Quarterly report pursuant to Section 13 or 15(d)

NOTE 5 - BUSINESS COMBINATION

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NOTE 5 - BUSINESS COMBINATION
6 Months Ended
Jun. 30, 2014
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
NOTE 5 – BUSINESS COMBINATION

On May 6, 2014 (the “Closing Date”) SWK Technologies, Inc. (“SWK”) , a wholly owned subsidiary of SilverSun Technologies, Inc, entered into an Asset Purchase Agreement with ESC, Inc. d/b/a ESC Software, an Arizona corporation, and Alan H. Hardy and Michael Dobberpuhl in their individual capacity as Shareholders. SWK acquired certain assets of ESC (as defined in the Purchase Agreement). In consideration for the acquired assets, the Company issued in favor of Seller a promissory note in the aggregate principal amount of $350,000 (the “Note”).  The Note is due sixty (60) months from the Closing Date (the “Maturity Date”) and bears interest at a rate of two percent (2%) per annum. Principal and interest payments are made monthly. Any overdue principal or interest on the Note shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the lesser of (i) the maximum interest rate permitted by applicable law or (ii) ten percent (10%). The outstanding balance at June 30, 2014 was $344,449. The purchase price has been initially allocated based on the Company’s estimate of fair value to intangible assets.  Intangible assets consist primarily of customers lists with a life of five years. Upon completion of our independent valuation, the allocation of the purchase price will be modified accordingly, with the excess purchase consideration, if any, being allocated to goodwill at the closing of the transaction.

Additionally, in connection with the Purchase Agreement, the Company entered into an Employment Agreement with Alan H. Hardy pursuant to which Mr. Hardy will serve as SWK’s Senior Vice President of business development. Mr. Hardy’s duties will vary, but will focus primarily on business development and software application sales.  The term of the Employment Agreement is three years (the “Term”). SWK shall pay Mr. Hardy a base salary of One Hundred Sixty Two Thousand ($162,000) per annum. Additionally, Mr. Hardy shall receive 600,000 options to purchase the Company’s common stock (see Note 8) at a strike price of $0.15 per share (the “Options”).  The Options shall vest at 20% year over year for five years.

The Company’s condensed consolidated financial statements for the three months and six months June 30, 2014 include the results of ESC since date of acquisition.  For the quarter ended June 30, 2014, the ESC operations had a net loss of $10,600 that was included in the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2014, which consisted of approximately $124,000 in revenues and $134,600 in expenses. The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on January 1, 2013, nor is the financial information indicative of the results of future operations.   The following table represents the unaudited consolidated pro forma results of operations for the six months ended June 30, 2014 and 2013 as if the acquisition occurred on January 1, 2013.  Operating expenses have been increased for the amortization expense associated with the estimated fair value adjustment as of June 30, 2014 of expected definite lived intangible assets, for a net adjustment of $35,000 for the six months ended June 30, 2014 and 2013.

 Pro Forma
 
Six Months Ended June 30, 2014
   
Six Months Ended June 30, 2013
 
Net sales
 
$
10,914,502
   
$
8,689,400
 
Operating expenses
   
4,163,349
     
3,246,483
 
Income  before taxes
   
396,646
     
158,321
 
Net income
 
$
235,125
   
$
158,321
 
Basic income per common share
 
$
0.00
   
$
0.00
 
Diluted income per common share
 
$
0.00
   
$
0.00