Business Context and Reporting Period
Company: SilverSun Technologies, Inc. (Note: Metadata referenced QXO, Inc., but the filing text identifies SilverSun Technologies, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: May 18, 2018
Reporting Period: Events occurring on May 18, 2018, with agreements effective June 1, 2018.
The Company entered into two Asset Purchase Agreements to acquire assets from Info Sys Management, Inc. (ISM) and its subsidiary Nellnube, Inc. Additionally, the Company executed an employment agreement for a new Chief Technology Officer.
Key Financial Metrics and Obligations
This filing details specific transaction costs and new financial obligations rather than periodic operating results.
- Cash Consideration: $300,000 payable to ISM.
- Debt Issuance (ISM Note): $1,000,000 convertible promissory note at 2% annual interest, maturing May 31, 2023.
- Debt Issuance (NN Note): $400,000 convertible promissory note at 2% annual interest, maturing May 31, 2023.
- Total New Debt Principal: $1,400,000.
- Compensation Obligation: $250,000 annual salary for the new CTO.
Note: The filing text does not provide clear values for revenue, profit, cash flow, margins, or existing liquidity positions.
Material Changes and Transaction Details
The Company is expanding its asset base through the following acquisitions, effective June 1, 2018:
- Info Sys Management Acquisition: Subsidiary SWK Technologies, Inc. acquired assets from ISM. Consideration includes the $300,000 cash payment and the $1,000,000 ISM Note.
- Nellnube Acquisition: Subsidiary Secure Cloud Services, Inc. acquired assets from Nellnube, Inc. Consideration includes the $400,000 NN Note.
Debt Terms: Both notes are payable in equal monthly installments, prepayable at any time, and convertible into common stock at a price equal to the average closing price of the Company's stock for the five trading days preceding issuance.
Management Commentary, Risks, and Contingencies
Employment Agreement: Brian James O'Reilly was hired as Chief Technology Officer of SWK Technologies, Inc. for a three-year term starting June 1, 2018.
- Severance Risk: If terminated without cause, the Company is obligated to pay the remainder of the base salary for the full term of the agreement, in addition to accrued benefits and expenses.
Securities Issuance: The convertible notes were issued in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act and/or Regulation D.
Investor Verification Checklist
- Verify the closing date of June 1, 2018, and confirm the delivery of assets and issuance of notes.
- Review the specific conversion pricing mechanism (5-day average closing price) to assess potential dilution.
- Assess the Company's liquidity to support the $300,000 immediate cash payment and future monthly note installments.
- Confirm the integration plan for the acquired assets from ISM and Nellnube.
- Monitor the impact of the new CTO's salary and potential severance liability on future operating expenses.