UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the quarterly period ended | Commission file number |
AMERI Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 95-4484725 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4080, McGinnis Ferry Road, Suite 1306, Alpharetta, Georgia | 30005 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:(770) 935-4152
732-243-9250Not applicable
(Title of class)
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, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑[X] No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer[ ] | Accelerated filer[ ] |
Non-accelerated filer[X] | Smaller reporting company[X] |
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 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐[ ] No ☑
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| Common Stock $0.01 par value per share | AMRH | The NASDAQ Stock Market LLC | ||
| Warrants to Purchase Common Stock | AMRHW | The NASDAQ Stock Market LLC |
As of October 30, 2017, 15,856,249August 12, 2020, 5,737,001 shares of the registrant’s common stock were issued and outstanding.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 2017
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Table of Contents |
| ITEM 1. | FINANCIAL STATEMENTS |
AMERI HOLDINGS, INC. See accompanying notes to the unaudited condensed consolidated financial statements. See accompanying notes to the unaudited condensed consolidated financial statements. Total stockholders’ equity See accompanying notes to the unaudited condensed consolidated financial statements. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS See accompanying notes to the unaudited condensed consolidated financial statements. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, NOTE 1. DESCRIPTION OF BUSINESS: AMERI Holdings, Inc. (“AMERI”, the “Company”, “we” or “our”) is a On January 10, 2020, we and Ameri100 On January 10, 2020, the Company entered into an Amalgamation Agreement (as amended on May 6, 2020, the “Amalgamation Agreement”) with Jay Pharma Merger Sub, Inc., a company organized under the laws of Canada and a wholly-owned subsidiary of the Company (“Merger Sub”), Jay Pharma Inc., a company organized under the laws of Canada (“Jay Pharma”), Jay Pharma ExchangeCo., Inc. a company organized under the laws of British Columbia and a wholly-owned subsidiary of the Company (“ExchangeCo”), and Barry Kostiner, as the Company Representative, which provides that, among other things, Merger Sub and Jay Pharma will be amalgamated and will continue as one corporation (“Amalco”), with Amalco continuing as a direct wholly-owned subsidiary of ExchangeCo and an indirect wholly-owned subsidiary of Ameri, on the terms and conditions set forth in the Liquidity and The Company One of the Company’s largest customers has terminated the majority of its work as a result of COVID-19. This customer has accounted in As a result of funding from the SBA as well as sales of shares, the Company has adequate cash reserves to cover expected working capital needs over the next 12 months. Our financial statements as of June 30, 2020 have been prepared under the assumption that we will continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to raise additional funding through the issuance of equity or debt securities, as well as to attain further operating efficiencies and, ultimately, to generate additional revenues. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. Although the Company believes in the viability of management’s strategy to generate sufficient revenue, control costs and the ability to raise additional funds if necessary, there can be no assurances to that effect. The foregoing conditions raise substantial doubt about our ability to continue as a going concern. NOTE 2. BASIS OF PRESENTATION: The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Certain information and disclosure notes normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to ensure the information presented is not misleading. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (which were of a normal, recurring nature) that, in the opinion of management, are necessary to present fairly our financial position, results of operations and cash flows as of and for the interim periods presented. All intercompany transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. Our comprehensive income (loss) consists of net income (loss) plus or minus any periodic currency translation adjustments. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ASU requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019 with early adoption permitted, and requires adoption using a modified retrospective approach, with certain exceptions. Based on the composition of the Company’s investment portfolio as of December 31, 2019, current market conditions and historical credit loss activity, the adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. Additionally, for trade receivables, due to their short duration and the credit profile of the Company’s customers, the effect of transitioning from the incurred losses model to the expected losses model is not expected to be material. In June 2018, the FASB issued Accounting Standards Update (ASU) No. 2018-07, Compensation – Stock Compensation (Topic718): Improvements to In In January 2017, the FASB issued ASU No. 2017-04, simplifying the Test for Goodwill Impairment. Under this new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. Standards Implemented In In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606), deferral of the Effective Date.” With the issuance of ASU 2015-14, the new revenue guidance ASU 2014-09 will be In February 2016, the FASB issued ASU 2016-02 “Leases” (Topic 842) which amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity’s leasing activities. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as ASC 842. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. On January 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and analyzed the lease for a right of use (“ROU”) asset and liability to be recorded on the consolidated balance sheet related to the operating lease for its office space. Results for the year ended December 31, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the legacy accounting guidance under ASC Topic 840, Leases. As part of the adoption the Company elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to: Refer to Note 15 of our consolidated financial statements for additional disclosures required by ASC 842. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard is required to be adopted in the first quarter of 2018. The Company adopted the standard during the year ended December 31, 2018 and the adoption did not have a material effect on its consolidated financial statements and disclosures. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those In NOTE 3. BUSINESS COMBINATIONS: Acquisition of Ameri Georgia On November 20, 2015, we completed the acquisition of Bellsoft, Inc., a consulting company based in Lawrenceville, Georgia, The total purchase price of On January 17, 2018, we completed all payment obligations to the former shareholders of Ameri Georgia Acquisition of Bigtech Software Private Limited On June 23, 2016, we entered into a definitive agreement to The acquisition of Bigtech was effective as of July 1, 2016, and the total consideration for the acquisition of Bigtech was Bigtech’s financial results are included in our condensed consolidated financial results starting July 1, 2016. The Bigtech acquisition did not constitute a significant acquisition for the Acquisition of Virtuoso On July 22, 2016, we The total purchase price of Acquisition of Ameri Arizona On July 29, 2016, we acquired 100% of the membership interests of DC&M Partners, L.L.C. (“Ameri Arizona”), an Arizona limited liability company, pursuant to the terms of a Membership Interest Purchase Agreement by and among us, Ameri Arizona, all of the members of Ameri Arizona, Giri Devanur and Srinidhi “Dev” Devanur, our former President and Chief Executive Officer and current Executive The aggregate purchase price for the acquisition of Ameri Arizona was As of the date of this report, the aggregate of $1,000,000 in Acquisition of Ameri California On March 10, 2017, we acquired 100% of the shares of ATCG Technology Solutions, Inc. (“Ameri California”), a Delaware corporation, pursuant to the terms of a Share Purchase Agreement among the Company, The aggregate purchase price for the acquisition of Ameri California was Presented below is the summary of the foregoing acquisitions: Ameri Georgia Ameri Arizona Ameri California NOTE 4. REVENUE RECOGNITION: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. We recognize revenues as we transfer control of deliverables (products, solutions and services) to our customers in an amount reflecting the consideration to which we expect to be entitled. To achieve this core principle, the Company applies the following five steps: A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of December 31, 2019 contained a significant financing component. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer. Disaggregation of Revenue from Entities. The following table disaggregates gross revenue by entity for the six months ended June 30, 2020 and 2019: For performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost to cost method, under which the total value of revenues is recognized on the basis of the percentage that each contract’s total labor cost to date bears to the total expected labor costs. Revenues related to fixed-price application maintenance, testing and business process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered. If our invoicing is not consistent with value delivered, revenues are recognized as the service is performed based on the cost to cost method described above. The Revenues related to our time-and-materials, transaction-based or volume-based contracts are recognized over the period the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the way in which value is delivered to the customer. Revenues also include the reimbursement of out-of-pocket expenses. We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus a margin approach. We typically establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change. We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of Prior to For the NOTE 5. INTANGIBLE ASSETS: The Company’s intangible assets primarily consists of the NOTE 6. GOODWILL: Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations. As per Company policy, goodwill impairment tests NOTE 7. EARNINGS (LOSS) PER SHARE: Basic income (loss) per share is computed based upon the weighted average number of common shares outstanding for the period. When applicable, diluted income (loss) per share is calculated using two approaches. The first approach, the treasury stock method, reflects the potential dilution that could occur if outstanding stock options, warrants, restricted stock units and outstanding shares to be awarded to satisfy contingent consideration for the business combinations (collectively, the “Equity Awards”) were exercised and issued. The second approach, the if converted method, reflects the potential dilution of the Equity Awards, the 8% Convertible Unsecured Promissory Notes (the “2017 Notes”) described in Note 10 being exchanged for common stock. Under this method, interest expense, net of tax, if any, associated with the 2017 Notes, up through redemption, is added back to net income attributable to common stockholders and the shares outstanding are increased by the underlying 2017 Notes are considered to be issued. For the six months ended June 30, 2020 and 2019, no shares related to the issuance of common stock upon exercise of the Equity Awards or the exchange of the 2017 Notes for common stock were considered in the calculation of diluted loss per share, as the effect would be anti-dilutive due to net losses attributable to common stockholders for both periods. A reconciliation of net NOTE 8. INCENTIVE PLAN ITEMS: During the six months ended June 30, 2020, the Company has not granted any restricted stock units and stock options to purchase Company’s common stock to key employees or directors out of Company’s 2015 Equity Incentive Award Plan. The company has booked charges of $34,642 as stock compensation expenses for the six months ended June 30 2020 and $0.5 million for the six months ended June 30, 2019. NOTE 9. BANK DEBT: On January 23, 2019, certain subsidiaries of the The Borrower also agreed to certain As of June 30, NOTE 10. CONVERTIBLE NOTES: On March 7, 2017, we completed the sale and issuance of 8% Convertible Unsecured Promissory Notes (the “2017 Notes”) for aggregate proceeds to us of During the first quarter of 2019 the company repaid $0.25 million towards 2017 notes. The 2017 Notes On June 3, 2020, the Company entered into an exchange agreement (the “Exchange Agreement”) with the holder of certain of the 2017 Notes, amounting to $1 million. Pursuant to the Exchange Agreement, the holder agreed to exchange the 2017 Notes for a new convertible 1% debenture (the “ 1% Debenture”), which 1% Debenture is convertible into shares of common stock of the Company at a conversion price of $1.75 per share. After the exchange, there are no 2017 Notes outstanding. The principal amount of the 1% Debenture is equal to the principal amount of the 2017 Notes and the accrued interest thereon On November 25, 2019, the Company entered into a securities purchase agreement with an institutional investor for the The First Debenture accrued interest at rate of 5% and was due six (6) months from the issue date. The First Debenture was convertible at any time after the issue date into shares of Company’s Common Stock at a price equal to On January 14, 2020, the Company entered into a securities purchase agreement (with the same institutional investor for the sale of a $500,000 convertible debenture (the “Second Debenture” and collectively with the First Debenture, the “Debentures”). The During the six months ended June 30, 2020 the holders of First Debenture and Second Debenture exercised their rights for conversion into common shares for which the company issued 550,458 common shares. After the conversion, there are no First Debentures or Second Debentures outstanding. NOTE 11. LEASES: The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company’s principal facility is located in The Company utilized a portfolio approach in determining the discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and the Company’s estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company also considered its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the incremental borrowing rates. The lease terms include options to extend the leases when it is reasonably certain that the Company will exercise that option. These operating leases contain renewal options for periods ranging from three to five years that expire at various dates with no residual value guarantees. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. Rent expense was $0.1 million and $0.17 million for the six months ended June 30, 2020 and June 30, 2019, respectively. The Year Six Months ended, Supplemental balance sheet information related to Supplemental cash flow and Total future minimum NOTE 12. FAIR VALUE MEASUREMENT: We utilize the following valuation hierarchy for disclosure of A financial asset or liability’s classification within the hierarchy is determined based upon the lowest level input that is significant to the fair value measurement. The fair value of the contingent consideration was estimated using a discounted cash flow technique with significant inputs that are not observable in the market. The significant inputs not supported by market activity included our probability assessments of expected future cash flows related to the acquisitions during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the respective terms of the share purchase agreements. No financial instruments were transferred into or out of Level 3 classification during the period ended June 30, 2020 and year ended December 31, 2019. NOTE 13. WARRANTS OUTSTANDING: The following warrants, were outstanding as of June 30, 2020: NOTE 14- PREFERRED STOCK On December 30, 2016, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Lone Star Value Investors, LP (“LSVI”), pursuant to which a Convertible Note was returned to the Company and cancelled in exchange for 363,611 shares of the Company’s Series A Preferred Stock, which is non-convertible and perpetual preferred stock of the Company. We have issued 61,327 shares as preferred dividends as of June 30, 2020 and the company has 424,938 outstanding shares preferred stock. A dividend of $106,234.50 due on April 1, 2020 has not yet been issued. NOTE 15. SECURED NOTE: Effective February 27, 2020, the “Company entered into a note purchase and security agreement (the “Purchase Agreement”) with an investor for the sale of a $1,000,000 secured promissory note (the “Note”). The Note accrues interest at rate of 7.25% and is due on August 31, 2020. The Company granted to the investor a security interest (the “Security Interest”) in and lien on all of Company’s tangible and intangible assets owned now or acquired later by the Company of any nature whatsoever. The Security Interest is a second priority security interest, senior to all other indebtedness of the Company other than with respect to the Company’s existing indebtedness to North Mill Capital LLC (“North Mill”) the priority of which is established pursuant to an Intercreditor and Debt Subordination Agreement between the investor and North Mill. NOTE 16. LOAN FROM PAYCHECK PROTECTION PROGRAM (PPP): On May 11, 2020, we received proceeds from a loan in the amount of NOTE 17. LOAN FROM U.S. SMALL BUSINESS ADMINISTRATION (EIDL) On June 18,2020, we have received proceeds from a loan in the amount of $ 149,900 (the “EIDL Loan”) from U.S.Small Business Administration as EIDL Loan pursuant to the Small Business Association Economic Injury Disaster Recovery Loan (the “EIDL Loan”) which was in the form of a Loan Authorization and Agreement executed by the company matures 30 years from the promissory note and bears interest at a rate of 3.75% per annum, Installment payments, including principal and interest of $731 monthly will begin 12 months from the date of promissory note. The balance of principal and interest will be payable 30 years from the date of the promissory note. NOTE 18. EXCHANGE OF CONVERTIBLE NOTE AND PROMISSORY NOTES On June 3, 2020, the Company entered into an Exchange Agreement with the holder of certain of the 2017 Notes, which notes were originally issued on or about March 7, 2017 amounting to $2 million. Pursuant to the Exchange Agreement, the holder agreed to exchange the 2017 Notes for a new convertible 1% Debenture in the aggregate principal amount of $2,265,342.46, which 1% Debenture is convertible into shares of common stock of the Company at a conversion price of $1.75 per share. After the exchange, there are no 2017 Notes outstanding. The principal amount of the 1% Debenture is equal to the principal amount of the 2017 Notes and the accrued interest thereon. NOTE 19. REGISTERED DIRECT OFFERING On June 2, 2020, the Company entered into a Securities Purchase Agreement with certain purchasers named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “June 2020 Registered Offering”), 862,500 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at an offering price of $2.00 per Share. The June 2020 Registered Offering resulted in gross proceeds of approximately $1.725 million before deducting the placement agent’s fees and related offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-233260), which was initially filed with the Securities and Exchange Commission (the “Commission”) on August 14, 2019, and was declared effective on November 19, 2019. The Company also agreed to issue to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants”) to purchase up to 60,375 shares of Common Stock, which represents 7.0% of the Shares sold in the June 2020 Registered Offering. The Placement Agent’s Warrants have an exercise price of $2.20 per share, which represents 110% of the per share offering price of the Shares. NOTE 20. MATERIAL AGREEMENTS: Maturity Extension and Forbearance Agreement On May 6, 2020, the Company entered into a Maturity Extension and Forbearance Agreement (“Agreement”) with the holder of the First Debentures. Pursuant to the Agreement (i) the holder agreed to extend the Maturity Date of the Debentures to from May 26, 2020 to September 30, 2020, (ii) the Company may now prepay each Debenture at any time, with accrued interest to the date of such payment, but no other premium or penalty, and (iii) the parties changed the definition of “Permitted Indebtedness” in the Debentures so as to permit indebtedness issued pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act or related or similar governmental programs including disaster-relief or pandemic-relief programs designed to help businesses in the wake of the Coronavirus pandemic. In consideration for entering into the Agreement the Company agreed to issue to the holder a prepaid warrant (the “Prepaid Warrant”) to purchase up to 646,094 shares of the Company’s common stock. The Prepaid Warrant shall be exercisable, commencing on May 6, 2020 until exercised in full, at a price of $0.001 per share, and shall also be exercisable on a cashless basis. Amalgamation Amendment Agreement On May 6, 2020, the Company entered into an Amalgamation Amendment Agreement (the “Amendment”) to amend that certain Amalgamation Agreement dated January 10, 2020, by and between Ameri Holdings, Inc., Jay Pharma Merger Sub, Inc. (“Merger Sub”), Jay Pharma Inc. (“Jay Pharma”), Jay Pharma ExchangeCo, Inc. (“ExchangeCo”), and Barry Kostiner (the “Amalgamation Agreement”). Pursuant to the Amendment, the parties agreed that (i) at the Effective Time, Ameri Holdings, Inc. shall issue to the holder of a certain note issued by Jay Pharma, series B warrants (the “Series B Warrants”) to acquire 8,100,000 shares of common stock of the company resulting from the amalgamation, and (ii) providing for certain registration rights, pursuant to a Registration Statement on Form S-4, of the Series B Warrants and the shares issuable upon exercise of the Series B Warrants. The Series B Warrants shall be exercisable for a period of five years commencing on the ninetieth (90th) day after the later of the last day of the Lock-up Period and leak-out Period (accelerated or otherwise) set forth in the Lock-up agreement to be executed by the holders of Jay Pharma securities in connection with the Amalgamation, at a price of $0.01 per share, and shall also be exercisable on a cashless basis. On August 12, 2020, the Company, Jay Pharma Inc. and certain other signatories thereto entered into a tender agreement (as may be amended from time to time, the “Tender Agreement”), which provides that, among other things, the Company will make a tender offer to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of the Company, on the terms and conditions set forth in the Tender Agreement. The Tender Agreement terminates and replaces in its entirety the Amalgamation Agreement, dated as of January 10, 2020, as amended on May 6, 2020, previously entered into by and among the parties thereto. NOTE 21. Revision of Prior Year Financial Statements The Company’s corrections of the financial statements as of December 31, 2019 and the year then ended were a result of the adoption of FASB ASU 2016-02 “Leases” (Topic 842) and the implementation of the guidance for a lease that was executed as of April 1, 2019. In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements the Company determined that previously issued financial statements be revised to reflect the correction of these errors. As a result of the aforementioned correction of accounting errors, the relevant financial statements have been revised as follows: The following tables summarize the effects of the revisions on the specific items presented in the Company’s historical consolidated financial statements previously included in NOTE 22. SUBSEQUENT EVENTS: Entry into a Material Definitive Agreement. On July 31, 2020, the Company entered into a securities purchase agreement (the “July 2020 Purchase Agreement”) with an accredited investor (the “Investor”) providing for the issuance of (i) 373,766 shares (the “Shares”) of the Company’s common stock, par value $0.01 (the “Common Stock”); (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 150,000 shares of Common Stock at an exercise price of $0.01 per share, subject to customary adjustments thereunder; and (iii) warrants (the “Unregistered Warrants”), with a term of five (5) years, to purchase an aggregate of up to 340,448 shares of Common Stock (the “Unregistered Warrant Shares”) at an exercise price of $1.828 per share, subject to customary adjustments thereunder. Pursuant to the Purchase Agreement, the Investor purchased the Securities for an aggregate purchase price of $1,000,000. Pursuant to the July 2020 Purchase Agreement, the Shares and Pre-Funded Warrants were issued to the Investors in a registered direct offering (the “July 2020 Registered Offering”) and registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a prospectus supplement to the Company’s currently effective registration statement on Form S-3 (File No. 333-233260). Pursuant to the July 2020 Purchase Agreement, the Company also issued to the Investors in a concurrent private placement pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder, the Unregistered Warrants. Subject to the Company’s prior receipt of shareholder approval under Nasdaq’s corporate governance rules, the Investor shall have the right at any time prior to the exercise in whole or in part of the Unregistered Warrant (as to the portion not exercised) to require the Company to repurchase the unexercised portion of the Unregistered Warrant for the sum of $0.60 per Unregistered Warrant Share, payable in cash or shares of common stock, at the Company’s discretion. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, We use the terms “we,” “our,” “us,” “AMERI” and “the Company” in this report to refer to AMERI Holdings, Inc. and its wholly-owned subsidiaries. Company History We were incorporated under the laws of the State of Delaware in February 1994 as Spatializer Audio Laboratories, Inc., which was a shell company immediately prior to our completion of a “reverse merger” transaction on May 26, 2015, in which we caused Ameri100 Acquisition, Inc., a Delaware corporation and our newly created, wholly owned subsidiary, to be merged with and into Ameri and Partners Inc (“Ameri and Partners”), a Delaware corporation (the “Merger”). On May 26, 2015, we completed the Merger, in which we caused Ameri100 Acquisition, Inc., a Delaware corporation and our newly created, wholly owned subsidiary, to be merged with and into Ameri and Partners (doing business as Ameri100), a Delaware corporation. As a result of the Merger, Ameri and Partners became our wholly owned operating subsidiary. The Merger was consummated under Delaware law, pursuant to an Agreement of Merger and Plan of Reorganization, dated as of May 26, 2015 (the “Merger Agreement”), and in connection with the Merger we changed our name to AMERI Holdings, Inc. We are headquartered in On January 10, 2020, we entered into the Stock Purchase Agreement with respect to the Spin-Off and the Amalgamation Agreement with respect to the Amalgamation. There is no assurance when or if the amalgamation will be completed. Any delay in completing the amalgamation may substantially reduce the intended benefits that Ameri and Jay Pharma expect to obtain from the amalgamation. Completion of the amalgamation and spin-off is subject to the satisfaction or waiver of a number of conditions as set forth in the Amalgamation Agreement and spin-off agreements, including the approval by Ameri’s stockholders and Jay Pharma’s shareholders, approval by NASDAQ of Ameri’s application for the listing of common stock in connection with the amalgamation, and other customary closing conditions. There can be no assurance that Ameri and Jay Pharma will be able to satisfy the closing conditions or that closing conditions of the amalgamation or spin-off beyond their control will be satisfied or waived. If such conditions are not satisfied or waived, the amalgamation and spin-off may not occur or will be delayed, and Ameri and Jay Pharma each may lose some or all of the intended benefits of the amalgamation. In addition, if the Amalgamation Agreement is terminated under certain circumstances, Ameri or Jay Pharma may be required to pay a termination fee of $500,000. Moreover, each of Ameri and Jay Pharma has incurred and expect to continue to incur significant expenses related to the amalgamation, such as legal and accounting fees, some of which must be paid even if the amalgamation is not completed. Overview We specialize in delivering SAP We generate revenue by providing consulting services under written service contracts with our customers. The service contracts we enter into generally fall into two categories: (1) time-and-materials contracts and (2) fixed-price contracts. When a customer enters into a time-and-materials or fixed-price (or a periodic retainer-based) contract, the revenue is recognized in accordance with the deliverables of each contract. If the deliverables involve separate units of accounting, the consideration from the arrangement is measured and allocated to the separate units, based on vendor specific objective evidence of the value for each deliverable. The revenue under time and materials contracts is recognized as services are rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. We routinely evaluate whether revenue and profitability should be recognized in the current period. We estimate the proportional performance on fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. For the three months ended For the We continue to explore strategic alternatives to improve the market position and profitability of our product and service offerings in the marketplace, generate additional liquidity for the Company, and enhance our valuation. We expect to pursue our goals during the next twelve months through organic growth and through other strategic alternatives. Some of these alternatives have included, and could continue to include, selective acquisitions. The Company has obtained financing and additional capital from the sale of equity and incurrence of indebtedness in the past, and continues to consider capital raising and financing from the sale of various types of equity and incurrence of indebtedness to provide capital for our business plans and operations in the future. Business Update Regarding COVID-19 During the first quarter of 2020, the spread of a new strain of coronavirus and the disease created by that virus, COVID-19, has created a global pandemic presenting substantial public health and economic challenges around the world. The global pandemic is affecting our employees, communities and business operations, as well as the global economy and financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. The disclosure in the remainder of this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is qualified by the disclosure in this section on the impacts of COVID-19 and, to the extent that the disclosure in the remainder of this MD&A refers to a financial or performance metric that has been affected by a trend or activity, that reference is in addition to any impact discussed in this section of the impacts of the COVID-19 pandemic. The effect of the COVID-19 pandemic is rapidly evolving and, as such, the information contained herein is accurate as of the date hereof, but may become outdated due to changing circumstances beyond our present awareness or control. The Company has No clients have gone out of business or filed for bankruptcy, and although there has been a reduction in staffing, no active clients have completely ceased using our services as a result of COVID-19. As a direct result of COVID-19 we had significant consultant roll-offs from one of the top US airlines that has been one of our top five revenue clients over the last several years. We expect a portion of that business to come back when the US airline business recovers. Additionally, we have seen minor consultant roll-offs from other clients related to COVID-19. We have had no projects cancelled due to COVID-19 although we have had some new projects put on hold. We have also had clients notify us they will be slow to pay our bills and have some reduced billable hours per week until the economy reopens further. We are at the beginning stages of rebuilding our sales pipeline for a post-COVID economy. Discussion of Business Activity The Company has recently been awarded enterprise IT solutions projects include implementations of i) S/4HANA, SAP’s new enterprise IT platform, ii) Hybris, SAP’s e-commerce platform, and iii) SuccessFactors, SAP’s human resources platform, in addition to the migration of enterprises from on-premises IT infrastructure to the cloud. Key new business activities in April and May, In addition to client initiatives, the Company has invested in continued development of its internal technology expertise and business process efficiency. We have initiated the internal implementation of a Professional Services Automation suite that we hope will significantly streamline our business operations. There is a continued near-term expectation of negative cashflow as a result of high Selling, General and Administrative expenses and significant expenses associated with building solutions, sales and resource recruiting capabilities. Also, SAP has pushed out its deadline for mandatory migration to S/4HANA past 2025, which is expected to have a near-term negative impact on the expansion of the solutions business. Due to the foregoing and COVID-19 Pandemic, it is expected that our business will fall short of our 2020 revenue goals. RESULTS OF OPERATIONS Results of Operations for the Three Months Ended Revenues Revenues for the three months ended For the three months ended June 30, 2020 and Revenues for the six months ended June 30, 2020 decreased by $3.8 million, or 22%, as compared to For the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for 48% and 46% of our total revenue, respectively. Two of our customers contributed 19% and 10% of our revenue for the We are expecting a decrease in revenue from existing clients of approximately $3.5 million, as compared to full year revenue of 2019, during the next 12 months due to COVID-19. Gross Our gross margin was 22% for the Our gross margin was 21% for the six months ended June 30, 2020, as compared to Our target gross margins in future periods are anticipated to be in the range of 20% to 25% based on a mix of project revenues and professional service revenues. However, there is no assurance that we will achieve such anticipated gross margins. Selling, general and SG&A expenses for the three months ended SG&A expenses for the Depreciation and Amortization Depreciation and amortization expense amounted to Operating Our operating Our operating loss was We expect the COVID-19 pandemic to negatively impact our operations for the Interest Expense Our interest expense for the three months ended Our interest expense Liquidity and Capital Resources Our cash position was Cash used for operating activities was Liquidity Concerns As of Our financial statements as of Available Credit Facility, Borrowings and As of June 30, 2020, we had approximately $2.3 million in borrowings outstanding under Effective February 27, 2020, we entered into a note purchase and security agreement with an investor for the sale of a $1,000,000 secured promissory note, which accrues interest at rate of 7.25% and is due on August 31, 2020. In addition, we have an outstanding aggregate of $815,342.46 million in Accounts receivable for the period ended Accounts Payable Accounts payable for the period ended Accrued Accrued expenses for the period ended Operating Activities Our largest source of operating cash flows is cash collections from our Off- Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Impact of Inflation We do not believe that inflation had a significant impact on our results of operations for the periods presented. On an ongoing basis, we attempt to minimize any effects of inflation on our operating results by controlling operating costs and, whenever possible, seeking to ensure that billing rates reflect increases in costs due to inflation. For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period end. Statements of Operations accounts are translated at the exchange rate prevailing as of the date of the transaction. The gains or losses resulting from such translation are reported under accumulated other comprehensive income (loss) as a separate component of equity. Realized gains and losses from foreign currency transactions are included in other income, net for the periods presented. Recent Accounting Pronouncements See Note 2 to our unaudited condensed consolidated financial statements for additional information. Critical Accounting The Company adopted this guidance and related amendments as of the first quarter of fiscal 2018, applying the full retrospective transition method. As the underlying principles of the new standard, relating to the measurement of revenue and the timing of recognition, are closely aligned with the Company’s current business model and practices, the adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements. In addition, the adoption of ASC 606 did not impact the previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. We recognize revenues as we transfer control of deliverables (products, solutions and services) to our customers in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We apply judgment in determining the customer’s ability and intention to pay based on a variety of factors including the customer’s historical payment experience. For performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost to cost method, under which the total value of revenues is recognized on the basis of the percentage that each contract’s total labor cost to date bears to the total expected labor costs. Revenues related to fixed-price application maintenance, testing and business process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered. If our invoicing is not consistent with value delivered, revenues are recognized as the service is performed based on the cost to cost method described above. The cost to cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenues related to our time-and-materials, transaction-based or volume-based contracts are recognized over the period the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the way in which value is delivered to the customer. Revenues also include the reimbursement of out-of-pocket expenses. We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of our We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set up or transition fees paid upfront by our customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract. Prior to the adoption of the New Revenue Standard on January 1, 2018, revenues were earned and recognized when all of the following criteria were met: evidence of an arrangement existed, the price was fixed or determinable, the services had been rendered and collectability was reasonably assured. Contingent or incentive revenues were recognized when the contingency was satisfied and we concluded the amounts were earned. Volume discounts were recorded as a reduction of revenues as services were provided. Revenues also included the reimbursement of out-of-pocket expenses. For the six months ended June 30, 2020 and June 30, 2019, sales to five major customers accounted for approximately 48% and 46% of our total revenue, respectively. For the six months ended June 30, 2020, five of our customers contributed 19%, 10% ,7% and 6% of our revenue, and for the six months ended June 30, 2019, five of our customers contributed 14%,11%,9% and 6% of our revenue. Stock-Based Compensation. Stock-based compensation expense for awards of equity instruments to employees and non-employee directors is determined based on the grant-date fair value of those awards. We recognize these compensation costs net of an estimated forfeiture rate over the requisite service period of the award. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates. Warrant Liability. The Company accounts for the warrants issued in July 2018 in accordance with the guidance on Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which provides that the Company classifies the warrant instrument as a liability at its fair value and adjusts the instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of warrants issued by the Company in connection with private placements of securities has been estimated using the warrants quoted market price. Impairment. Long-lived assets, which include property, plant and equipment, and certain other assets to be held and used by us, are reviewed when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable based on estimated future cash flows. If this assessment indicates that the carrying values will not be recoverable, as determined based on undiscounted cash flows over the remaining useful lives, an impairment loss is recognized based on the fair value of the asset. Income Taxes. We provide for income taxes utilizing the asset and liability method of accounting. Under this method, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities Accounts Receivable. We extend credit to clients based upon management’s assessment of their Business Combination. We account for business combinations using the Goodwill and Purchased Intangibles. We evaluate goodwill and purchased intangible assets for impairment at least annually, or as Valuation of Contingent Earn-out Consideration.Acquisitions may include contingent consideration payments based on the achievement of certain future financial performance measures of the acquired company. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired companies and estimated probabilities of achievement. We believe our estimates and assumptions are reasonable, however, there is significant judgment involved. We evaluate, on a routine, periodic basis, the estimated fair value of the contingent consideration and changes in estimated fair value, subsequent to the initial fair value estimate at the time of the acquisition, will be reflected in income or expense in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue and/or earnings estimates and changes in probability assumptions with respect to the likelihood of achieving the various earn-out criteria. Any changes in the estimated fair value of contingent consideration may have a material impact on our operating results. The Company translates the foreign currency financial statements into U.S. Dollars using the year or reporting period end or average exchange rates in accordance with the Some of the statements in this Quarterly Report on Form 10-Q and elsewhere constitute forward-looking statements under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve known and unknown risks, uncertainties and other factors that may cause results, levels of activity, growth, performance, tax consequences or achievements to be materially different from any future results, levels of activity, growth, performance, tax consequences or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, those listed below. The forward-looking statements included in this Form 10-Q and referred to elsewhere are related to future events or our strategies or future financial performance, including statements concerning our Although we believe that the expectations in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Except as otherwise required, we undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform such statements to actual results. Not applicable. Management’s Report on Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our 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, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q, we have carried out an evaluation of the effectiveness of the design and operation of our Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our management has assessed the effectiveness of our internal control over financial reporting as of This Quarterly Report on Form 10-Q does not include an attestation report of our independent auditors regarding internal control over financial reporting. Inherent Limitations on Effectiveness of Controls Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization and personnel factors. Internal control over financial reporting is a process, which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Changes in Internal Control Over Financial Reporting There We are not currently a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our Form 10-K, the occurrence of any one of which could have a material adverse effect on our actual results. There have been no material changes to the Risk Factors previously disclosed in our Form 10-K, except as noted below. Our results of operations could in the future be materially adversely affected by the global coronavirus pandemic (COVID-19). The global coronavirus pandemic (COVID-19) has created significant volatility in the price of our common stock, uncertainty in customer demand for our services, and widespread economic disruption. The extent to which the coronavirus pandemic will impact our business, operations and financial results will depend on numerous factors that are frequently changing or unknown, and that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ responses or planned responses to the pandemic; the impact of the pandemic on economic activity and any interventions intended to mitigate decreased economic activity; the effect on our customers and customer demand for our products, services, and solutions; our ability to sell and provide our products, services, and solutions, including as a result of travel restrictions, personnel working from home or with diminished technology and communication abilities, and social distancing; the ability of our customers to pay timely, if at all, for our services and solutions with or without discounts requested by our customers; and closures of our and our customers’ offices and facilities. The closure of our customers’ facilities, restrictions that prevent our customers from accessing those facilities or their own customers, and broad disruptions in our customers’ markets and customer base, has disrupted, and could in the future disrupt the demand for our products, services, and solutions and result in, among other things, termination of customer contracts, delays or interruptions in the performance of contracts, losses of revenues, and an increase in bad debts. Customers may also slow or halt decision making, delay planned work, or suspend, terminate, or reduce existing contracts or services. Travel and immigration restrictions may delay or prevent our personnel from accessing worksites, and work-from-home or remote working arrangements could reduce profitability or increase information security and connectivity vulnerabilities. In addition, when COVID-19-related restrictions on business are eased, our ability to deliver services to our customers could be affected by any outbreak of illness among employees returning to our facilities or to our customers’ facilities. Moreover, there may be additional costs that we will have to incur in connection with further changes to, or a return to, normal operating conditions. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2019, including, but not limited to, those relating to our operations in emerging markets, our ability to execute on our growth strategy through strategic acquisitions, our dependency on third parties for network infrastructure, attracting, hiring, and retaining personnel, the effects on movements in foreign currency exchange rates, and the effects that changes to fiscal, political, regulatory and other federal policies may have on our operations, each of which could materially adversely affect our business, financial condition, results of operations and/or stock price. Except as set forth below or previously reported on a Current Report on Form 8-K, we had no unregistered sales of equity securities during the three month period ended June 30, 2020. On June 2, 2020, the Company issued warrants to purchase up to 60,375 shares of Common Stock to a FINRA-registered broker-dealer and certain individuals associated with the broker-dealer for services related to the June 2020 Registered Direct Offering. The warrants were issued in reliance on an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) thereof. Not applicable. Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the Assets Current assets: Cash and cash equivalents $ 844,104 $ 1,379,887 Accounts receivable 9,167,088 8,059,910 Investments 82,908 82,908 Other current assets 1,321,334 542,237 Total current assets 11,415,434 10,064,942 Other assets: Property and equipment, net 92,870 100,241 Intangible assets, net 10,253,381 8,764,704 Acquired goodwill 21,886,567 17,089,076 Deferred income tax assets, net 3,488,960 3,488,960 Total other assets 35,721,778 29,442,981 Total assets $ 47,137,212 $ 39,507,923 Current liabilities: Line of credit $ 3,765,391 3,088,890 Accounts payable 4,126,323 5,130,817 Other accrued expenses 3,947,293 2,165,088 Bank term loan 406,156 405,376 Consideration payable – cash 7,129,238 1,854,397 Consideration payable – equity 11,589,973 64,384 Dividend payable 527,979 - Total current liabilities 31,492,353 12,708,952 Long- term Liabilities: Convertible notes 1,250,000 - Bank term loan 1,575,206 1,536,191 Consideration payable – cash - 2,711,717 Consideration payable – equity 600,000 10,887,360 Total long-term liabilities 3,425,206 15,135,268 Total liabilities 34,917,559 27,844,220 Stockholders’ equity: Preferred stock, $0.01 par value; 1,000,000 authorized, 383,985 issued and outstanding as of September 30, 2017 and 363,611 as of December 31, 2016 3,840 3,636 Common stock, $0.01 par value; 100,000,000 shares authorized, 15,856,249 and 13,885,972 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 158,561 138,860 Additional paid-in capital 25,487,970 15,358,839 Accumulated deficit (13,430,711 ) (3,833,588 ) Accumulated other comprehensive income (loss) (18,511 ) (7,426 ) Non-controlling interest 18,504 3,382 Total stockholders’ equity 12,219,653 11,663,703 Total liabilities and stockholders’ equity $ 47,137,212 $ 39,507,923 June 30,
2020 December 31,
2019 Assets Current assets: Cash and cash equivalents 2,087,691 431,400 Accounts receivable 7,294,578 6,384,148 Other current assets 886,999 783,606 Total current assets 10,269,268 7,599,154 Other assets: Property and equipment, net 104,905 83,128 Intangible assets, net 2,487,316 3,584,221 Acquired goodwill 13,729,770 13,729,770 Operating lease right of use asset, net 906,995 286,163 Deferred income tax assets, net 8,170 8,879 Total other assets 17,237,156 17,692,161 Total assets 27,506,424 25,291,315 Liabilities Current liabilities: Line of credit 2,337,246 2,881,061 Accounts payable 4,867,360 4,696,352 Other accrued expenses 1,924,468 1,989,894 Operating lease liability 208,663 120,052 Paycheck Protection Program Loan 1,729,600 - Convertible notes 1,000,000 Consideration payable – cash - 2,496,000 Debenture Liability 1,165,342 - Dividend payable 535,968 320,298 Total current liabilities 12,768,647 13,503,657 Long term liabilities: Operating lease liability, net 708,237 169,897 Economic Injury Disaster Loan 149,900 - Short term Loans 1,000,000 1,000,000 Total long term liabilities 1,858,137 1,169,897 Total liabilities 14,626,784 14,673,554 Stockholders’ equity: Preferred stock, $0.01 par value; 1,000,000 authorized, 424,938 issued and outstanding as of June 30, 2020 and December 31, 2019. 4,249 4,249 Common stock, $0.01 par value; 100,000,000 shares authorized, 5,163,265 and 2,522,095 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 51,633 25,221 Additional paid-in capital 56,869,527 51,040,296 Accumulated deficit (44,085,632 ) (40,512,017 ) Accumulated other comprehensive income (loss) 39,863 60,012 Total stockholders’ equity 12,879,640 10,617,761 Total liabilities and stockholders’ equity 27,506,424 25,291,315 3 Revenue $ 12,529,928 $ 10,058,558 $ 37,139,114 $ 23,758,460 Cost of revenue 9,966,490 8,361,960 28,941,535 18,897,059 Gross profit 2,563,438 1,696,598 8,197,579 4,861,401 Operating expenses Selling and marketing 402,846 137,024 1,170,051 401,487 General and administration 5,283,059 1,326,327 12,389,581 5,316,390 Acquisition related expenses 5,694 1,015,558 390,174 1,630,778 Depreciation and amortization 817,284 509,377 2,332,041 722,390 Operating expenses 6,508,883 2,988,286 16,281,847 8,071,045 Operating income (loss) (3,945,445 ) (1,291,688 ) (8,084,268 ) (3,209,644 ) Interest expenses (132,973 ) (290,423 ) (388,122 ) (674,683 ) Changes in estimates - - 400,000 - Others, net 17,446 (195,518 ) 21,921 (197,679 ) Income (loss) before income taxes (4,060,972 ) (1,777,629 ) (8,050,469 ) (4,082,006 ) Tax benefit / (provision) - - - - Income after income taxes (4,060,972 ) (1,777,629 ) (8,050,469 ) (4,082,006 ) Net income attributable to non-controlling interest (6,632 ) - (18,504 ) - Net income (loss) attributable to the Company (4,067,604 ) (1,777,629 ) (8,068,973 ) (4,082,006 ) Dividend on preferred stock (541,864 ) - (1,546,655 ) - Net loss attributable to common stock holders (4,609,468 ) (1,777,629 ) (9,615,628 ) (4,082,006 ) Other comprehensive income (loss), net of tax - - - - Foreign exchange translation (14,234 ) 59,079 (11,084 ) (6,619 ) Comprehensive income/(loss) $ (4,623,702 ) $ (1,718,550 ) $ (9,626,712 ) $ (4,088,625 ) Comprehensive income/(loss) attributable to the Company (4,617,070 ) (1,718,550 ) (9,608,208 ) (4,088,625 ) Comprehensive income/(loss) attributable to the non-controlling interest (6,632 ) - (18,504 ) - $ (4,623,702 ) $ (1,718,550 ) $ (9,626,712 ) $ (4,088,625 ) Basic income (loss) per share $ (0.31 ) $ (0.13 ) $ (0.66 ) $ (0.32 ) Diluted income (loss) per share $ (0.31 ) $ (0.13 ) $ (0.66 ) $ (0.32 ) Basic weighted average number of common shares outstanding 14,715,947 13,653,586 14,472,322 12,794,149 Diluted weighted average number of common shares outstanding 14,715,947 13,653,586 14,472,322 12,794,149 Three Months
June 30, 2020 Three Months
June 30, 2019 Six Months
June 30, 2020 Six Months
June 30, 2019 Revenue 8,254,941 11,015,057 17,857,469 21,701,253 Cost of revenue 6,436,811 8,632,882 14,157,773 17,179,114 Gross profit 1,818,130 2,382,175 3,699,696 4,522,139 Operating expenses Selling, General and administration 2,470,723 3,296,041 5,395,241 6,173,350 Depreciation and amortization 533,863 562,570 1,093,486 1,123,587 Operating expenses 3,004,586 3,858,611 6,488,727 7,296,937 Operating Income (loss) (1,186,456 ) (1,476,436 ) (2,789,031 ) (2,774,798 ) Interest expenses (372,288 ) (156,660 ) (532,348 ) (299,214 ) Impairment on goodwill and Intangibles Changes in fair value of warrant liability - 388,552 - (61,715 ) Others, net 2,811 4,566 2,811 4,566 Income (loss) before income taxes (1,555,933 ) (1,239,978 ) (3,318,568 ) (3,131,161 ) Income tax benefit(expenses) (17,485 ) (16,590 ) (39,377 ) 14,621 Income (loss) after income taxes (1,573,418 ) (1,256,568 ) (3,357,945 ) (3,116,540 ) Net income attributable to non-controlling interest Net Income (loss) attributable to the Company (1,573,418 ) (1,256,568 ) (3,357,945 ) (3,116,540 ) Dividend on preferred stock (107,835 ) (106,234 ) (215,670 ) (211,939 ) Net Income (loss) attributable to common stock holders (1,681,253 ) (1,362,802 ) (3,573,615 ) (3,328,479 ) Other comprehensive income (loss), net of tax Foreign exchange translation 15,354 (18,141 ) (20,149 ) 573 Total Comprehensive Income (loss) (1,665,899 ) (1,380,943 ) (3,593,764 ) (3,327,906 ) Basic income (loss) per share (0.48 ) (0.67 ) (1.03 ) (1.73 ) Diluted income (loss) per share (0.48 ) (0.67 ) (1.03 ) (1.73 ) Basic weighted average number of common shares outstanding 3,518,118 2,027,095 3,482,286 1,925,009 Diluted weighted average number of common shares outstanding 3,518,118 2,027,095 3,482,286 1,925,009 4 2017 2016 Cash flow from operating activities Comprehensive income/(loss) $ (9,626,712 ) $ (4,088,625 ) Adjustment to reconcile comprehensive income/(loss) to net cash used in operating activities Depreciation and amortization 2,332,041 722,390 Provision for Preference dividend 1,546,655 - Changes in estimate of contingent consideration (400,000 ) - Stock, option, restricted stock unit and warrant expense 5,167,358 945,959 Foreign exchange translation adjustment 11,085 - Changes in assets and liabilities: Increase (decrease) in: Accounts receivable (1,107,178 ) (2,852,778 ) Other current assets (779,097 ) (285,831 ) Increase (decrease) in: Accounts payable and accrued expenses 1,056,277 2,561,321 Net cash provided by (used in) operating activities (1,799,571 ) (2,997,564 ) Cash flow from investing activities Purchase of fixed assets (7,797 ) 3,261,617 Acquisition consideration (694,711 ) (8,779,040 ) Investments - 82,908 Net cash used in investing activities (702,508 ) (5,434,515 ) Cash flow from financing activities Proceeds from bank loan and convertible notes, net 1,966,296 4,467,879 Additional stock issued - 5,000,000 Net cash provided by financing activities 1,966,296 9,467,879 Net increase (decrease) in cash and cash equivalents (535,783 ) 1,035,800 Cash and cash equivalents as at beginning of the period 1,379,887 1,878,034 Cash at the end of the period $ 844,104 $ 2,913,834 Common Stock Preferred Stock Shares Par Value at $0.01 Shares Par Value at $0.01 Additional paid-in capital Foreign Currency Translation Reserve Retained earnings Balance at Dec 31, 2018 1,693,165 $ 16,932 420,720 $ 4,207 $ 45,129,214 $ 86,997 $ (34,478,253 ) $ 10,759,097 Net Loss for the period (3,328,478 ) (3,328,478 ) Other comprehensive income (loss) 573 573 Shares Issued towards earnouts 131,570 1,316 603,907 605,223 Exercise of Warrants (PIPE series A&B) 271,972 2,720 2,331,590 2,334,310 Stock Compensation expenses 490,175 490,175 Balance at June 30, 2019 2,096,708 $ 20,968 420,720 $ 4,207 $ 48,554,887 $ 87,570 $ (37,806,731 ) $ 10,860,900 Balance at December 31, 2019 2,522,095 $ 25,221 424,938 $ 4,249 $ 51,040,296 $ 60,012 $ (40,512,017 ) $ 10,617,761 Net Loss for the period (3,573,615 ) (3,573,615 ) Other comprehensive income (loss) (20,149 ) (20,149 ) Stock Compensation expenses 34,642 34,642 Shares Issued for Extinguishment of liability 1,778,640 17,786 4,078,214 4,096,000 Rights Issue of Shares 862,500 8,625 1,716,375 1,725,000 Balance at June 30, 2020 5,163,235 $ 51,633 424,938 $ 4,249 $ 56,869,527 $ 39,863 $ (44,085,632 ) $ 12,879,640 5 June 30 2020 2019 Cash flow from operating activities Net Income (Loss) (3,593,764 ) (3,327,905 ) Adjustment to reconcile comprehensive income/(loss) to net cash used in operating activities Depreciation and amortization 1,093,486 1,123,587 Non cash expenses 6,117 Provision for Preference dividend 215,670 211,939 Changes in fair value of warrants - 61,715 Stock, option, restricted stock unit and warrant expense 34,642 490,175 Foreign exchange translation adjustment (20,149 ) 573 Provision for Income taxes ( net off deferred income taxes) 25,071 (14,622 ) Loss on sale of fixed assets 21,611 - Changes in assets and liabilities: Increase (decrease) in: Accounts receivable (910,430 ) (673,381 ) Other current assets (103,393 ) (1,388 ) Increase (decrease) in: Accounts payable and accrued expenses 366,713 655,151 Net cash provided by (used in) operating activities (2,864,426 ) (1,474,156 ) Cash flow from investing activities Purchase of fixed assets (39,969 ) (27,698 ) Acquisition consideration - (200,000 ) Net cash used in investing activities (39,969 ) (227,698 ) Cash flow from financing activities Proceeds from bank loan and convertible notes, net 2,835,685 (191,762 ) Proceeds from issuance of common shares, net 1,725,000 2,123,425 Net cash provided by financing activities 4,560,685 1,931,663 Net increase (decrease) in cash and cash equivalents 1,656,291 229,809 Cash and cash equivalents as at beginning of the period 431,400 1,371,331 Cash at the end of the period 2,087,691 1,601,140 6 SEPTEMBER2017NOTE 1.ORGANIZATION:fast-growing technology services company whichthat, through the operations of its eleven subsidiaries, provides SAP TMcloud and digital and enterprise services to clients worldwide. Headquartered in Princeton, New JerseyAlpharetta, Georgia, we typically go to market both vertically by industry and horizontally by product/technology specialties and provide our customers with a wide range of business and technology offerings. We work with customers, primarily within North America, to improve process, reduce costs and increase revenue through the judicious use of technology. The Company earns almost all of its revenue from North America. The Company takes the position that all of its businesses operate as a single segment.has officesInc. (“Buyer”) entered into a Stock Purchase Agreement (the “Agreement”) pursuant to which, among other things and subject to the satisfaction or waiver of specified conditions, the Company will sell to Buyer and Buyer will purchase from the Company one hundred percent (100%) of the outstanding equity interests (the “Purchased Shares”) of Ameri100 Holdco, Inc. (“Holdco”) (the “Spin-Off”).U.S.Amalgamation Agreement.Canada. Going Concernadditionally has global delivery centersincurred net losses from operations since inception. The net loss for the six months ended June 30, 2020 was $3.6 million and the accumulated deficit was $44 million as of June 30, 2020. The Company’s ongoing losses have had a significant negative impact on the Company’s financial position and liquidity. The Company has also been historically reliant on loans from related parties, loans from third parties and sales of equity securities to fund operations, working capital and complete acquisitions. To increase revenues, our operating expenses are likely to continue to grow and, as a result, we will need to generate significant additional revenues to cover such expenses. We expect our primary sources of cash to be customer collections and external financing. We also continue to work on cost reductions, and we have initiated steps to reduce our overhead to improve cash savings. We may raise additional capital through the sale of equity or debt securities or borrowings from financial institutions or third parties or a combination of the foregoing. Capital raised will be used to implement our business plan, grow current operations, make acquisitions or start new vertical businesses among some of the possible uses.India. With its bespoke engagement model, Ameri100 delivers transformational valuethe past for annual revenues of between five to its clients across industry verticals.NOTE 2.BASIS OF PRESENTATION:The Company’s year-end is December 31. Ameri and Partners Inc, the Company’s wholly-owned operating subsidiary that was the accounting acquirer in connection with the Company’s May 2015 reverse merger, changed its fiscal year end from March 31 to December 31 pursuant to the merger, so that all of the Company’s subsidiaries’ year-ends are consistent with the year-end of the Company.During the first quarter of 2016, the Company erroneously classified approximately $1.9 million of expenses as general and administrative expenses which should have been classified as cost of revenue. The Company has corrected this error in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. The reclassification did not change the Company’s net income or loss for the period reported.2016.7 NewBe ImplementedMay 2014,August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with CustomersASU No. 2018-13, “Fair Value Measurement (Topic 606)820),” which supersedes Disclosure Framework – Changes to the revenue recognition requirements in “Revenue Recognition (Topic 605)Disclosure Requirements for Fair Value Measurement”.” This ASU requiresremoved the following disclosure requirements: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; and (3) the valuation processes for Level 3 fair value measurements. Additionally, this update added the following disclosure requirements: (1) the changes in unrealized gains and losses for the period included in other comprehensive income and loss for recurring Level 3 fair value measurements held at the end of the reporting period; (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity to recognize revenue when goods are transferredmay disclose other quantitative information (such as the median or services are provided to customersarithmetic average) in an amount that reflectslieu of the consideration to whichweighted average if the entity expectsdetermines that other quantitative information would be a more reasonable and rational method to be entitledreflect the distribution of unobservable inputs used to in exchange for those goods or services. This ASU also requires disclosures enabling users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606), deferral of the Effective Date.” With the issuance of ASU 2015-14, the new revenue guidance ASU 2014-09 will be effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, using one of two prescribed retrospective methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customer (Topic 606), Identifying Performance Obligations and Licensing.” The guidance is applicable from the date of applicability of ASU 2014-09. This ASU finalizes the amendments to the guidance on the new revenue standard on the identification of performance obligations and accounting for licenses of intellectual property. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements (Topic 606)” which is applicable from the date of applicability of ASU 2014-09. This guidance provides optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. In May 2016, FASB issueddevelop Level 3 fair value measurements. ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients”. This amendment clarified certain aspects of Topic 606 and2018-13 will be applicable from the date of applicability of ASU 2014-09. The Company is in process of evaluating the impact of the foregoing updates.In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2018. Upon adoption, entities will be required to use a modified retrospective transition which provides for certain practical expedients. Entities are required to apply the new standard at the beginning of the earliest comparative period presented. Early adoption of this new standard is permitted. The Company is currently evaluating the effect this new standard will have on its consolidated financial statements and related disclosures. The Company does not expect the requirement to recognize a right-of-use asset and a lease liability for operating leases to have a material impact on the presentation of its consolidated statements of financial position.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Based on its current assessment, the Company does not expect the2019 with early adoption of this update to have a material impact on its consolidated financial statements.On November 17, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. This new standard requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017 including interim periods within those fiscal years, but earlier adoption is permitted. The Company does not believe the adoption of this new standard will have a material impact on its consolidated financial statements.The Company is in processBased on the Company’s preliminary assessment of evaluating the foregoing update, it does not anticipate such update will have a material impact of these updates.January 2017,May 2014, the FASB issued ASU No. 2017-01, clarifying2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the Definitionrevenue recognition requirements in “Revenue Recognition (Topic 605).” This ASU requires an entity to recognize revenue when goods are transferred, or services are provided to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This ASU also requires disclosures enabling users of a Business, which clarifiesfinancial statements to understand the nature, amount, timing, and provides a more robust framework to use in determining when a setuncertainty of assetsrevenue and activities is a business. The amendments in this update shouldcash flows arising from contracts with customers.applied prospectively on or after the effective date. This update is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, using one of two prescribed retrospective methods. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customer (Topic 606), Identifying Performance Obligations and Licensing.” The guidance is applicable from the date of applicability of ASU 2014-09. This ASU finalizes the amendments to the guidance on the new revenue standard on the identification of performance obligations and accounting for licenses of intellectual property. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements (Topic 606)” which is applicable from the date of applicability of ASU 2014-09. This guidance provides optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. In May 2016, FASB issued ASU No. 2016-12, “Narrow-Scope Improvements and Practical Expedients”. This amendment clarified certain aspects of Topic 606 and will be applicable from the date of applicability of ASU 2014-09. The Company has implemented the above standard.8 1. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. 2. Not to apply the recognition requirements in ASC 842 to short-term leases. 3. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial. periods. Early adoption is permitted for acquisition or deconsolidation transactions occurring before the issuance date or effective date and only when the transactions have not been reported in issued or made available for issuance financial statements. The Company does not believe the adoption of this new standard will have a material impact on its consolidated financial statements.Standards ImplementedIn September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments”. The guidance eliminates the requirement that an acquirer in a business combination account for a measurement period adjustment retrospectively. Instead, an acquirer will recognize a measurement period adjustment during the period in which the amount of the adjustment is determined. In addition, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date should be presented separately on the face of the income statement or disclosed in the notes. This guidance was effective for fiscal years, beginning after December 15, 2015, including interim periods within those fiscal years. This guidance2018. The Company adopted the new standard during the year ended December 31, 2019 and the adoption did not have a material impacteffect on the Company’s consolidated financial results.March 2016,June 2018, the FASB issued ASUAccounting Standards Update (ASU) No. 2016-09, “Compensation2018-07, Compensation – Stock Compensation”Compensation (Topic718): Improvements to Nonemployee Share-Based Payment Accounting. TheUnder the new guidance changesstandard, companies will no longer be required to value non-employee awards differently from employee awards. Companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the accounting for share based payment transactions, includingaward after the income tax consequences, classification of awards as either equity or liabilities and classification in the Consolidated Statement of Cash Flows. The guidancegrant date. ASU 2018-07 is effective for annual reporting periods beginning after December 15, 2016, and2018, including interim reporting periods within those annual periods. This guidancethat reporting period. Early adoption is permitted, but no earlier than the Company’s adoption date of Topic 606, Revenue from Contracts with Customers (as described above under “Revenue Recognition”). The Company adopted the new standard during the year ended December 31, 2019 and the adoption did not have a material impacteffect on the Company’s consolidated financial results.7Subsequent Events. The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date.NOTE 3.BUSINESS COMBINATIONS:with over 175 consultants specializedwhich specializes in the areas of SAP software, business intelligence, data warehousing and other enterprise resource planning services. Following the acquisition, the name of Bellsoft, Inc. was changed to Ameri100 Georgia Inc. (“Ameri Georgia”). Ameri Georgia has operations in the United States, Canada and India. For financial accounting purposes, we recognized September 1, 2015 as the effective date of the acquisition. The total consideration for the acquisition of Ameri Georgia was $9,910,817, consisting of:9 (a)A cash payment in the amountTable of $3,000,000, which was paid at closing;Contents(b)235,295 shares of our common stock issued at closing;(c)$250,000 quarterly cash payments paid on the last day of each calendar quarter of 2016;(d)A $1,000,000 cash reimbursement paid 5 days following closing to compensate Ameri Georgia for a portion of its approximate cash balance as of September 1, 2015;(e)Approximately $2,910,817 paid within 30 days of closing in connection with the excess of Ameri Georgia’s accounts receivable over its accounts payable as of September 1, 2015; and(f)Earn-out payments of approximately $500,000 a year for 2016 and 2017, if earned through the achievement of annual revenue and earnings before interest taxes, depreciation and amortization (“EBITDA”) targets specified in the purchase agreement, subject to downward or upward adjustment depending on actual results.The earn-out for 2016 was 30% higher than the previously agreed targets, resulting in a higher than anticipated earn-out payment, and the excess of the 2016 earn-out payment over what was planned was made as an adjustment to our income statement.The valuation of Ameri Georgia was made on the basis of its projected revenues. The accounting acquisition date for Ameri Georgia was determined on the basis of the date when the Company acquired control of Ameri Georgia, in accordance with FASB codification ASU 805-10-25-6 for business combinations. That ASU provides that the date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. For example, the acquisition date precedes the closing date if a written agreement provides that the acquirer obtains control of the acquiree on a date before the closing date. An acquirer shall consider all pertinent facts and circumstances in identifying the acquisition date. The term sheet and the Share Purchase Agreement that were entered into by the Company and Ameri Georgia contained agreements by the parties that the Company acquired control of Ameri Georgia’s accounts payable, accounts receivable and business decisions as of September 1, 2015. In addition, on that date, the Company became responsible for performance of Ameri Georgia’s existing contracts. Accordingly, the Company has recognized September 1, 2015 as the accounting acquisition date.$9,910,817$9.9 million was allocated to net working capital of $4.6 million, intangibles of $1.8 million, taking into consideration projected revenue from the acquired list of Ameri Georgia customers over a period of three years, and goodwill. The excess of total purchase price over the net working capital and intangibles allocations has been allocated to goodwill.The Company paid $261,876 in cashas earn-out payments duringin connection with the nine months ended September 30, 2017.acquirepurchase Bigtech Software Private Limited (“Bigtech”), a pure-play SAP services company providing a completewide range of SAP services including turnkey implementations, application management, training and basis ABAP support. Based in Bangalore, India, Bigtech offers SAP services to improve business operations at companies of all sizes and verticals.$850,000, consisting of:(a)A cash payment in the amount of $340,000, which was due within 90 days of closing and was paid on September 22, 2016;(b)Warrants for the purchase of 51,000 shares of our common stock (valued at approximately $250,000 based on the $6.51 closing price of our common stock on the closing date of the acquisition), with such warrants exercisable for two years; and(c)$255,000, which may become payable in cash earn-outs to the sellers of Bigtech, if Bigtech achieves certain pre-determined revenue and EBITDA targets in 2017 and 2018. We estimate the earn-out payments to be earned at 100% of the targets set forth in the purchase agreement.Company.Company for purposes of Regulation S-X. The valuation of Bigtech was made on the basis of its projected revenues.The total purchase price of $850,000 was allocated to intangibles of $595,000, taking into consideration projected revenue from the acquired list of Bigtech customers over a period of three years, and goodwill. The excess of total purchase price over the intangibles allocation has been allocated to goodwill. The Bigtech acquisition did not constitute a significant acquisition for the Company. through wholly-owned acquisition subsidiaries, acquired all of the outstanding membership interests of Virtuoso, L.L.C. (“Virtuoso”), a Kansas limited liability company, pursuant to the terms of an Agreement of Merger and Plan of Reorganization, by and among us, Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso and the sole member of Virtuoso (the “Sole Member”). Virtuoso is aan SAP consulting firm specialized in providing services on SAP S/4 HANA finance, enterprise mobility and cloud migration and is based in Leawood, Kansas. In connection with the merger, Virtuoso’s name was changed to Ameri100 Virtuoso Inc. The Virtuoso acquisition did not constitute a significant acquisition for the Company.The total purchase price paid to the Sole MemberCompany for the acquisitionpurposes of Virtuoso was $1,831,881 consisting of:(a)A cash payment in the amount of $675,000, which was due within 90 days of closing and was paid on October 21, 2016;(b)101,250 shares of our common stock at closing, valued at approximately $700,000 based on the $6.51 closing price of our common stock on the closing date of the acquisition; and(c)Earn-out payments in cash and stock of $450,000 and approximately $560,807, respectively, to be paid, if earned, through the achievement of annual revenue and gross margin targets in 2017, 2018 and 2019. Out of the total contingent consideration of approximately $1,000,000, we only considered 50% of the earn-out in the purchase price, mainly due to the reorganization of Virtuoso.$1,831,881$1.8 million was allocated to intangibles of $0.9 million, taking into consideration projected revenue from the acquired list of Virtuoso customers over a period of three years, and the balance was allocated to goodwill. The Virtuoso earn-out payments for 2016 amounted to $64,736$0.06 million in cash and 12,408 shares of common stock, which were delivered to the Sole Member during the ninetwelve months ended September 30,December 31, 2017. Vice Chairman, respectively. In July 2017, the name of DC&M Partners, L.L.C. was changed to Ameri100 Arizona LLC. Ameri Arizona is aan SAP consulting company headquartered in Chandler, Arizona. Ameri Arizona provides its clients with a wide range of information technology development, consultancy and management services with an emphasis on the design, build and rollout of SAP implementations and related products. Ameri Arizona is also a SAP-certified software partner, having launched its SAP reporting, extraction and distribution tool called “IRIS”. Ameri Arizona services clients in diverse industries, including retail, apparel/footwear, third-party logistics providers, chemicals, consumer goods, energy, high-tech electronics, media/entertainment and aerospace.$15,816,000 consisting of:(a)A cash payment in the amount of $3,000,000 at closing;(b)1,600,000 shares of our common stock (valued at approximately $10.4 million based on the $6.51 closing price of our common stock on the closing date of the acquisition), which are to be issued on July 29, 2018 or upon a change of control of our company (whichever occurs earlier); and(c)Earn-out payments of $1,500,000 payable in cash each year to be paid, if earned, through the achievement of annual revenue and gross margin in 2017 and 2018.$15,816,000$15.8 million was allocated to intangibles of $5.4 million, taking into consideration projected revenue from the acquired list of Ameri Arizona customers over a period of three years, and the balance was allocated to goodwill. Based on the Company’s current estimates of the consideration payable under the purchase agreement,In August 2018, the Company does not believeresolved the Ameri Arizona will achieve itspayment of all earn-out for 2017 and reduced the consideration payable estimates by $400,000 in its income statement for the quarter ended June 30, 2017. The Company is also currently negotiating withpayments to the former members of Ameri Arizona regardingpursuant to the Company’s earn-outAmeri Arizona membership interest purchase agreement, and the Company has no further payment obligations. The Company paid $300,000obligations with respect to any Ameri Arizona earn-out.earn-out payments duringconsideration payable by cash to Lucid Solutions Inc. and Houskens LLC in connection with the nine months ended September 30, 2017Ameri100 Arizona acquisition has been taken over as per the Exchange Agreement dated June 3, 2020. See Note 10 to our unaudited condensed consolidated financial statements for earn-out amounts earned prior to such date.ATCG,Ameri California, all of the stockholders of Ameri California (the “Stockholders”), and the Stockholders’ representative. In July 2017, the name of ATCG Technology Solutions, Inc. was changed to Ameri100 California Inc. Ameri California provides U.S. domestic, offshore and onsite SAP consulting services and has its main office in Folsom, California. Ameri California specializes in providing SAP Hybris, SAP Success Factors and business intelligence services.10 $8,784,533, consisting of:(a)576,923 shares of our common stock, valued at approximately $3.8 million based on the closing price of our Common Stock on the closing date of the acquisition;(b)Unsecured promissory notes issued to certain of Ameri California’s selling Stockholders for the aggregate amount of $3,750,000 (which notes bear interest at a rate of 6% per annum and mature on June 30, 2018);(c)Earn-out payments in shares of our common stock (up to an aggregate value of $1,200,000 worth of shares) to be paid, if earned, in each of 2018 and 2019 based on certain revenue and EBITDA targets as specified in the purchase agreement. We estimate those targets will be fully achieved; and(d)An additional cash payment of $55,687 for cash that was left in Ameri California at closing.$8,784,533$8.8 million was allocated to intangibles of $3.75$3.8 million, taking into consideration projected revenue from the acquired list of Ameri California customers over a period of three years, and goodwill. The excess of total purchase price over the intangibles allocation has been allocated to goodwill.For this acquisition, the net cash outflow in 2017 was $ 55,687.AllocationAllocation of purchase price in millions of U.S. dollars Asset Component Bigtech Virtuoso Intangible Assets 1.8 0.6 0.9 5.4 3.8 Goodwill 3.5 0.3 0.9 10.4 5.0 Working Capital Current Assets Cash 1.4 - - - - Accounts Receivable 5.6 - - - - Other Assets 0.2 - - - - 7.3 - - - - Current Liabilities Accounts Payable 1.3 - - - - Accrued Expenses & Other Current Liabilities 1.3 - - - - 2.7 - - - - Net Working Capital Acquired 4.6 - - - - Total Purchase Price 9.9 0.9 1.8 15.8 8.8 purchase pricethe ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in millions of U.S. dollarsAsset Component Bigtech Virtuoso Intangible Assets 1.8 0.6 0.9 5.4 3.8 Goodwill 3.5 0.3 0.9 10.4 5.0 Current Assets Cash 1.4 - - - - Accounts Receivable 5.6 - - - - Other Assets 0.2 - - - - 7.3 - - - - Current Liabilities Accounts Payable 1.3 - - - - Accrued Expenses & Other Current Liabilities 1.3 - - - - 2.7 - - - - Net Working Capital Acquired 4.6 - - - - Total Purchase Price 9.9 0.9 1.8 15.8 8.8 The Company has $19,319,211, in total towardsan amount that reflects the consideration payable including contingent consideration payable for its acquisitions, consisting of $7,129,238 in cash obligations and $12,189,973 worth of common stockto which an entity expects to be entitled in exchange for those goods or services. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In May 2016, the FASB issued (assuming a per share priceASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients. This update clarifies the objectives of $6.51). Out of $19,319,211, $5,346,688 is towards contingentcollectability, sales and other taxes, noncash consideration, payable on earn-outs.11 NOTE 4.Table of Contents1) REVENUE RECOGNITION:Identify the contract with a customer2) Identify the performance obligations in the contract 3) Determine the transaction price 4) Allocate the transaction price to performance obligations in the contract 5) Recognize revenue when or as the Company satisfies a performance obligation For the Year Ended June 30, 2020 June 30, 2019 ATGC India $ 114,184 $ 177,105 Ameri 100 California 6,733,692 5,684,839 Ameri 100 Arizona 1,843,565 4,852,187 Ameri 100 Canada 214,578 346,349 Ameri 100 Georgia 3,168,466 6,610,680 Bigtech Software 39,170 177,542 Ameri 100 Consulting Pvt Ltd 179,406 56,392 Ameri Partners 5,564,408 3,796,159 Total revenue $ 17,857,469 $ 21,701,253 12 Company recognizes revenue primarily throughcost to cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately.consulting services.finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We generate revenuedo not consider set up or transition fees paid upfront by providing consulting services under written service contracts with our customers. The service contracts we enter generally fall into two categories: (1) time-and-materials contractscustomers to represent a financing component, as such fees are required to encourage customer commitment to the project and (2) fixed-price contracts.We consider amountsprotect us from early termination of the contract.bethe adoption of the New Revenue Standard on January 1, 2018, revenues were earned onceand recognized when all of the following criteria were met: evidence of an arrangement has been obtained, services are delivered, fees areexisted, the price was fixed or determinable, the services had been rendered and collectability iswas reasonably assured. We establish billing terms atContingent or incentive revenues were recognized when the time at whichcontingency was satisfied and we concluded the project deliverables and milestones are agreed. Our standard payment terms are 60 days from invoice date.Whenamounts were earned. Volume discounts were recorded as a customer enters into a time-and-materials or fixed-price (or a periodic retainer-based) contract, the Company recognizes revenue in accordance with its evaluationreduction of the deliverables in each contract. If the deliverables represent separate units of accounting, the Company then measures and allocates the consideration from the arrangement to the separate units, based on vendor specific objective evidence of the value for each deliverable.The revenue under time and materials contracts is recognizedrevenues as services are rendered and performed at contractually agreed upon rates. Revenue pursuant to fixed-price contracts is recognized underwere provided. Revenues also included the proportional performance methodreimbursement of accounting. We routinely evaluate whether revenue and profitability should be recognized inout-of-pocket expenses.current period. We estimate the proportional performance on our fixed-price contracts on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. This method is used because reasonably dependable estimates of costs and revenue earned can be made, based on historical experience and milestones identified in any particular contract. If we do not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion of performance, subject to any warranty provisions or other project management assessments as to the status of work performed.Estimates of total project costs are continuously monitored during the term of an engagement. There are situations where the number of hours to complete projects may exceed our original estimate, as a result of an increase in project scope, unforeseen events that arise, or the inability of the client or the delivery team to fulfill their responsibilities. Accordingly, recorded revenues and costs are subject to revision throughout the life of a project based on current information and historical trends. Such revisions may result in increases or decreases to revenue and income and are reflected in the consolidated financial statements in the periods in which they are first identified.If our initial estimates of the resources required or the scope of work to be performed on a contract are inaccurate, or we do not manage the project properly within the planned time period, a provision for estimated losses on incomplete projects may be made. Any known or probable losses on projects are charged to operations in the period in which such losses are determined. A formal project review process takes place quarterly, although projects are continuously evaluated throughout the period. Management reviews the estimated total direct costs on each contract to determine if the estimated amounts are accurate, and estimates are adjusted as needed in the period identified. No losses were recognized on contracts during the quarter ended September 30, 2017.NOTE 5.SHARE-BASED COMPENSATION:On April 20, 2015, our Board of Directors and the holder of a majority of our outstanding shares of common stock approved the adoption of our 2015 Equity Incentive Award Plan (the "Plan"). The Plan allows for the issuance of up to 2,000,000 shares of our common stock for award grants. The Plan provides equity-based compensation through the grant of cash-based awards, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards. We believe that an adequate reserve of shares available for issuance under the Plan is necessary to enable us to attract, motivate and retain key employees and directors and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of our Company. We granted options to purchase 185,000 shares of our common stock and 98,669 restricted stock units pursuant to the Plan during the ninesix months ended September 30, 2017. Share based compensation expense for nine months ended September 30, 2017 was $5,167,354. During the quarter ended September 30, 2017, Lone Star Value Investors, LP exercised on a cashless basis a warrant which resulted in the issuance of 1,205,837 shares of our common stock and we recorded a corresponding charge to stock based compensation expense of $2,170,506.During quarter ended June 30, 2017, 174,680 restricted stock units were cancelled2020 and an accelerated cost of $792,764 dueJune 30, 2019, sales to such cancellation has beenfive major customers accounted for as stock based compensation expense. Asapproximately 48% and 46% of Septemberour total revenue, respectively. For the six months ended June 30, 2017, out2020, five of our customers contributed 19%, 10% ,7% and 6% of our revenue, and for the six months ended June 30, 2019, five of our customers contributed 14%,11%,9% and 6% of our revenue.2,000,000 shares available under the Plan, aggregate grants of 1,607,758 shares of our common stock had been granted as options and restricted stock units.NOTE 6.INTANGIBLE ASSETS:method.method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the asset will be utilized. Amortization expense was $2,264,247 during$1.1 million for the ninesix months ended SeptemberJune 30, 2017.2020 and June 30, 2019. This amortization expense relates to customer lists and products capitalized on our balance sheet, which expire through 2020.As of September 30, 2017, and December 31, 2016, capitalized intangible assets were as follows: Capitalized intangible assets $ 12,517,628 $ 10,074,546 Accumulated amortization 2,264,247 1,309,842 Total intangible assets $ 10,253,381 $ 8,764,704 Our amortization schedule is as follows: Amount 2017 $ 665,859 2018 2,955,873 2019 2,727,968 2020 2,652,000 2021 1,251,681 Total $ 10,253,381 The Company’s intangible assets consist of the customer lists acquired from the Company’s acquisition of WinHire Inc, Ameri Georgia, Ameri Arizona, Virtuoso, Bigtech and Ameri California. The products acquired from the acquisition of Linear Logics. Corp. and the amount spent on improving those products are also categorized as intangible assets and are being amortized over the useful life of those products.NOTE 7.GOODWILL:Goodwill was comprisedThe total value of the following amounts: Virtuoso $ 939,881 $ 939,881 Ameri Arizona 10,416,000 10,416,000 Bigtech 299,803 314,555 Ameri Consulting Service Pvt. Ltd. 1,948,118 1,948,118 Ameri Georgia 3,470,522 3,470,522 Ameri California 4,812,243 - Total $ 21,886,567 $ 17,089,076 will beare conducted on an annual basis and any impairment will beis reflected in the Company’s statementsStatements of operations.13 NOTE 8.EARNINGS (LOSS) PER SHARE:Table of Contentsincomeloss attributable to common stockholders and weighted average shares used in computing basic and diluted net incomeloss per share is as follows: For the Six Months Ended June 30, 2020 June 30, 2019 Numerator for basic and diluted income (loss) per share: Net income (loss) attributable to common stockholders $ (3,573,615 ) (3,328,479 ) Numerator for diluted income (loss) per share: Net income (loss) attributable to common stockholders - as reported $ (3,573,615 ) (3,328,479 ) Net income (loss) attributable to common stockholders - after assumed conversions of dilutive shares $ (3,573,615 ) (3,328,479 ) Denominator for weighted average common shares outstanding: Basic shares 3,482,286 1,925,009 Dilutive effect of Equity Awards - Dilutive effect of 2017 Notes - - Diluted shares 3,482,286 1,925,009 Income (loss) per share – basic: $ (1.03 ) (1.73 ) Income (loss) per share – diluted: $ (1.03 ) (1.73 ) 14 Net income (loss) attributable to common stock holders $ (9,615,628 ) $ (4,082,006 ) Weighted average common shares outstanding 14,472,322 12,794,149 Basic net income (loss) per share of common stock $ (0.66 ) $ (0.32 ) Diluted net income (loss) per share of common stock $ (0.66 ) $ (0.32 ) Share based awards, inclusive of all grants made under the Plan, for which either the stock option exercise price or the fair valuerestricted share award exceeds the average market price over the period, have an anti- dilutive effect on earnings per share,Company, including Ameri100 Arizona LLC, Ameri100 Georgia, Inc., Ameri100 California, Inc. and accordingly, are excluded from the diluted computations for all periods presented.NOTE 9.OTHER ITEMS:The Company paid an in-kind dividend on its Series A Preferred Stock for the quarter ended September 30, 2017 by issuing 10,277 shares of Series A Preferred Stock to the sole holder of the Company’s Series A Preferred Stock. The Company has yet to make the dividend payment on its Series A Preferred Stock which was payable on September 30, 2017. The Company will pay the sole holder of the Series A Preferred Stock the accrued dividend in-kind pursuant to the terms of the Certificate of Designation contemporaneously with the filing of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.NOTE 10.BANK DEBT:On July 1, 2016, the CompanyAmeri and Partners, Inc., as borrowers (individually and collectively, “Borrower”) entered into a Loan and Security Agreement (the “Loan Agreement”), for a credit facility (the “Credit Facility”) with North Mill Capital LLC, as lender (the “Lender”). The Loan Agreement has an initial term of two years from the closing date, with renewal thereafter if Lender, at its wholly-owned subsidiaries Ameri and Partners Inc and Ameri Georgia, as borrowersoption, agrees in writing to extend the term for additional one year periods (the “Borrowers”“Term”). The Loan Agreement is collateralized by a first-priority security interest in all of the assets of Borrower. In addition, (i) pursuant to a Corporate Guaranty entered into by the Company in favor of the Lender (the “Corporate Guaranty”), the Company and its wholly-owned subsidiary Linear Logics, Corp. serving as guarantors,has guaranteed the Company’s Chief Executive Officer, Giri Devanur, serving as a validity guarantor, and Sterling National Bank, N.A. (as lender and as agent, “Sterling”). The Company joined Ameri Arizona, Virtuoso and Ameri California as borrowersBorrower’s obligations under the Loan Agreement following their respective acquisition.Under the Loan Agreement, the Borrowers can borrow up to an aggregate of $10 million, which includes up to $8 million in principal for revolving loans (the “Revolving Loans”) for general working capital purposes, up to $2 million in principalCredit Facility and (ii) pursuant to a term loan (the “Term Loan”) for the purpose of a permitted business acquisition and up to $200,000 for letters of credit. A portion of the proceeds of the LoanSecurity Agreement were also used to repay the November 20, 2015 credit facility that was entered into between the Company and Lender (the “Security Agreement”), the Company granted a first-priority security interest in all of its wholly-owned subsidiary Ameri Georgia and Federal National Payables, Inc.maturityBorrowers received an initial advance on January 23, 2019 in an amount of the loansapproximately $2.85 million (the “Initial Advance”). Borrowings under the Loan Agreement are as follows:Revolving Loan Maturity Date: July 1, 2019; provided, however, thatCredit Facility accrue interest at the Revolving Loan Maturity Date will extendprime rate (as designated by Wells Fargo Bank, National Association) plus one and renew automatically for successive one-year terms on each anniversary ofthree quarters percentage points (1.75%), but in no event shall the initial Revolving Loan Maturity Date (each an “Anniversary Date”) thereafter, unless notinterest rate be less than sixty (60) days prior to any such Anniversary Date, written notice of non-renewal is given by either partyseven and one-quarter percent (7.25%). Notwithstanding anything to the other,contrary contained in which case the Revolving Loan Maturity Date willDocuments, the minimum monthly interest payable by Borrower on the Advances (as defined in the Loan Agreement) in any month shall be calculated based on an average Daily Balance (as defined in the Loan Agreement) of Two Million Dollars ($2,000,000) for such next Anniversary Date.Term Loan Maturity Date: The earliest of (a)month. For the date following accelerationfirst year of the Term, Loan and/Borrower shall pay to Lender a facility fee equal to $50,000, due in equal monthly installments, with additional facility fees due to Lender in the event borrowings exceed certain thresholds and with additional facility fees due and payable in later years or upon later milestones. In addition, Borrower shall pay to Lender a monthly fee (the “Servicing Fee”) in an amount equal to one-eighth percent (.125%) of the Revolving Loans; (b) the Revolving Loan Maturity Date; or (c) July 1, 2019.Interest underaverage Daily Balance (as defined in the Loan Agreement is payable monthly in arrears and accrues as follows:(a)in the case of Revolving Loans, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 2.00%;(b)in the case of the Term Loan, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 3.75%; and(c)in the case of other obligations of the Borrowers, a rate per annum equal to the sum of (i) the greater of (A) 3.25%Agreement) during each month on or (B) Wall Street Journal Prime Rate plus (ii) 3.75%.The Loan Agreement also requires the payment of certain fees, including, but not limited to letter of credit fees and an unused Revolving Loans fee.The Loan Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to not permit capital expenditures above $150,000 in any fiscal year, maintain a fixed charge coverage ratio of not less than 2.00 to 1.00 and maintain certain debt to EBITDA ratios. The Loan Agreement also requires the Company and Borrowers to obtain Sterling’s consent before making any permitted acquisitions. The amounts borrowed by the Borrowers under the Loan Agreement are guaranteed by the guarantors, and the Loan Agreement is secured by substantially all of the Borrowers’ assets.The principal amount of the Term Loan will be repaid as follows: (i) equal consecutive monthly installments in the amount of $33,333.33 each, paid on the first day of each calendar month and (ii) one final payment ofduring the entire remaining principal balance, together with all accrued unpaid interest on the Term Loan maturity date.On August 28, 2017, the Company andTerm.of its subsidiaries obtained an incremental term loan from Sterling National Banknegative covenants in the amount of $343,200.58, which amount shall be an addition to and comprise a part of the existing term loan under the existing Loan Agreement.The Company has not been in compliance with the financial covenants contained in its Loan Agreement with Sterling National Bank. The Company received waivers from Sterling National Bank for its non-compliance with the Loan Agreement, forincluding that they will not, without the quarters ended March 31, 2017,prior written consent of Lender, enter into any extraordinary transactions, dispose of assets, merge, acquire, or consolidate with or into any other business organization or restructure.20172020, the principal balance and September 30, 2017 in exchange for the payment of a fee of $5,000 for each quarterly waiver. The Company does not expect to be in compliance with the terms of the Loan Agreement following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with Sterling National Bank to address its non-compliance.If we are unable to obtain future waivers from Sterling National Bank, the bank could declare our loans with it to be in default and elect to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If we are unable to repay the outstanding amounts, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateralaccrued interest under the Loan Agreement. The Loan Agreement is also supported by a limited guaranty from Giri Devanur, our President and Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to repay the loans. A default under the Loan Agreement may also result in an event of default under the Company’s outstanding convertible notes. We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.Interest paid on the Term Loan during the nine months ended September 30, 2017Credit Facility amounted to $108,206. Principal repaid on the Term Loan during the nine months ended September 30, 2017 was $304,144. The short term and long-term outstanding balances on the Term Loan as of September 30, 2017 was $406,156 and $1,575,206, respectively. The outstanding balance of the Revolving Loans as of September 30, 2017 was $3,765,391.Bigtech, which was acquired as of July 1, 2016, had a term loan of $14,695 and a line of credit for $305,282 as of September 30, 2017. The Bigtech line of credit is with an Indian bank, HDFC Bank Limited, and was entered into on September 3, 2015 for Bigtech’s working capital requirements. The line of credit is for up to $416,667 with an interest rate of 11.85% per annum and maturity in June 2020. The Bigtech term loan accrues interest at the rate of 10.30% per annum and matures in 2020. Both the term loan and the line of credit were already in place when the Company acquired Bigtech. Interest paid during the nine months ended September 30, 2017 amounted to $1,486 for the term loan and $28,560 line of credit held by Bigtech.NOTE 11.CONVERTIBLE NOTES:$1,250,000$1.25 million from four accredited investors, including one of the Company’s directors,then-directors, Dhruwa N. Rai.Rai, and David Luci, who became a director of the Company in February 2018. The 2017 Notes were issued pursuant to Securities Purchase Agreements between the Company and each investor. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum.can be prepaid by us at any time without penalty.The 2017 Notes arewere convertible into shares of our common stock at a conversion price of (i) in the event that any registration statement for the public offering of common stock filed by the Company with the Securities and Exchange Commission (the “SEC”) in connection with an uplisting to a national stock exchange is declared effective by the SEC on or prior to December 31, 2017, such price per share that is equal to 68%$2.80. The holders of the price per share of common stock offered2017 Notes had the right, at their option, at any time and sold pursuantfrom time to such registration statement,time to convert, in part or (ii) if no such registration statement is declared effective by December 31,in whole, the outstanding principal amount and all accrued and unpaid interest under the 2017 such price per share that is equal to the weighted average closing price per shareNotes into shares of the Company’s common stock at the conversion price.20 trading days immediately preceding December 31, 2017, subjectsale of a $1,000,000 convertible debenture (the “First Debenture”).adjustment under certain circumstances. $2.725.2017 Notes rank juniorSecond Debenture accrued interest at rate of 5% and was due on the same date as the First Debenture. The Second Debenture was convertible at any time after the issue date into shares of Company’s Common Stock at a price equal to our secured credit facility with Sterling National Bank. The 2017 Notes also include certain negative covenants including, without the investors’ approval, restrictions on dividends and other restricted payments and reclassification of its stock.15 NOTE 12.COMMITMENTS AND CONTINGENCIES:Table of ContentsOperating LeasesPrinceton, New Jersey.Suwanee, Georgia. The Company also leases office space in various locations with expiration dates between 2016 and 2020. In January 2020, the Company entered into a lease agreement for its Dallas office with expiration date 2027. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs, or defined rent increases. All of the Company’s leases are accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $232,022$0.1 million and $125,883$0.17 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,June 30, 2019, respectively.increase during the comparative periods is duecomponents of lease expense were as follows:
June 30, 2020Operating leases 107,852 Interest on lease liabilities 6,117 Total net lease cost 113,969 16 the addition of office space through the acquisition of Ameri Arizona, Virtuoso, Bigtechleases was as follows: June 30, 2020 Operating leases: Operating lease ROU assets $ 906,995 Current operating lease liabilities, included in current liabilities $ 208,663 Noncurrent operating lease liabilities, included in long-term liabilities 708,237 Total operating lease liabilities $ 916,900 Ameri California.The Company has entered into an operating lease for its primary office facility in Princeton, New Jersey, which expires in July 2019. Theother information related to leases was as follows: Six Months Ended
June 30, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ - ROU assets obtained in exchange for lease liabilities: Operating leases $ 906,995 Weighted average remaining lease term (in years): 7 Operating leases 2.3 Weighted average discount rate: Operating leases 7.25 % rental payments required under thesethe lease agreementsobligations as of June 30, 2020 are as follows:Year ending December 31, Amount 2017 $ 68,360 2018 189,428 2019 123,083 2020 70,333 2021 7,371 Total $ 458,575 NOTE 13.FAIR VALUE MEASUREMENT:The group’s financial instruments consist primarilySix Months Ending June 30, 2020 $ 208,663 2021 192,470 2022 81,444 2023 91,140 2024 101,675 Thereafter 238,308 Total lease payments $ 913,700 Less: amounts representing interest Total lease obligations $ 913,700 cash and cash equivalent, accounts receivable, accounts payable, contingent consideration liability and accrued liabilities. The carrying amounts of accounts receivable, accounts payable, cash and cash equivalents and accrued liabilities are consideredthe inputs to be the same as their fair value, due to their short-term nature.Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniquesvaluation used to measure fair value must maximizevalue. This hierarchy prioritizes the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosuresinto three broad levels as follows:Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; andLevel 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; ● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and ● Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of September 30, 2017 and December 31, 2016: Level 3 Contingent consideration $ 5,346,688 $ 5,266,488 The following table presents the change in level 3 instruments: Opening balance 5,346,688 5,266,488 Additions during the period $ - $ 1,200,000 Paid/settlements - (719,800 ) Total gains recognized in Statement of Operations - (400,000 ) Closing balance 5,346,688 5,346,688 Contingent consideration pertaining to the acquisitions referred to in note 3 above as of September 30, 2017 has been classified under level 3 as the fair valuation of such contingent consideration has been done using one or more of the significant inputs which are not based on observable market data.Exercise Price Number Outstanding Weighted Average Remaining Contractual life (Years) Number Exercisable $ 150.00 40,000 0.02 40,000 $ 102.88 3,902 0.03 3,902 $ 37.50 200,000 2.27 200,000 $ 102.88 48,975 0.42 48,975 $ 2.20 36,664 5 36,664 Total 329,542 329,542 17 total gains/(losses)$1,719,600 (the “PPP Loan”) from Sterling National Bank, as lender, pursuant to the Small Business Association Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan, which was in the form of a promissory note issued by the Company, matures on May 6, 2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing on November 6, 2020. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before July 12, 2020. The Company intends to use the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.18 our Statement of Operations and Comprehensive Income/(Loss) is attributable to change in fair value of contingent consideration arising from the acquisition of Ameri Arizona were $400,000 and $0Company’s Annual Report for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. December 31, 2019 As Previously Reported Adjustment As Revised Balance Sheet Other Assets Operating lease right of use asset, net $ - $ 286,161 $ 286,161 Total Other Assets 17,405,998 286,161 4,763,000 Total Assets $ 25,005,152 $ 286,161 $ 7,667,771 Current Liabilities Current portion – operating lease liability $ - $ 120,052 $ 120,052 Total Current Liabilities 14,383,605 120,052 14,503,657 Long-term Liabilities Operating lease liability, net - 169,897 169,897 Total Long-term Liabilities - 169,897 169,897 Total Liabilities $ 14,383,605 $ 289,949 $ 14,673,554 Stockholders’ Equity Accumulated Deficit $ (40,508,231 ) $ (3,788 ) $ (40,512,019 ) Total Stockholders’ Equity 10,621,547 (3,788 ) 10,617,764 Total Liabilities and Stockholders’ Equity $ 25,005,152 286,163 25,291,315 For the year ended December 31, 2019 As Previously Reported Adjustments As Revised Statement of Operations Interest expense $ (691,138 ) $ (3,788 ) $ (694,926 ) Total other income (expenses) 1,109,576 (3,788 ) 1,105,788 Loss before income taxes (5,215,318 ) (3,788 ) (5,219,106 ) Net loss (5,603,975 ) (3,788 ) (5,607,763 ) Net loss attributable to common stockholders (6,029,978 ) (3,788 ) (6,033,766 ) Total comprehensive loss (6,056,963 ) (3,788 ) (6,060,751 ) Comprehensive loss attributable to Company $ (6,056,963 ) $ (3,788 ) $ (6,060,751 ) Basic and diluted loss per share $ (2.83 ) $ - $ (2.83 ) Statements of Cash Flows Net loss $ (6,029,978 ) $ (3,788 ) $ (6,033,766 ) Amortization of right of use asset - 3,788 3,788 Net Cash Used in Operating Activities $ (2,453,123 ) $ - $ (2,453,123 ) For the year ended December 31, 2019 As Previously Reported Adjustments As Revised Statement of Stockholders’ Deficit Net loss $ (6,029,978 ) $ (3,788 ) $ (6,033,766 ) Accumulated deficit ending balance $ (40,508,231 ) $ (3,788 ) $ (40,512,019 ) Total stockholders’ equity ending balance $ 10,621,547 $ (3,788 ) $ 10,617,764 19 Note 14.NON-CONTROLLING INTEREST:Table of ContentsThe subsidiaries of the Company are all direct or indirect wholly-owned subsidiaries, except for Ameritas Technologies India Private Limited, of which the Company held 76% of the equity of the company, through September 30, 2017. The Company attributes relevant gains and losses to such non-controlling interests for every financial year. During the three months ended September 30, 2017 and 2016 and the nine months ended September 30, 2017 and 2016 the profit/(loss) attributable to the holders of non-controlling interests amounted to $(6,632) and $0 and $(18,504) and $0, respectively.NOTE 15.RESTRUCTURING AND STREAMLINING COSTS:During the quarter ended September 30, 2017, the Company streamlined its operations by eliminating redundant positions across its acquired entities, which resulted in a restructuring charge of approximately $85,000 affecting approximately 20 employees. The Company anticipates that streamlining of its operations will result in annual savings of approximately $1.5 million, inclusive of payroll, benefits, office consolidations and other ancillary employee related costs.2016.2019. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” included elsewhere herein.Princeton, New Jersey.TM cloud, digital and enterprise services to clients worldwide. Our SAP focus allows us to provide technological solutions to a broad and growing base of clients. We are headquartered in Princeton, NJ, and we have offices across the United States, which are supported by offices in India. Our model inverts the conventional global delivery model wherein offshore information technology (“IT”)IT service providers are based abroad and maintain a minimal presence in the United States. With a strong SAP focus, our client partnerships anchor around SAP cloud services, artificial intelligence, internet of things and robotic process automation.digital services. We pursue an acquisition strategy that seeks to disrupt the established business model of offshore IT service providers.We partnered with NEC Corporation of America (NEC), in February 2017, to offer SAP HANA Migration services. Through this partnership, the Company will offer solutions to its clients aspiring to make the transition from SAP ECC (on-premise) applications to SAP HANA applications. NEC is a leading technology integrator providing integrated communications, analytics, security, biometrics and technology solutions.20 SeptemberJune 30, 20172020 and SeptemberJune 30, 2016,2019, sales to five major customers accounted for 43%41% and 45%49% of our total revenue, respectively. OneFor the three months ended June 30, 2019, one of our customers contributed 13% of our revenue. For the comparable period in 2019, two of our customers contributed 14% of our revenue for the three months ended September 30, 2017. For the comparable period in 2016, two customers each contributed 15% and 12% of our revenue, respectively.ninesix months ended SeptemberJune 30, 20172020 and SeptemberJune 30, 2016,2019, sales to five major customers accounted for 39%48% and 54%46% of our total revenue, respectively. OneTwo of our customers contributed 11%19% and 10% of our revenue for the ninesix months ended SeptemberJune 30, 2017.2020. For the comparable period in 2016,2019, two of our customers each contributed 19%14% and 14%11% of our revenue, respectively.also provided,Implemented work from home policies and may from time to timeprocedures for all of its employees and consultants in the future provide, informationUSA and India. These policies and procedures will remain in place until such time that the local regulatory authorities in each of our locations approves the return to interested parties.Mattersour employees’ health has been impacted by COVID-19.or Are Currently Affecting Our BusinessThe main challenges and trends that could affect or are affecting our financial results include:● Awarded S/4HANA transformation for a spinoff in the midstream oil and gas industry: ● Awarded S/4HANA private cloud transformation for US firearm and ammunition company ● Completed go live on Hybris e-commerce implementation for lifestyle apparel and athletic company ·Our ability to enter into additional technology-management and consulting agreements, to diversify our client base and to expand the geographic areas we serve;21·Our ability to attract competent, skilled professionals and on-demand technology partners for our operations at acceptable prices to manage our overhead;Table of Contents·●Our ability to acquire other technologyInitiated Application Managed Services (AMS) contract with a transportation infrastructure construction and maintenance client● Initiated Application Managed Services (AMS) contract with a US manufacturer of industrial cooling equipment ● Signed a new Master Services Agreement and commenced services companies and integrate them with our existing business;for water treatment provider.·Our ability to raise additional capital, if and when needed; and·Our ability to control our costs of operation as we expand our organization and capabilities.SeptemberJune 30, 20172020 Compared to the Three Months Ended SeptemberJune 30, 20162019 and for the NineSix Months Ended SeptemberJune 30, 20172020 Compared to the NineSix Months Ended SeptemberJune 30, 20162019 Three Months
June 30,2020 Three Months
June 30,2019 Six Months
June 30,2020 Six Months
June 30,2019 Revenue 8,254,941 11,015,057 17,857,469 21,701,253 Cost of revenue 6,436,811 8,632,882 14,157,773 17,179,114 Gross profit 1,818,130 2,382,175 3,699,696 4,522,139 Operating expenses Selling, General and administration 2,470,723 3,296,041 5,395,241 6,173,350 Depreciation and amortization 533,863 562,570 1,093,486 1,123,587 Operating expenses 3,004,586 3,858,611 6,488,727 7,296,937 Operating Income (loss) (1,186,456 ) (1,476,436 ) (2,789,031 ) (2,774,798 ) Interest expenses (372,288 ) (156,660 ) (532,348 ) (299,214 ) Impairment on goodwill and Intangibles Changes in fair value of warrant liability - 388,552 - (61,715 ) Others, net 2,811 4,566 2,811 4,566 Income (loss) before income taxes (1,555,933 ) (1,239,978 ) (3,318,568 ) (3,131,161 ) Income tax benefit (expenses) (17,485 ) (16,590 ) (39,377 ) 14,621 Income (loss) after income taxes (1,573,418 ) (1,256,568 ) (3,357,945 ) (3,116,540 ) Net income attributable to non-controlling interest Net Income (loss) attributable to the Company (1,573,418 ) (1,256,568 ) (3,357,945 ) (3,116,540 ) Dividend on preferred stock (107,835 ) (106,234 ) (215,670 ) (211,939 ) Net Income (loss) attributable to common stock holders (1,681,253 ) (1,362,802 ) (3,573,615 ) (3,328,479 ) Other comprehensive income (loss), net of tax Foreign exchange translation 15,354 (18,141 ) (20,149 ) 573 Total Comprehensive Income (loss) (1,665,899 ) (1,380,943 ) (3,593,764 ) (3,327,906 ) Basic income (loss) per share (0.48 ) (0.67 ) (1.03 ) (1.73 ) Diluted income (loss) per share (0.48 ) (0.67 ) (1.03 ) (1.73 ) Basic weighted average number of common shares outstanding 3,518,118 2,027,095 3,482,286 1,925,009 Diluted weighted average number of common shares outstanding 3,518,118 2,027,095 3,482,286 1,925,009 22 Revenue $ 12,529,928 $ 10,058,558 $ 37,139,114 23,758,460 Cost of revenue 9,966,490 8,361,960 28,941,535 18,897,059 Gross profit 2,563,438 1,696,598 8,197,579 4,861,401 Operating expenses Selling and marketing 402,846 137,024 1,170,051 401,487 General and administration 5,283,059 1,326,327 12,389,581 5,316,390 Acquisition related expenses 5,694 1,015,558 390,174 1,630,778 Depreciation and amortization 817,284 509,377 2,332,041 722,390 Operating expenses 6,508,883 2,988,286 16,281,847 8,071,045 Operating income (loss) (3,945,445 ) (1,291,688 ) (8,084,268 ) (3,209,644 ) Interest expenses (132,973 ) (290,423 ) (388,122 ) (674,683 ) Changes in estimates - - 400,000 - Others, net 17,446 (195,518 ) 21,921 (197,679 ) Income (loss) before income taxes (4,060,972 ) (1,777,629 ) (8,050,469 ) (4,082,006 ) Tax benefit / (provision) - - - - Income after income taxes (4,060,972 ) (1,777,629 ) (8,050,469 ) (4,082,006 ) Net income attributable to non-controlling interest (6,632 ) - (18,504 ) - Net income (loss) attributable to the Company (4,067,604 ) (1,777,629 ) (8,068,973 ) (4,082,006 ) Dividend on preferred stock (541,864 ) - (1,546,655 ) - Net loss attributable to common stock holders (4,609,468 ) (1,777,629 ) (9,615,628 ) (4,082,006 ) Other comprehensive income (loss), net of tax - - - - Foreign exchange translation (14,234 ) 59,079 (11,084 ) (6,619 ) Comprehensive income/(loss) $ (4,623,702 ) $ (1,718,550 ) $ (9,626,712 ) $ (4,088,625 ) Comprehensive income/(loss) attributable to the Company (4,617,070 ) (1,718,550 ) (9,608,208 ) (4,088,625 ) Comprehensive income/(loss) attributable to the non-controlling interest (6,632 ) - (18,504 ) - $ (4,623,702 ) $ (1,718,550 ) $ (9,626,712 ) $ (4,088,625 ) Basic income (loss) per share $ (0.31 ) $ (0.13 ) $ (0.66 ) $ (0.32 ) Diluted income (loss) per share $ (0.31 ) $ (0.13 ) $ (0.66 ) $ (0.32 ) Basic weighted average number of common shares outstanding 14,715,947 13,653,586 14,472,322 12,794,149 Diluted weighted average number of common shares outstanding 14,715,947 13,653,586 14,472,322 12,794,149 SeptemberJune 30, 2017 increased2020 decreased by approximately $2.47$2.8 million, or 26%, as compared to the three months ended SeptemberJune 30, 2016. This increase was primarily attributable2019 mainly due to our acquisition of Ameri California. For changes in revenue by entity please refer to the table below.Revenues by subsidiary of the Company(in millions of U.S. dollars) Increase (Decrease) Ameri & Partners 1.41 2.07 (0.66) Ameri Georgia 4.64 4.38 0.26 Bigtech 0.31 0.31 0.00 Ameri Arizona 3.09 3.28 (0.19) Ameri California 3.07 - 3.07 Total 12.53 10.06 2.47 Revenues for the nine months ended September 30, 2017 increased by approximately $13.38 million as compared to the nine months ended September 30, 2016. Of this increase in revenue, $6.60 million was attributable to our acquisition of Ameri California and $7.35 million was attributable to increasesloss of revenue from Ameri Arizonaexisting customers due to COVID-19.BigtechJune 30, 2019, sales to five major customers accounted for which we had41% and 49% of our total revenue, respectively. For the benefitthree months ended June 30, 2019, one of a full nine monthsour customers contributed 13% of revenueour revenue. For the comparable period in 2017 while2019, two of our customers contributed 14% and 12% of our revenue. We derived most of our revenues from our customers located in 2016 each company was not acquired until July of 2016. Changes in revenue by entity were as follows.Revenues by subsidiary of the Company(in millions of U.S. dollars) Increase (Decrease) Ameri & Partners 4.77 5.53 (0.76) Ameri Georgia 14.82 14.62 0.20 Bigtech 0.82 0.31 0.51 Ameri Arizona 10.12 3.28 6.84 Ameri California 6.60 - 6.60 Total 37.14 23.76 13.38 Gross MarginOur gross margin was 20%North America for the three months ended SeptemberJune 30, 2017,2020 and June 30, 2019.17%the six months ended June 30, 2019 mainly due to loss of revenue from existing customers due to COVID-19.threesix months ended SeptemberJune 30, 2016. 2020. For the comparable period in 2019, two of our customers contributed 14% and 11% of our revenue. We derived most of our revenues from our customers located in North America for the six months ended June 30, 2020 and June 30, 2019.margin from Ameri CaliforniaMargin, which was acquired in March 2017, was 28%; without that acquisition our gross margin would have been 18%.ninethree months ended SeptemberJune 30, 2017,2020 and for the comparable period in 2019.20%22% for the ninesix months ended SeptemberJune 30, 2016. Gross margin from Ameri California was 29%; without this acquisition our gross margin would have been 21%.and Marketing ExpensesSelling and marketing expenses were $402,846 for the three months ended September 30, 2017, compared to $137,024 for the three months ended September 30, 2016. Our acquisition of Ameri California and Ameri Arizona added selling and marketing expenditures of $65,557 and $221,810, respectively.Selling and marketing expenses were $1,170,051 for the nine months ended September 30, 2017, compared to $ 401,486 for the nine months ended September 30, 2016. Our acquisition of Ameri California and Ameri Arizona added selling and marketing expenditures of $141,268 and 718,607, respectively. However, selling and marketing expenditures for Ameri Georgia decreased by $85,615 in the nine months ended September 30, 2017.GeneralAdministrationadministration (“GSG&A”) expenses include all costs, including rent costs, which are not directly associated with revenue-generating activities, as well as the non-cash expense for stock basedstock-based compensation. These include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include reorganization costs, legal, accounting and outside consulting fees. FacilityFacilities costs primarily include rent and communications costs.GSeptemberJune 30, 20172020 were $5,283,059$2.5 million, as compared to $1,326,327$3.3 million for the three months ended SeptemberJune 30, 2016. G&A expenses increased by $3,956,732 of which $2,194,121 was attributable to stock based compensation expenses. our acquisition of Ameri California and Ameri Arizona added an additional $740,198 to our G2019.threesix months ended SeptemberJune 30, 20172020 were $5.4 million, as compared to the same period in 2016.G&A expenses$6.2 million for the ninesix months ended SeptemberJune 30, 2017 were $12,389,581 as compared to $5,316,389 for the nine months ended September 30, 2016. G&A expenses increased by $7,073,192, of which $4,221,395 was attributable to our stock based compensation expense due to grants made to our employees, accelerated expenses upon cancellation of restricted stock units in the second quarter of 2017 and a charge related to a warrant exercised by Lone star Value Investors, LP during the quarter ended September 30, 2017. Our acquisition of Ameri California and Ameri Arizona added an additional $2,477,041 to our G&A expenses for the nine months ended September 30, 2017 as compared to the same period in 2016.$817,284$0.5 million for the three months ended SeptemberJune 30, 2017,2020, as compared to $509,377$0.6 million for the three months ended SeptemberJune 30, 2016.2019 and $1.1 million for the six months ended June 30, 2020 and June 30, 2019. We capitalized the customer lists acquired during various acquisitions, resulting in increased amortization costs. The customer lists from each acquisition are amortized over a period of 60 months.Depreciation and amortization expense amounted to $2,332,041 for the nine months ended September 30, 2017, as compared to $722,390 for the nine months ended September 30, 2016. We capitalized the customer lists acquired during various acquisitions, resulting in increased amortization costs. The customer lists from each acquisition are amortized over a period of 60 months.Income/Income (Loss)income/(loss)loss was $(3,945,445)$1.2 million for the three months ended SeptemberJune 30, 2017,2020, as compared to $(1,291,688)$1.5 million for the three months ended SeptemberJune 30, 2016. This increase in2019.mainly due to the increase in G&A expenses of our acquired entities.Our operating income (loss) was $(8,084,268)$2.8 million for the ninesix months ended SeptemberJune 30, 2017, as compared to $(3,209,644)2020 and for the ninesix months ended SeptemberJune 30, 2016. This increase in loss was mainly due2019.increase in G&A expensesremainder of our acquired entities.the fiscal year and for the next twelve months.23 SeptemberJune 30, 20172020 was $132,973$0.37 million as compared to $290,423$0.16 million for the three months ended SeptemberJune 30, 2016.2019. The decreaseincrease in interest expenses is mainly due to changes in interest rates charged by our lenders.for the ninesix three months ended SeptemberJune 30, 20172020 was $388,122$0.5 million as compared to $674,683$0.3 million for the ninesix months ended SeptemberJune 30, 2016.2019. The decreaseincrease in interest expenses is mainly due to changes in interest rates charged by our lenders.Changes in EstimatesBased on our current estimates of consideration payable under the Ameri Arizona purchase agreement, we do not believe Ameri Arizona will achieve its 2017 earn-out and we have adjusted the consideration payable in connection therewith by reducing the estimates by $400,000 and reflecting the adjustment in our income statement for the quarter ended June 30, 2017.Income taxesOur provision for income taxes for the three months ended September 30, 2017 and the three months period ended September 30, 2016 was $0 for each period.Our provision for income taxes for the nine months ended September 30, 2017 and the nine months period ended September 30, 2016 was $0 for each period.Acquisition Related ExpensesWe had acquisition related expenditures of $390,174 and $1,630,778new debts obtained during the nine months ended September 30, 2017 and September 30, 2016, respectively. These expenses included acquisition costs and legal, banking and other acquisition related fees incurred in connection with our acquisitions. The decrease is due to the decline in acquisition related activities in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.$844,104approximately $2.1 million as of SeptemberJune 30, 2017,2020, as compared to $1,379,887$0.4 million as of December 31, 2016, a decrease of $535,783 primarily due to the use of funds towards working capital and earn-out payments.$1,799,568$2.9 million during the ninesix months ended SeptemberJune 30, 20172020 and was primarily a result of net changes in working capital requirements. Cash used in investing activities was $702,508$0.04 million during the ninesix months ended SeptemberJune 30, 2017.2020. Cash provided by financing activities by loans was $1,966,296$4.6 million during the ninesix months ended SeptemberJune 30, 2017 and was attributable to the increased borrowing under our line2020.credit with Sterling National Bank and the issuance of convertible notes.Due to our current constraints inJune 30, 2020, we had negative working capital weof $2.5 million and cash of $2.1 million. Our principal sources of cash have been unableincluded bank borrowings, the private placement of shares and net bank borrowings. To increase revenues, our operating expenses are likely to pay a few vendorscontinue to grow and, as a result, somewe will need to generate significant additional revenues to cover such expenses.themJune 30, 2020 have threatened legal action against us. We are currently working with these vendorsbeen prepared under the assumption that we will continue as a going concern. Our ability to negotiate longer payment terms until we are ablecontinue as a going concern is dependent upon our ability to raise more capital;additional funding through the issuance of equity or debt securities, as well as to attain further operating efficiencies and, ultimately, to generate additional revenues. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. Although the Company is tryingbelieves in the viability of management’s strategy to mitigate these efforts by raising more capitalgenerate sufficient revenue, control costs and through streamlining its operations which will provide cash savings going forward, howeverthe ability to raise additional funds if necessary, there can be no assuranceassurances to that the Company will be ableeffect. The foregoing conditions raise substantial doubt about our ability to secure additional sources of capital. In case we are unable to pay these vendors, they can take legal action against us or stop doing business with us which may have an impact on our revenue.On July 1, 2016, the Company entered into a Loan and Security Agreement (the “Loan Agreement”), with its wholly-owned subsidiaries Ameri and Partners Inc and Ameri Georgia, as borrowers (the “Borrowers”), the Company and its wholly-owned subsidiary Linear Logics, Corp. serving as guarantors, the Company’s Chief Executive Officer, Giri Devanur, servingcontinue as a validity guarantor,going concern.Sterling National Bank, N.A. (as lender and as agent, “Sterling”). The Company joined Ameri Arizona, Virtuoso and Ameri California as borrowersRepayment of Debtthe Loan Agreement following their respective acquisition.Under the Loan Agreement, the Borrowers can borrow up to an aggregate of $10 million,our senior secured credit facility (the “Credit Facility”), which includesprovided for up to $8 million in principal for revolving loans (the “Revolving Loans”) for general working capital purposes, up to $2purposes.principal pursuant1% convertible unsecured debentures (the “1% Debentures”), which were issued to a term loan (the “Term Loan”) for the purposeone of a permitted business acquisition and up to $200,000 for letters of credit. A portion of the proceeds of the Loan Agreement were also used to repay the November 20, 2015 credit facility that was entered into between the Company, its wholly-owned subsidiary Ameri Georgia and Federal National Payables, Inc.maturity of the loans under the Loan Agreement are as follows:Revolving Loan Maturity Date: July 1, 2019; provided, however, that the Revolving Loan Maturity Date will extend and renew automatically for successive one-year terms on each anniversary of the initial Revolving Loan Maturity Date (each an “Anniversary Date”) thereafter, unless not less than sixty (60) days prior to any such Anniversary Date, written notice of non-renewal is given by either party to the other, in which case the Revolving Loan Maturity Date will be such next Anniversary Date.Term Loan Maturity Date: The earliest of (a) the date following acceleration of the Term Loan and/or the Revolving Loans; (b) the Revolving Loan Maturity Date; or (c) July 1, 2019.Interest under the Loan Agreement is payable monthly in arrears and accrues as follows:(a)in the case of Revolving Loans, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 2.00%;(b)in the case of the Term Loan, a rate per annum equal to the sum of (i) the Wall Street Journal Prime Rate plus (ii) 3.75%; and(c)in the case of other obligations of the Borrowers, a rate per annum equal to the sum of (i) the greater of (A) 3.25% or (B) Wall Street Journal Prime Rate plus (ii) 3.75%.The Loan Agreement also requires the payment of certain fees, including, but not limited to letter of credit fees and an unused Revolving Loans fee.The Loan Agreement contains financial and other covenant requirements, including, but not limited to, financial covenants that require the Borrowers to not permit capital expenditures above $150,000 in any fiscal year, maintain a fixed charge coverage ratio of not less than 2.00 to 1.00 and maintain certain debt to EBITDA ratios. The Loan Agreement also requires the Company and Borrowers to obtain Sterling’s consent before making any permitted acquisitions. The amounts borrowed by the Borrowers under the Loan Agreement are guaranteed by the guarantors, and the Loan Agreement is secured by substantially all of the Borrowers’ assets.The principal amount of the Term Loan will be repaid as follows: (i) equal consecutive monthly installments in the amount of $33,333.33 each, paid on the first day of each calendar month and (ii) one final payment of the entire remaining principal balance, together with all accrued unpaid1% Debentures bear interest on the Term Loan maturity date.On August 28, 2017, the Company and certain of its subsidiaries obtained an incremental term loan from Sterling National Bank in the amount of $343,200.58, which amount shall be an addition to and comprise a part of the existing term loan under the existing Loan Agreement.The Company has not been in compliance with the financial covenants contained in its Loan Agreement with Sterling National Bank. The Company received waivers from Sterling National Bank for its non-compliance with the Loan Agreement for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 in exchange for the payment of a fee of $5,000 for each quarterly waiver. The Company does not expect to be in compliance with the terms of the Loan Agreement following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with Sterling National Bank to address its non-compliance.If we are unable to obtain future waivers from Sterling National Bank, the bank could declare our loans with it to be in default and elect to claim all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If we are unable to repay the outstanding amounts, Sterling National Bank could proceed against the collateral granted to it to secure our indebtedness to it. We pledged substantially all of our assets as collateral under the Loan Agreement. The Loan Agreement is also supported by a limited guaranty from Giri Devanur, our President and Chief Executive Officer. If Sterling National Bank accelerates the repayment of our loans, there is no assurance that we will have sufficient assets to repay the loans. A default under the Loan Agreement may also result in an event of default under the Company’s outstanding convertible notes. We are currently looking for additional sources of financing, however there is no guarantee that we will have additional financing available to us.Interest paid on the Term Loan during the nine months ended September 30, 2017 amounted to $108,206. Principal repaid on the Term Loan during the nine months ended September 30, 2017 was $304,144. The short term and long-term outstanding balances on the Term Loan as of September 30, 2017 was $406,156 and $1,575,206, respectively. The outstanding balance of the Revolving Loans as of September 30, 2017 was $3,765,391.Bigtech, which was acquired as of July 1, 2016, had a term loan of $14,695 and a line of credit for $305,282 as of September 30, 2017. The Bigtech line of credit is with an Indian bank, HDFC Bank Limited, and was entered into on September 3, 2015 for Bigtech’s working capital requirements. The line of credit is for up to $416,667 with an interest rate of 11.85%at 1% per annum and maturity in June 2020. The Bigtech term loan accrues interest at the rate of 10.30% per annum and matures in 2020. Both the term loan and the line of credit were already in place when the Company acquired Bigtech. Interest paid during the nine months ended September 30, 2017 amounted to $1,486 for the term loan and $28,560 line of credit held by Bigtech.On March 7, 2017, we completed the sale and issuance of 8% Convertible Unsecured Promissory Notes (the “2017 Notes”) for aggregate proceeds to us of $1,250,000 from four accredited investors, including one of the Company’s directors, Dhruwa N. Rai. The 2017 Notes were issued pursuant to Securities Purchase Agreements between the Company and each investor. The 2017 Notes bear interest at 8% per annum until maturity in March 2020, with interest being paid annually on the first, second and third anniversaries of the issuance of the 2017 Notes beginning in March 2018. From and after an event of default and for so long as the event of default is continuing, the 2017 Notes will bear default interest at the rate of 10% per annum. The 2017 Notes can be prepaid by us at any time without penalty.The 2017 Notes are convertible into shares of our common stock at a conversion price of (i) in the event that any registration statement for the public offering of common stock filed by the Company with the SEC in connection with an uplisting to a national stock exchange is declared effective by the SEC on or prior to December 31, 2017, such price$1.75 per share that is equal to 68% of the price per share of common stock offered and sold pursuant to such registration statement, or (ii) if no such registration statement is declared effective by December 31, 2017, such price per share that is equal to the weighted average closing price per share of the Company’s common stock for the 20 trading days immediately preceding December 31, 2017, subject to adjustment under certain circumstances. The 2017 Notes rank junior to our secured credit facility with Sterling. The 2017 Notes also include certain negative covenants including, without the investors’ approval, restrictions on dividends and other restricted payments and reclassification of its stock.SeptemberJune 30, 20172020 were $9,167,088$7.3 million as compared to $8,059,910$6.4 million as on December 31, 2016. The2019 the increase was mainly due to acquisition of Ameri California.SeptemberJune 30, 20172020 were $4,126,323$4.9 million as compared to $5,130,817$4.7 million as on December 31, 2016.2019. The decrease was primarilyincrease in Accounts payable is due to the payoff of accumulated accounts payable during the nine months ended September 30, 2017.ExpensesSeptemberJune 30, 20172020 were $3,947,294$1.9 million as compared to $2,165,088$2.1 million as on December 31, 2016. Our acquisition of Ameri California led to an increase of accrued expenses of $754,257 and the balance was attributable to our existing entities.customers for different information technology services we render under various statements of work.customers. Our primary uses of cash for operating activities are for personnel-related expenditures, leased facilities and taxes.24 EstimatesPurchase Price Allocation. WeRevenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the purchasetransaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients. This update clarifies the objectives of collectability, sales and other taxes, noncash consideration, contract modifications at transition, completed contracts at transition and technical correction. The amendments in this update affect the guidance in ASU 2014-09. In September 2017, the FASB issued additional amendments providing clarification and implementation guidance.25 acquisitionsdeliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus a margin approach. We typically establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change.26 acquired, including identifiable intangible assets,and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely than not that future tax benefits associated with a deferred income tax asset will not be realized, a valuation allowance is provided. The effect on deferred income tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. Tax benefits earned on employee stock awards in excess of recorded stock-based compensation expense are credited to additional paid-in capital. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest.respective fair values atcredit-worthiness on an unsecured basis. We provide an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. We include any balances that are determined to be uncollectible in allowance for doubtful accounts.date of acquisition. Someacquisition method, which requires the identification of the items, including accounts receivable, property and equipment, other intangible assets, certain accrued liabilities and other reserves require a degree of management judgment. Certain estimates may change as additional information becomes available. Goodwill is assigned atacquirer, the enterprise level and is deductible for tax purposes for certain types of acquisitions. Management finalizes the purchase price allocation within the defined measurement perioddetermination of the acquisition date and the allocation of the purchase price paid by the acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent consideration and any non-controlling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our consolidated financial statements from the acquisition date.certain initial accountingcircumstances warrant. Goodwill is evaluated at the reporting unit level by comparing the fair value of the reporting unit with its carrying amount. For purchased intangible assets, if our annual qualitative assessment indicates possible impairment, we test the assets for impairment by comparing the fair value of such assets to their carrying value. In determining the fair value, we utilize various estimates are resolved.Revenue Recognition. We recognize revenueAccounting Standard Codification 605 “Revenue Recognition.” Revenue is recognized when allrequirements of ASC 830, Foreign Currency Matters. Assets and liabilities are translated at exchange rates as of the following criteriabalance sheet date. Revenues and expenses are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3)translated at average rates in effect for the seller’s price to buyerperiods presented. The cumulative translation adjustment is fixed and determinable, and (4) collectability is reasonably assured. We recognize revenue from information technology services as the services are provided. Service revenues are recognized based on contracted hourly rates, as services are rendered or upon completion of specified contracted services and acceptance by the customer.Accounts Receivable. We extend credit to clients based upon management’s assessment of their credit-worthiness on an unsecured basis. We provide an allowance for uncollectible accounts based on historical experience and management evaluation of trend analysis. We include any balances that are determined to be uncollectible in allowance for doubtful accounts.Property and Equipment. Property and equipment is stated at cost. We provide for depreciation of property and equipment using the straight-line method over the estimated useful lives of the related assets ranging from 3 to 7 years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease terms or the useful lives of the improvements. We charge repairs and maintenance costs that do not extend the lives of the assets to expenses as incurred.Intangible assets. We account for computer software costs developed for internal use in accordance with U.S. GAAP, which requires companies to capitalize certain qualifying costs during the application development stage of the related software development project and to exclude the initial planning phase that determines performance requirements, most data conversion, general and administrative costs related to payroll and training costs incurred. Whenever a software program is considered operational, we consider the project to be completed, place it into service and commence amortization of the development costincluded in the succeeding month.Goodwill. We capitalize the excess of capitalized intangible assets of an acquisition over the purchase consideration as goodwill in for each of our acquisitions. Impairment of goodwill is analyzed on an annual basis as per Company policy.20172020 outlook, future revenue and growth, customer spending outlook, general economic trends, IT service demand, future revenue and revenue mix, utilization, new service offerings, significant customers, competitive and strategic initiatives, growth plans, potential stock repurchases, future results, tax consequences and liquidity needs. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “believe,” “anticipate,” “anticipated,” “expectation,” “continued,” “future,” “forward,” “potential,” “estimate,” “estimated,” “forecast,” “project,” “encourage,” “opportunity,” “goal,” “objective,” “could,” “expect,” “expected,” “intend,” “plan,” “planned,” or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this Form 10-Q. Factors that may cause actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecasted, estimated, anticipated, planned or budgeted in such forward-looking statements include, among others, the following possibilities: (1) failure to obtain new customers or retain significant existing customers; (2) the loss of one or more key executives and/or employees; (3) changes in industry trends, such as a decline in the demand for Enterprise Resource Planning and Enterprise Performance Management solutions, custom development and system integration services and/or declines in industry-wide information technology spending, whether on a temporary or permanent basis and/or delays by customers in initiating new projects or existing project milestones; (4) inability to execute upon growth objectives, including new services and growth in entities acquired by our Company; (5) adverse developments and volatility involving geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified as delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) termination by clients of their contracts with us or inability or unwillingness of clients to pay for our services, which may impact our accounting assumptions; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (10) failure to expand outsourcing services to generate additional revenue; (11) any changes in ownership of the Company or otherwise that would result in a limitation of the net operating loss carry forward under applicable tax laws; (12) the failure of the marketplace to embrace advisory and product-based consulting services; (13) changes in our utilization levels; (14) competition in our markets; (15) our ability to grow and manage growth profitably; our ability to access additional capital; (16) changes in applicable laws or regulations; (17) the failure to fully integrate acquired businesses; and (18) poor performance of acquired businesses following the closing of the acquisition. In evaluating these statements, you should specifically consider various factors described above. These factors may cause our actual results to differ materially from those contemplated, projected, anticipated, planned or budgeted in any such forward-looking statements.27 Company'sCompany’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Company'sCompany’s management, including our Company'sCompany’s Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our company'scompany’s Chief Executive Officer and Chief Financial Officer concluded that our company'scompany’s disclosure controls and procedures are not yet effective as of the end of the period covered by this report as noted below in management'smanagement’s report on internal control over financial reporting. This is largely due to the fact that we are acquiring privately held companies as part of our growth strategy and our control procedures over all acquired subsidiaries will not be effective until such time as we are able to fully integrate the acquisition with our company and set processes and procedures for the acquired entities. We are working to improve and harmonize our financial reporting controls and procedures across all of our companies. There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.SeptemberJune 30, 2017,2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles; providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and our directors; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. As a result of this assessment, our management concluded that, as of SeptemberJune 30, 2017,2020, our internal control over financial reporting was not yet effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. This is largely due to the fact that we are acquiringpreviously acquired multiple privately held companies as part of our growth strategy and our control procedures over all acquired subsidiaries will not be effective until such time as we are able to fully integrate the acquisition with our company and set processes and procedures for the acquired entities. We are working to improve and harmonize our financial reporting controls and procedures across all of our companies.28 Management'sManagement’s report was not subject to attestation by our independent auditors pursuant to temporary rules of the SEC that permit our company to provide only management'smanagement’s report in this Quarterly Report on Form 10-Q.werehave been no changes to correct certain internal control inadequacies, due toin the privately held nature of acquired subsidiaries in ourCompany’s internal control over financial reporting as such term is definedidentified in Rules 13a-15(f) and 15d-15(f) underconnection with the Exchange Act,evaluation that occurred during the period covered by this reportthird quarter ended in 2019 that have not materially affected, or are not reasonably likely to materially affect, ourthe internal control over financial reporting.ITEM 1. LEGAL PROCEEDINGS ITEM 1A. RISK FACTORS 29 ITEM 1.LEGAL PROCEEDINGSNone.Not applicable.None.ITEM 3. To date, the Company has not been in conformance with the financial covenants contained in its Loan Agreement with Sterling National Bank. The Company received waivers from Sterling National Bank for its non-compliance with the Loan Agreement for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 in exchange for the payment of a fee of $5,000 for each quarterly waiver. The Company does not expect to be in compliance with the terms of the Loan Agreement following the conclusion of the terms of the waivers granted by Sterling National Bank. The Company is continuing to work with Sterling National Bank to address its non-compliance.The Company has yet to make the dividend payment on its Series A Preferred Stock that was payable on September 30, 2017. The Company will pay the sole holder of the Series A Preferred Stock, the accrued dividend in-kind pursuant to the terms of the Certificate of Designation contemporaneously with the filing of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.None.30 10.5 Form of Series B Warrant, dated May 6, 2020 (incorporated by reference as Exhibit 10.5 to the Company’s current report on Form 8-K filed on May 6, 2020) 10.6 Amalgamation Amendment Agreement No. 2, dated May 26, 2020, by and between Ameri Holdings, Inc., Jay Pharma Merger Sub, Inc., Jay Pharma Inc., Jay Pharma ExchangeCo, Inc. and the shareholders of Ameri Consulting Service Private Limited. (filedBarry Kostiner (incorporated by reference as Exhibit 10.310.1 to Ameri Holdings, Inc.’s Current Reportthe Company’s current report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).2020)2.310.7Share Purchase Agreement, dated as of November 20, 2015, by and among Ameri Holdings, Inc., Bellsoft, Inc., and all of the shareholders of Bellsoft, Inc. (filed as Exhibit 10.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on November 23, 2015 and incorporated herein by reference).2.4Agreement of Merger and Plan of Reorganization, dated as of July 22, 2016, by and among Ameri Holdings, Inc., Virtuoso Acquisition Inc., Ameri100 Virtuoso Inc., Virtuoso, L.L.C. and the sole member of Virtuoso, L.L.C. (filed as Exhibit 2.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on July 27, 2016 and incorporated herein by reference).2.5Membership Interest Purchase Agreement, dated as of July 29, 2016, by and among Ameri Holdings, Inc., DC&M Partners, L.L.C., all of the members of DC&M Partners, L.L.C., Giri Devanur and Srinidhi “Dev” Devanur (filed as Exhibit 2.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 1, 2016 and incorporated herein by reference).2.6Share Purchase Agreement, dated as of March 10, 2017, by and among Ameri Holdings, Inc., ATCG Technology Solutions, Inc., all of the stockholders of ATCG Technology Solutions, Inc., and the Stockholders’ representative (filed as Exhibit 2.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on March 13, 2017 and incorporated herein by reference).3.1Amended and Restated Certificate of Incorporation of Ameri Holdings, Inc. (filed as Exhibit 3.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 23, 2016 and incorporated herein by reference).3.2Certificate of Designation of Rights and Preferences of 9.00% Series A Cumulative Preferred Stock (filed as Exhibit 3.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on January 4, 2017 and incorporated herein by reference).3.3Corrected Certificate of Designation of Rights and Preferences of 9.00% Series A Cumulative Preferred Stock (filed as Exhibit 3.3 to Ameri Holdings, Inc.’s Registration Statement on Form S-1, Amendment No. 1, filed with the SEC on April 18, 2017 and incorporated herein by reference).3.4Amended and Restated Bylaws of Ameri Holdings, Inc. (filed as Exhibit 3.2 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 23, 2016 and incorporated herein by reference).4.1Form of Certificate Representing Shares of common stock of Registrant (filed as Exhibit 4.1 to Ameri Holdings, Inc.’s Registration Statement on Form S-8 filed with the SEC on December 17, 2015 and incorporated herein by reference).4.2Form of common stock Purchase Warrant issued by Ameri Holdings, Inc. to Lone Star Value Investors, LP, dated May 26, 2015 (filed as Exhibit 4.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).4.3Common Stock Purchase Warrant, dated May 12, 2016, issued by Ameri Holdings, Inc. to Lone Star Value Investors, LP, dated May 12, 2016 (filed as Exhibit 4.3 to Ameri Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016 and incorporated herein by reference).4.4Amended and Restated Registration Rights Agreement, dated May 12, 2016, by and between Ameri Holdings, Inc. and Lone Star Value Investors, LP (filed as Exhibit 10.3 to Ameri Holdings, Inc.’s Quarterly Report on Form 10-Q filed with the SEC on May 16, 2016 and incorporated herein by reference).4.5Form of 8% Convertible Unsecured Promissory Note due March 2020 (filed as Exhibit 10.2 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on March 8, 2017 and incorporated herein by reference).4.6Form of Registration Rights Agreement for 2017 Notes Investors (filed as Exhibit 10.3 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on March 8, 2017 and incorporated herein by reference).4.7Form of 6% Unsecured Promissory Note (filed as Exhibit 10.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on March 13, 2017 and incorporated herein by reference).10.1Employment Agreement, dated as of May 26, 2015, between Giri Devanur and Ameri Holdings, Inc. (filed as Exhibit 10.4 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).10.2Employment Agreement, dated as of May 26, 2015, between Srinidhi “Dev” Devanur and Ameri Holdings, Inc. (filed as Exhibit 10.5 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on June 1, 2015 and incorporated herein by reference).10.3Employment Letter, dated April 24, 2016, between Ameri and Partners Inc and Viraj Patel (filed as Exhibit 10.1 to Ameri Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on April 25, 2017 and incorporated herein by reference).10.4Form of Securities Purchase Agreement for 2017 Notes Investors (filed(incorporated by reference as Exhibit 10.1 to Ameri Holdings, Inc.’s Current Reportthe Company’s current report on Form 8-K filed with the SEC on March 8, 2017 and incorporated herein by reference).June 4, 2020)10.510.8Form of Exchange Agreement dated as of December 30, 2016, between Ameri Holdings, Inc. and Lone Star Value Investors, LP (filed(incorporated by reference as Exhibit 10.110.2 to Ameri Holdings, Inc.’s Current Reportthe Company’s current report on Form 8-K filed with the SEC on JanuaryJune 4, 2017 and incorporated herein by reference).2020)10.610.9Loan and Security Agreement, datedForm of Debenture (incorporated by reference as of July 1, 2016, by and among Ameri and Partners Inc, Bellsoft, Inc., Ameri Holdings, Inc., Linear Logics, Corp., Winhire Inc, Giri Devanur, the lenders which become a partyExhibit 10.3 to the Loan and Security Agreement, and Sterling National Bank, N.A. (a lender and as agent for the lenders) (filed as Exhibit 10.1 to Ameri Holdings, Inc.’s Current ReportCompany’s current report on Form 8-K filed with the SEC on July 7, 2016 and incorporated herein by reference).June 4, 2020)Section 302 Certification of Principal Executive Officer Section 302 Certification of Principal Financial and Accounting Officer Section 906 Certification of Principal Executive Officer Section 906 Certification of Principal Financial and Accounting Officer 101** The following materials from Ameri Holdings, Inc.’s Quarterly Report on Form 10-Q for the three months ended September 30, 20172019 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Stockholders’ Equity (Deficit), (iv) the Consolidated Statements of Cash Flow, and (iv) Notes to the Consolidated Financial Statements.* Furnished herewith. ** In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933. 31 13th14 day of November 2017. AMERI Holdings, Inc. By: /s/ Giri DevanurBrent Kelton Giri DevanurBrent Kelton President and Chief Executive Officer (Principal Executive Officer) By: /s/ Viraj PatelBarry Kostiner Viraj PatelBarry Kostiner Chief Financial Officer (Principal Accounting Officer) 32 29