silversun20220930

silversun20220930_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, 2022

☐ 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 10, 2022, 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):
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2022			December 31, 2021
ASSETS	(unaudited)

Current assets:
Cash and cash equivalents	$	7,232,158		$	6,814,117
Accounts receivable, net of allowance of $450,311 and $330,311		2,252,936			1,926,859
Unbilled services		386,285			284,218
Deferred charges		1,122,600			-
Prepaid expenses and other current assets		1,017,852			1,685,728

Total current assets		12,011,831			10,710,922

Property and equipment, net		806,440			636,901
Operating lease right-of-use assets		419,757			964,990
Intangible assets, net		4,556,041			3,492,234
Goodwill		1,011,952			1,011,952
Deferred tax assets		985,706			990,958
Deposits and other assets		187,553			190,805

Total assets	$	19,979,280		$	17,998,762

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	2,546,111		$	2,038,025
Accrued expenses		2,126,362			1,743,148
Accrued interest		23,379			28,784
Income taxes payable		-			69,614
Long-term debt – current portion		636,087			293,696
Long-term – related party – current portion		103,333			108,309
Finance lease obligations – current portion		215,863			166,571
Operating lease liabilities – current portion		299,763			465,813
Deferred revenue		3,130,282			2,475,583

Total current liabilities		9,081,180			7,389,543

Long-term debt net of current portion		795,211			463,602
Long-term – related party - net of current portion		-			103,333
Finance lease obligations net of current portion		455,056			186,284
Operating lease liabilities net of current portion		119,994			499,177

Total liabilities		10,451,441			8,641,939

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 5,136,177 shares issued and outstanding		52			52
Additional paid-in capital		10,384,817			9,951,142
Accumulated deficit		(857,030	)		(594,371	)

Total stockholders’ equity		9,527,839			9,356,823

Total liabilities and stockholders’ equity	$	19,979,280		$	17,998,762

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, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenues:
Software product, net	$	2,482,488		$	1,553,567		$	7,875,531		$	5,319,063
Service, net		8,434,671			8,556,087			24,703,545			25,899,268
Total revenues, net		10,917,159			10,109,654			32,579,076			31,218,331

Cost of revenues:
Product		1,597,220			888,258			4,808,072			3,023,830
Service		4,891,370			5,282,088			14,510,300			15,237,976
Total cost of revenues		6,488,590			6,170,346			19,318,372			18,261,806

Gross profit		4,428,569			3,939,308			13,260,704			12,956,525

Selling, general and administrative expenses:
Selling and marketing expenses		2,016,850			1,702,496			5,645,564			5,035,910
General and administrative expenses		2,244,622			2,251,467			6,956,744			6,779,662
Share-based compensation expenses		44,185			48,878			136,075			98,810
Depreciation and amortization expenses		240,522			226,765			738,893			635,264
Total selling, general and administrative expenses		4,546,179			4,229,606			13,477,276			12,549,646

(Loss) income from operations		(117,610	)		(290,298	)		(216,572	)		406,879

Other expense:
Interest expense		(23,688	)		(18,367	)		(66,340	)		(35,559	)
Total other expense		(23,688	)		(18,367	)		(66,340	)		(35,559	)

(Loss) income before taxes		(141,298	)		(308,665	)		(282,912	)		371,320

(Benefit) provision for income taxes		(7,061	)		(68,636	)		(20,253	)		126,381

Net (loss) income	$	(134,237	)	$	(240,029	)	$	(262,659	)	$	244,939
Net (loss) income per common share:
Basic	$	(0.03	)	$	(0.05	)	$	(0.05	)	$	0.05
Diluted	$	(0.03	)	$	(0.05	)	$	(0.05	)	$	0.05
Weighted average shares:
Basic		5,136,177			5,136,177			5,136,177			4,989,432
Diluted		5,136,177			5,136,177			5,136,177			4,991,631

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

SILVERSUN TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022

	Series A Preferred Stock				Series B Preferred Stock				Common Stock Class A				Additional Paid in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance at July 1, 2022		-	$	-		-	$	-		5,136,177	$	52	$	10,043,032	$	(722,793	)	$	9,320,291

Share-based compensation		-		-		-		-		-		-		44,185		-			44,185
Stock compensation issued for services		-		-		-		-		-		-		297,600		-			297,600
Net loss		-		-		-		-		-		-		-		(134,237	)		(134,237	)

Balance at September 30, 2022		-	$	-		-	$	-		5,136,177	$	52	$	10,384,817	$	(857,030	)	$	9,527,839

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

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, 2022

	Series A Preferred Stock				Series B Preferred Stock				Common Stock Class A				Additional Paid in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance at January 1, 2022		-	$	-		-	$	-		5,136,177	$	52	$	9,951,142	$	(594,371	)	$	9,356,823

Share-based compensation		-		-		-		-		-		-		136,075		-			136,075
Stock compensation issued for services		-		-		-		-		-		-		297,600					297,600
Net loss		-		-		-		-		-		-		-		(262,659	)		(262,659	)

Balance at September 30, 2022		-	$	-		-	$	-		5,136,177	$	52	$	10,384,817	$	(857,030	)	$	9,527,839

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

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,
	2022			2021
Cash flows from operating activities:
Net (loss) income	$	(262,659	)	$	244,939
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Deferred income taxes		5,252			142,245
Depreciation and amortization		291,720			248,540
Amortization of intangibles		569,864			388,024
Amortization of right of use assets		545,233			272,597
Bad debt expense		120,000			(50,000	)
Share-based compensation		136,075			98,810

Changes in assets and liabilities:
Accounts receivable		(446,077	)		665
Unbilled services		(102,067	)		(137,450

SEC Form 10-Q filed by SilverSun Technologies Inc.