UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number ~~000-52049~~001-40574

SYNCHRONOSS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware			06-1594540
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

200 Crossing Boulevard, ~~8th~~3rd Floor Bridgewater, New Jersey			08807
(Address of principal executive offices)			(Zip Code)

(866) 620-3940

(Registrant’s telephone number, including area code)

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, ~~par value~~ $.0001 par value	SNCR	The Nasdaq Stock Market, LLC
8.375% Senior Notes due 2026	SNCRL	The Nasdaq Stock Market, LLC

As of ~~May 06,~~November 05, 2021, there wewere 88,340,870 s~~re 44,150,959 shares~~hares of common stock issued and outstanding.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

FORM 10-Q INDEX


		Page No.
PART I.	FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements and Notes	3

	Condensed Consolidated Balance Sheets (unaudited)	3

	Condensed Consolidated Statements of Operations (unaudited)	4

	Condensed Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	6

	Condensed Consolidated Statements of Cash Flows (unaudited)	78

	Notes to Condensed Consolidated Financial Statements (unaudited)	89


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2832

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3741

Item 4.	Controls and Procedures	3842


PART II.	OTHER INFORMATION	3943

Item 1.	Legal Proceedings	3943

Item 1A.	Risk Factors	3943

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3947

Item 3.	Defaults Upon Senior Securities	3947

Item 4.	Mine Safety Disclosures	3947

Item 5.	Other Information	3947

Item 6.	Exhibits	4048

SIGNATURES		4149

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020

ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash, restricted cash and cash equivalents		$	29,818	$	33,671
Cash and cash equivalents						Cash and cash equivalents	$	24,141	$	33,671

Accounts receivable, net	Accounts receivable, net	46,236		47,849		Accounts receivable, net	39,073		47,849
Prepaid & Other Current Assets		40,861		39,847
Prepaid & other current assets						Prepaid & other current assets	47,239		39,847

Total Current assets		116,915		121,367
Non-Current Assets:
Total current assets						Total current assets	110,453		121,367
Non-current assets:						Non-current assets:

Property and equipment, net	Property and equipment, net	10,799		11,732		Property and equipment, net	8,161		11,732
Operating lease right-of-use assets	Operating lease right-of-use assets	31,960		34,538		Operating lease right-of-use assets	27,629		34,538
Goodwill	Goodwill	228,537		232,771		Goodwill	226,840		232,771
Intangible assets, net	Intangible assets, net	65,292		69,593		Intangible assets, net	63,464		69,593
Loan Receivable		4,834		4,834
Loan receivable						Loan receivable	4,834		4,834

Other Assets, non-current		6,793		7,420
Other assets, non-current						Other assets, non-current	6,994		7,420

Total Non-Current Assets		348,215		360,888
Total non-current assets						Total non-current assets	337,922		360,888
Total assets	Total assets	$	465,130	$	482,255	Total assets	$	448,375	$	482,255
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	16,907	$	12,749	Accounts payable	$	6,795	$	12,749
Accrued expenses	Accrued expenses	67,685		69,326		Accrued expenses	70,255		69,326
Deferred revenues, current	Deferred revenues, current	32,358		33,045		Deferred revenues, current	31,506		33,045
Debt, current	Debt, current	10,000		10,000		Debt, current	—		10,000

Total Current liabilities		126,950		125,120
Total current liabilities						Total current liabilities	108,556		125,120

Long-term debt, net of debt issuance costs						Long-term debt, net of debt issuance costs	117,494		—
Deferred tax liabilities	Deferred tax liabilities	1,295		1,875		Deferred tax liabilities	790		1,875
Deferred revenues, non-current	Deferred revenues, non-current	7,495		12,569		Deferred revenues, non-current	845		12,569

Leases, non-current	Leases, non-current	42,088		44,273		Leases, non-current	38,013		44,273
Other non-current liabilities	Other non-current liabilities	4,897		4,995		Other non-current liabilities	4,578		4,995
Redeemable noncontrolling interest	Redeemable noncontrolling interest	12,500		12,500		Redeemable noncontrolling interest	12,500		12,500
Total liabilities						Total liabilities	282,776		201,332
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; 10,000 shares authorized, 260 and 250 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		247,842		237,641

Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; nil and 10,000 shares authorized, nil and 250 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; nil and 10,000 shares authorized, nil and 250 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	—		237,641
Series B Non-Convertible Perpetual Preferred Stock, $0.0001 par value; 150 and nil shares authorized, 75 and nil shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Series B Non-Convertible Perpetual Preferred Stock, $0.0001 par value; 150 and nil shares authorized, 75 and nil shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	72,505		—

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, $0.0001 par value; 100,000 shares authorized, 51,331 and 51,177 shares issued; 44,169 and 44,015 outstanding at March 31, 2021 and December 31, 2020, respectively		5		5
Treasury stock, at cost (7,162 and 7,162 shares at March 31, 2021 and December 31, 2020, respectively)		(82,087)		(82,087)
Common stock, $0.0001 par value; 100,000 shares authorized, 87,999 and 51,177 shares issued; 87,999 and 44,015 outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock, $0.0001 par value; 100,000 shares authorized, 87,999 and 51,177 shares issued; 87,999 and 44,015 outstanding at September 30, 2021 and December 31, 2020, respectively	9		5
Treasury stock, at cost (nil and 7,162 shares at September 30, 2021 and December 31, 2020, respectively)						Treasury stock, at cost (nil and 7,162 shares at September 30, 2021 and December 31, 2020, respectively)	—		(82,087)
Additional paid-in capital	Additional paid-in capital	491,295		499,348		Additional paid-in capital	492,376		499,348
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(29,349)		(28,213)		Accumulated other comprehensive loss	(30,911)		(28,213)
Accumulated deficit	Accumulated deficit	(357,801)		(345,771)		Accumulated deficit	(368,380)		(345,771)
Total stockholders’ equity	Total stockholders’ equity	22,063		43,282		Total stockholders’ equity	93,094		43,282
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	465,130	$	482,255	Total liabilities and stockholders’ equity	$	448,375	$	482,255

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


		Three Months Ended March 31,				Three Months Ended September 30,		Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020

Net revenues	Net revenues	$	65,499	$	77,122		Net revenues	$	69,753	$	68,636	$	206,784	$	222,293
Costs and expenses:	Costs and expenses:						Costs and expenses:
Cost of revenues*		28,637		35,471
Cost of revenues1							Cost of revenues1	27,245		28,452		83,024		93,403
Research and development	Research and development	17,397		19,788			Research and development	15,368		20,885		49,962		59,769
Selling, general and administrative	Selling, general and administrative	17,928		26,344			Selling, general and administrative	27,953		23,265		67,790		74,249
Restructuring charges	Restructuring charges	713		1,450			Restructuring charges	1,485		820		3,075		6,763
Depreciation and amortization	Depreciation and amortization	9,867		11,356			Depreciation and amortization	8,215		12,212		26,567		33,852
Total costs and expenses	Total costs and expenses	74,542		94,409			Total costs and expenses	80,266		85,634		230,418		268,036
Loss from continuing operations	Loss from continuing operations	(9,043)		(17,287)			Loss from continuing operations	(10,513)		(16,998)		(23,634)		(45,743)
Interest income	Interest income	5		58			Interest income	24		20		54		1,587
Interest expense	Interest expense	(95)		(245)			Interest expense	(2,933)		(72)		(3,172)		(401)

Other Income (expense)	Other Income (expense)	(3,396)		1,692			Other Income (expense)	(1,669)		2,684		(3,489)		5,743

Loss from continuing operations, before taxes	Loss from continuing operations, before taxes	(12,529)		(15,782)			Loss from continuing operations, before taxes	(15,091)		(14,366)		(30,241)		(38,814)
Benefit for income taxes	Benefit for income taxes	163		12,432			Benefit for income taxes	6,982		8,744		7,346		29,148
Net loss from continuing operations	Net loss from continuing operations	(12,366)		(3,350)			Net loss from continuing operations	(8,109)		(5,622)		(22,895)		(9,666)

Net income (loss) attributable to redeemable noncontrolling interests	Net income (loss) attributable to redeemable noncontrolling interests	336		(17)			Net income (loss) attributable to redeemable noncontrolling interests	—		(60)		286		(242)
Preferred stock dividend	Preferred stock dividend	(10,530)		(8,909)			Preferred stock dividend	(1,722)		(9,685)		(33,728)		(27,882)
Net loss attributable to Synchronoss	Net loss attributable to Synchronoss	$	(22,560)	$	(12,276)		Net loss attributable to Synchronoss	$	(9,831)	$	(15,367)	$	(56,337)	$	(37,790)

Earnings (loss) per share	Earnings (loss) per share						Earnings (loss) per share

Basic	Basic	$	(0.53)	$	(0.30)		Basic	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)

Diluted	Diluted	$	(0.53)	$	(0.30)		Diluted	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)
Weighted-average common shares outstanding:	Weighted-average common shares outstanding:						Weighted-average common shares outstanding:
Basic	Basic	42,737		41,483			Basic	85,646		42,360		57,662		41,777
Diluted	Diluted	42,737		41,483			Diluted	85,646		42,360		57,662		41,777

*1 Cost of revenues excludes depreciation and amortization which are shown separately.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited) (In thousands)

Three Months Ended March 31,
2021 2020
Net loss $ (12,366) $ (3,350)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments (1,888) (3,941)
Unrealized gain on available for sale securities 0 751
Net income (loss) on inter-company foreign currency transactions 752 (372)
Total other comprehensive loss (1,136) (3,562)
Comprehensive loss (13,502) (6,912)
Comprehensive loss attributable to redeemable noncontrolling interests 336 (17)
Comprehensive loss attributable to Synchronoss $ (13,166) $ (6,929)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(8,109)	$	(5,622)	$	(22,895)	$	(9,666)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	(1,827)		1,343		(3,595)		(726)
Unrealized gain on available for sale securities	—		—		—		751
Net income on inter-company foreign currency transactions	358		864		897		1,046
Total other comprehensive (loss) income	(1,469)		2,207		(2,698)		1,071
Comprehensive loss	(9,578)		(3,415)		(25,593)		(8,595)
Comprehensive (loss) income attributable to redeemable noncontrolling interests	—		(60)		286		(242)
Comprehensive loss attributable to Synchronoss	$	(9,578)	$	(3,475)	$	(25,307)	$	(8,837)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited) (In thousands)

Three Months Ended March 31, 2021
Common Stock Treasury Stock Additional Accumulated Other Total
Shares Amount Shares Amount Paid-In Capital Comprehensive Income (Loss) Accumulated deficit Stockholders' Equity
Balance at December 31, 2020 51,177 $ 5 (7,162) $ (82,087) $ 499,348 $ (28,213) $ (345,771) $ 43,282
Stock based compensation — — — — 2,813 — — 2,813
Issuance of restricted stock 154 — — — — — — 0
Preferred stock dividends accrued — — — — (9,407) — — (9,407)
Amortization of preferred stock issuance costs — — — — (1,123) — — (1,123)
Net loss attributable to Synchronoss — — — — — — (12,366) (12,366)
Non-controlling interest — — — — (336) — 336 0
Total other comprehensive income (loss) — — — — — (1,136) — (1,136)
Balance at March 31, 2021 51,331 $ 5 (7,162) $ (82,087) $ 491,295 $ (29,349) $ (357,801) $ 22,063


	Three Months Ended September 30, 2021
	Common Stock			Treasury Stock			Additional		Accumulated Other				Total
	Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at June 30, 2021	88,121	$	9	—	$	—	$	491,660	$	(29,442)	$	(360,271)	$	101,956
Stock based compensation	—	—		—	—		2,438		—		—		2,438
Issuance of restricted stock	(122)	—		—	—		—		—		—		—

Preferred stock dividend	—	—		—	—		(1,722)		—		—		(1,722)










Net income (loss) attributable to Synchronoss	—	—		—	—		—		—		(8,109)		(8,109)

Total other comprehensive income (loss)	—	—		—	—		—		(1,469)		—		(1,469)







Balance at September 30, 2021	87,999	$	9	—	$	—	$	492,376	$	(30,911)	$	(368,380)	$	93,094

Three Months Ended March 31, 2020
Common Stock Treasury Stock Additional Accumulated Other Total
Shares Amount Shares Amount Paid-In Capital Comprehensive Income (Loss) Accumulated deficit Stockholders' Equity
Balance at December 31, 2019 51,704 $ 5 (7,162) $ (82,087) $ 525,739 $ (33,261) $ (334,319) $ 76,077
Stock based compensation — — — — 5,316 — — 5,316
Issuance of restricted stock 55 — — — — — �� 0
Preferred stock dividends accrued — — — — (8,158) — — (8,158)
Amortization of preferred stock issuance costs — — — — (750) — — (750)
Shares withheld for taxes in connection with issuance of restricted stock (1) — — — — — — 0
Net income attributable to Synchronoss — — — — — — (3,350) (3,350)
Non-controlling interest — — — — 17 — (17) 0
Total other comprehensive income (loss) — — — — — (3,562) — (3,562)
Adoption of new credit loss accounting standard — — — — — — (768) (768)
Balance at March 31, 2020 51,758 $ 5 (7,162) $ (82,087) $ 522,164 $ (36,823) $ (338,454) $ 64,805


	Three Months Ended September 30, 2020
	Common Stock			Treasury Stock			Additional		Accumulated Other				Total
	Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at June 30, 2020	51,619	$	5	(7,162)	$	(82,087)	$	517,794	$	(34,397)	$	(339,313)	$	62,002
Stock based compensation	—	—		—	—		4,336		—		—		4,336
Issuance of restricted stock	(105)	—		—	—		—		—		—		—

Preferred stock dividends accrued	—	—		—	—		(8,761)		—		—		(8,761)
Amortization of preferred stock issuance costs	—	—		—	—		(925)		—		—		(925)









Net income attributable to Synchronoss	—	—		—	—		—		—		(5,622)		(5,622)
Non-controlling interest	—	—		—	—		60		—		(60)		—
Total other comprehensive income (loss)	—	—		—	—		—		2,207		—		2,207


Adoption of new credit loss accounting standard	—	—		—	—		—		—		18		18




Balance at September 30, 2020	51,514	$	5	(7,162)	$	(82,087)	$	512,504	$	(32,190)	$	(344,977)	$	53,255

Table of Contents


	Nine Months Ended September 30, 2021
	Common Stock			Treasury Stock			Additional		Accumulated Other				Total
	Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at December 31, 2020	51,177	$	5	(7,162)	$	(82,087)	$	499,348	$	(28,213)	$	(345,771)	$	43,282
Stock based compensation	—	—		—	—		7,472		—		—		7,472
Issuance of restricted stock	1,676	—		—	—		1		—		—		1

Preferred stock dividend	—	—		—	—		(20,937)		—		—		(20,937)
Amortization of preferred stock issuance costs	—	—		—	—		(12,791)		—		—		(12,791)

Common stock issuance - Public Offering	42,308	4		—	—		109,996		—		—		110,000
Treasury shares used in Public Offering	(7,162)	—		7,162	82,087		(82,087)		—		—		—
Common Stock - Issuance Costs	—	—		—	—		(8,340)		—		—		(8,340)





Net income (loss) attributable to Synchronoss	—	—		—	—		—		—		(22,895)		(22,895)
Non-controlling interest	—	—		—	—		(286)		—		286		—
Total other comprehensive income (loss)	—	—		—	—		—		(2,698)		—		(2,698)







Balance at September 30, 2021	87,999	$	9	—	$	—	$	492,376	$	(30,911)	$	(368,380)	$	93,094

1 Includes amortization of preferred stock issuance costs accelerated due to Series A redemption.


	Nine Months Ended September 30, 2020
	Common Stock			Treasury Stock			Additional		Accumulated Other				Total
	Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at December 31, 2019	51,704	$	5	(7,162)	$	(82,087)	$	525,739	$	(33,261)	$	(334,319)	$	76,077
Stock based compensation	—	—		—	—		14,406		—		—		14,406
Issuance of restricted stock	(188)	—		—	—		—		—		—		—

Preferred stock dividends accrued	—	—		—	—		(25,373)		—		—		(25,373)
Amortization of preferred stock issuance costs	—	—		—	—		(2,510)		—		—		(2,510)





Shares withheld for taxes in connection with issuance of restricted stock	(2)	—		—	—		—		—		—		—



Net income attributable to Synchronoss	—	—		—	—		—		—		(9,666)		(9,666)
Non-controlling interest	—	—		—	—		242		—		(242)		—
Total other comprehensive income (loss)	—	—		—	—		—		1,071		—		1,071



Adoption of new credit loss accounting standard	—	—		—	—		—		—		(750)		(750)




Balance at September 30, 2020	51,514	$	5	(7,162)	$	(82,087)	$	512,504	$	(32,190)	$	(344,977)	$	53,255

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


		Three Months Ended March 31,				Nine Months Ended September 30,
		2021		2020				2021		2020
Operating activities:	Operating activities:						Operating activities:
Net loss continuing operations	Net loss continuing operations	$	(12,366)	$	(3,350)		Net loss continuing operations	$	(22,895)	$	(9,666)

Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:						Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	9,867		11,357			Depreciation and amortization	26,567		33,852

Amortization of debt issuance costs							Amortization of debt issuance costs	305		—

(Gain) loss on Disposals of fixed assets	(Gain) loss on Disposals of fixed assets	(9)		0			(Gain) loss on Disposals of fixed assets	58		12

(Gain) loss on Disposals of intangible assets	(Gain) loss on Disposals of intangible assets	0		(1,843)			(Gain) loss on Disposals of intangible assets	(550)		(2,164)

Deferred income taxes	Deferred income taxes	(1,037)		(10)			Deferred income taxes	(1,574)		356

Stock-based compensation	Stock-based compensation	2,721		5,186			Stock-based compensation	7,230		14,547

Operating lease impairment	Operating lease impairment	555		0			Operating lease impairment	1,794		6,232
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	3,214		(6,961)			Accounts receivable, net	8,905		11,357
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(445)		(6,240)			Prepaid expenses and other current assets	(7,275)		(5,426)
Accounts payable	Accounts payable	3,752		7,515			Accounts payable	(6,441)		(8,400)
Accrued expenses	Accrued expenses	(3,762)		1			Accrued expenses	8,237		10,063

Other assets		0		198

Deferred revenues	Deferred revenues	(6,648)		(20,454)			Deferred revenues	(13,338)		(36,924)
Other liabilities	Other liabilities	6,419		(415)			Other liabilities	4,528		(5,178)

Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	2,261		(15,016)			Net cash provided by (used in) operating activities	5,551		8,661

Investing activities:	Investing activities:						Investing activities:
Purchases of fixed assets	Purchases of fixed assets	(721)		(249)			Purchases of fixed assets	(1,386)		(571)
Additions to capitalized software	Additions to capitalized software	(5,042)		(4,428)			Additions to capitalized software	(17,004)		(12,610)

Acquisition of intangible assets							Acquisition of intangible assets	—		(400)
Proceeds from the sale of intangibles	Proceeds from the sale of intangibles	0		1,843			Proceeds from the sale of intangibles	550		2,164

Maturity of marketable securities available for sale	Maturity of marketable securities available for sale	0		11			Maturity of marketable securities available for sale	—		11

Net cash used in investing activities	Net cash used in investing activities	(5,763)		(2,823)			Net cash used in investing activities	(17,840)		(11,406)

Financing activities:	Financing activities:						Financing activities:

Share-based compensation-related proceeds, net of taxes paid on withholding shares							Share-based compensation-related proceeds, net of taxes paid on withholding shares	(1)		—
Taxes paid on withholding shares	Taxes paid on withholding shares	0		(4)			Taxes paid on withholding shares	(1)		(9)

Debt issuance costs related to long term debt							Debt issuance costs related to long term debt	(7,811)		—

Proceeds from issuance of long term debt							Proceeds from issuance of long term debt	125,000		—

Borrowings on revolving line of credit	Borrowings on revolving line of credit	0		10,000			Borrowings on revolving line of credit	—		10,000
Repayment of revolving line of credit							Repayment of revolving line of credit	(10,000)		—

Proceeds from issuance of common stock							Proceeds from issuance of common stock	110,000		—
Common stock issuance costs							Common stock issuance costs	(8,340)		—

Proceeds from issuance of preferred stock							Proceeds from issuance of preferred stock	75,000		—

Redemption of Series A Preferred stock							Redemption of Series A Preferred stock	(278,665)		—
Series B preferred stock issuance costs							Series B preferred stock issuance costs	(2,495)		—

Net cash provided by financing activities	Net cash provided by financing activities	0		9,996			Net cash provided by financing activities	2,687		9,991

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(351)		(252)			Effect of exchange rate changes on cash	72		112

Net decrease in cash and cash equivalents		(3,853)		(8,095)
Net (decrease) increase in cash and cash equivalents							Net (decrease) increase in cash and cash equivalents	(9,530)		7,358
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	33,671		39,001			Cash and cash equivalents, beginning of period	33,671		39,001
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	29,818	$	30,906		Cash and cash equivalents, end of period	$	24,141	$	46,359

Supplemental disclosures of non-cash investing and financing activities:	Supplemental disclosures of non-cash investing and financing activities:						Supplemental disclosures of non-cash investing and financing activities:
Paid in kind dividends on Series A Convertible Participating Perpetual Preferred Stock		$	10,201	$	8,623
Paid in kind dividends on Series A Convertible Participating Perpetual Preferred Stock 1							Paid in kind dividends on Series A Convertible Participating Perpetual Preferred Stock 1	$	31,277	$	26,995

1 Current year amounts include amortization of preferred stock issuance costs accelerated due to Series A redemption.

See accompanying notes to condensed consolidated financial statements.

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1. Description of Business

General

Synchronoss Technologies, Inc. (“Synchronoss” or the ~~“Company”~~“Company”) Digital, Cloud, Messaging and Total Network Management platforms help the world’s leading companies, including operators, original equipment manufacturers (“OEMs”), and Media and Technology providers to deliver continuously transformative customer experiences that create high value engagement and new monetization opportunities.

The Company currently operates in and markets solutions and services directly through the Company’s sales organizations in North America, Europe and Asia-Pacific. The Company’s platforms give customers new opportunities in the Telecommunications, Media and Technology (“TMT”) space, taking advantage of the rapidly converging services, connected devices, networks and applications.

The Company delivers platforms, products and solutions including:

•White Label Personal Cloud: Cloud sync, backup, storage, device set up, content transfer and content engagement for user generated content.

•Messaging: White label consumer email solutions. A~~dvanced,~~Advanced, multi-channel messaging peer-to-peer (“P2P”) communications and application-to-person (“A2P”) commerce solutions.

•Digital: Customer journey and workflow design, development, orchestration and experience management.

•Total Network Management (“TNM”): integrated application suite that designs, procures, ~~manage~~smanages and optimizes telecom network infrastructure.

The Synchronoss Personal Cloud™ platform is a secure and highly scalable white label platform designed to store and sync subscriber’s personally created content seamlessly to and from current and new devices. This allows a carrier’s customers to protect, engage with and manage their personal content and gives the Company’s Operator customers the ability to increase average revenue per user (“ARPU”) through a new monthly recurring charge (“MRC”) and opportunities to mine valuable data that will give subscribers access to new, beneficial services. Additionally, the Company’s Personal Cloud Platform performs an expanding set of value-add services including facilitating an Operator’s initial device setup and enhancing visibility and control across disparate devices within subscribers’ smart homes.

The Synchronoss Messaging Platform powers hundreds of millions of subscribers’ mail boxes worldwide. The Company’s Advanced Messaging Product is a powerful, secure and intelligent white label messaging platform that expands capabilities for Operators and TMT companies to offer P2P messaging via Rich Communications Services (“RCS”). ~~Additionally,~~Additionally, the Company’s Advanced Messaging Product powers commerce and a robust ecosystem for Operators, brands and advertisers to execute Application to Person (“A2P”) commerce and data-rich dialogue with subscribers.

The Synchronoss Digital Platform is a suite of technology, tools and solutions that includes digital experience creation and management, automated provisioning, artificial intelligence and financial analytics that service a broad array of TMT markets. The products equip customers with a toolkit of capabilities where they can design, deploy and manage end user customer journeys and workflows easily and quickly from one central platform that also integrates across front end customer engagement channels as well as enterprise business systems (e.g. CRM, POS) allowing non-citizen developers to configure rather than code experiences. The platform sits between customer-facing touch points and a customer’s existing back-office systems to orchestrate data, workflows and processes into digital customer journeys that interface with end user channels creating user experiences that can be centrally managed and coordinated with less resources than is typical in a traditional IT environment.

The Synchronoss Total Network Management application suite provides Operators with the tools and software to design their physical network, streamline their infrastructure purchases, and comprehensive network expense optimization and management for leading top tier carriers around the globe.

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2. Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared by Synchronoss and in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and nine months ended ~~March 31,~~September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021.

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary and entities in which the Company has a controlling interest. Investments in less than majority-owned companies in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. Investments in less than majority-owned companies in which the Company does not have the ability to exert significant influence over the operating and financial policies of the investee are accounted for using the cost method. All material intercompany transactions and accounts are eliminated in consolidation. ~~Certain prior year amounts have been reclassified to conform to the current year's presentation.~~

For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Risks and Uncertainties

There continue to be uncertainties regarding the current coronavirus ("COVID-19") pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company’s financial results and business operations for the three and nine months ended ~~March 31,~~September 30, 2021, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.

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Recently Issued Accounting Standards

Recent accounting pronouncements adopted

Standard

Description

Effect on the financial statements

Update 2019-12 - Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes

The ASU removes the exception to the general principles in ASC 740, Income Taxes, associated with the incremental approach for intra-period tax allocation, accounting for basis differences when there are ownership changes in foreign investments and interim-period income tax accounting for year-to-date losses that exceed anticipated losses. In addition, the ASU improves the application of income tax related guidance and simplifies U.S. GAAP when accounting for franchise taxes that are partially based on income, transactions with government resulting in a step-up in tax basis goodwill, separate financial statements of legal entities not subject to tax, and enacted changes in tax laws in interim periods. Different transition approaches, retrospective, modified retrospective, or prospective, will apply to each income tax simplification provision.

The Company adopted the new standard as of January 1, 2021. The standard did not have a material impact on the Company’s consolidated financial position or results of operations upon adoption.

Date of adoption: January 1, 2021.

Standards issued not yet adopted

Standard

Description

Effect on the financial statements

Update 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity (ASU 2020-06)

The ASU simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. This guidance will be effective for us in the first quarter of 2022 on a full or modified retrospective basis, with early adoption permitted. ~~We do~~The Company does not expect the adoption of this guidance to have a material impact on ~~our~~its consolidated financial statements.

The Company does not expect the adoption of this guidance to have a material impact on ~~our~~its consolidated financial statements.

Date of adoption: January 1, 2022.

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3. Revenue

Disaggregation of revenue

The Company disaggregates revenue from contracts with customers into the nature of the products and services and geographical regions. The Company’s geographic regions are the Americas, Europe, the Middle East and Africa (“EMEA”), and Asia Pacific (“APAC”). The majority of the Company’s revenue is from the ~~Technology, Media and Telecom (collectively, “TMT”)~~TMT sector.


		Three Months Ended March 31, 2021								Three Months Ended March 31, 2020									Three Months Ended September 30, 2021								Three Months Ended September 30, 2020
		Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total			Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total
Geography	Geography																	Geography
Americas	Americas	$	37,031	$	11,240	$	3,516	$	51,787	$	39,322	$	10,937	$	10,903	$	61,162	Americas	$	41,090	$	12,486	$	2,426	$	56,002	$	37,806	$	10,211	$	4,249	$	52,266
APAC	APAC	0		1,128		6,700		7,828		0		558		9,175		9,733		APAC	245		1,123		6,929		8,297		—		791		8,280		9,071
EMEA	EMEA	1,865		609		3,410		5,884		1,722		1,257		3,248		6,227		EMEA	1,789		756		2,909		5,454		1,678		1,633		3,988		7,299
Total	Total	$	38,896	$	12,977	$	13,626	$	65,499	$	41,044	$	12,752	$	23,326	$	77,122	Total	$	43,124	$	14,365	$	12,264	$	69,753	$	39,484	$	12,635	$	16,517	$	68,636

Service Line	Service Line																	Service Line
Professional Services	Professional Services	$	3,925	$	2,111	$	2,611	$	8,647	$	4,161	$	4,536	$	5,230	$	13,927	Professional Services	$	3,542	$	1,983	$	3,709	$	9,234	$	5,253	$	2,891	$	3,262	$	11,406
Transaction Services	Transaction Services	1,975		2,268		1		4,244		1,307		1,074		0		2,381		Transaction Services	1,237		1,113		2		2,352		1,345		1,715		—		3,060
Subscription Services	Subscription Services	32,996		8,433		10,614		52,043		35,576		7,002		10,617		53,195		Subscription Services	38,345		9,456		7,830		55,631		32,886		8,001		11,236		52,123
License	License	0		165		400		565		0		140		7,479		7,619		License	—		1,813		723		2,536		—		28		2,019		2,047
Total	Total	$	38,896	$	12,977	$	13,626	$	65,499	$	41,044	$	12,752	$	23,326	$	77,122	Total	$	43,124	$	14,365	$	12,264	$	69,753	$	39,484	$	12,635	$	16,517	$	68,636


	Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020
	Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total
Geography
Americas	$	115,192	$	34,329	$	17,207	$	166,728	$	117,889	$	33,785	$	23,652	$	175,326
APAC	245		3,166		19,878		23,289		—		2,368		24,163		26,531
EMEA	5,474		1,978		9,315		16,767		5,086		4,237		11,113		20,436
Total	$	120,911	$	39,473	$	46,400	$	206,784	$	122,975	$	40,390	$	58,928	$	222,293

Service Line
Professional Services	$	11,351	$	6,212	$	8,907	$	26,470	$	14,398	$	10,163	$	14,464	$	39,025
Transaction Services	4,533		4,326		5		8,864		4,126		5,004		—		9,130
Subscription Services	105,027		26,435		36,365		167,827		104,451		24,254		32,965		161,670
License	—		2,500		1,123		3,623		—		969		11,499		12,468
Total	$	120,911	$	39,473	$	46,400	$	206,784	$	122,975	$	40,390	$	58,928	$	222,293

Trade Accounts Receivable and Contract balances

The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, the Company recognizes a receivable for revenues related to its time and materials and transaction or volume-based contracts. The Company presents such receivables in Trade accounts receivable, net in its ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~financial position~~Financial Position at their net estimated realizable value. The Company maintains an allowance for credit losses to provide

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for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other economic indicators.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. For example, the Company would record a contract asset if it records revenue on a professional services engagement but are not entitled to bill until the Company achieves specified milestones. Contract assets balance at ~~March 31,~~September 30, 2021 is ~~$6.6~~$7.5 million.

Amounts collected in advance of services being provided are accounted for as contract liabilities, which are presented as deferred revenue on the accompanying Condensed Consolidated Balance Sheets and are realized with the associated revenue recognized under the contract. Nearly all of the Company's contract liabilities balance is related to services revenue, primarily subscription services contracts.

The Company’s contract assets and liabilities are reported in a net position on a customer basis at the end of each reporting period.

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~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

Significant changes in the contract liabilities balance (current and non-current) during the period are as follows:


	Contract Liabilities*Liabilities1
Balance - January 1, 2021	$	45,614
Revenue recognized in the period	~~(66,055)~~(207,027)
Amounts billed but not recognized as revenue	~~60,294~~193,764


Balance - ~~March 31,~~September 30, 2021	$	~~39,853~~32,351

*1 Comprised of Deferred Revenue

Transaction price allocated to the remaining performance obligations

Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of ~~March 31,~~September 30, 2021. The Company has elected not to disclose transaction price allocated to remaining performance obligations for:

1.Contracts with an original duration of one year or less, including contracts that can be terminated for convenience without a substantive penalty;

2.Contracts for which the Company recognizes revenues based on the right to invoice for services performed;

3.Variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with Topic 606 Section 10-25-14(b), for which the criteria in Topic 606 Section 10-32-40 have been met. This applies to a limited number of situations where the Company is dependent upon data from a third party or where fees are highly variable.

Many of the Company’s performance obligations meet one or more of these exemptions. Specifically, the Company has excluded the following from the Company’s remaining performance obligations, all of which will be resolved in the period in which amounts are known:

•consideration for future transactions, above any contractual minimums

•consideration for success-based transactions contingent on third party data

•credits for failure to meet future service level requirements

As of ~~March 31,~~September 30, 2021, the aggregate amount of transaction price allocated to remaining performance obligations, other than those meeting the exclusion criteria above, was ~~$264.2~~$240.4 million, of which approximately ~~73.8~~85.5 percent is expected to be recognized as revenues within 2 years, and the remainder thereafter.

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Estimates of revenue expected to be recognized in future periods also exclude unexercised customer options to purchase services that do not represent material rights to the customer. Customer options that do not represent a material right are only accounted for in accordance with Topic 606 when the customer exercises its option to purchase additional goods or services.

4. Fair Value Measurements

In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows:

•Level 1 - Observable inputs - quoted prices in active markets for identical assets and liabilities;

•Level 2 - Observable inputs other than the quoted prices in active markets for identical assets and liabilities includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and

•Level 3 - Unobservable inputs - includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

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~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

The following is a summary of assets, liabilities and redeemable noncontrolling interests and their related classifications under the fair value hierarchy:


		March 31, 2021									September 30, 2021
		Total		(Level 1)		(Level 2)		(Level 3)			Total		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash and cash equivalents (1)		$	29,818	$	29,818	$	0	$	0
Cash and cash equivalents1										Cash and cash equivalents1	$	24,141	$	24,141	$	—	$	—

Total assets	Total assets	$	29,818	$	29,818	$	0	$	0	Total assets	$	24,141	$	24,141	$	—	$	—

Temporary equity	Temporary equity									Temporary equity
Redeemable noncontrolling interests (2)		$	12,500	$	0	$	0	$	12,500
Redeemable noncontrolling interests2										Redeemable noncontrolling interests2	$	12,500	$	—	$	—	$	12,500
Total temporary equity	Total temporary equity	$	12,500	$	0	$	0	$	12,500	Total temporary equity	$	12,500	$	—	$	—	$	12,500


		December 31, 2020									December 31, 2020
		Total		(Level 1)		(Level 2)		(Level 3)			Total		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash and cash equivalents (1)		$	33,671	$	33,671	$	0	$	0
Cash and cash equivalents1										Cash and cash equivalents1	$	33,671	$	33,671	$	—	$	—

Total assets	Total assets	$	33,671	$	33,671	$	0	$	0	Total assets	$	33,671	$	33,671	$	—	$	—

Temporary Equity	Temporary Equity									Temporary Equity
Redeemable noncontrolling interests (2)		$	12,500	$	0	$	0	$	12,500
Redeemable noncontrolling interests2										Redeemable noncontrolling interests2	$	12,500	$	—	$	—	$	12,500
Total temporary equity	Total temporary equity	$	12,500	$	0	$	0	$	12,500	Total temporary equity	$	12,500	$	—	$	—	$	12,500

~~(1)~~1Cash equivalents ~~primarily included~~includes money market funds.

~~(2)~~2Put arrangements held by the noncontrolling interests in certain of the Company’s joint ventures.

Redeemable Noncontrolling Interests

The redeemable noncontrolling interests recorded at fair value are put arrangements held by the noncontrolling interests in certain of the Company’s joint ventures. The Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying value of the noncontrolling interest to the greater of the estimated redemption value, which approximates fair value, at the end of each reporting period or the initial carrying amount.

The fair value of the redeemable noncontrolling interests was estimated by applying an income approach using a discounted cash flow analysis. This fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement. Significant changes in the underlying assumptions used to value the redeemable ~~noncontrolling interests could significantly increase or decrease the fair value estimates recorded in the Condensed Consolidated Balance Sheets.~~

~~The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the three months ended March 31, 2021 were as follows:~~


~~Balance at December 31, 2020~~	$	~~12,500~~
~~Fair value adjustment~~	~~336~~
~~Net loss attributable to redeemable noncontrolling interests~~	~~(336)~~
~~Balance at March 31, 2021~~	$	~~12,500~~

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noncontrolling interests could significantly increase or decrease the fair value estimates recorded in the Condensed Consolidated Balance Sheets.

The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the nine months ended September 30, 2021 were as follows:


Balance at December 31, 2020	$	12,500
Fair value adjustment	286
Net (income) loss attributable to redeemable noncontrolling interests	(286)
Balance at September 30, 2021	$	12,500

5. Leases

The Company has entered into contracts with third parties to lease a variety of assets, including certain real estate, equipment, automobiles and other assets. The Company’s leases frequently allow for lease payments that could vary based on factors such as inflation or the degree of utilization of the underlying asset. For example, certain of the Company’s real estate leases could require us to make payments that vary based on common area maintenance charges, insurance and other charges. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company is party to certain sublease arrangements, primarily related to the Company’s real estate leases, where it acts as the lessee and intermediate lessor.

The Company reflects finance leases as a component of Leases, non-current on the Condensed Consolidated Balance Sheet. The finance leases were not material for the period ended ~~March 31,~~September 30, 2021.

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The following table presents information about the Company's Right of Use (ROU) assets and lease liabilities at ~~March 31, 2021 (in thousands):~~September 30, 2021:



ROU assets:
Non-current operating lease ROU assets	$	~~31,960~~27,629



Operating lease liabilities:
Current operating lease liabilities*liabilities1	$	~~9,342~~8,037
Non-current operating lease liabilities	~~41,803~~37,572
Total operating lease liabilities	$	~~51,145~~45,609

*1 Amounts are included in Accrued Expenses on the Condensed Consolidated Balance Sheet.

The following table presents information about lease expense and sublease income for the three and nine months ended ~~March 31, 2021 (in thousands):~~September 30, 2021:


	~~Three Months Ended~~
	~~March 31, 2021~~
Operating lease cost*	$	~~2,600~~
~~Other lease costs and income:~~
Variable lease costs*~~(1)~~	~~775~~
Sublease income*	~~(945)~~

~~Total net lease cost~~	$	~~2,430~~


	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021
Operating lease cost1	$	2,235	$	7,268
Other lease costs and income:
Variable lease costs1	85		501
Operating lease impairments1, 2	642		1,794
Sublease income1	(693)		(2,471)

Total net lease cost	$	2,269	$	7,092

*1 Amounts are included in Cost of revenues, Selling, general and administrative and/or Research and development based on the function that the underlying leased asset supports which are reflected in the Condensed Consolidated Statements of Operations.

~~(1)~~2 As part of the Company’s continued cost savings initiatives, the Company closed certain office spaces and terminated various lease agreements. These actions resulted in a ~~$0.6 million~~ ROU asset impairment charge for the period, which was determined by the present value of the forecasted future cash flows for the remaining lease term.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

The following table provides the undiscounted amount of future cash flows included in our lease liabilities at ~~March 31,~~September 30, 2021 for each of the five years subsequent to December 31, 2020 and thereafter, as well as a reconciliation of such undiscounted cash flows to our lease liabilities at ~~March 31, 2021 (in thousands):~~September 30, 2021:


		Operating Leases			Operating Leases
Remaining 2021	Remaining 2021	$	9,552	Remaining 2021	$	2,975
2022	2022	11,021		2022	10,870
2023	2023	8,595		2023	8,552
2024	2024	8,346		2024	8,308
2025	2025	8,223		2025	8,193
Thereafter	Thereafter	18,590		Thereafter	18,562
Total future lease payments	Total future lease payments	64,327		Total future lease payments	57,460
Less: amount representing interest	Less: amount representing interest	(13,182)		Less: amount representing interest	(11,851)
Present value of future lease payments (lease liability)	Present value of future lease payments (lease liability)	$	51,145	Present value of future lease payments (lease liability)	$	45,609

The following table provides the weighted-average remaining lease term and weighted-average discount rates for our leases as of ~~March 31,~~September 30, 2021:


Operating Leases:
Weighted-average remaining lease term (years), weighted based on lease liability balances			~~6.52~~6.06
Weighted-average discount rate (percentages), weighted based on the remaining balance of lease payments			~~7.6%~~8.1%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the ~~three~~nine months ended ~~March 31, 2021 (in thousands):~~September 30, 2021:



Operating Leases:
Cash paid for amounts included in the measurement of lease liabilities	$	~~3,449~~10,437
~~Lease liabilities arising from obtaining right-of-use assets~~	0

6. Investments in Affiliates and Related Transactions

Sequential Technology International, LLC

In connection with the divestiture of the exception handling business of the Company in 2017, Synchronoss entered into a three-year Cloud Telephony and Support services agreement (“CTS Agreement”) to grant Sequential Technology International, LLC (“STIN”) access to certain Synchronoss software and private branch exchange systems to facilitate exception handling operations required to support STIN customers.

The CTS agreement expired in the first quarter of 2020. At the time of the expiration, the Company entered into an Asset Purchase Agreement with STIN. As part of the agreement, the Company received $1.6 million in exchange for certain hardware and system assets for the cloud telephony and remaining support service business.

During the second quarter of 2020, the Company entered into an agreement with STIN and AP Capital Holdings II, LLC (“APC”) to divest its remaining equity interest in STIN as well as settle its paid-in-kind purchase money note (“PIK note”) and certain amounts due as of December 31, 2019 in consideration for a $9.0 million secured promissory note (the “Note”), which includes contingent consideration of up to $16.0 million. The Note has an 8% interest rate and a 3-year stated term. As part of the arrangement, APC acquired a majority stake of STIN. Additionally, in the event of a ~~Sale~~sale of STIN by APC and STIN at a future date, the Company shall receive 5% of such sale proceeds, after reducing the sale proceeds by any outstanding amounts of the above Note, including any earned contingent consideration. The Company determined the fair value of the Note as of the

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~~of the above Note, including any earned contingent consideration. The Company determined the fair value of the Note as of the~~ transaction date to be approximately $4.8 million. The Company determined the fair value of the Note using a discounted cash flow analysis, which discounts the expected future cash flows of the asset to determine its fair value. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. ~~The Note has been reflected in Other assets on the Condensed Consolidated balance sheet.~~ No gain or loss was recognized as a result of the transaction. As of ~~March 31,~~September 30, 2021, the Company reassessed the fair value of the ~~note~~Note and there were no material changes.

7. Debt

Offering of Senior Notes

On June 30, 2021, the Company closed its underwritten public offering of $120.0 million aggregate principal amount of 8.375% senior notes due 2026 at a par value of $25.00 per senior note (the “Senior Notes”). The offering was conducted pursuant to an underwriting agreement (the “Notes Underwriting Agreement”) dated June 25, 2021, by and among the Company and B. Riley Securities, Inc., as representative of the several underwriters (the “Notes Underwriters”). At the closing, the Company issued $125.0 million aggregate principal amount of Senior Notes, inclusive of $5.0 million aggregate principal amount of Senior Notes issued pursuant to the full exercise of the Notes Underwriters’ option to purchase additional Senior Notes.

The Notes Underwriting Agreement contains customary representations, warranties and covenants of the Company, customary conditions to closing, indemnification obligations of the Company and the Notes Underwriters, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.

On June 30, 2021, the Company entered into an indenture (the “Base Indenture”) and a supplemental indenture (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) with The Bank of New York Mellon Trust Company National Association, as trustee (the “Trustee”), between the Company and the Trustee. The Indenture establishes the form and provides for the issuance of the Senior Notes.

The Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness. The Senior Notes are effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness of the Company’s subsidiaries, including trade payables. The Senior Notes bear interest at the rate of 8.375% per annum. Interest on the Senior Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on July 31, 2021. The Senior Notes will mature on June 30, 2026, unless redeemed prior to maturity.

The Company may, at its option, at any time and from time to time, redeem the Senior Notes for cash in whole or in part (i) on or after June 30, 2022 and prior to June 30, 2023, at a price equal to $25.75 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after June 30, 2023 and prior to June 30, 2024, at a price equal to $25.50 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, (iii) on or after June 30, 2024 and prior to June 30, 2025, at a price equal to $25.25 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, and (iv) on or after June 30, 2025 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Senior Notes.

The Indenture contains customary events of default and cure provisions. If an uncured default occurs and is continuing, the Trustee or the holders of at least 25% of the principal amount of the Senior Notes may declare the entire amount of the Senior Notes, together with accrued and unpaid interest, if any, to be immediately due and payable. In the case of an event of default involving the Company’s bankruptcy, insolvency or reorganization, the principal of, and accrued and unpaid interest on, the principal amount of the Senior Notes, together with accrued and unpaid interest, if any, will automatically, and without any declaration or other action on the part of the Trustee or the holders of the Senior Notes, become due and payable.

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(Amounts in tables in thousands, except for per share data or unless otherwise noted)

The carrying amounts of the Company’s borrowings were as follows:


Senior Notes	September 30, 2021		December 31, 2020
8.375% Senior Notes due 2026	$	125,000	$	—
Unamortized discount and debt issuance cost1	(7,506)		—
Carrying value of Senior Notes	$	117,494	$	—

1 Debt issuance are deferred and amortized into interest expense using the effective interest method.

The total fair value of the outstanding Senior Notes was $124.1 million as of September 30, 2021. The Company is in compliance with its debt covenants as of September 30, 2021.

On October 25, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) between the Company and B. Riley Securities, Inc. (the “Agent”), a related party, pursuant to which the Company may offer and sell, from time to time, up to $18.0 million of the Company’s 8.375% Senior Notes due 2026. Sales of the additional Senior Notes pursuant to the Sales Agreement, if any, may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). The Agent is not required to sell any specific number of the additional Senior Notes, but the Agent will make all sales using commercially reasonable efforts consistent with its normal trading and sales practices on mutually agreed terms between the Agent and the Company. Under the Sales Agreement, the Agent will be entitled to compensation of 2.0% of the gross proceeds of all notes sold through it as the Company’s agent.

The additional Senior Notes sold pursuant to the Sales Agreement will be issued pursuant to a prospectus dated August 28, 2020, as supplemented by a prospectus supplement dated October 25, 2021, in each case filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-248133), which was declared effective by the Commission on August 28, 2020, and the Registration Statement on Form S-3 (File No. 333-260482), filed with the Commission pursuant to Rule 462(b) under the Securities Act on October 25, 2021. The additional Senior Notes will be issued pursuant to the Indenture, dated June 30, 2021 (the “Base Indenture”), as supplemented by the First Supplemental Indenture, dated June 30, 2021 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) between The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and the Company.

The up to $18.0 million in aggregate principal amount of the additional Senior Notes that the Company may offer and sell under the prospectus supplement and the accompanying prospectus constitutes a further issuance of and are fungible with the $125.0 million in aggregate principal amount of the Senior Notes that the Company has issued to date, and form a single series of debt securities. The additional Senior Notes issued will have terms identical to the initial Senior Notes and will have the same CUSIP number as, and will be fungible and vote together with, the initial Senior Notes immediately upon issuance. The additional Senior Notes (when issued) and initial Senior Notes are listed and trade on The Nasdaq Global Market under the symbol “SNCRL.”

2019 Revolving Credit Facility

On October 4, 2019, the Company entered into a Credit Agreement with Citizens Bank, N.A., for a $10.0 million Revolving Credit Facility. Borrowings under the Revolving Credit Facility ~~bear~~bore interest at a rate equal to, at the Company’s option, either (1) the arithmetic average of the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period (one, three or six months (or 12 months if agreed to by all applicable Lenders)) as selected by the Company relevant to such borrowing plus the applicable margin, or (2) a base rate determined by reference to the greatest of the ~~federal funds rate plus 0.5%, the prime commercial lending rate as determined by the Agent, and the daily LIBOR rate plus 1.0%, in each case plus an applicable margin and subject to a floor~~ ~~of 0.5%.~~ In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Credit Facility a 0.2% commitment fee in respect of commitments under the Revolving Credit Facility, which may be subject to adjustment based on the Company’s total leverage ratio. On November 9, 2020, the Company entered into an amended credit agreement which changes the terms of the Company’s debt covenants. The Company is in compliance with its debt covenants. ~~The outstanding balance under the Revolving Credit Facility as of~~ ~~March 31, 2021~~ ~~is $10.0 million.~~

~~Interest expense~~

~~The following table summarizes the Company’s interest expense:~~

Three Months Ended March 31,
2021 2020
2019 Revolving Credit Facility
Amortization of debt issuance costs $ 12 $ 16
Commitment fee 0 4
Interest on borrowings 63 14
Other* 20 211
Total $ 95 $ 245

* Mainly finance leases’ related interest expense

~~8. Accumulated Other Comprehensive (Loss) / Income~~

~~The changes in accumulated other comprehensive (loss) income during the three months ended March 31, 2021 were as follows:~~

Balance at December 31, 2020 Other comprehensive (loss) income Tax effect Balance at March 31, 2021
Foreign currency $ (26,076) $ (1,888) $ 0 $ (27,964)
Unrealized income (loss) on intra-entity foreign currency transactions (2,137) 1,144 (392) (1,385)
Total $ (28,213) $ (744) $ (392) $ (29,349)

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(Amounts in tables in thousands, except for per share data or unless otherwise noted)

~~9. Stockholders’ Equity~~federal funds rate plus 0.5%, the prime commercial lending rate as determined by the Agent, and the daily LIBOR rate plus 1.0%, in each case plus an applicable margin and subject to a floor of 0.5%.

~~There were no significant~~On June 30, 2021, the Company paid off the outstanding balance and closed the Revolving Credit Facility.

Interest expense

The following table summarizes the Company’s interest expense:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021		2020
2021 Senior Notes due 2026
Amortization of debt issuance costs	$	306	$	—		$	306	$	—
Interest on borrowings	2,617		—			2,617		—

2019 Revolving Credit Facility
Amortization of debt issuance costs	—		12			84		40
Commitment fee	—		—			—		4
Interest on borrowings	—		59			126		141

Other1	10		1			39		216
Total	$	2,933	$	72		$	3,172	$	401

1 Mainly finance leases’ related interest expense

Debt issuance costs are deferred and amortized to interest expense using the effective interest method.

8. Accumulated Other Comprehensive (Loss) / Income

The changes ~~to Company’s authorized capital stock and preferred stock~~in accumulated other comprehensive (loss) income during the ~~three~~nine months ended ~~March 31, 2021.~~September 30, 2021 were as follows:


	Balance at December 31, 2020		Other comprehensive (loss) income		Tax effect		Balance at September 30, 2021
Foreign currency	$	(26,076)	$	(3,595)	$	—	$	(29,671)
Unrealized loss on intra-entity foreign currency transactions	(2,137)		1,361		(464)		(1,240)

Total	$	(28,213)	$	(2,234)	$	(464)	$	(30,911)

9. Stockholders’ Equity

Common Stock

Each holder of common stock is entitled to vote on all matters and is entitled to 1 vote for each share held. Dividends on common stock will be paid when, and if, declared by the Company’s Board of Directors. ~~NaN~~No dividends have ever been declared or paid by the Company.

Common Stock Offering

On June 29, 2021, the Company closed its underwritten public offering of common stock, par value $0.0001 per share. The offering was conducted pursuant to an underwriting agreement (the “Underwriting Agreement”) dated June 24, 2021, by and between the Company and B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”) for net proceeds of $102.3 million. At the closing, the Company issued 42,307,692 shares of common stock, inclusive of 3,846,154

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(Amounts in tables in thousands, except for per share data or unless otherwise noted)

shares of common stock issued pursuant to the full exercise of the Underwriters’ option to purchase additional shares of common stock. The Company used the net proceeds for the redemption of the Series A Convertible Preferred Stock.

Preferred Stock

The Company’s Board of Directors (the “Board”) is authorized to issue preferred shares and has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of preferred stock.

Series B Non-Convertible Preferred Stock

On June 30, 2021, the Company closed a private placement of 75,000 shares of its Series B Perpetual Non-Convertible Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share (the “Series B Preferred Stock”), for net proceeds of $72.5 million (the “Series B Transaction”). The sale of the Series B Preferred Stock was pursuant to the Series B Preferred Stock Purchase Agreement, dated as of June 24, 2021 (the “Series B Purchase Agreement”), between the Company and B. Riley Principal Investments, LLC (“BRPI”).

In connection with the closing of the Series B Transaction, the Company (i) filed a Certificate of Designation with the State of Delaware setting forth the rights, preferences, privileges, qualifications, restrictions and limitations on the Series B Preferred Stock (the “Series B Certificate”) and (ii) entered into an Investor Rights Agreement with B. Riley Financial, Inc. (“B. Riley Financial”) and BRPI setting forth certain governance and registration rights of B. Riley Financial with respect to the Company.

Certificate of Designation of the Series B Preferred Stock

The rights, preferences, privileges, qualifications, restrictions and limitations of the shares of Series B Preferred Stock are set forth in the Series B Certificate. Under the Series B Certificate, the holders of the Series B Preferred Stock are entitled to receive, on each share of Series B Preferred Stock on a quarterly basis, an amount equal to the dividend rate, as described in the following sentence, divided by four and multiplied by the then-applicable Liquidation Preference per share of Series B Preferred Stock (collectively, the “Preferred Dividends”). The dividend rate is (1) 9.5% per annum for the period commencing on June 30, 2021 and ending on and including December 31, 2021, (2) 13% per annum for the year commencing on January 1, 2022 and ending on and including December 31, 2022; and (3) 14% per annum for the year commencing on January 1, 2023 and thereafter. The Preferred Dividends will be due in cash on January 1, April 1, July 1 and October 1 of each year (each, a “Series B Dividend Payment Date”). The Company may choose to pay the Series B Preferred Dividends in cash or in additional shares of Series B Preferred Stock. In the event the Company does not declare and pay a dividend in cash on any Series B Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference. As of September 30, 2021, the Liquidation Value and Redemption Value of the Series B Preferred Shares was $76.8 million.

On and after the fifth anniversary of the date of issuance, holders of shares of Series B Preferred Stock will have the right to cause the Company to redeem each share of Series B Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series B Preferred Stock will also be redeemable at the option of the holder upon the occurrence of a “Fundamental Change” at (i) par in the case of a payment in cash or (ii) 1.5 times par in the case of payment in shares of Common Stock (such shares being, “Registrable Securities”), subject to certain limitations on the amount of stock that could be issued to the holders of Series B Stock. In addition, the Company will be permitted to redeem outstanding shares of the Series B Preferred Stock at any time for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. Pursuant to the Series B Certificate, the Company will be required to use (i) the first $50.0 million of proceeds from certain transactions (i.e., disposition, sale of assets, tax refunds) received by the Company to redeem for cash, shares of the Series B Preferred Stock, on a pro rata basis among each holder of Series B Preferred Stock and (ii) the next $25.0 million of proceeds from certain transactions received by the Company may be used by the Company to buy back shares of Common Stock and to the extent, not used for such purpose by the Company, to redeem, for cash, shares of the Series B Preferred Stock, on a pro rata basis among each holder of the Series B Preferred Stock.

The Company shall be required to obtain the prior written consent of the holders holding at least a majority of the outstanding shares of the Series B Preferred Stock before taking certain actions, including: (i) certain dividends, repayments and redemptions; (ii) any amendment to the Company’s certificate of incorporation that adversely affects the rights,

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preferences, privileges or voting powers of the Series B Preferred Stock; and (iii) issuances of stock ranking senior or equivalent to shares of the Series B Preferred Stock (including additional shares of the Series B Preferred Stock) in the priority of payment of dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company. Other than with respect to the foregoing consent rights, the Series B Preferred Stock is non-voting stock.

Investor Rights Agreement

On June 30, 2021, the Company, B. Riley Financial and BRPI entered into an Investor Rights Agreement (the “Investor Rights Agreement”). Pursuant to the Investor Rights Agreement, for so long as affiliates of B. Riley Financial beneficially own at least 10% of the outstanding shares of common stock (unless such equity threshold percentage is not met due to dilution from equity issuances), B. Riley Financial is entitled to nominate one Class II director (the “B. Riley Nominee”) to the Company’s board of directors (the “Board”), who shall be an employee of B. Riley Financial or its affiliates and is approved by the Board, such approval not to be unreasonably withheld. For so long as affiliates of B. Riley Financial beneficially own 5% or more but less than 10% of the outstanding shares of common stock (unless such equity threshold percentage is not met due to dilution from equity issuances), B. Riley Financial is entitled to certain board observer rights.

A summary of the Company’s Series B Perpetual Non-Convertible Preferred Stock balance at September 30, 2021 and changes during the nine months ended September 30, 2021, are presented below:


	Series B Preferred Stock
	Shares	Amount
Balance at December 31, 2020	—	$	—
Issuance of Series B preferred stock	75	75,000
Issuance costs related to preferred stock	—	(2,495)






Balance at September 30, 2021	75	$	72,505

On October 1, 2021 the Company paid the accrued Series B Perpetual Non-Convertible Preferred Stock dividend of $1.8 million.

Series A Convertible Preferred Stock

In accordance with the terms of the Share Purchase Agreement dated as of October 17, 2017 (the “PIPE Purchase Agreement”), with Silver Private Holdings I, LLC, an affiliate of Siris (“Silver”), on February 15, 2018, the Company issued to Silver 185,000 shares of its newly issued Series A Convertible Participating Perpetual Preferred Stock (the “Series A Preferred Stock”), par value $0.0001 per share, with an initial liquidation preference of $1,000 per share, in exchange for $97.7 million in cash and the transfer from Silver to the Company of the 5,994,667 shares of the Company’s common stock held by Silver (the “Preferred Transaction”).

AsRedemption of March 31, 2021, there were 259,510 shares of Series A Preferred Stock outstanding, including the initial issuance of 185,000 shares of Series A Preferred Stock and the issuance of 74,510 shares of Series A Preferred Stock as dividends.

~~Certificate of Designation of the~~ Series A Preferred Stock

The ~~rights, preferences, privileges, qualifications, restrictions~~net proceeds from the common stock public offering, Senior Note offering and ~~limitations~~the Series B transaction was used in part to fully redeem all outstanding shares of the ~~shares of Series A Preferred Stock are set forth in the Series A Certificate. Under the Series A Certificate, the holders of the Series A Preferred Stock are entitled to receive, on each share of~~Company’s Series A Preferred Stock on a quarterly basis, an amount equal to the dividend rate of 14.5% divided by four and multiplied by the then-applicable Liquidation Preference (as defined in the Series A Certificate) per share of Series A Preferred Stock (collectively, the “Preferred Dividends”). The Preferred Dividends are due on January 1, April 1, July 1 and October 1 of each year (each, a “Series A Dividend Payment Date”June 30, 2021 (the “Redemption”). The Company ~~may choose to pay the Preferred Dividends~~redeemed in ~~cash or in additional shares of Series A Preferred Stock. In the event the Company does not declare and pay a dividend in-kind or in cash on any Series A Dividend Payment Date, the unpaid amount~~full all of the ~~Preferred Dividend will be added to the Liquidation Preference. In addition, the Series A Preferred Stock participates in dividends declared and paid on shares of the Company’s common stock.~~

Each share of Series A Preferred Stock is convertible, at the option of the holder, into the number of shares of common stock equal to the “Conversion Price” (as that term is defined in the Series A Certificate) multiplied by the then applicable “Conversion Rate” (as that term is defined in the Series A Certificate). Each share of Series A Preferred Stock is initially convertible into 55.5556 shares of common stock, representing an initial “conversion price” of approximately $18.00 per share of common stock. The Conversion Rate is subject to equitable proportionate adjustment in the event of stock splits, recapitalizations and other events set forth in the Series A Certificate.

On and after February 15, 2023, holders of shares of Series A Preferred Stock have the right to cause the Company to redeem each share of Series A Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series A Preferred Stock is also redeemable at the option of the holder upon the occurrence of a “Fundamental Change” (as that term is defined in the Series A Certificate) at a specified premium (“Liquidation Value”). In addition, the Company is also permitted to redeem all268,917 outstanding shares of the Series A Preferred Stock ~~at any time (i) within~~for an aggregate Redemption Price of $278.7 million and all rights under the ~~first~~Investor Rights Agreement relating to the Series A Preferred Stock were terminated effective with the Redemption. No Series A Preferred Stock remain outstanding or authorized as of September 30, months of the date of issuance for the sum of the then-applicable Liquidation Preference, accrued but unpaid dividends and a make whole amount (known as “Redemption Value”) and (ii) following the 30-month anniversary of2021.

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the date of issuance for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. As of March 31, 2021, the Liquidation Value and Redemption Value of the Preferred Shares was $243.1 million.

The holders of a majority of the Series A Preferred Stock, voting separately as a class, are entitled at each of the Company’s annual meetings of stockholders or at any special meeting called for the purpose of electing directors (or by written consent signed by the holders of a majority of the then-outstanding shares of Series A Preferred Stock in lieu of such a meeting): (i) to nominate and elect 2 members of the Company’s Board of Directors for so long as the Preferred Percentage (as defined in the Series A Certificate) is equal to or greater than 10%; and (ii) to nominate and elect 1 member of the Company’s Board of Directors for so long as the Preferred Percentage is equal to or greater than 5% but less than 10%.

For so long as the holders of shares of Series A Preferred Stock have the right to nominate at least one director, the Company is required to obtain the prior approval of Silver prior to taking certain actions, including: (i) certain dividends, repayments and redemptions; (ii) any amendment to the Company’s certificate of incorporation that adversely effects the rights, preferences, privileges or voting powers of the Series A Preferred Stock; (iii) issuances of stock ranking senior or equivalent to shares of Series A Preferred Stock (including additional shares of Series A Preferred Stock) in the priority of payment of dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company; (iv) changes in the size of the Company’s Board of Directors; (v) any amendment, alteration, modification or repeal of the charter of the Company’s Nominating and Corporate Governance Committee of the Board of Directors and related documents; and (vi) any change in the Company’s principal business or the entry into any line of business outside of the Company’s existing lines of businesses. In addition, in the event that the Company is in EBITDA Non-Compliance (as defined in the Series A Certificate) or the undertaking of certain actions would result in the Company exceeding a specified pro forma leverage ratio, then the prior approval of Silver would be required to incur indebtedness (or alter any debt document) in excess of $10.0 million, enter or consummate any transaction where the fair market value exceeds $5.0 million individually or $10.0 million in the aggregate in a fiscal year or authorize or commit to capital expenditures in excess of $25.0 million in a fiscal year.

Each holder of Series A Preferred Stock has 1 vote per share on any matter on which holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent. The holders of Series A Preferred Stock are permitted to take any action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or electronic transmission of the holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders. In addition to any vote (or action taken by written consent) of the holders of the shares of Series A Preferred Stock as a separate class provided for in the Series A Certificate or by the General Corporation Law of the State of Delaware, the holders of shares of the Series A Preferred Stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote on an as-converted basis with the holders of common stock) on all matters submitted to a vote or to the consent of the stockholders of the Company (including the election of directors) as one class.

Under the Series A Certificate, if Silver and certain of its affiliates have elected to effect a conversion of some or all of their shares of Series A Preferred Stock and if the sum, without duplication, of (i) the aggregate number of shares of the Company’s common stock issued to such holders upon such conversion and any shares of the Company’s common stock previously issued to such holders upon conversion of Series A Preferred Stock and then held by such holders, plus (ii) the number of shares of the Company’s common stock underlying shares of Series A Preferred Stock that would be held at such time by such holders (after giving effect to such conversion), would exceed the 19.9% of the issued and outstanding shares of the Company’s voting stock on an as converted basis (the “Conversion Cap”), then such holders would only be entitled to convert such number of shares as would result in the sum of clauses (i) and (ii) (after giving effect to such conversion) being equal to the Conversion Cap (after giving effect to any such limitation on conversion). Any shares of Series A Preferred Stock which a holder has elected to convert but which, by reason of the previous sentence, are not so converted, will be treated as if the holder had not made such election to convert and such shares of Series A Preferred Stock will remain outstanding. Also, under the Series A Certificate, if the sum, without duplication, of (i) the aggregate voting power of the shares previously issued to Silver and certain of its affiliates held by such holders at the record date, plus (ii) the aggregate voting power of the shares of Series A Preferred Stock held by such holders as of such record date, would exceed 19.99% of the total voting power of the Company’s outstanding voting stock at such record date, then, with respect to such shares, Silver and certain of its affiliates are only entitled to cast a number of votes equal to 19.99% of such total voting power. The limitation on conversion and voting ceases to apply upon receipt of the requisite approval of holders of the Company’s common stock under the applicable listing standards.

~~Table of Content~~

~~SYNCHRONOSS TECHNOLOGIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED~~

~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

~~Investor Rights Agreement~~

Concurrently with the closing of the Preferred Transaction, Synchronoss and Silver entered into an Investor Rights Agreement. Under the terms of the Investor Rights Agreement, Silver and Synchronoss have agreed that, effective as of the closing of the Preferred Transaction, the Board of Directors of Synchronoss will consist of 10 members. From and after the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate a member to the Board of Directors pursuant to the Series A Certificate, the Board of Directors of Synchronoss will consist of (i) 2 directors nominated and elected by the holders of shares of Series A Preferred Stock; (ii) 4 directors who meet the independence criteria set forth in the applicable listing standards (each of whom will be initially agreed upon by Synchronoss and Silver); and (iii) 4 other directors, 2 of whom shall satisfy the independence criteria of the applicable listing standards and, as of the closing of the Preferred Transaction, 1 of whom shall be the individual then serving as chief executive officer of Synchronoss and 1 of whom shall be the current chairman of the Board of Directors of Synchronoss as of the date of execution of the Investors Rights Agreement. Following the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate at least 1 director to the Board of Directors of Synchronoss pursuant to the Series A Certificate, Silver will have the right to designate 2 members of the Nominating and Corporate Governance Committee of the Board of Directors.

Pursuant to the terms of the Investor Rights Agreement, neither Silver nor its affiliates may transfer any shares of Series A Preferred Stock subject to certain exceptions (including transfers to affiliates that agree to be bound by the terms of the Investor Rights Agreement).

For so long as Silver has the right to appoint a director to the Board of Directors of Synchronoss, without the prior approval by a majority of directors voting who are not appointed by the holders of shares of Series A Preferred Stock, neither Silver nor its affiliates will directly or indirectly purchase or acquire any debt or equity securities of Synchronoss (including equity-linked derivative securities) if such purchase or acquisition would result in Silver’s Standstill Percentage (as defined in the Investor Rights Agreement) being in excess of 30%. However, the foregoing standstill restrictions would not prohibit the purchase of shares pursuant to the PIPE Purchase Agreement or the receipt of shares of Series A Preferred Stock issued as Preferred Dividends pursuant to the Series A Certificate, shares of Common Stock received upon conversion of shares of Series A Preferred Stock or receipt of any shares of Series A Preferred Stock, Common Stock or other securities of the Company otherwise paid as dividends or as an increase of the Liquidation Preference (as defined in the Series A Certificate) or distributions thereon. Silver will also have preemptive rights with respect to issuances of securities of Synchronoss to maintain its ownership percentage.

Under the terms of the Investor Rights Agreement, Silver will be entitled to (i) 3 demand registrations, with no more than 2 demand registrations in any single calendar year and provided that each demand registration must include at least 10% of the shares of Common Stock held by Silver, including shares of Common Stock issuable upon conversion of shares of Series A Preferred Stock and (ii) unlimited piggyback registration rights with respect to primary issuances and all other issuances.

A summary of the Company’s Series A Convertible Participating Perpetual Preferred Stock balance at ~~March 31,~~September 30, 2021 and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, are presented below:


		Preferred Stock				Series A Preferred Stock
		Shares	Amount			Shares	Amount
Balance at December 31, 2020	Balance at December 31, 2020	250	$	237,641	Balance at December 31, 2020	250	$	237,641
Issuance of preferred stock		0	0

Amortization of preferred stock issuance costs	Amortization of preferred stock issuance costs	0	1,122		Amortization of preferred stock issuance costs	—	12,791
Issuance of preferred PIK dividend	Issuance of preferred PIK dividend	10	9,079		Issuance of preferred PIK dividend	19	18,485

Balance at March 31, 2021		260	$	247,842
Payment of preferred dividend					Payment of preferred dividend	—	9,748
Redemption of Series A preferred shares					Redemption of Series A preferred shares	(269)	(278,665)
Balance at September 30, 2021					Balance at September 30, 2021	—	$	—

~~Table of Content~~

~~SYNCHRONOSS TECHNOLOGIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED~~

~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

The Company and Siris Capital Group, LLC (“Siris”) entered into an Advisory Services Agreement dated as of May 18, 2020 under which Siris may provide consulting and advisory services to the Company on operational, business, financial and strategic matters. ~~Under the agreement,~~All obligations related to this Advisory Services Agreement were paid by the Company agreed to pay Siris a fee of $110,000 per month for calendar year 2021, which fee increases by $10,000 a month in each successive calendar year during the term of the agreement. No payment of the fee is required until February 1, 2022 and the ~~Company does not currently intend to pay any portion~~Advisory Services Agreement was terminated as of the fee until this date. On February 1 of each calendar year commencing on February 1, 2022, the Company shall pay Siris 20% of the aggregate annual amount of the fees with respect to the prior calendar year that were not previously paid. In addition, no later thanJune 30, days following the date on which Silver and its affiliates, including Siris, collectively hold no shares of Series A Preferred Stock, the Company shall pay all fees with respect to the period from January 1, 2021 through the termination date of the agreement not previously paid. The Company shall also reimburse Siris for any pre-approved out-of-pocket expenses in connection with providing services under the agreement.2021.

Registration Rights

~~There were no significant changes~~The Investor Rights Agreement entered into on June 30, 2021 provides that in the event Synchronoss issues Registrable Securities to the ~~Company’s~~holders of Series B Preferred Stock, such holders will have certain demand and piggy-back registration rights ~~during~~with respect to such Registrable Securities. In addition, on June 30, 2021, in connection with the ~~three months ended March 31, 2021.~~redemption of the Series A Preferred Stock, the Investor Rights Agreement between the Company and Silver terminated.

Stock Plans

On June 10, 2021, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive Plan to increase the number of shares issuable thereunder by 3.0 million shares. There w~~ere~~were no significant changes to ~~the Company’s Stock Plans~~Synchronoss Technologies, Inc. 2017 New Hire Equity Incentive Plan (the “Incentive Plan”) during the three and nine months ended ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021, there were ~~1.4~~1.2 million shares available for the grant or award under the Company’s 2015 Equity Incentive Plan and 0.4 million shares available for the grant or award under the Company’s 2017 New Hire Equity Incentive Plan.

On November 1, 2021 the Incentive Plan was amended to increase the maximum number of shares of Common Stock authorized for issuance under the Incentive Plan by 566,711 shares from 1,500,000 shares to a new aggregate total of 2,066,711 shares.

The Company’s performance cash awards granted to executives under the Long Term Incentive (“LTI”) Plans have been accounted for as liability awards, due to the Company’s intent and the ability to settle such awards in cash upon vesting and the Company has reflected such awards in accrued expenses. As of ~~March 31,~~September 30, 2021, the liability for such awards is approximately $0.2 million.

~~Stock-Based Compensation~~

~~The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by operating expense categories, as follows:~~
Three Months Ended March 31,
2021 2020
Cost of revenues $ 478 $ 752
Research and development 855 1,431
Selling, general and administrative 1,388 2,986
Total stock-based compensation expense $ 2,721 $ 5,169

~~The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by award type, as follows:~~
Three Months Ended March 31,
2021 2020
Stock options $ 955 $ 1,783
Restricted stock awards 1,710 3,334
Performance Based Cash Units 56 52
Total stock-based compensation before taxes $ 2,721 $ 5,169
Tax benefit $ 497 $ 924

The total stock-based compensation cost related to unvested equity awards as of March 31, 2021 was approximately $10.9 million. The expense is expected to be recognized over a weighted-average period of approximately 1.1 years.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by operating expense categories, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021		2020
Cost of revenues	$	432	$	505		$	1,289	$	1,899
Research and development	725		890			2,276		3,392
Selling, general and administrative	1,132		2,996			3,790		9,256
Total stock-based compensation expense	$	2,289	$	4,391		$	7,355	$	14,547

The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by award type, as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020			2021		2020
Stock options	$	1,064	$	1,701		$	2,912	$	5,289
Restricted stock awards	1,373		2,626			4,412		8,922
Performance Based Cash Units	(148)		64			31		336

Total stock-based compensation before taxes	$	2,289	$	4,391		$	7,355	$	14,547
Tax benefit	$	420	$	604		$	1,357	$	2,192

The total stock-based compensation cost related to unvested equity awards as of September 30, 2021 was approximately $10.9 million. The expense is expected to be recognized over a weighted-average period of approximately 1.3 years.

The total stock-based compensation cost related to unvested performance based cash units as of ~~March 31,~~September 30, 2021 was approximately ~~$0.2~~$0.5 million. The expense is expected to be recognized over a weighted-average period of approximately ~~1.6~~2.2 years.

Stock Options

~~There were no significant changes to the Company’s Stock Option Plans during the three months ended March 31, 2021.~~

The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock options. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

Three Months Ended March 31,
2021 2020
Expected stock price volatility 83.0 % 72.5 %
Risk-free interest rate 0.6 % 1.4 %
Expected life of options (in years) 4.18 4.45
Expected dividend yield 0.0 % 0.0 %
Weighted-average fair value (PSV) of the options $ 2.42 $ 3.09

~~The following table summarizes information about stock options outstanding as of March 31, 2021:~~

Options Number of
Options Weighted-Average
Exercise Price Weighted-Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value
Outstanding at December 31, 2020 4,423 $ 9.60
Options Granted 255 3.97
Options Exercised 0 0
Options Cancelled (620) 9.66
Outstanding at March 31, 2021 4,058 $ 9.23 5.00 $ 22
Vested at March 31, 2021 1,876 $ 13.88 3.93 $ 0
Exercisable at March 31, 2021 1,876 $ 13.88 3.93 $ 0

The total intrinsic value of stock options exercisable at March 31, 2021 and 2020 was NaN and NaN, respectively. The total intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020 was NaN and NaN, respectively.

~~Awards of Restricted Stock and Performance Stock~~

~~There were no significant changes to the Company’s restricted stock award (“Restricted Stock”) and performance stock plan during the three months ended March 31, 2021.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020				2021			2020
Expected stock price volatility	78.5		%	78.3		%		82.9		%	74.5		%
Risk-free interest rate	0.6		%	0.2		%		0.6		%	1.0		%
Expected life of options (in years)	4.20			4.52				4.24			4.47
Expected dividend yield	0.0		%	0.0		%		0.0		%	0.0		%
Weighted-average fair value (PSV) of the options	$	1.72		$	2.23			$	1.88		$	2.80

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

The following table summarizes information about stock options outstanding as of September 30, 2021:


Options	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2020	4,423	$	9.60
Options Granted	1,966	3.08
Options Exercised	—	—
Options Cancelled	(1,395)	9.81
Outstanding at September 30, 2021	4,994	$	6.97	5.07	$	—
Vested and exercisable at September 30, 2021	1,696	$	12.76	3.14	$	—

The total intrinsic value of stock options exercisable at September 30, 2021 and 2020 was nil and nil, respectively. The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was nil and nil, respectively.

Awards of Restricted Stock and Performance Stock

A summary of the Company’s unvested restricted stock at ~~March 31,~~September 30, 2021, and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, is presented below:


Unvested Restricted Stock	Unvested Restricted Stock	Number of Awards	Weighted- Average Grant Date Fair Value		Unvested Restricted Stock	Number of Awards	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2020	Unvested at December 31, 2020	1,510	$	7.05	Unvested at December 31, 2020	1,510	$	7.05
Granted	Granted	167	4.02		Granted	2,000	3.11
Vested	Vested	(574)	7.27		Vested	(837)	7.56
Forfeited	Forfeited	(43)	7.09		Forfeited	(354)	4.38
Unvested at March 31, 2021		1,060	$	6.36
Unvested at September 30, 2021					Unvested at September 30, 2021	2,319	$	3.84

Restricted stock awards are granted subject to other service conditions or service and performance conditions (“Performance-Based Awards”). Restricted stock and Performance-Based Awards are measured at the closing stock price at the date of grant and are recognized straight line over the requisite service period.

Performance Based Cash Units

Performance based cash units vest at the end of a three-year period based on service and achievement of certain performance objectives determined by the Company’s Board of Directors.

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

A summary of the Company’s unvested performance-based cash units at ~~March 31,~~September 30, 2021 and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, is presented below:


Unvested Cash Units	Unvested Cash Units	Number of Units	Period End Fair Value		Unvested Cash Units	Number of Units	Period End Fair Value
Unvested at December 31, 2020	Unvested at December 31, 2020	907	$	4.70	Unvested at December 31, 2020	907	$	4.70
Granted	Granted	0	0		Granted	1,556	—
Granted adjustment		(307)	0
Granted adjustment1					Granted adjustment1	(307)	0
Vested	Vested	(30)	0		Vested	(30)	—
Forfeited	Forfeited	0	0		Forfeited	(564)	—
Unvested at March 31, 2021		570	$	3.57
Unvested at September 30, 2021					Unvested at September 30, 2021	1,562	$	2.40

___________________________

1 Includes changes in the unvested units due to performance adjustments

Performance based cash units are measured at the closing stock price at the reporting period end date and are recognized straight line over the requisite service period. The expense for the period will increase or decrease based on updated fair values of these awards at each reporting date. Unvested units fluctuations are shown as adjustments to units granted in the table above. These fluctuations are based on the percentage achievement of the performance metrics at the end of each reporting period.

10. Income Taxes

The Company recognized ~~approximately $0.2 million and $12.4 million in related~~an income tax benefit of approximately $7.3 million and $29.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively. The effective tax rate was approximately ~~1.3%~~24.3% for the ~~three~~nine months ended September 30, 2021, ~~March 31, 2021~~, which was ~~lower~~higher than the U.S. federal statutory rate primarily due to discrete income tax benefit recorded in the current quarter associated with the finalization of the Company’s U.S. federal income tax return, which reflected a net operating loss that was carried back to prior tax years. Based on the final carryback claim, the Company recorded a discrete income tax benefit of $7.4 million and discrete income tax expense related to a liability for unrecognized tax benefits in the amount of $2.1 million, all of which, if recognized, would impact the Company’s effective tax rate. This increase was partially offset by pre-tax losses in jurisdictions where full valuation allowances have been recorded, pre-tax losses in jurisdictions which have a zero tax rate, and ~~in zero rate jurisdictions.~~ certain foreign jurisdictions projecting current income tax expense. The Company’s effective tax rate was approximately ~~78.8%~~75.3% for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, which was higher than the U.S. federal statutory rate primarily due to the Company’s ability to recognize certain loss carrybacks as a result of the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) in Q1the first quarter of 2020, the impact of the redemption of the Company’s interest in STIN and valuation allowances recorded in domestic and foreign jurisdictions, partially offset by the impact of permanent book-tax differences. The Company continues to consider all available evidence, including historical profitability and projections of future taxable income together with new evidence, both positive and negative, that could affect the view of the future realization of deferred tax assets. As a result of the assessment, no change was recorded by the Company to the valuation allowance during the ~~three~~nine months ended ~~March 31, 2021~~.September 30, 2021.

~~Table of Content~~

~~SYNCHRONOSS TECHNOLOGIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED~~

~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

On March 11, 2021 the American Rescue Plan Act ("ARPA") was signed into law which is aimed at addressing the continuing economic and health impacts of the COVID-19 pandemic. This legislation relief, along with the previous governmental relief packages provide for numerous changes to current tax law. The Company does not anticipate that ARPA ~~did not~~will have a material impact on ~~our~~its financial statements in the ~~first quarter of~~period ending September 30, 2021.

During the quarter, the Internal Revenue Service commenced an audit of certain of the Company’s prior year U.S. federal income tax filings, including the 2015 through 2020 tax years. The Company does not believe that the results of this audit will have a material effect on its financial position or results of operations.

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

11. Restructuring

The Company continues to execute certain restructurings to identify workforce optimization opportunities to better align the Company’s resources with its key strategic priorities. A summary of the Company’s restructuring accrual at ~~March 31,~~September 30, 2021 and changes during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, are presented below:

Balance at December 31, 2020 Charges Payments Other Adjustments Balance at March 31, 2021
Employment termination costs $ 1,580 $ 713 $ (1,010) $ (2) $ 1,281


	Balance at December 31, 2020		Charges		Payments		Other Adjustments		Balance at September 30, 2021
Employment termination costs	$	1,580	$	3,075	$	(2,130)	$	—	$	2,525

12. Earnings per Common Share (“EPS”)

Basic EPS is computed based upon the weighted average number of common shares outstanding for the year. Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of the Company’s common stock for the year. The Company includes participating securities (Redeemable Convertible Preferred Stock - Participation with Dividends on Common Stock that contain preferred dividend) in the computation of EPS pursuant to the two-class method. The two-class method of computing earnings per share is an allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share from continued and discontinued operations.


		Three Months Ended March 31,				Three Months Ended September 30,	Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
Numerator - Basic:	Numerator - Basic:							Numerator - Basic:
Net loss from continuing operations	Net loss from continuing operations	$	(12,366)	$	(3,350)			Net loss from continuing operations	$	(8,109)	$	(5,622)	$	(22,895)	$	(9,666)
Net income (loss) attributable to redeemable noncontrolling interests	Net income (loss) attributable to redeemable noncontrolling interests	336		(17)				Net income (loss) attributable to redeemable noncontrolling interests	—		(60)		286		(242)
Preferred stock dividend		(10,530)		(8,909)
Preferred stock dividend 1								Preferred stock dividend 1	(1,722)		(9,685)		(33,728)		(27,882)

Net loss attributable to Synchronoss	Net loss attributable to Synchronoss	$	(22,560)	$	(12,276)			Net loss attributable to Synchronoss	$	(9,831)	$	(15,367)	$	(56,337)	$	(37,790)

Numerator - Diluted:	Numerator - Diluted:							Numerator - Diluted:
Net loss from continuing operations attributable to Synchronoss	Net loss from continuing operations attributable to Synchronoss	$	(22,560)	$	(12,276)			Net loss from continuing operations attributable to Synchronoss	$	(9,831)	$	(15,367)	$	(56,337)	$	(37,790)
Income effect for interest on convertible debt, net of tax		0		0
Net loss from continuing operations adjusted for the convertible debt		(22,560)		(12,276)

Denominator:	Denominator:							Denominator:
Weighted average common shares outstanding — basic	Weighted average common shares outstanding — basic	42,737		41,483				Weighted average common shares outstanding — basic	85,646		42,360		57,662		41,777
Dilutive effect of:	Dilutive effect of:							Dilutive effect of:

Shares from assumed conversion of preferred stock 1		0		0
Shares from assumed conversion of Performance Based Cash Units 2		0		0
Shares from assumed conversion of preferred stock2								Shares from assumed conversion of preferred stock2	—		—		—		—
Shares from assumed conversion of Performance Based Cash Units3								Shares from assumed conversion of Performance Based Cash Units3	—		—		—		—

Weighted average common shares outstanding — diluted	Weighted average common shares outstanding — diluted	42,737		41,483				Weighted average common shares outstanding — diluted	85,646		42,360		57,662		41,777

Basic EPS	Basic EPS							Basic EPS
Earnings per share:	Earnings per share:							Earnings per share:
Basic	Basic	$	(0.53)	$	(0.30)			Basic	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)

Diluted	Diluted	$	(0.53)	$	(0.30)			Diluted	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)

Anti-dilutive stock options excluded	Anti-dilutive stock options excluded	0		0				Anti-dilutive stock options excluded	—		—		—		—
Unvested shares of restricted stock awards	Unvested shares of restricted stock awards	1,060		3,222				Unvested shares of restricted stock awards	2,319		1,952		2,319		1,952

~~(1)~~1 Current year amounts include amortization of preferred stock issuance costs accelerated due to Series A redemption during the second quarter.

2 The calculation does not include the effect of assumed conversion of preferred stock of ~~14,417,234~~nil and ~~12,503,264~~13,426,155 shares for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively; and 14,767,557 and 12,963,664 shares for the nine months ended September 30, 2021 and 2020, respectively; which is based on 55.5556 shares per $1,000 principal amount of the preferred

stock, because the effect would have been anti–dilutive.

~~(2)~~3 The calculation does not include the effect of assumed conversion of Performance Based Cash Units of ~~586,976~~1,559,130 and ~~NaN~~nil shares for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively; and 776,303 and nil shares for the nine months ended September 30, 2021 and 2020, respectively; which is based on 1 share per 1 Performance Based Cash Unit, because the effect would have been anti–dilutive.

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

13. Commitments, Contingencies and Other

Purchase Obligations

Aggregate annual future minimum payments under non-cancelable agreements are as follows:


Year	Year	Non-cancelable agreements		Year	Non-cancelable agreements
2021	2021	$	9,909	2021	$	4,788
2022	2022	16,317		2022	21,696
2023	2023	13,749		2023	14,541
2024 and thereafter	2024 and thereafter	21,994		2024 and thereafter	21,995
Total	Total	$	61,969	Total	$	63,020

Legal Matters

In the ordinary course of business, the Company is regularly subject to various claims, suits, regulatory inquiries and investigations. The Company records a liability for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable, and the loss can be reasonably estimated. Management has also identified certain other legal matters where they believe an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the Company.

On May 1, 2017, May 2, 2017, June 8, 2017 and June 14, 2017, 4 putative class actions were filed against the Company and certain of its current and former officers and directors in the United States District Court for the District of New Jersey (the “Securities Law Action”). After these cases were consolidated, the court appointed as lead plaintiff Employees’ Retirement System of the State of Hawaii, which filed, on November 20, 2017, a consolidated complaint purportedly on behalf of purchasers of the Company’s common stock between February 3, 2016 and June 13, 2017. On February 2, 2018, the defendants moved to dismiss the consolidated complaint in its entirety, with prejudice. Before that motion was decided, on August 24, 2018, lead plaintiff filed a consolidated amended complaint purportedly on behalf of purchasers of the Company’s common stock between October 28, 2014 and June 13, 2017. On June 28, 2019, the Court granted defendants’ motion to dismiss the consolidated amended complaint in its entirety, without prejudice, allowing lead plaintiff to leave to amend its complaint.On August 14, 2019, lead plaintiff filed a second amended complaint. The second amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and it alleges, among other things, that the defendants made false and misleading statements of material information concerning the Company’s financial results, business operations, and prospects. The plaintiff seeks unspecified damages, fees, interest, and costs. On October 4, 2019, the defendants moved to dismiss the second amended complaint in its entirety.On May 29, 2020, the ~~court~~Court granted in part and denied in part defendants’ motion to dismiss the second amended complaint, without prejudice. Plaintiff filed its motion for class certification on October 30, 2020, which motion remains pending. The Company believes that the asserted claims lack merit and intends to defend against all of the claims vigorously. Due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the action at this time and can give no assurance that the asserted claims will not have a material adverse effect on its financial position or results of operations.2020.

On September 15, 2017, October 24, 2017, October 27, 2017 and October 30, 2017, Company shareholders filed derivative lawsuits against certain of the Company’s current and former officers and directors and the Company (as nominal defendant) in the United States District Court for the District of New Jersey (the “Derivative Suits”). On May 24, 2018, the Court consolidated the Derivative Suits and appointed Lisa LeBoeuf as lead plaintiff. The lead plaintiff designated as the Operative Complaint the complaint she previously had filed on October 27, 2017. On March 11, 2019, the defendants filed a motion to dismiss the Operative Complaint, which the Court granted in substantial part on November 26, 2019. On December 10, 2019, the defendants filed a motion for reconsideration respecting the only claim to survive the motion to dismiss. On June 12, 2020,

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

~~the defendants filed a motion for reconsideration respecting the only claim to survive the motion to dismiss. On June 12, 2020,~~ the Court granted the defendants’ motion for reconsideration and dismissed the remaining claim without prejudice, allowing lead plaintiff leave to amend her complaint. On July 13, 2020, lead plaintiff filed an amended complaint. The amended complaint alleges claims related to breaches of fiduciary duties and unjust enrichment. The amended complaint’s allegations relate to substantially the same facts as those underlying the Securities Law Action described above. On April 30, 2021, the Court dismissed Plaintiff’s amended complaint in its entirety. ~~Due to the inherent uncertainties~~Plaintiff filed a notice of ~~litigation, including a potential~~ appeal ~~the Company cannot predict the outcome of the action at this time and can give no assurance that the asserted claims will not have a material adverse effect~~ on ~~our financial position or results of operations.~~May 28, 2021.

On March 7, 2019, Synchronoss shareholders, Beth Daniel and Juan Solis, filed a separate derivative lawsuit against certain of the Company’s current and former officers and directors and the Company (as nominal defendant) in the Court of Chancery of the State of Delaware, asserting substantially the same allegations as those underlying the Derivative Suits and the Securities Law Action described ~~above.~~above (the “Delaware Litigation”). Plaintiffs seek unspecified damages and for the Company to take steps to improve its corporate governance and internal procedures. On May 20, 2019, the parties stipulated to a stay of the action pending a ruling on the pending motion to dismiss in the Derivative Suits. The Company believes that the asserted claims lack merit and intends to defend against all of the claims vigorously. Due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the action at this time and can give no assurance that the asserted claims will not have a material adverse effect on our financial position or results of operations.

On June 11, 2020 and June 12, 2020, Company shareholders filed derivative lawsuits against certain of the Company’s current and former officers and directors and the Company (as nominal defendant) in the United States District Court for the District of New Jersey (the “Demand Refused Derivative Complaints” and together with the Delaware Litigation and the Derivative Suits, the “Derivative Actions”). The Demand Refused Derivative Complaints allege claims related to breaches of fiduciary duty, unjust enrichment, and alleged violations of securities laws. The ~~complaints’~~complainants’ allegations relate substantially to the same facts as those underlying the Securities Law Action described above. The Demand Refused Derivative Complaints further allege that each plaintiff made a demand upon the Company’s Board of Directors to investigate the alleged misconduct and that such demand was wrongfully refused. Plaintiffs seek unspecified damages and for the Company to take steps to improve its corporate governance and internal procedures. On October 20, 2020, the Court consolidated the actions and appointed co-lead plaintiffs. On December 4, 2020, co-lead plaintiffs filed a consolidated amended complaint. On February 3, 2021, the defendants filed motions to dismiss the amended ~~complaint, which remain pending before~~complaint.

On May 7, 2021, a mediation took place concerning the ~~Court.~~ Securities Law Action and the Derivative Actions.On August 19, 2021, the parties to the Securities Law Action entered into a stipulation of settlement.The Court preliminarily approved the proposed settlement in the Securities Law Action on August 25, 2021, and a settlement hearing is scheduled for December 8, 2021.On September 9, 2021, the parties to the Derivative Actions entered into a stipulation of settlement.The Court preliminarily approved the proposed settlement in the Derivative Actions on September 14, 2021, and a settlement hearing is scheduled for November 30, 2021.Due to the inherent uncertainties of litigation, the Company cannot predict the outcomes of the settlement hearings and gives no assurance that the asserted claims in the Securities Law Action or the Derivative Actions will not have a material adverse effect on the Company’s financial position, prospects, or results of operations.

In the third quarter of 2017, the SEC and Department of Justice initiated investigations in connection with the June 2017 Announcement and certain transactions that the Company restated in the third quarter of 2018.The Company has received subpoenas, produced documents, and provided additional information to the government in connection with those investigations.On June 22, 2021, the Securities and Exchange Commission (“SEC”) staff verbally notified the Company that the staff has made a preliminary determination to recommend that the SEC initiate an enforcement action against the Company. This is in connection with certain financial transactions that the Company effected in 2015 and 2016 and its disclosure of and accounting for such transactions, which the Company restated in the third quarter of 2018 in its restated annual and quarterly financial statements for 2015 and 2016.That restatement followed the Company’s announcement, on June 13, 2017 (the “June 2017 Announcement”), that certain of its prior financial statements would need to be restated.Certain individuals, including certain former members of Synchronoss’ management team, received similar notifications.The Company remains in discussions with the SEC staff regarding the prospect of resolving this matter through settlement.If the Company is unable to resolve this matter through settlement then it would expect to receive a “Wells notice” from the SEC staff in connection with this matter. Although a Wells notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law, it is a formal notice that the SEC intends to bring an enforcement action against the recipient.Upon receipt of a Wells notice, the recipient has the opportunity to respond to the SEC staff’s position before any formal enforcement action is taken.Due to the inherent uncertainties of government investigations, the Company cannot predict the outcome of these

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

(Amounts in tables in thousands, except for per share data or unless otherwise noted)

government investigations or the ~~action~~SEC staff’s preliminary determination at this time and can give no assurance that the asserted claims will not have a material adverse effect on its financial position, prospects, or results of operations.

Except as set forth above, the Company is not currently subject to any other legal proceedings that could have a material adverse effect on its operations; however, itthe Company may from time to time become a party to various legal proceedings arising in the ordinary course of ~~its~~our business. The Company is currently the plaintiff in several patent infringement cases. The defendants in several of these cases have filed counterclaims.Although the Company cannot predict the outcome of the cases at this time due to the inherent uncertainties of litigation, the Company continues to pursue its claims and believes that the counterclaims are without merit, and the Company intends to defend ~~against~~ all of such counterclaims.

~~Table of Content~~

~~SYNCHRONOSS TECHNOLOGIES, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED~~

~~(Amounts in tables in thousands, except for per share data or unless otherwise noted)~~

14. Additional Financial Information

Other Income, net

The following table sets forth the components of included in the Other Income, net included in the Condensed Consolidated Statements of Operations:

Three Months Ended March 31,
2021 2020
FX gains (losses) (1)
$ (3,274) $ (212)
Income from sale of intangible assets (2)
0 1,843
Other (3)
(122) 61
Total $ (3,396) $ 1,692


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
FX gains (losses)1	$	(1,752)	$	2,228	$	(4,055)	$	2,330





Government refunds	195		322		199		874
Income from sale of intangible assets2	—		—		550		2,164
Other3	(112)		134		(183)		375
Total	$	(1,669)	$	2,684	$	(3,489)	$	5,743

~~(1)~~1 Fair value of foreign exchange gains and losses

~~(2)~~2 Represents gain on sale of certain of the Company’s IP addresses and Patents

~~(3)~~3 Represents an aggregate of individually immaterial transactions

~~15. Subsequent Events~~

~~Preferred Dividends~~

~~Subsequent to March 31, 2021, the Company paid in-kind the accrued Preferred Dividends of $9.4 million.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes included in Item 1 “Financial Information” of this Form 10-Q.

The words “Synchronoss,” “we,” “our,” “ours,” “us,” and the “Company” refer to Synchronoss Technologies, Inc. and its consolidated subsidiaries. This quarterly report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management based on information currently available to our management. Use of words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “hopes,” “should,” “continues,” “seeks,” “likely” or similar expressions, indicate a forward-looking statement. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, including, but not limited to, risks, uncertainties and assumptions relating to the duration and severity of the COVID-19 pandemic and its impact on our business and financial performance. Actual results may differ materially from the forward-looking statements we make. We caution investors not to place substantial reliance on the forward-looking statements included in this quarterly report. These statements speak only as of the date of this quarterly report, and we undertake no obligation to update or revise the statements in light of future developments. All numbers are expressed in thousands unless otherwise stated.

Overview

Synchronoss Technologies, Inc. (“Synchronoss” or the “Company”) is a global software and services company that provides essential technologies for the mobile transformation of business. The Company’s portfolio contains offerings such as personal cloud, secure-mobility, identity management and scalable messaging platforms, products and solutions. These essential technologies create a better way of delivering the transformative mobile experiences that the Company’s customers need to help them stay ahead of the curve in competition, innovation, productivity, growth and operational efficiency.

Synchronoss’ products and platforms are designed to be carrier-grade, flexible and scalable, enabling multiple converged communication services to be managed across a range of distribution channels including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets. This business model allows the Company to meet the rapidly changing converged services and connected devices offered by their customers. Synchronoss’ products, platforms and solutions enable its customers to acquire, retain and service subscribers and employees quickly, reliably and cost-effectively with white label and custom-branded solutions. Synchronoss’ customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, backing-up, synchronizing and sharing/collaboration with connected devices and contents from these devices and associated services. The extensibility, scalability, reliability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for their customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud. By using the Company’s technologies, Synchronoss’ customers can optimize their cost of operations while enhancing their customer experience.

The Company currently operates in and markets its solutions and services directly through its sales organizations in North America, Europe and Asia-Pacific.

Impacts of ~~the Recent Novel Coronavirus (COVID-19)~~COVID-19

Although COVID-19 has not significantly affected our business to date, this disclosure discusses the actions the Company has taken in response to the COVID-19 crisis and the impacts that the situation has had on our business, as well as related known or expected trends.

The continued impact of COVID-19 on the macroeconomy and our business will depend significantly on the effectiveness and distribution of the vaccine, the potential cyclicality of the health crisis and the related public policy actions, market or regulatory needs or demands, the length and severity of the global economic slowdown, and whether and how our customers change their behaviors over the longer term. As a result, the demand for our products and services, as well as our overall results

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of operations, may be materially and adversely impacted by the pandemic for the duration of 2021 or longer, and we are unable to predict the duration or degree of such impact with any certainty.

In response to the ongoing COVID-19 pandemic, we continue to execute our business continuity plans and evolve our operations to protect the safety of our employees while continuing to provide critical products and services to our customers. Some of the key initiatives the Company continues to execute include:

•Working safely and effectively with new and existing customers to continue to provide our products and services through the pandemic

•Continuing to enhance and modify our safety protocols for our employees

•Adjusting business operations to address circumstances created by COVID-19

•Maintaining effective governance and internal controls in a remote work environment

As the pandemic continues, we may revise our approach to these initiatives or take additional actions to meet the needs of our employees, customers and the Company and to continue to provide our products and services.

Revenues

We generate most of our revenues on a per transaction or subscription basis, which is derived from contracts that extend up to 60 months from execution.

The future success of our business depends on the continued growth of Business-to-Business and Business-to-Business-to-Consumer driving customer transactions, and continued expansion of our platforms into the TMT Market globally through Cloud, Messaging and Digital markets. As such, the volume of transactions and our ability to expand our footprint in TMT and globally may result in revenue fluctuations on a quarterly basis.

Most of our revenues are recorded in U.S. dollars but as we continue to expand our footprint with international carriers, we will become subject to currency translation that could affect our future net sales as reported in U.S. dollars.

Our top five customers accounted for ~~68.3%~~69.2% and ~~74.7%~~69.0% of net revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020, respectively. Contracts with these customers typically run for three to five years. Of these customers, Verizon accounted for more than 10% of our revenues in 2021 and 2020. The loss of Verizon as a customer would have a material negative impact on our company. However, we believe that the costs incurred and subscriber disruption by Verizon to replace Synchronoss’ solutions would be substantial.

Current Trends Affecting Our Results of Operations

As the COVID-19 pandemic continues to evolve, we are actively monitoring the global situation. The extent of the continuing impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, impact on our business operations, impact on our customer, employee or industry events, and effect on our vendors, all of which are uncertain and cannot be predicted. The extent to which the COVID-19 pandemic may continue to impact our business, financial condition or results of operations is uncertain, but may include, without limitation, impacts to our paying user growth as well as disruptions to our business operations as a result of travel restrictions, shutdown of workplaces and potential impacts to our vendors. Additionally, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates relative to U.S. dollars, our reporting currency, as well as changes in interest rates. Volatile market conditions arising from the COVID-19 pandemic have and may continue to negatively impact our results of operations and cash flows, due to a weakening of foreign currencies relative to the U.S. dollar, which may cause our revenues to decline relative to our costs.

Business from our Synchronoss Personal Cloud™ solution has been driven by the growth in mobile devices globally that are becoming content rich. As these devices replace other traditional devices like PCs, the ability to securely back up content from mobile devices, sync it with other devices and share it with family, friends and business associates have become essential needs and subscriber expectations. Such devices include smartphones, connected cars, personal health and wellness devices and

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connected home devices. The need for the contents of these devices to be stored in a common cloud are also expected to be drivers of our business in the longer term.

Business from our traditional Synchronoss Messaging business (Email) has been driven by a resurgence in the need for white label secure messaging platforms that favor the Mobile Network Operator’s (“MNO”) business objectives and are not beholden to the objectives of a sponsoring over-the-top (“OTT”) platform. We believe that messaging drives higher subscriber engagement than any other application in the market today and holds the potential to stimulate new revenue from traditional services and third-party brands. OTT global success has driven MNOs to look at opportunities to preempt and compete with the OTTs which has potential opportunity for Synchronoss’ future growth to be driven by the need of TMT companies including (and especially) MNOs to embrace Messaging as a Platform (“MaaP”). MaaP will allow TMT and MNO’s to converse with subscribers in an efficient, automated way by streamlining the costs and increasing the effectiveness of self-care, as well as yielding cross-sell upselling of service plans, devices, bundles, etc. The Synchronoss Advanced Messaging Platform provides state of the art RCS-driven features including the ability to support advanced Peer to Peer communications and introduce new revenue streams driven by commerce and advertising via Application-to-Person capabilities.

Companies in the TMT market all face the dilemma of attempting to pivot their businesses to digital execution in order to create experiences that meet the expectations of their subscribers, generate new revenues and streamline costs creating healthier margins at a faster time to market than they have ever operated before. Their challenges feature the lack of skill sets to conceptualize and run day to day digital operations and the lack of resources to integrate their legacy back end systems to enact digital experiences that achieve their business objectives. The growth of Synchronoss Digital Platforms will be driven by the ability to provide TMT companies’ desire to obtain digital transformation solutions as quickly as possible while educating them on the ability to operate a digital business efficiently. Our Platform as a Service (“PaaS”) model provides a desirable alternative to heavy capital expenditure spending options often tried internally. The ability for our platforms to create low/no code, new customer digital journeys, virtually on the fly, gives TMT Companies the ability to operate new experiences and businesses without heavily investing in development resources.

To support our growth, which we expect to be driven by these favorable industry trends mentioned above, we will leverage modular components from our existing software platforms to build new products. We believe that these opportunities will continue to provide future benefits and position us for future revenue growth. We are also making investments in research and development of new products designed to enable us to grow rapidly in the mobile wireless market. Our purchase of capital assets and equipment may also increase based on aggressive deployment, subscriber growth and promotional offers for free or bundled storage by our major Tier 1 carrier customers.

We continue to expand our platforms into the converging TMT, MNO, and Digital spaces to enable connected devices to do more things across multiple networks, brands and communities. Our initiatives with our customers continue to grow both with regard to our current business as well as our new product offerings. We are also exploring additional opportunities to support our customer, product and geographic diversification strategies.

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Discussion of the Condensed Consolidated Statements of Operations

Three months ended ~~March 31,~~September 30, 2021 compared to the three months ended ~~March 31,~~September 30, 2020

The following table presents an overview of our results of operations for the three months ended ~~March 31,~~September 30, 2021 and 2020 (in thousands):


		Three Months Ended March 31, 2021				2021 vs 2020			Three Months Ended September 30, 2021				$ Change
		2021		2020			$ Change				2021		2020		2021 vs 2020
Net revenues	Net revenues	$	65,499	$	77,122		$	(11,623)		Net revenues	$	69,753	$	68,636	$	1,117
Cost of revenues*		28,637		35,471			(6,834)
Cost of revenues1										Cost of revenues1	27,245		28,452		(1,207)
Research and development	Research and development	17,397		19,788			(2,391)			Research and development	15,368		20,885		(5,517)
Selling, general and administrative	Selling, general and administrative	17,928		26,344			(8,416)			Selling, general and administrative	27,953		23,265		4,688
Restructuring charges	Restructuring charges	713		1,450			(737)			Restructuring charges	1,485		820		665
Depreciation and amortization	Depreciation and amortization	9,867		11,356			(1,489)			Depreciation and amortization	8,215		12,212		(3,997)
Total costs and expenses	Total costs and expenses	74,542		94,409			(19,867)			Total costs and expenses	80,266		85,634		(5,368)
Loss from continuing operations	Loss from continuing operations	$	(9,043)	$	(17,287)		$	8,244		Loss from continuing operations	$	(10,513)	$	(16,998)	$	6,485

*1 Cost of revenues excludes depreciation and amortization which are shown separately.

Net revenues increased $1.1 million to $69.8 million for the three months ended September 30, 2021, compared to the same period in 2020.The increase in revenue is primarily driven by growth in cloud subscribers and new digital license sales partially offset by non-recurring advanced messaging deals in the prior period.

Cost of revenues decreased $1.2 million to $27.2 million for the three months ended September 30, 2021, compared to the same period in 2020. The 2021 decrease was primarily attributable to continued efforts to streamline our business operations and reduce costs.

Research and development expense decreased $5.5 million to $15.4 million for the three months ended September 30, 2021, compared to the same period in 2020. The research and development costs decreased year over year mainly as a result of executed cost savings initiatives to streamline our workforce and reduce vendor spend.

Selling, general and administrative expense increased $4.7 million to $28.0 million for the three months ended September 30, 2021, compared to the same period in 2020. Our selling, general and administrative expense excluding legal reserves decreased period over period as a result of the continued cost savings initiatives executed in year which included headcount reductions, reduced vendor spending and lower facility costs.

Restructuring charges were $1.5 million and $0.8 million for the three months ended September 30, 2021 and 2020, respectively, which primarily related to employment termination costs as a result of the work-force reductions initiated in the current year to reduce operating costs and align our resources with our key strategic priorities.

Depreciation and amortization expense decreased $4.0 million to $8.2 million for the three months ended September 30, 2021, compared to the same period in 2020. The 2021 decrease was primarily attributable to the expiration of amortizable acquired assets in combination with reduced capital expenditures mainly as a result of the data center consolidation project and efforts to streamline business operations, partially offset by the increased amortization of capitalized software.

Income tax. The Company recognized an income tax benefit of approximately $7.0 million and $8.7 million during the three months ended September 30, 2021 and 2020, respectively. The effective tax rate was approximately 46.3% for the three months ended September 30, 2021, which was higher than the U.S. federal statutory rate primarily due to discrete income tax benefit recorded in the current quarter associated with the finalization of the Company’s U.S. federal income tax return, which reflected a net operating loss that was carried back to prior tax years. Based on the final carryback claim, the Company recorded a discrete income tax benefit of $7.4 million and discrete income tax expense related to a liability for unrecognized tax benefits in the amount of $2.1 million, all of which, if recognized, would impact our effective tax rate. This increase was partially offset

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by pre-tax losses in jurisdictions where full valuation allowances have been recorded, pre-tax losses in jurisdictions which have a zero tax rate, and certain foreign jurisdictions projecting current income tax expense. The Company’s effective tax rate was approximately 60.9% for the three months ended September 30, 2020, which was higher than the U.S. federal statutory rate primarily due to the Company’s ability to recognize certain loss carrybacks as a result of the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) in the first quarter of 2020, the impact of the redemption of the Company’s interest in STIN and valuation allowances recorded in domestic and foreign jurisdictions, partially offset by the impact of permanent book-tax differences.

Discussion of the Condensed Consolidated Statements of Operations

Nine months ended September 30, 2021 compared to the nine months ended September 30, 2020

The following table presents an overview of our results of operations for the nine months ended September 30, 2021 and 2020 (in thousands):


	Nine Months Ended September 30,				$ Change
	2021		2020			2021 vs 2020
Net revenues	$	206,784	$	222,293		$	(15,509)
Cost of revenues1	83,024		93,403			(10,379)
Research and development	49,962		59,769			(9,807)
Selling, general and administrative	67,790		74,249			(6,459)
Restructuring charges	3,075		6,763			(3,688)
Depreciation and amortization	26,567		33,852			(7,285)
Total costs and expenses	230,418		268,036			(37,618)
Loss from continuing operations	$	(23,634)	$	(45,743)		$	22,109

1 Cost of revenues excludes depreciation and amortization which are shown separately.

Net revenues decreased ~~$11.6~~$15.5 million to ~~$65.5~~$206.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to the same period in 2020. The decrease in revenue is primarily attributable to non-recurring license sales and one-time professional services in the prior ~~period.~~period and the accounting treatment of deferred revenue due to a customer renewal as per ASC 606, which was signed in the third quarter of fiscal 2020. These changes were partially offset by growth in cloud subscribers and the acceleration of subscription revenue from the dissolution of a previous customer.

Cost of revenues decreased ~~$6.8~~$10.4 million to ~~$28.6~~$83.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to the same period in 2020. The 2021 decrease was primarily ~~attributable~~due to ~~the year over year reduction~~continued efforts to streamline operations and reduce costs. These initiatives resulted in ~~revenue and the~~a significant decrease in cost ~~savings from strategic initiatives implemented in the year~~of revenues driven mainly by data center consolidation, reduced vendor spending, and operating expense savings.

Research and development expense decreased ~~$2.4~~$9.8 million to ~~$17.4~~$50.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to the same period in 2020. The research and development costs decreased year over year mainly as a result of executed cost savings initiatives to streamline our workforce and reduce vendor spend.

Selling, general and administrative expense decreased ~~$8.4~~$6.5 million to ~~$17.9~~$67.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to the same period in 2020. The 2021 decrease was primarily ~~attributable~~driven by cost savings initiatives that resulted in a decrease in employee costs, facilities, and external costs related to ~~significant cost cutting initiatives executed in year which included headcount reductions, reduced vendor spending~~outside consultants and ~~lower facility costs.~~legal fees.

Restructuring charges ~~were~~ ~~$0.7~~decreased $3.7 million ~~and~~ ~~$1.5~~ to $3.1 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, ~~and~~compared to the same period in 2020, ~~respectively,~~ which primarily related to employment termination costs as a result of the work-force reductions initiated in the current year to reduce operating costs and align our resources with our key strategic priorities.

Depreciation and amortization expense decreased ~~$1.5~~$7.3 million to ~~$9.9~~$26.6 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to the same period in 2020. The 2021 decrease was primarily attributable to the expiration of amortizable

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acquired assets in combination with reduced capital expenditures mainly as a result of the data center consolidation project and efforts to streamline business operations, partially offset by the increased amortization of capitalized software.

Income tax. The Company recognized ~~approximately $0.2 million and $12.4 million in related~~an income tax benefit of approximately $7.3 million and $29.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively. The effective tax rate was approximately ~~1.3%~~24.3% for the ~~three~~nine months ended September 30, 2021, ~~March 31, 2021~~, which was ~~lower~~higher than the U.S. federal statutory rate primarily due to discrete income tax benefit recorded in the current quarter associated with the finalization of the Company’s U.S. federal income tax return, which reflected a net operating loss that was carried back to prior tax years. Based on the final carryback claim, the Company recorded a discrete income tax benefit of $7.4 million and discrete income tax expense related to a liability for unrecognized tax benefits in the amount of $2.1 million, all of which, if recognized, would impact our effective tax rate. This increase was partially offset by pre-tax losses in jurisdictions where full valuation allowances have been recorded, pre-tax losses in jurisdictions which have a zero tax rate, and ~~in zero rate jurisdictions.~~ certain foreign jurisdictions projecting current income tax expense. The Company’s effective tax rate was approximately ~~78.8%~~75.3% for the ~~three~~nine months ended ~~March 31,~~September 30, 2020, which was higher than the U.S. federal statutory rate primarily due to the Company’s ability to recognize certain loss carrybacks as a result of the enactment of the Coronavirus Aid,

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Relief and Economic Security Act (“CARES Act”) in Q1the first quarter 2020, the impact of the redemption of the Company’s interest in STIN and valuation allowances recorded in domestic and foreign jurisdictions, partially offset by the impact of permanent book-tax differences. The Company continues to consider all available evidence, including historical profitability and projections of future taxable income together with new evidence, both positive and negative, that could affect the view of the future realization of deferred tax assets. As a result of the assessment, no change was recorded by the Company to the valuation allowance during the nine months ended September 30, 2021.

Liquidity and Capital Resources

As of ~~March 31,~~September 30, 2021, our principal sources of liquidity were cash provided by operations and ~~capital~~the remaining proceeds from ~~our revolving credit facility.~~the financing transactions. Our cash and cash equivalents ~~marketable securities and restricted cash~~ balance was ~~$29.8~~$24.1 million at ~~March 31,~~September 30, 2021. We anticipate that our principal uses of cash and cash equivalents will be to fund our business, including technology expansion and working capital.

At ~~March 31,~~September 30, 2021, our non-U.S. subsidiaries held approximately ~~$7.3~~$9.0 million of cash and cash equivalents that are available for use by our operations around the world. At this time, we believe the funds held by all non-U.S. subsidiaries will be permanently reinvested outside of the U.S. However, if these funds were repatriated to the U.S. or used for U.S. operations, certain amounts could be subject to U.S. tax for the incremental amount in excess of the foreign tax paid. Due to the timing and circumstances of repatriation of these earnings, if any, it is not practical to determine the unrecognized deferred tax liability related to the amount.

We believe that our ~~existing~~ cash, cash equivalents, ~~credit facility,~~financing sources, and our ability to manage working capital and expected positive cash flows generated from operations in combination with continued expense reductions will be sufficient to fund our operations for the next twelve months from the filing date of this Form 10-Q based on our current business plans. However, as the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. Given the economic uncertainty as a result of the pandemic, we have taken actions to improve our current liquidity position, including, reducing working capital, reducing operating costs and substantially reducing discretionary spending. Even with these actions however, an extended period of economic disruption as a result of the continued global impact of COVID-19 could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, some of which are outside of our control.

Redemption of Series A Preferred Stock

The net proceeds from our public offering of common stock, Senior Note offering and the Series B Preferred Stock transaction was used in part to fully redeem all outstanding shares of Series A Preferred Stock on June 30, 2021 (the “Redemption”).

For further details, see Note7. Debt and Note9. Stockholders’ Equity of the Notes to Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.

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Series B Preferred Stock

On June 30, 2021, we closed a private placement of 75,000 shares of or Series B Preferred Stock, for an aggregate purchase price of $75.0 million. The holders of the Series B Preferred Stock are entitled to receive, on each share of Series B Preferred Stock on a quarterly basis, an amount equal to the dividend rate, as described in the following sentence, divided by four and multiplied by the then-applicable Liquidation Preference (as defined in the Series B Certificate) per share of Series B Preferred Stock (collectively, the “Preferred Dividends”). The dividend rate is (1) 9.5% per annum for the period commencing on June 30, 2021 and ending on and including December 31, 2021, (2) 13% per annum for the year commencing on January 1, 2022 and ending on and including December 31, 2022; and (3) 14% per annum for the year commencing on January 1, 2023 and thereafter. The Preferred Dividends will be due in cash on January 1, April 1, July 1 and October 1 of each year (each, a “Series B Dividend Payment Date”). The Company may choose to pay the Series B Preferred Dividends in cash or in additional shares of Series B Preferred Stock. In the event Synchronoss does not declare and pay a dividend in cash on any Series B Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference.

On and after the fifth anniversary of the date of issuance, holders of shares of Series B Preferred Stock will have the right to cause Synchronoss to redeem each share of Series B Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series B Preferred Stock will also be redeemable at the option of the holder upon the occurrence of a “Fundamental Change” (as that term is defined in the Series B Certificate) at (i) par in the case of a payment in cash or (ii) 1.5 times par in the case of payment in shares of Common Stock (such shares being, “Registrable Securities”), subject to certain limitations on the amount of stock that could be issued to the holders of Series B Stock. In addition, the Company will be permitted to redeem outstanding shares of the Series B Preferred Stock at any time for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. Pursuant to the Series B Certificate, Synchronoss will be required to use (i) the first proceeds $50.0 million of proceeds from certain transactions (i.e., disposition, sale of assets, tax refunds) received by the Company to redeem for cash, shares of Series B Preferred Stock, on a pro rata basis among each holder of Series B Preferred Stock and (ii) the next $25.0 million of proceeds from certain transactions received by the Company may be used by the Company to buy back shares of Common Stock, and to the extent, not used for such purpose by the Company, to redeem, for cash, shares of Series B Preferred Stock, on a pro rata basis among each holder of Series B Preferred Stock.

Revolving Credit Facility

~~In the first quarter of fiscal 2020, the Company drew the $10.0 million from~~We repaid in full and closed our Revolving Credit Facility ~~which remains outstanding~~ as of ~~March 31,~~June 30, 2021. For further details, see Note 7. Debt of the Notes to Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.

Shelf Registration Statement

On August 19, 2020, the Company filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, debt securities, guarantees of debt securities, warrants and units up to an aggregate amount of $250.0 million (“the 2020 Shelf Registration Statement”). On August 28, 2020, the 2020 Shelf Registration Statement was declared effective by the SEC. As of ~~March 31,~~September 30, 2021, except for the Common Stock offering and the issuance of Senior Notes, the Company has not raised additional capital using the ~~shelf registration statement.~~2020 Shelf Registration Statement.

~~Share Repurchase Program~~

Offering of Additional Senior Notes

~~There were no repurchases in 2021.~~On October 25, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) between the Company and B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to $18.0 million of the Company’s 8.375% Senior Notes due 2026.

~~Shares~~The up to $18.0 million in aggregate principal amount of ~~Preferred Stock~~

~~In accordance~~the additional Senior Notes that the Company may offer and sell under the prospectus supplement and the accompanying prospectus constitutes a further issuance of and are fungible with the ~~terms~~$125.0 million in aggregate principal amount of the ~~Share Purchase Agreement dated as of October 17, 2017 (the “PIPE Purchase Agreement”), with Silver Private Holdings I, LLC, an affiliate of Siris (“Silver”), on February 15, 2018, we~~Senior Notes that the Company has issued to ~~Silver 185,000 shares~~date, and form a single series of our newly issued Series A Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share, in exchange for $97.7 million in cash and the transfer from Silver to us of the 5,994,667 shares of our common stock held by Silver (the “Preferred Transaction”). In connection with the issuance of the Series A Preferred Stock, wedebt securities.

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(i) filed the Series A Certificate and (ii) entered into an Investor Rights Agreement with Silver setting forth certain registration, governance and preemptive rights of Silver with respect to us (the “Investor Rights Agreement”). Pursuant to the PIPE Purchase Agreement, at the closing, we paid to Siris $5.0 million as a reimbursement of Silver’s reasonable costs and expenses incurred in connection with the Preferred Transaction.

~~Certificate of Designation of the Series A Preferred Stock~~

The rights, preferences, privileges, qualifications, restrictions and limitations of the shares of Series A Preferred Stock are set forth in the Series A Certificate. Under the Series A Certificate, the holders of the Series A Preferred Stock are entitled to receive Preferred Dividends. The Preferred Dividends are due on each Series A Dividend Payment Date. We may choose to pay the Preferred Dividends in cash or in additional shares of Series A Preferred Stock. In the event we do not declare and pay a dividend in-kind or in cash on any Series A Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference. In addition, the Series A Preferred Stock participates in dividends declared and paid on shares of our common stock.

On and after February 15, 2023, holders of shares of Series A Preferred Stock have the right to cause the Company to redeem each share of Series A Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series A Preferred Stock is also redeemable at the option of the holder upon the occurrence of a “Fundamental Change” (as that term is defined in the Series A Certificate) at a specified premium (“Liquidation Value”). In addition, the Company is also permitted to redeem all outstanding shares of the Series A Preferred Stock at any time (i) within the first 30 months of the date of issuance for the sum of the then-applicable Liquidation Preference, accrued but unpaid dividends and a make whole amount (known as “Redemption Value”) and (ii) following the 30-month anniversary of the date of issuance for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. As of March 31, 2021, the Liquidation Value and Redemption Value of the Preferred Shares was $243.1 million.

The holders of a majority of the Series A Preferred Stock, voting separately as a class, are entitled at each of our annual meetings of stockholders or at any special meeting called for the purpose of electing directors (or by written consent signed by the holders of a majority of the then-outstanding shares of Series A Preferred Stock in lieu of such a meeting): (i) to nominate and elect two members of our Board of Directors for so long as the Preferred Percentage (as defined in the Series A Certificate) is equal to or greater than 10%; and (ii) to nominate and elect one member of our Board of Directors for so long as the Preferred Percentage is equal to or greater than 5% but less than 10%.

For so long as the holders of shares of Series A Preferred Stock have the right to nominate at least one director, we are required to obtain the prior approval of Silver prior to taking certain actions, including: (i) certain dividends, repayments and redemptions; (ii) any amendment to our certificate of incorporation that adversely effects the rights, preferences, privileges or voting powers of the Series A Preferred Stock; (iii) issuances of stock ranking senior or equivalent to shares of Series A Preferred Stock (including additional shares of Series A Preferred Stock) in the priority of payment of dividends or in the distribution of assets upon any liquidation, dissolution or winding up of us; (iv) changes in the size of our Board of Directors; (v) any amendment, alteration, modification or repeal of the charter of our Nominating and Corporate Governance Committee of the Board of Directors and related documents; and (vi) any change in our principal business or the entry into any line of business outside of our existing lines of businesses. In addition, in the event that we are in EBITDA Non-Compliance (as defined in the Series A Certificate) or the undertaking of certain actions would result in us exceeding a specified pro forma leverage ratio, then the prior approval of Silver would be required to incur indebtedness (or alter any debt document) in excess of $10.0 million, enter or consummate any transaction where the fair market value exceeds $5.0 million individually or $10.0 million in the aggregate in a fiscal year or authorize or commit to capital expenditures in excess of $25.0 million in a fiscal year.

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Each holder of Series A Preferred Stock has one vote per share on any matter on which holders of Series A Preferred Stock are entitled to vote separately as a class, whether at a meeting or by written consent. The holders of Series A Preferred Stock are permitted to take any action or consent to any action with respect to such rights without a meeting by delivering a consent in writing or electronic transmission of the holders of the Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize, take or consent to such action at a meeting of stockholders. In addition to any vote (or action taken by written consent) of the holders of the shares of Series A Preferred Stock as a separate class provided for in the Series A Certificate or by the General Corporation Law of the State of Delaware, the holders of shares of the Series A Preferred Stock are entitled to vote with the holders of shares of common stock (and any other class or series that may similarly be entitled to vote on an as-converted basis with the holders of common stock) on all matters submitted to a vote or to the consent of the stockholders of the Company (including the election of directors) as one class.

Under the Series A Certificate, if Silver and certain of its affiliates have elected to effect a conversion of some or all of their shares of Series A Preferred Stock and if the sum, without duplication, of (i) the aggregate number of shares of our common stock issued to such holders upon such conversion and any shares of our common stock previously issued to such holders upon conversion of Series A Preferred Stock and then held by such holders, plus (ii) the number of shares of our common stock underlying shares of Series A Preferred Stock that would be held at such time by such holders (after giving effect to such conversion), would exceed the 19.9% of the issued and outstanding shares of our voting stock on an as converted basis (the “Conversion Cap”), then such holders would only be entitled to convert such number of shares as would result in the sum of clauses (i) and (ii) (after giving effect to such conversion) being equal to the Conversion Cap (after giving effect to any such limitation on conversion). Any shares of Series A Preferred Stock which a holder has elected to convert but which, by reason of the previous sentence, are not so converted, will be treated as if the holder had not made such election to convert and such shares of Series A Preferred Stock will remain outstanding. Also, under the Series A Certificate, if the sum, without duplication, of (i) the aggregate voting power of the shares previously issued to Silver and certain of its affiliates held by such holders at the record date, plus (ii) the aggregate voting power of the shares of Series A Preferred Stock held by such holders as of such record date, would exceed 19.99% of the total voting power of our outstanding voting stock at such record date, then, with respect to such shares, Silver and certain of its affiliates are only entitled to cast a number of votes equal to 19.99% of such total voting power. The limitation on conversion and voting ceases to apply upon receipt of the requisite approval of holders of our common stock under the applicable listing standards.

~~Investor Rights Agreement~~

Concurrently with the closing of the Preferred Transaction, Synchronoss and Silver entered into an Investor Rights Agreement. Under the terms of the Investor Rights Agreement, Silver and Synchronoss have agreed that, effective as of the closing of the Preferred Transaction, the Board of Directors of Synchronoss will consist of ten members. From and after the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate a member to the Board of Directors pursuant to the Series A Certificate, the Board of Directors of Synchronoss will consist of (i) two directors nominated and elected by the holders of shares of Series A Preferred Stock; (ii) four directors who meet the independence criteria set forth in the applicable listing standards (each of whom will be initially agreed upon by Synchronoss and Silver); and (iii) four other directors, two of whom shall satisfy the independence criteria of the applicable listing standards and, as of the closing of the Preferred Transaction, one of whom shall be the individual then serving as chief executive officer of Synchronoss and one of whom shall be the current chairman of the Board of Directors of Synchronoss as of the date of execution of the Investors Rights Agreement. Following the closing of the Preferred Transaction, so long as the holders of Series A Preferred Stock have the right to nominate at least one director to the Board of Directors of Synchronoss pursuant to the Series A Certificate, Silver will have the right to designate two members of the Nominating and Corporate Governance Committee of the Board of Directors.

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Rights Agreement) being in excess of 30%. However, the foregoing standstill restrictions would not prohibit the purchase of shares pursuant to the PIPE Purchase Agreement or the receipt of shares of Series A Preferred Stock issued as Preferred Dividends pursuant to the Series A Certificate, shares of Common Stock received upon conversion of shares of Series A Preferred Stock or receipt of any shares of Series A Preferred Stock, Common Stock or other securities of the Company otherwise paid as dividends or as an increase of the Liquidation Preference (as defined in the Series A Certificate) or distributions thereon. Silver will also have preemptive rights with respect to issuances of securities of Synchronoss in order to maintain its ownership percentage.

Under the terms of the Investor Rights Agreement, Silver will be entitled to (i) three demand registrations, with no more than two demand registrations in any single calendar year and provided that each demand registration must include at least 10% of the shares of Common Stock held by Silver, including shares of Common Stock issuable upon conversion of shares of Series A Preferred Stock and (ii) unlimited piggyback registration rights with respect to primary issuances and all other issuances.

Discussion of Cash Flows

A summary of net cash flows follows (in thousands):


		Three Months Ended March 31,				Change			Nine Months Ended September 30,				Change
		2021		2020			2021 vs 2020				2021		2020		2021 vs 2020
Net cash provided by (used in):	Net cash provided by (used in):									Net cash provided by (used in):
Operating activities	Operating activities	$	2,261	$	(15,016)		$	17,277		Operating activities	$	5,551	$	8,661	$	(3,110)
Investing activities	Investing activities	(5,763)		(2,823)			(2,940)			Investing activities	(17,840)		(11,406)		(6,434)
Financing activities	Financing activities	—		9,996			(9,996)			Financing activities	2,687		9,991		(7,304)

Our primary source of cash is receipts from revenue. The primary uses of cash are personnel and related costs, telecommunications and facility costs related primarily to our cost of revenue and general operating expenses including professional service fees, consulting fees, building and equipment maintenance and marketing expense.

Cash flows from operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~$2.3~~$5.6 million cash provided by operating activities, as compared to ~~$15.0~~$8.7 million of cash ~~used~~provided by operating activities for the same period in 2020. ~~The increase~~Excluding the effects of the tax refunds received in the prior period, cash provided by operations increased from the prior year ~~is primarily attributable~~as a result of our continued efforts to streamline our business operations and reduce costs and favorable ~~changes in~~ working ~~capital.~~capital changes.

Cash flows from investing for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was ~~$5.8~~$17.8 million cash used ~~for~~in investing, as compared to ~~$2.8~~$11.4 million in cash used byin investing activities during the same period in 2020. The cash used for investing in the current year was primarily related to the purchase of fixed assets and investment in capitalized software. The net decrease in cash used for investing in the prior year was primarily related to the investment in capitalized software offset by the sale of certain IP address assets.

Cash flows from financing for ~~three~~the nine months ended ~~March 31,~~September 30, 2021 was ~~$0.0~~$2.7 million of cash provided, as compared to $10.0 million of cash ~~used~~provided by financing activities for the same period in 2020. In 2021, the net proceeds from our public offering of common stock, Senior Note offering and Series B Preferred Stock transaction was primarily used to fully redeem all outstanding shares of the Company’s Series A Preferred Stock and repay and close the Revolving Credit Facility on June 30, 2021. The cash provided from ~~investing~~financing activities in the prior year was attributable to the drawdown from our Revolving Credit Facility.

Effect of Inflation

~~Although inflation generally affects us by increasing our cost of~~While inflationary increases in certain input costs, such as occupancy, labor and ~~equipment, we do not believe that~~benefits, and general administrative costs, have an impact on our operating results, inflation has had ~~any material~~minimal net effect on our results of operations during the three or nine months ended September 30, 2021 and 2020. We docannot assure you, however, that we will not ~~expect~~be affected by general inflation in the ~~current rate of inflation to have a material impact on our business.~~future.

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Contractual Obligations

Our contractual obligations consist of contingent consideration, office equipment and colocation services and contractual commitments under third-party hosting, software licenses and maintenance agreements. The following table summarizes our long-term contractual obligations as of ~~March 31,~~September 30, 2021 (in thousands).


		Payments Due by Period											Payments Due by Period
		Total		2021		2022-2024		2025-2026		Thereafter			Total		2021		2022-2024		2025-2026		Thereafter
Capital lease obligations	Capital lease obligations	$	472	$	126	$	346	$	—	$	—	Capital lease obligations	$	738	$	65	$	599	$	74	$	—
Revolving Credit Facility		$	—	$	—	$	—	$	—	$	—
Interest		—		—		—		—		—

Operating lease obligations	Operating lease obligations	64,327		9,552		27,962		16,264		10,549		Operating lease obligations	57,460		2,975		27,730		16,213		10,542
Purchase obligations*		61,969		9,909		42,361		9,699		—

Purchase obligations1												Purchase obligations1	63,020		4,788		48,533		9,699		—
Senior Note Payable												Senior Note Payable	125,000		—		—		125,000		—
Total	Total	$	126,768	$	19,587	$	70,669	$	25,963	$	10,549	Total	$	247,963	$	9,573	$	76,862	$	150,986	$	10,542

*1 Amount represents obligations associated with colocation agreements and other customer delivery related purchase obligations.

Uncertain Tax Positions

Unrecognized tax positions ~~were $3.3~~of $4.6 millionat ~~March 31,~~September 30, 2021~~. We~~are excluded from the table above as we are not able to reasonably estimate when we would make any cash payments required to settle these liabilities, but we do not believe that the ultimate settlement of our obligations will materially affect our liquidity. We anticipate that the balance of unrecognized tax benefits will decrease by approximately ~~$1.4~~$0.6 million over the next twelve months.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements in accordance with U.S. GAAP requires us to utilize accounting policies and make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during a fiscal period. The SEC considers an accounting policy to be critical if it is important to a company’s financial condition and results of operations, and if it requires significant judgment and estimates on the part of management in its application.

These estimates and assumptions take into account historical and forward looking factors that the Company believes are reasonable, including but not limited to the potential impacts continuing to arise from COVID-19 and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change. Actual results could differ significantly from those estimates. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected. See Part II, “Item 1A. Risk Factors” in this Form 10-Q for certain matters bearing risks on our future results of operations.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, there were no significant changes in our critical accounting policies and estimates discussed in our Form 10-K for the year ended December 31, 2020. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 for a more complete discussion of our critical accounting policies and estimates.

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Recently Issued Accounting Standards

For a discussion of recently issued accounting standards see Note 2. Basis of Presentation and Consolidation included in Part I, Item 1. “Notes to Condensed Consolidated Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.

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Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of ~~March 31,~~September 30, 2021 and December 31, 2020 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The following discussion about market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We deposit our excess cash in what we believe are high-quality financial instruments, primarily money market funds and certificates of deposit and, we may be exposed to market risks related to changes in interest rates. We do not actively manage the risk of interest rate fluctuations on our marketable securities; however, such risk is mitigated by the relatively short-term nature of these investments. These investments are denominated in United States dollars.

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations, while at the same time maximizing the income, we receive from our investments without significantly increasing risk. To achieve these objectives, our investment policy allows us to maintain a portfolio of cash equivalents and short- and long-term investments in a variety of securities, which could include commercial paper, money market funds and corporate and government debt securities. Our cash, cash equivalents and marketable securities at ~~March 31,~~September 30, 2021 and December 31, 2020 were invested in liquid money market accounts, certificates of deposit and government securities. All market-risk sensitive instruments were entered into for non-trading purposes.

Foreign Currency Exchange Risk

We are exposed to translation risk because certain of our foreign operations utilize the local currency as their functional currency and those financial results must be translated into U.S. dollars. As currency exchange rates fluctuate, translation of the financial statements of foreign businesses into U.S. dollars affects the comparability of financial results between years.

We do not hold any derivative instruments and do not engage in any hedging activities. Although our reporting currency is the U.S. dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials and services. As a result, we are subject to foreign currency transaction risk. Further, changes in exchange rates between foreign currencies and the U.S. dollar could affect our future net sales, cost of sales and expenses and could result in foreign currency transaction gains or losses.

We cannot accurately predict future exchange rates or the overall impact of future exchange rate fluctuations on our business, results of operations and financial condition. To the extent that our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase and hedging activities may be considered if appropriate.

Interest Rate Risk

We are exposed to the risk of interest rate fluctuations on the interest income earned on our cash and cash equivalents. A hypothetical 100 basis point movement in interest rates applicable to our cash and cash equivalents outstanding at ~~March 31,~~September 30, 2021 would increase interest income by approximately ~~$0.3~~$0.2 million on an annual basis.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report, that ensure that information relating to the registrant which is required to be disclosed in this report is recorded, processed, summarized and reported within required time periods using the criteria for effective internal control established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the registrant’s disclosure controls and procedures were effective as of ~~March 31,~~September 30, 2021.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of our material pending legal proceedings that could impact our results of operations, financial condition or cash flows see Note 13. Commitments, Contingencies and Other included in Part I, Item 1. “Notes to Condensed Consolidated Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

~~There~~Other than set forth below, there have been no material changes to our risk factors as previously disclosed in Part I, Item 1A. included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Risks Related to our Senior Notes, Series B Preferred Stock and Common Stock

We are subject to investigations relating to certain transactions in 2015 and 2016 that resulted in the restatement of our financial statements in 2018, and the Securities and Exchange Commission staff has preliminarily determined to recommend the initiation of an enforcement action against us in connection with that matter.

On June 22, 2021, the SEC staff verbally notified us that it has made a preliminary determination to recommend that the SEC initiate an enforcement action against us in connection with certain financial transactions that we effected in 2015 and 2016 and our disclosure of and accounting for such transactions, which we restated in the third quarter of 2018 in our restated annual and quarterly financial statements for 2015 and 2016. That restatement followed our announcement on June 13, 2017 (the “June 2017 Announcement”), that certain of our prior financial statements would need to be restated. Certain individuals, including current and former members of our management team, received similar notifications. We remain in discussions with the SEC staff regarding the prospect of resolving this matter through settlement. If we are unable to resolve this matter through settlement then we would expect to receive a “Wells notice” from the SEC staff in connection with this matter. Although a Wells notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law, it is a formal notice that the SEC intends to bring an enforcement action against the recipient. Upon receipt of a Wells notice, the recipient has the opportunity to respond to the SEC staff’s position before any formal enforcement action is taken.

In the third quarter of 2017, the SEC and Department of Justice initiated investigations in connection with the June 2017 Announcement and certain transactions that we restated in the third quarter of 2018. We have received subpoenas, produced documents, and provided additional information to the government in connection with those investigations.

At this time, we cannot predict with certainty what the outcome of these government investigations or the SEC staff’s preliminary determination might be, but they could have a material adverse impact on our financial position, prospects and results of operations.

Downgrades in our credit ratings may increase our future borrowing costs, limit our ability to raise capital, cause our stock price to decline or reduce analyst coverage, any of which could have a material adverse impact on our business.

Credit rating agencies review their ratings periodically and, therefore, the credit rating assigned to us by each of the rating agencies may be subject to revision at any time. Factors that can affect our credit ratings include changes in our operating performance, the economic environment, our financial position, conditions in and periods of disruption in any of our principal markets and changes in our business strategy. If weak financial market conditions or competitive dynamics cause any of these factors to deteriorate, we could see a reduction in our corporate credit rating. Since investors, analysts and financial institutions often rely on credit ratings to assess a company’s creditworthiness and risk profile, make investment decisions and establish threshold requirements for investment guidelines, our ability to raise capital, our access to external financing, our stock price and analyst coverage of our stock could be negatively impacted by a downgrade to our credit rating.

Our current or future debt securities or preferred equity securities, which would be senior to our common stock, may adversely affect the market price of our common stock.

Our Senior Notes and Series B Preferred Stock are senior to our common stock. In addition, in the future, we may attempt to increase our capital resources by offering debt or preferred equity securities, including medium term notes, senior or

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subordinated notes and classes of preferred stock. Debt securities or shares of preferred stock will generally be entitled to receive interest payments or distributions, both current and in connection with any liquidation or sale, prior to the holders of our common stock. We are not required to offer any such additional debt or preferred equity securities to existing common stockholders on a preemptive basis, and we may generally issue any such debt or preferred equity securities in the future without obtaining the consent of our common stockholders. As a result, any such future offerings of debt securities or preferred equity securities may adversely affect the market price of the common stock.

B. Riley Securities, Inc. and its affiliates (“BRS”) have significant influence over us and may have conflicts of interest that arise out of future contractual relationships it or its affiliates may have with us.

As of June 30, 2021, BRS owned 19.2% of our outstanding common stock and all of our Series B Preferred Stock. As a result, BRS holds significant influence over us as a significant shareholder and may have conflicts of interest that arise out of current or future contractual relationships it or its affiliates may have with us. In addition, for so long as BRS and its affiliates beneficially own at least 10% of our outstanding common stock, BRS will have the right to nominate one member of our board of directors pursuant to an investor rights agreement.

As a result of the foregoing arrangements, BRS has significant influence over our management and policies and over all matters requiring shareholder approval, including the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions. Further, if BRS and other significant shareholders of the Company were to act together on any matter presented for shareholder approval, they could have the ability to control the outcome of that matter. BRS can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent shareholders from receiving a premium for their shares. These actions may be taken even if other shareholders oppose them.

We may be able to incur substantially more debt, which could have important consequences to investors.

We may be able to incur substantial additional indebtedness in the future. The terms of the indenture governing the Senior Notes does not prohibit us from doing so. If we incur any additional indebtedness that ranks equally with the Senior Notes, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution. This may have the effect of reducing the amount of proceeds paid to investors. Incurrence of additional debt would also further reduce the cash available to invest in operations, as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face could intensify.

Our level of indebtedness could have important consequences to investors, because:

•it could affect our ability to satisfy our financial obligations, including those relating to the Senior Notes;

•a substantial portion of our cash flows from operations would have to be dedicated to interest and principal payments and may not be available for operations, capital expenditures, expansion, acquisitions or general corporate or other purposes;

•it may impair our ability to obtain additional debt or equity financing in the future;

•it may limit our ability to refinance all or a portion of our indebtedness on or before maturity;

•it may limit our flexibility in planning for, or reacting to, changes in our business and industry; and

•it may make us more vulnerable to downturns in our business, our industry or the economy in general.

Our operations may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on the Senior Notes, we could be in default on the Senior Notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding. Conversely, a default under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder. In addition, such default or acceleration may result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder. If a judgment is obtained by any such holders, such holders could seek to collect on such judgment from the assets of the Company. If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it. Even if new financing were then available, it may not be on terms that are acceptable to us.

However, no event of default under the Senior Notes would result from a default or acceleration of, or suit, other exercise of remedies or collection proceeding by holders of, our other outstanding debt, if any. As a result, all or substantially all of our

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assets may be used to satisfy claims of holders of our other outstanding debt, if any, without the holders of the Senior Notes having any rights to such assets.

The Senior Notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future.

The Senior Notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the Senior Notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. The indenture governing the Senior Notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness in the future. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of the Senior Notes.

The Senior Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

The Senior Notes are obligations exclusively of Synchronoss Technologies, Inc. and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Senior Notes, and the Senior Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. Therefore, in any bankruptcy, liquidation or similar proceeding, all claims of creditors (including trade creditors) of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Senior Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Senior Notes are structurally subordinated to all indebtedness and other liabilities (including trade payables) of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise. The indenture governing the Senior Notes does not prohibit us or our subsidiaries from incurring additional indebtedness in the future. In addition, future debt and security agreements entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral.

The indenture under which the Senior Notes were issued contains limited protection for holders of the Senior Notes.

The indenture under which the Senior Notes were issued offers limited protection to holders of the Senior Notes. The terms of the indenture and the Senior Notes does not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on your investment in the Senior Notes. In particular, the terms of the indenture and the Senior Notes do not place any restrictions on our or our subsidiaries’ ability to:

•issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Senior Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Senior Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Senior Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Senior Notes with respect to the assets of our subsidiaries;

•pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to the Senior Notes;

•sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);

•enter into transactions with affiliates;

•create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;

•make investments; or

•create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

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In addition, the indenture does not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions. Furthermore, the terms of the indenture and the Senior Notes will not protect holders of the Senior Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity. Also, an event of default or acceleration under our other indebtedness would not necessarily result in an Event of Default under the Senior Notes.

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Senior Notes may have important consequences for you as a holder of the Senior Notes, including making it more difficult for us to satisfy our obligations with respect to the Senior Notes or negatively affecting the trading value of the Senior Notes.

Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Senior Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Senior Notes.

An increase in market interest rates could result in a decrease in the value of the Senior Notes.

In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. We cannot predict the future level of market interest rates.

An active trading market for the Senior Notes may not develop, which could limit the market price of the Senior Notes or your ability to sell them.

The Senior Notes are listed on Nasdaq under the symbol “SNCRL”. We cannot provide any assurances that an active trading market will develop for the Senior Notes or that you will be able to sell your Notes. If the Senior Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. The underwriters of our Senior Note offering have advised us that they may make a market in the Senior Notes, but they are not obligated to do so. The underwriters may discontinue any market-making in the Senior Notes at any time at their sole discretion. Accordingly, we cannot assure you that a liquid trading market will develop for the Senior Notes, that you will be able to sell your Senior Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for the Senior Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Senior Notes for an indefinite period of time.

In addition, there may be a limited number of buyers when you decide to sell your Senior Notes. This may affect the price, if any, offered for your Notes or your ability to sell your Notes when desired or at all.

We may issue additional Senior Notes.

Under the terms of the indenture governing the Senior Notes, we may from time to time without notice to, or the consent of, the holders of the Senior Notes, create and issue additional notes which will be equal in rank to the Senior Notes. We will not issue any such additional Notes unless such issuance would constitute a “qualified reopening” for U.S. federal income tax purposes.

The rating for the Senior Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

We have obtained a rating for the Senior Notes. Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold the Senior Notes. Ratings do not reflect market prices or suitability of a security for a particular investor and the rating of the Senior Notes may not reflect all risks related to us and our business, or the structure or market value of the Senior Notes. We may elect to issue other securities for which we may seek to obtain a rating in

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the future. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the Senior Notes.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~On June 30, 2021, we issued and sold 75,000 shares of Series B Preferred Stock, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share, for an aggregate purchase price of $75.0 million (the “Series B Transaction”). The sale of the Series B Preferred Stock was pursuant to the Series B Preferred Stock Purchase Agreement, dated as of June 24, 2021 (the “Series B Purchase Agreement”), between Synchronoss and B. Riley Principal Investments, LLC (“BRPI”). The sale was deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS


Exhibit No.						Description

3.1						Restated Certificate of Incorporation of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S‑1 (Commission File No. 333‑132080).
3.2						Amended and Restated Bylaws of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S‑1 (Commission File No. 333‑132080).
3.3						Amendment No. 1 to Amended and Restated Bylaws of Registration, incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on February 20, 2018.
3.4						Amendment No. 2 to the Amended and Restated Bylaws of Synchronoss Technologies, Inc., incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on June 30, 2021.
3.5						Certificate of Designations of the Series B Perpetual Non-Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 30, 2021.
10.1†						~~Employment agreement~~Transition and Separation Agreement dated ~~as of March 8,~~September 2, 2021 between the Registrant and ~~Jeff Miller.~~Ronald Prague
10.2†						Tier One Executive Employment ~~agreement~~Plan dated ~~as of May 1, 2017~~July 27, 2021 between the Registrant and ~~Ronald Prague.~~Christina Gabrys
31.1						Certification of Principal Executive Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002 (filed herewith)
31.2						Certification of Principal Financial Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002 (filed herewith)
32.1						Certification of Principal Executive Officer pursuant to Rule 13a‑14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes‑Oxley Act of 2002 (filed herewith)
32.2						Certification of Principal Financial Officer pursuant to Rule 13a‑14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes‑Oxley Act of 2002 (filed herewith)
101.INS						XBRL Instance Document
101.SCH						XBRL Schema Document
101.CAL						XBRL Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Labels Linkbase Document
101.PRE						XBRL Presentation Linkbase Document

† Compensation Arrangement.

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SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


						Synchronoss Technologies, Inc.



						/s/ Jeff Miller
						Jeff Miller
						Chief Executive Officer
						(Principal Executive Officer)


						/s/ ~~David Clark~~Taylor Greenwald
						~~David Clark~~Taylor Greenwald
						Chief Financial Officer

~~May 10,~~November 9, 2021

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