Business Context and Reporting Period
This Form 8-K was filed by SilverSun Technologies, Inc. (the "Company") on July 9, 2015, reporting events occurring on July 6, 2015. The filing details the acquisition of assets from ProductiveTech, Inc. ("PTI") by the Company's wholly-owned subsidiary, SWK Technologies, Inc. ("SWK"). The transaction establishes a new business unit, NetUp-IT, and involves the assumption of certain liabilities and the hiring of PTI's former owners.
Key Financial Metrics and Transaction Terms
The acquisition consideration totaled $1,360,000, structured as follows:
- Cash Payment: $500,000 paid immediately to the Seller.
- Promissory Note: $600,000 principal amount (the "PTI Note") bearing 2.5% annual interest, amortized over 60 monthly installments with a 5-year term.
- Equity Issuance: Common stock valued at $260,000, calculated based on the average closing price of the Company's stock over the five trading days preceding the closing date.
Employment Obligations: The Company entered into three-year employment agreements with two key executives:
- John McPoyle (Vice President of Operations): $155,000 annual salary.
- Kevin Snyder (Vice President of Business Development and Sales): $155,000 annual salary.
Liquidity and Debt: The filing creates a direct financial obligation of $600,000 via the promissory note. The filing text does not provide specific data on the Company's overall cash flow, total debt, or liquidity position outside of this transaction.
Material Changes
The primary material change is the expansion of the Company's operations through the acquisition of PTI's assets and the formation of the NetUp-IT business unit. This represents a shift in asset composition and the incurrence of new debt and equity obligations. No comparative financial data for prior periods is provided in this current report.
Outlook, Risks, and Unusual Items
Management Commentary: The acquired executives are tasked with leading day-to-day operations, staff management, revenue growth, and expense control for the NetUp-IT unit.
Risks and Contingencies: The Company assumed certain liabilities of PTI pursuant to an Assignment and Assumption Agreement. The specific nature and magnitude of these assumed liabilities are not detailed in the summary text but are referenced in the exhibits.
Unusual Items: The equity portion of the purchase price was issued as unregistered securities under Section 4(a)(2) of the Securities Act of 1933 and/or Regulation D.
Investor Verification Checklist
- Verify the exact number of shares issued for the $260,000 equity component and the resulting dilution impact.
- Review the Assignment and Assumption Agreement (Exhibit 2.1) to quantify the specific liabilities assumed from PTI.
- Confirm the Company's current cash balance to ensure the $500,000 cash payment did not materially impair liquidity.
- Assess the integration plan for the NetUp-IT business unit and the projected revenue contribution from the acquired assets.