Filing summary
Entity and period: The supplied filing is SilverSun Technologies, Inc.’s Form 10-K for the fiscal year ended December 31, 2019—not a filing identified as QXO, Inc. or a standalone fourth-quarter report. Verify the issuer and filing before relying on this summary.
Business context
SilverSun provided ERP and accounting software, consulting and implementation, and managed IT, cybersecurity, hosting and related services, primarily to small and midsize businesses. The filing describes a growth strategy centered on recurring services, customer retention, cross-selling and acquisitions. In August 2019, the company sold substantially all MAPADOC EDI business assets to SPS Commerce.
Financial performance
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $38.50 million | $36.10 million |
| Software product revenue | $6.88 million | $5.32 million |
| Service revenue | $31.63 million | $30.78 million |
| Gross profit / gross margin | $14.68 million / 38.1% | $13.85 million / 38.4% |
| Loss from continuing operations | $1.47 million | $0.92 million |
| Net income | $6.79 million | $0.26 million |
| Basic and diluted earnings per share | $1.51 | $0.06 |
Revenue increased 6.6%; software revenue rose 29.2%, which management attributed mainly to cloud ERP sales. Gross profit increased 5.9%, while operating expenses rose to $16.59 million from $15.02 million. Net income included $8.26 million from discontinued operations, including a $10.31 million gain on the MAPADOC sale, partly offset by taxes. The continuing business remained loss-making.
Cash flow, liquidity and debt
- Year-end cash was $8.66 million, up from $1.90 million. Current assets were $12.98 million and current liabilities $8.66 million.
- Continuing operating activities used $0.90 million of cash, compared with $0.27 million used in 2018. Management cited higher receivables and lower cash flows related to income taxes.
- Continuing investing activities provided $8.15 million, principally reflecting the MAPADOC transaction; the cash-flow statement reports $8.37 million of sale proceeds net of fees and taxes.
- Continuing financing activities used $0.87 million. At year-end, promissory-note debt was approximately $1.19 million, finance lease obligations $0.34 million and operating lease liabilities $0.70 million. The $2 million revolving credit facility was repaid and terminated at the sale closing.
- Management said available proceeds from the sale provided adequate liquidity for operating plans for at least 12 months from issuance of the financial statements. This is management’s assessment, not a guarantee.
Material changes, outlook and risks
- MAPADOC was sold for stated aggregate consideration of $11.5 million, with $1.15 million placed in escrow. The filing says $575,000 of escrow was received in February 2020; it also reports a $162,868 working-capital adjustment to the sale gain.
- A $0.50-per-share special dividend, totaling about $2.25 million, was declared in December 2019 and paid in January 2020. A separate $2 million share-repurchase authorization was approved; no repurchases had been made as of March 25, 2020.
- Management continued to consider acquisitions, mergers and other uses of sale proceeds, but reported no material acquisition agreement or understanding. The filing gives no formal revenue or earnings guidance.
- Risks highlighted include competition and pricing pressure, dependence on qualified employees and key personnel, acquisition integration, financing needs, software defects, cybersecurity and service disruptions, and the possibility of future losses. The company reported approximately $6.53 million of federal net operating loss carryforwards, subject to Section 382 limitations.
- The filing discusses COVID-19 as a subsequent risk whose effects were uncertain and could materially affect customers, revenue, workforce, supplies, assets and cash flows.
- Unusual items included $0.24 million of intangible-asset impairment, approximately $0.12 million of legal expense related to a shareholder suit resolved in 2019, and the substantial gain from the business sale. Management reported effective disclosure controls and internal control over financial reporting; the auditor issued an unqualified opinion on the financial statements but did not attest to internal control.
Important facts for investors to verify
- Confirm that SilverSun Technologies, Inc. is the intended issuer; the request metadata names QXO, Inc., which does not match the supplied filing.
- Review the audited statements and discontinued-operations disclosures to distinguish ongoing operating results from the MAPADOC sale gain.
- Check the release conditions and remaining balance of the sale escrow, along with the working-capital adjustment and related tax effects.
- Verify cash conversion, receivables and deferred revenue, and whether continuing operations can support liquidity after the special dividend and planned investments.
- Assess the outstanding convertible acquisition notes, lease commitments, potential dilution, and the terms and use of the share-repurchase authorization.
- Evaluate the actual business impact of COVID-19 and subsequent developments; the filing states that the effect was uncertain.