Filing summary
Issuer/period mismatch: The supplied filing is SilverSun Technologies, Inc.’s Form 10-K for the fiscal year ended December 31, 2020, filed March 25, 2021. It is not identified in the filing as a QXO, Inc. filing or a 2020 fourth-quarter report.
Business context
SilverSun provides ERP and accounting software, related consulting and support, and managed IT, cybersecurity, hosting, and business continuity services, primarily to small and midsize businesses. Most revenue came from services. The company continued its acquisition-led growth strategy, acquiring Prairie Technology Solutions Group, Computer Management Services, and Business Software Solutions during 2020.
Financial performance
| Metric | FY 2020 | FY 2019 |
|---|---|---|
| Revenue | $41.22 million | $38.50 million |
| Gross profit / margin | $16.58 million / 40.2% | $14.68 million / 38.1% |
| Income (loss) from continuing operations before tax | $223,038 | ($1.92 million) |
| Net income (loss) from continuing operations | $175,647 | ($1.47 million) |
| Consolidated net income | $175,647 | $6.79 million |
| Cash from continuing operating activities | $1.73 million | ($903,307) |
| Cash at year-end | $6.60 million | $8.66 million |
Revenue increased 7.1% year over year: software sales rose 11.4% and service revenue rose 6.1%. Management attributed improved gross margin to higher-margin products and services, including managed services and application hosting. Selling and marketing expense increased 7.7%; general and administrative expense declined 5.7%. The 2019 consolidated net income includes $8.26 million from discontinued operations, largely reflecting the sale of the MAPADOC EDI practice; it is not directly comparable with 2020 continuing operations.
Liquidity, debt, and capital
At December 31, 2020, current assets were $8.63 million and current liabilities were $6.73 million. Stockholders’ equity was $7.28 million. Reported long-term and convertible debt totaled $1.48 million, including $545,000 classified as current; finance lease obligations totaled about $181,000. Operating lease liabilities were $1.37 million. Cash declined $2.06 million during the year, chiefly reflecting $4.05 million of dividend payments and the absence of the prior-year EDI sale proceeds. Management stated that liquidity was adequate for operating plans for at least 12 months from issuance of the financial statements.
The company received a $3.15 million Paycheck Protection Program loan and repaid it in full in May 2020 after new SBA guidance raised qualification uncertainty. It paid a $0.40-per-share special dividend in December 2020; cash financing outflows also included payment of a $0.50-per-share dividend declared in 2019 and paid in January 2020. In February 2021, the company raised net proceeds of $3.38 million by selling 393,300 common shares.
Changes, outlook, and risks
Results improved substantially in continuing operations versus 2019, when the company recorded a loss. Operating cash flow also turned positive. The 2020 acquisitions expanded geographic reach and service offerings, while new acquisition-related notes contributed to higher debt balances. No quantitative earnings or revenue guidance is provided. Management described recurring revenue, customer retention, cross-selling, and acquisitions as growth priorities, while noting that the future effect of COVID-19 was uncertain.
Key risks include COVID-19 effects on customer spending and collections; competition and price pressure; recruiting and retaining technical staff; executing and integrating acquisitions; dependence on key vendors and personnel; cybersecurity and service interruption; and access to financing. The company reported no litigation it believed would materially affect its financial condition or results; a previously disclosed shareholder derivative action was resolved in 2019. The independent auditor issued an unqualified opinion on the financial statements. Management concluded internal control over financial reporting was effective, but the auditor did not attest to that assessment.
Important facts for investors to verify
- Confirm the intended issuer and period: this filing is for SilverSun Technologies’ full-year 2020, not QXO, Inc. or a standalone Q4 report.
- Review the quality and sustainability of earnings and cash flow, including the separation of continuing results from the 2019 discontinued-operation sale gain.
- Assess post-year-end dilution and debt changes, including the February 2021 share offering and conversions of the ISM and Nellnube notes into shares.
- Verify acquisition performance, integration costs, and remaining note maturities, particularly for the 2020 acquisitions.
- Consider cash usage and capital allocation: dividends materially reduced cash, while management also planned further acquisition-led growth.
- Evaluate COVID-19 exposure, customer collections, vendor reliance, and the company’s stated 12-month liquidity outlook against subsequent results.