Filing identity and reporting period
The supplied filing is SilverSun Technologies, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2013—not a filing identified as QXO, Inc. Investors should verify the issuer before relying on these figures. Unless otherwise noted, financial amounts below are in thousands of dollars.
SilverSun provides business software, consulting, support and managed IT services, and pursues growth through proprietary products and acquisitions. Its 2013 results include HighTower, acquired in June 2012; the 2012 comparison does not include HighTower’s results.
Financial results and liquidity
| Metric | Q1 2013 | Q1 2012 |
|---|---|---|
| Revenue | $4,044 | $2,909 |
| Gross profit and margin | $1,635; 40.4% | $1,183; 40.7% |
| Operating income (loss) | $132 | $(686) |
| Net income (loss) | $116 | $(708) |
| Operating cash flow | $471 | $(46) |
| Investing cash flow | $(22) | $(79) |
| Financing cash flow | $(192) | $(9) |
Revenue increased 39.0%, with management citing higher maintenance agreements and software sales, as well as approximately $416 of HighTower revenue. Selling and marketing expense rose to $730 from $515, and general and administrative expense rose to $693 from $616. The prior-year period included $719 of share-based compensation expense, a major contributor to the reported earnings improvement. Basic and diluted earnings per share were reported as $0.00 in 2013, versus a loss of $0.01 in 2012.
At March 31, 2013, cash was $261, current assets were $1,608 and current liabilities were $3,395, implying a working-capital deficit of $1,787. Total assets were $2,729 and stockholders’ deficit was $666. The bank line had no balance outstanding, with $516 available under a facility with a stated maximum of $750; the company had repaid the $179 balance reported at December 31, 2012. The facility bears 6% interest at quarter-end, is secured by substantially all company assets and guaranteed by the CEO, and expires in October 2014. Current capital lease obligations were $93 and related-party notes payable were $20.
Cash increased by $257 during the quarter, from $4 to $261. The operating cash inflow included a $319 reduction in accounts receivable and a $176 increase in deferred revenue; financing cash use principally reflected repayment of the bank line. The company reported compliance with required credit-facility covenants.
Material changes, outlook and risks
- HighTower contributed to year-over-year growth; management attributed the remaining increase to existing business, including maintenance and software sales.
- Gross margin edged down from 40.7% to 40.4%; management said changes in product mix can affect the margin.
- Management said it believed liquidity, including credit-line availability, was adequate to fund operating plans for at least the next 12 months. The filing gives no specific revenue or earnings guidance.
- Management intends to pursue further acquisitions, partnerships or investments, which could require cash or equity funding. The company’s substantial working-capital deficit is relevant to that plan.
- The filing reports no material off-balance-sheet arrangements, no material litigation, and no material changes to internal control during the quarter. Management concluded disclosure controls were effective. The company reported no material change to previously disclosed risk factors.
- Forward-looking statements are subject to risks and assumptions; management disclaims an obligation to update them except as required by law. The interim results are not necessarily indicative of full-year results.
Important facts for investors to verify
- Confirm issuer identity: the supplied filing names SilverSun Technologies, Inc., while the request identifies QXO, Inc.
- Reconcile the share-count presentation: the balance-sheet text contains an apparent unit inconsistency for issued and outstanding shares; the filing separately reports 116,978,291 common shares outstanding as of May 10, 2013.
- Assess liquidity and near-term funding needs against the $1,787 working-capital deficit, $261 cash balance, and $516 reported line availability, including the facility’s borrowing-base conditions and collateral guarantee.
- Separate organic growth from acquisition contribution and consider the prior-year $719 share-based compensation charge when comparing profitability.
- Review acquisition plans, potential funding requirements, and the underlying risk factors in the company’s annual report.