Attached files
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EX-99.1 - EX-99.1 - SilverSun Technologies, Inc. | ex99-1.htm |
8-K/A - 8-K/A - SilverSun Technologies, Inc. | silversuntech8ka091815.htm |
EX-99.3 - EX-99.3 - SilverSun Technologies, Inc. | ex99-3.htm |
Exhibit 99.2
PRODUCTIVETECH, INC.
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
TABLE OF CONTENTS
Page
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Financial Statements
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Balance Sheet
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1
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Statement of Income and Changes in Retained Earnings
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2
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Statement of Cash Flows
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3
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Notes to Financial Statements
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4
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BALANCE SHEETS
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June 30,
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December 31,
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2015
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2014
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(Unaudited)
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(Audited)
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 44,844 | $ | 13,297 | ||||
Accounts receivable
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162,687 | 169,007 | ||||||
Inventory
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13,042 | 9,041 | ||||||
Total current assets
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220,573 | 191,345 | ||||||
Property and equipment, net
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93,300 | 85,232 | ||||||
Other assets
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20,913 | 8,119 | ||||||
Total assets
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$ | 334,786 | $ | 284,696 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities
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Line of credit
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$ | 95,614 | 50,000 | |||||
Accounts payable, trade
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95,712 | 17,962 | ||||||
Notes payable, related parties
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38,091 | 49,798 | ||||||
Current portion of long-term debt
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9,337 | 12,006 | ||||||
Deferred revenue
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16,815 | 25,711 | ||||||
Other liabilities
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17,010 | 9,601 | ||||||
Total current liabilities
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272,579 | 165,078 | ||||||
Long-term debt
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15,384 | 20,881 | ||||||
Total liabilities
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287,963 | 185,959 | ||||||
Commitments
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Stockholders' equity
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Common stock, no par value, 100 shares authorized and issued
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5,000 | 5,000 | ||||||
Retained earnings
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41,823 | 93,737 | ||||||
Total stockholders' equity
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46,823 | 98,737 | ||||||
Total liabilities and stockholders' equity
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$ | 334,786 | $ | 284,696 |
See accompanying notes to the financial statements.
1
STATEMENTS OF INCOME AND CHANGES IN RETAINED EARNINGS
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(Unaudited)
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Six Months Ended June 30,
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2015
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2014
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Revenues
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Service
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$ | 696,326 | $ | 627,038 | ||||
Product
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206,317 | 290,520 | ||||||
Total Revenues
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902,643 | 917,558 | ||||||
Cost of revenues
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Service
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323,277 | 288,366 | ||||||
Product
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169,027 | 219,189 | ||||||
Cost of revenues
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492,304 | 507,555 | ||||||
Gross profit
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410,339 | 410,003 | ||||||
Operating expenses
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General and administrative expenses
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366,325 | 283,499 | ||||||
Income from operations
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44,014 | 126,504 | ||||||
Other income (expense)
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Interest Expense
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(4,472 | ) | (1,961 | ) | ||||
Income, other
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2,544 | 1,193 | ||||||
(1,928 | ) | (768 | ) | |||||
Income before income taxes
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42,086 | 125,736 | ||||||
Income tax expense
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1,000 | 825 | ||||||
Net income
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41,086 | 124,911 | ||||||
Retained earnings, beginning of period
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93,737 | 46,800 | ||||||
Distributions
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(93,000 | ) | (69,000 | ) | ||||
Retained earnings, end of period
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$ | 41,823 | $ | 102,711 |
See accompanying notes to the financial statements.
2
PRODUCTIVETECH, INC.
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STATEMENTS OF CASH FLOWS
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(Unaudited)
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Six Months Ended
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June 30,
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June 30,
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2015
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2014
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Cash flows from operating activities
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Net income
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$ | 41,086 | $ | 124,911 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities
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Depreciation
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15,457 | 11,681 | ||||||
Changes in assets and liabilities
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Accounts receivable
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6,320 | 10,156 | ||||||
Inventory
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(4,001 | ) | (9,974 | ) | ||||
Accounts payable
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77,750 | 23,481 | ||||||
Deferred revenue
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(8,896 | ) | (26,144 | ) | ||||
Other liabilities
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7,409 | 8,347 | ||||||
Net cash provided by operating activities
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135,125 | 142,458 | ||||||
Cash flows from investing activities
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Acquisition of property, plant and equipment
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(23,525 | ) | (12,552 | ) | ||||
Loan to stockholder
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(20,000 | ) | - | |||||
Loan to employees
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(587 | ) | - | |||||
Proceeds from notes receivable, related party
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811 | 779 | ||||||
Net cash used in investing activities
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(43,301 | ) | (11,773 | ) | ||||
Cash flows from financing activities
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Repayment of long-term debt
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(8,166 | ) | (14,255 | ) | ||||
Repayment of notes payable - related parties
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(4,725 | ) | (6,578 | ) | ||||
Proceeds from line of credit
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50,000 | - | ||||||
Repayment of line of credit
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(4,386 | ) | (25,000 | ) | ||||
Distributions
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(93,000 | ) | (69,000 | ) | ||||
Net cash used in financing activities
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(60,277 | ) | (114,833 | ) | ||||
Net change in cash and equivalents
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31,547 | 15,852 | ||||||
Cash and equivalents, beginning of period
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13,297 | 12,430 | ||||||
Cash and equivalents, end of period
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$ | 44,844 | $ | 28,282 | ||||
Supplemental cash flow disclosures
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Income taxes paid
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$ | 1,000 | $ | 825 | ||||
Interest paid
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3,732 | 1,264 |
See accompanying notes to the financial statements.
3
PRODUCTIVE TECH, INC.
NOTES TO FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
ProductiveTech, Inc. (the “Company”), is incorporated in the state of New Jersey. The Company is engaged in the business of managed and hosted services, information technology consulting services and sales of computer hardware. Managed and hosted services include cloud services such as server backups and spam filtering.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates.
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Cash balances in banks are insured by the Federal Deposit Insurance Corporation subject to certain limitations.
Accounts Receivable
Accounts receivable are stated at the amounts management expects to collect. An allowance for doubtful accounts is recorded based on a combination of historical experience, aging analysis and information on specific accounts. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Management has determined that no allowance is required at June 30, 2015 and December 31, 2014.
Revenue Recognition
Managed and hosted services are recognized at the first of each month, as services are prepaid to cover the month in which revenue is recognized. Consulting and project services are billed and revenue is recognized as services are provided. Product revenue is recorded as products are sold and delivered to customers. If the product to be sold requires a down payment, the payment is recorded as a customer deposit and is recognized as revenue once the product is delivered to the customer.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided using the straight-line method over estimated useful lives of three to six years. Leasehold improvements are amortized over the shorter of the useful life of the related asset or the period of the lease.
4
PRODUCTIVE TECH, INC.
NOTES TO FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventory
Inventory, which consist of purchased finished goods, are stated at the lower of cost (first-in, first-out) or market.
Deferred Revenue
Deferred revenue consists of prepaid blocks of time deposited for future consulting services which will be earned as services are performed.
Income Taxes
The Company has elected S Corporation status for federal income tax, New Jersey and Pennsylvania corporation business tax purposes. Under these elections, the Company is not a taxpaying entity for federal and state income tax purposes and, accordingly, no provision has been made for such income taxes, except for a minimum state corporate business tax. The stockholders’ allocable share of the Company’s income or loss is reportable on their income tax returns.
Fair Value of Financial Instruments
The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, accrued expenses, and other liabilities approximates fair value due to their short maturities. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.
Subsequent Events
The Company has evaluated events and transactions for potential recognition or disclosure through September 18, 2015, which is the date the financial statements were available to be issued.
2 - RELATED PARTY TRANSACTIONS
The Company borrowed funds from the stockholders to support the Company’s operations, as necessary. As of June 30, 2015 and December 31, 2014 the amount due is $38,091 and $49,798, respectively. During the six months ended June 30, 2015 a stockholder borrowed $20,000 from the Company. The advance was applied against amounts due to stockholder. At June 30, 2015 the remaining balance due from the stockholder is $13,018 and is classified in other assets. All stockholder loans and advances are non-interest bearing with no set maturity date.
5
PRODUCTIVE TECH, INC.
NOTES TO FINANCIAL STATEMENTS
2 - RELATED PARTY TRANSACTIONS (Continued)
In January 2013 the Company entered into a $10,000 note receivable with a related party. The term of the loan is five years, maturing in January 2018, at an interest rate of 5%. As of June 30, 2015 and December 31, 2014, the balance of the loan is $5,808 and $6,619, respectively.
3 - PROPERTY AND EQUIPMENT
Property and equipment, at cost, consist of the following:
June 30,
2015
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December 31,
2014
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Computers and equipment
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$ | 221,725 | $ | 198,200 | ||||
Leasehold improvements and other fixed assets
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42,606 | 42,606 | ||||||
264,331 | 240,806 | |||||||
Less - Accumulated depreciation and amortization
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171,031 | 155,574 | ||||||
$ | 93,300 | $ | 85,232 |
4 - LINES OF CREDIT
The Company had a $50,000 revolving line of credit with Fulton Bank of New Jersey, guaranteed by the stockholders of the Company and an annual basis minimum thirty day zero balance requirement. The collateral on the line included accounts receivable, inventory, property and equipment as pledged by the Company. Interest is at prime rate plus 1.0% not less than 4.5% (4.5% at June 30, 2015). On April 10, 2015 the Company, increased their borrowings up to $150,000 under this line. The annual minimum thirty day zero balance requirement was replaced with required monthly principal payments of one thirty sixth of the balance outstanding. The Company had $75,614 and $50,000 in borrowings against the line as of June 30, 2015 and December 31, 2014, respectively.
On April 10, 2015, the Company also opened a new $50,000 revolving line of credit with the same bank that is guaranteed by the stockholders of the Company and requires on an annual basis a minimum thirty day balance of zero. The collateral on the line includes accounts receivable, inventory, property and equipment as pledged by the Company. Interest is at prime rate plus 1.0% not less than 4.5% (4.5% at June 30, 2015). The Company had $20,000 in borrowings against this line of credit as of June 30, 2015.
6
PRODUCTIVE TECH, INC.
NOTES TO FINANCIAL STATEMENTS
5 - NOTES PAYABLE
On May 31, 2012, the Company entered into a thirty six-month financing agreement with Leaf Capital Funding, LLC in the amount of $16,204 due May 31, 2015, which is guaranteed by the stockholders of the Company and collateralized by the assets purchased with the funds. The monthly payment amount is $563 and has an imputed interest rate of 1.26% per month. As of December 31, 2014 the outstanding balance was $3,232 and the Company satisfied the outstanding balance as of June 30, 2015.
On December 23, 2014, the Company entered into a thirty-six month financing agreement with Leaf Capital Funding, LLC in the amount of $29,603 due December 23, 2017, which is guaranteed by the stockholders of the Company and collateralized by the assets purchased with the funds. The monthly payment amount is $991 and has an imputed interest rate of 1.04% per month. At June 30, 2015 and December 31, 2014 and the outstanding balance was $24,721 and $29,655, respectively.
Year Ending June 30,
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2015
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$ | 9,337 | ||
2016
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10,574 | |||
2017
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4,810 | |||
$ | 24,721 |
6 - CONCENTRATIONS OF CREDIT RISK
Accounts receivable from one customer represents approximately 18% and 11% of the total receivable balance as of June 30, 2015 and December 31, 2014, respectively. No customers accounted for more than 10% of revenue for the six months ended June 30, 2015 and 2014.
7 - COMMITMENTS
On December 17, 2012, the Company signed a three year lease commencing on January 1, 2013 and terminating on December 31, 2015, with a base rent of $1,750 per month. On May 22, 2014, the lease agreement was amended for use of additional square footage increasing monthly base rent to $2,200, effective June 1, 2014. As of June 30, 2015 there are no future minimum payments as the Company was acquired and the lease was taken over by the acquirer (see Note 8). Total rent expense was approximately $13,800 and $11,175 for six months ended June 30, 2015 and 2014, respectively.
8 - SUBSEQUENT EVENTS
On July 6, 2015, the Company entered into an Asset Purchase Agreement and sold substantially all of the Company’s assets for total consideration of $1,360,000 to SWK Technologies, Inc. (“SWK”), a subsidiary of SilverSun Technologies, Inc. (“SSNT”). The consideration is comprised of $500,000 in cash and a promissory note for $600,000. The note is due in 60 months from the closing date and bears interest at a rate of two and one half (2.5%) percent. Additionally in connection with the purchase agreement, SSNT issued 64,484 shares of common stock at a value of $260,000. Subsequent to the sale of the Company’s assets, the Company no longer has ongoing operations.
7