Business Context and Reporting Period
This Form 8-K Current Report is filed by SilverSun Technologies, Inc. (Ticker: SSNT) for the reporting period of August 26, 2019. The filing discloses the closing of a material asset purchase agreement and the termination of a material debt agreement.
Key Financial Metrics and Transactions
- Asset Sale Proceeds: The Company sold assets related to its MAPADOC business to SPS Commerce, Inc. for an aggregate purchase price of $11,500,000.
- Cash Received: $10,350,000 was paid in cash at closing.
- Escrow Amount: $1,150,000 was placed in escrow, subject to release at six and twelve months pending indemnity claims.
- Debt Repayment: The Company fully repaid and terminated a Revolving Demand Note with JPMorgan Chase Bank. The note had a principal capacity of up to $2,000,000 and carried a variable interest rate of Adjusted LIBOR plus 2.25%.
Material Changes
The primary material change is the divestiture of the MAPADOC business assets, resulting in a significant one-time cash inflow. Concurrently, the Company eliminated a secured revolving credit facility that was collateralized by substantially all of the Company's assets, thereby removing associated debt obligations and security interests.
Outlook, Risks, and Contingencies
Contingencies: The release of the $1,150,000 escrowed portion of the purchase price is contingent upon the absence of indemnity claims filed by the buyer within six and twelve months post-closing.
Management Commentary: The filing references a press release issued on August 27, 2019, regarding the transaction but does not provide additional forward-looking guidance or risk factors within the text of this specific report.
Investor Verification Checklist
- Verify the exact definition of "Acquired Assets" in the Asset Purchase Agreement (Exhibit 10.1) to confirm the scope of the divestiture.
- Review the Escrow Agreement (Exhibit 10.2) for specific conditions regarding the release of the $1,150,000 escrow funds.
- Confirm the impact of the asset sale on the Company's remaining operational capabilities and revenue streams.
- Assess whether the repayment of the JPMorgan note was funded entirely by the asset sale proceeds or other liquidity sources.