Filing summary
Entity and period: The supplied filing is SilverSun Technologies, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2018—not a QXO, Inc. filing. SilverSun provides business software, consulting, and managed IT services through its wholly owned subsidiary, SWK Technologies. Financial amounts below are in U.S. dollars.
Financial results
| Metric | Q1 2018 | Q1 2017 | Change |
|---|---|---|---|
| Revenue | $9.31 million | $8.00 million | +16.3% |
| Gross profit / margin | $3.94 million / 42.3% | $3.39 million / 42.3% | Gross profit +16.3% |
| Operating income / margin | $88,322 / 0.9% | $288,192 / 3.6% | Down $199,870 |
| Net income | $58,387 | $153,853 | Down 62.1% |
| Diluted earnings per share | $0.01 | $0.03 | Down |
| Operating cash flow | $(116,605) | $133,517 | Declined |
| Investing cash flow | $(190,733) | $(193,599) | Use decreased |
| Financing cash flow | $(120,838) | $(200,038) | Use decreased |
Software product revenue rose 80.3% to $1.64 million; service revenue rose 8.2% to $7.68 million. Gross margin held at 42.3%. Selling and marketing expense increased 39.2% to $1.60 million, and general and administrative expense increased 20.8% to $2.06 million, weighing on operating income. Management attributed the expense increases mainly to additional sales personnel and travel, and added management payroll.
Balance sheet and liquidity
- Cash was $1.81 million at March 31, 2018, down $428,176 from year-end 2017. Current assets were $5.88 million and current liabilities $6.32 million, implying negative working capital of about $433,000 and a current ratio of approximately 0.93.
- Long-term debt, including its current portion, totaled $374,068; capital lease obligations totaled $134,897. The company reported no borrowings on its $1 million M&T Bank demand line of credit.
- Operating cash use reflected increases in accounts receivable and unbilled services. Investing outflows primarily included $174,399 of software development costs and $16,334 for property and equipment.
- Management said available liquidity, including the credit line, was adequate for operating plans for at least the next 12 months. The filing also describes the line as secured by company assets and guaranteed by the company and CEO.
Outlook, risks, and notable items
- Management described continued customer-base growth and is pursuing acquisitions, investments, collaborations, and asset purchases; these plans may consume cash or require additional cash or equity. No quantified earnings or revenue guidance was provided.
- Customer concentration: one customer represented about 17% of accounts receivable and unbilled services. The top ten customers generated 25% of quarterly revenue, versus 22% a year earlier. One channel-partner supplier represented about 25% of cost of revenue; one supplier was about 34% of accounts payable.
- Cash balances exceeded FDIC insurance limits by approximately $1.46 million. The company cited competition and the need to win profitable contracts as factors that could affect future profitability and realization of deferred tax assets.
- Federal NOL carryforwards were approximately $6.85 million and are subject to Section 382 limitations. The company adopted ASC 606 in Q1 with no opening retained-earnings adjustment. The filing reported no material litigation, no material change in previously disclosed risk factors, and effective disclosure controls.
- A related-party note and accrued interest were offset against a related-party receivable of $47,043 on March 31, 2018. Management reported no impairment losses for goodwill or intangible assets in the quarter.
Most important facts to verify
- Confirm the issuer identity: the filing text identifies SilverSun Technologies (ticker SSNT), while the request metadata names QXO, Inc.
- Assess whether expense growth and working-capital cash use can be managed while revenue expands; operating income and net income declined despite higher sales.
- Review receivables, unbilled services, customer concentration, and supplier/channel-partner dependence.
- Confirm the availability and terms of the secured demand credit line and the implications of the company and CEO guarantees.
- Evaluate acquisition and investment plans against cash needs, debt and lease payments, and the company’s negative working capital.