liabilities	$	1,245,787
Less current portion		(462,374	)
Long-term operating lease liabilities	$	783,413

Pro Forma	Three Months Ended March 31, 2020
Net revenues	$	10,653,419
Cost of revenues		6,485,427
Operating expenses		4,564,559
Loss before taxes		(396,567	)
Net loss	$	(309,474	)
Basic and diluted loss per common share	$	(0.07	)

1.1		At The Market Issuance Sales Agreement between SilverSun Technologies, Inc. and H.C. Wainwright & Co., LLC (incorporated herein by reference to Exhibit 1.1 on that Form S-3 registration statement filed with the SEC on October 2, 2020).
31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
31.2		Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*
32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

SEC Form 10-Q filed by SilverSun Technologies, Inc.