silversun20210930

silversun20210930_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: September 30, 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 November 08, 2021, there were 5,136,177 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 September 30, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2021 and 2020	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2021			December 31, 2020
ASSETS

Current assets:
Cash	$	7,252,236		$	6,595,416
Accounts receivable, net of allowance of $325,000 and $375,000, respectively		1,629,577			1,580,242
Unbilled services		189,522			52,072
Prepaid expenses and other current assets		729,790			400,820

Total current assets		9,801,125			8,628,550

Property and equipment, net		676,378			523,040
Operating lease right-of-use assets		1,101,123			1,373,720
Intangible assets, net		3,563,953			3,126,336
Goodwill		1,011,952			1,011,952
Deferred tax assets		896,839			1,039,084
Deposits and other assets		194,168			198,726

Total assets	$	17,245,538		$	15,901,408

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	1,381,482		$	1,875,115
Accrued expenses		1,562,079			1,330,786
Accrued interest		22,818			21,206
Income taxes payable		83,031			318,031
Long-term debt – current portion		415,419			262,301
Long-term convertible debt – current portion		-			282,699
Finance lease obligations – current portion		170,670			118,658
Operating lease liabilities – current portion		493,514			481,250
Deferred revenue		2,300,190			2,039,241

Total current liabilities		6,429,203			6,729,287

Long-term debt net of current portion		640,910			502,560
Long-term convertible debt net of current portion		-			434,783
Finance lease obligations net of current portion		174,120			62,316
Operating lease liabilities net of current portion		607,609			892,470

Total liabilities		7,851,842			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, 5,136,177 and 4,501,271 shares issued and outstanding, respectively		52			46
Additional paid-in capital		9,608,642			7,739,883
Accumulated deficit		(214,998	)		(459,937	)

Total stockholders’ equity		9,393,696			7,279,992

Total liabilities and stockholders’ equity	$	17,245,538		$	15,901,408

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Revenues:
Software product, net	$	1,553,567		$	1,639,245		$	5,319,063		$	5,335,112
Service, net		8,556,087			8,519,907			25,899,268			24,576,507
Total revenues, net		10,109,654			10,159,152			31,218,331			29,911,619

Cost of revenues:
Product		888,258			961,304			3,023,830			3,323,861
Service		5,282,088			5,145,857			15,237,976			14,744,954
Total cost of revenues		6,170,346			6,107,161			18,261,806			18,068,815

Gross profit		3,939,308			4,051,991			12,956,525			11,842,804

Selling, general and administrative expenses:
Selling and marketing expenses		1,702,496			1,752,319			5,035,910			5,427,115
General and administrative expenses		2,251,467			2,026,477			6,779,662			6,133,865
Share-based compensation expenses		48,878			3,396			98,810			10,194
Depreciation and amortization expenses		226,765			179,057			635,264			528,636
Total selling, general and administrative expenses		4,229,606			3,961,249			12,549,646			12,099,810

(Loss) income from operations		(290,298	)		90,742			406,879			(257,006	)

Other (expense) income:
Other income		-			1,758			-			13,169
Interest expense		(18,367	)		(5,817	)		(35,559	)		(6,463	)
Total other (expense) income		(18,367	)		(4,059	)		(35,559	)		6,706

(Loss) income before taxes		(308,665	)		86,683			371,320			(250,300	)

(Benefit) provision for income taxes		(68,636	)		31,478			126,381			(46,904	)

Net (loss) income	$	(240,029	)	$	55,205		$	244,939		$	(203,396	)
Net (loss) per common share:
Basic	$	(0.05	)	$	0.01		$	0.05		$	(0.05	)
Fully diluted	$	(0.05	)	$	0.01		$	0.05		$	(0.05	)
Weighted average shares:
Basic		5,136,177			4,501,271			4,989,432			4,501,271
Diluted		5,136,177			4,696,820			4,991,631			4,501,271

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021

	Series A Preferred Stock				Series B Preferred Stock				Common Stock Class A				Additional Paid in			Retained Earnings (Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit)			Equity
Balance at July 1, 2021		-	$	-		-	$	-		5,126,629	$	52	$	12,565,034		$	25,031		$	12,590,117

Share-based compensation		-		-		-		-		-		-		48,878			-			48,878
Issuance of common stock from a public offering, net of expenses		-		-		-		-		9,548		-		76,436			-			76,436
Cash dividend		-		-		-		-		-		-		(3,081,706	)		-			(3,081,706	)
Net loss		-		-		-		-		-		-		-			(240,029	)		(240,029	)

Balance at September 30, 2021		-	$	-		-	$	-		5,136,177	$	52	$	9,608,642		$	(214,998	)	$	9,393,696

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020

	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 July 1, 2020		-	$	-		-	$	-		4,501,271	$	46	$	9,536,996	$	(894,185	)	$	8,642,857

Share-based compensation		-		-		-		-		-		-		3,396		-			3,396
Net income		-		-		-		-		-		-		-		55,205			55,205

Balance at September 30, 2020		-	$	-		-	$	-		4,501,271	$	46	$	9,540,392	$	(838,980	)	$	8,701,458

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

	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		-		-		-		-		468,300		4		4,180,900			-			4,180,904
Cash dividend		-		-		-		-		-		-		(3,081,706	)		-			(3,081,706	)
Share-based compensation		-		-		-		-		-		-		98,810			-			98,810
Net income		-		-		-		-		-		-		-			244,939			244,939

Balance at September 30, 2021		-	$	-		-	$	-		5,136,177	$	52	$	9,608,642		$	(214,998	)	$	9,393,696

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

	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, 2020		-	$	-		-	$	-		4,501,271	$	46	$	9,530,198	$	(635,584	)	$	8,894,660

Share-based compensation		-		-		-		-		-		-		10,194		-			10,194
Net loss		-		-		-		-		-		-		-		(203,396	)		(203,396	)

Balance at September 30, 2020		-	$	-		-	$	-		4,501,271	$	46	$	9,540,392	$	(838,980	)	$	8,701,458

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net income (loss)	$	244,939		$	(203,396	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred income taxes		142,245			(393,454	)
Depreciation and amortization		248,540			240,479
Amortization of intangibles		388,024			288,157
Amortization of right of use assets		272,597			361,199
Bad debt recovery		(50,000	)		(486	)
Share-based compensation		98,810			10,194

Changes in assets and liabilities:
Accounts receivable		665			546,530
Unbilled services		(137,450	)		(415,965	)
Prepaid expenses and other current assets		(328,970	)		141,257
Deposits and other assets		4,558			354
Accounts payable		(493,633	)		(318,105	)
Accrued expenses		231,293			220,574
Income tax payable		(235,000	)		311,531
Accrued interest		1,612			561
Deferred revenues		161,011			(181,096	)
Operating lease obligations		(272,597	)		(361,199	)
Net cash provided by operating activities		276,644			247,135

Cash flows from investing activities:
Purchase of property and equipment		(119,129	)		(97,995	)
Acquisition of business		(145,703	)		(185,000	)
Escrow accounts receivable		-			1,150,000
Net cash (used in) provided by investing activities		(264,832	)		867,005

Cash flows from financing activities:
Payment of cash dividend		(3,081,706	)		(2,250,636	)
Proceeds from PPP loan		-			3,150,832
Payment of PPP loan		-			(3,150,832	)
Proceeds from issuance of stock, net of expenses		4,180,904			-
Payment of long-term debt		(288,532	)		(117,246	)
Payment of long-term convertible debt

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