Business context and reporting period
This is SilverSun Technologies, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2022—not a filing identified in its text as QXO, Inc. The company provides business software, technology, cybersecurity, managed services and consulting, and pursues growth through recurring services and acquisitions.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $11.024 million | $10.879 million; up 1.3% |
| Software revenue | $2.611 million | $2.004 million; up 30.3% |
| Service revenue | $8.413 million | $8.875 million; down 5.2% |
| Gross profit / margin | $4.705 million / 42.7% | $4.747 million / 43.6% |
| Operating income (loss) | $(19,716) | $493,273 |
| Net income (loss) | $(40,656), or $(0.01) per share | $354,679, or $0.07 per share |
| Operating cash flow | $(8,246) | $(500,461) |
| Cash, March 31 | $6.486 million | $6.814 million at December 31, 2021 |
| Working capital, March 31 | $2.635 million | Prior comparable value not stated in the filing text |
Total long-term and related-party debt was $1.797 million at quarter-end, including $631,834 current; finance lease obligations totaled $295,866. Operating lease liabilities were $604,222. The company reported total assets of $18.658 million and stockholders’ equity of $9.362 million. No line of credit or other lender facility was in place.
Material changes versus prior period
- Revenue rose modestly as software sales—particularly Acumatica—increased, partly offset by lower services revenue.
- Gross profit declined $41,670 and gross margin contracted 0.9 percentage points. Management attributed weaker services profitability to training newer staff, higher compensation and increased vacation and personal time off.
- Operating results shifted from $493,273 income to a $19,716 loss. General and administrative expenses increased 13.1%, and depreciation and amortization also rose, partly reflecting acquisitions.
- Operating cash use improved substantially year over year, but cash declined $327,684 in the quarter. Investing activities used $180,548; financing activities used $138,890. Q1 2021 financing had included $3.382 million of net stock-offering proceeds.
- Debt increased from $968,940 at December 31, 2021 to $1.797 million, primarily reflecting acquisition-related notes, including the $835,000 DTS note.
Outlook, risks and unusual items
No quantified revenue, earnings or margin guidance is provided. Management said it believes cash and business growth are sufficient to fund operating plans for at least 12 months, while cautioning that pandemic effects could undermine that assessment. It cited growth through cloud products, recurring revenue, customer retention, cross-selling and acquisitions.
Management said software sales growth may support future services revenue. It also reported inflation-related recruiting and retention costs and expected higher travel and meal costs as trade-show activity returned. The company is monitoring COVID-19 disruption and noted potential effects on customers, collections, staffing, supply availability and technology spending. It reported minimal direct business in Russia and Ukraine but acknowledged possible indirect effects from sanctions.
In January 2022, the company acquired assets from Dynamic Tech Services for $1.335 million, funded with $500,000 cash and an $835,000 four-year note bearing 3.25% interest. The note may be reduced by up to $150,000 if subscription renewals from acquired customers fall below the contractual threshold. The company also acquired a NEO3 customer list for $225,000 plus assumed prepaid time. Purchase-price allocation for DTS was preliminary. Separately, a subsequent event disclosed approximately $494,275 of equipment finance lease obligations incurred April 15, 2022.
The company reported no material litigation, no material off-balance-sheet arrangements, and no material changes to previously disclosed risk factors. Management concluded disclosure controls were effective; no material quarterly changes in internal control over financial reporting were reported.
Important facts for investors to verify
- Confirm issuer identity and ticker: the supplied metadata names QXO, Inc., but the filing identifies SilverSun Technologies, Inc. (SSNT).
- Review the DTS and NEO3 acquisition terms, final purchase-price allocation, renewal performance and resulting amortization and debt obligations.
- Assess whether the company can restore operating profitability and margins as service revenue, staffing costs and acquisition-related expenses evolve.
- Track liquidity, cash conversion, debt maturities and the effect of the April 2022 equipment leases; the company has no credit facility.
- Monitor COVID-19, inflation, customer technology spending, collections and potential indirect impacts from sanctions.