UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~September 30, 2021~~March 31, 2022


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

For the transition period from to

Commission file number 001-40574

SYNCHRONOSS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


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

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

(866) 620-3940

(Registrant’s telephone number, including area code)

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

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

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

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

Large accelerated filer

☐

Accelerated filer

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging growth company

☐

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

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

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


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

As of ~~November~~May 05, ~~2021,~~2022, there were ~~88,340,870~~88,301,312 shares of common stock issued and outstanding.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

FORM 10-Q INDEX


		Page No.
PART I.	FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements and Notes	3

	Condensed Consolidated Balance Sheets (unaudited)	3

	Condensed Consolidated Statements of Operations (unaudited)	4

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

	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	6

	Condensed Consolidated Statements of Cash Flows (unaudited)	87

	Notes to Condensed Consolidated Financial Statements (unaudited)	97


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3226

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4132

Item 4.	Controls and Procedures	4233


PART II.	OTHER INFORMATION	4334

Item 1.	Legal Proceedings	4334

Item 1A.	Risk Factors	4334

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4736

Item 3.	Defaults Upon Senior Securities	4736

Item 4.	Mine Safety Disclosures	4737

Item 5.	Other Information	4737

Item 6.	Exhibits	4838

SIGNATURES		4939

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
September 30, 2021 December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $ 24,141 $ 33,671
Accounts receivable, net 39,073 47,849
Prepaid & other current assets 47,239 39,847
Total current assets 110,453 121,367
Non-current assets:
Property and equipment, net 8,161 11,732
Operating lease right-of-use assets 27,629 34,538
Goodwill 226,840 232,771
Intangible assets, net 63,464 69,593
Loan receivable 4,834 4,834
Other assets, non-current 6,994 7,420
Total non-current assets 337,922 360,888
Total assets $ 448,375 $ 482,255
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 6,795 $ 12,749
Accrued expenses 70,255 69,326
Deferred revenues, current 31,506 33,045
Debt, current — 10,000
Total current liabilities 108,556 125,120
Long-term debt, net of debt issuance costs 117,494 —
Deferred tax liabilities 790 1,875
Deferred revenues, non-current 845 12,569
Leases, non-current 38,013 44,273
Other non-current liabilities 4,578 4,995
Redeemable noncontrolling interest 12,500 12,500
Total liabilities 282,776 201,332
Commitments and contingencies 0 0
Series A Convertible Participating Perpetual Preferred Stock, $0.0001 par value; nil and 10,000 shares authorized, nil and 250 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively — 237,641
Series B Non-Convertible Perpetual Preferred Stock, $0.0001 par value; 150 and nil shares authorized, 75 and nil shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively 72,505 —
Stockholders’ equity:
Common stock, $0.0001 par value; 100,000 shares authorized, 87,999 and 51,177 shares issued; 87,999 and 44,015 outstanding at September 30, 2021 and December 31, 2020, respectively 9 5
Treasury stock, at cost (nil and 7,162 shares at September 30, 2021 and December 31, 2020, respectively) — (82,087)
Additional paid-in capital 492,376 499,348
Accumulated other comprehensive loss (30,911) (28,213)
Accumulated deficit (368,380) (345,771)
Total stockholders’ equity 93,094 43,282
Total liabilities and stockholders’ equity $ 448,375 $ 482,255


	March 31, 2022		December 31, 2021

ASSETS
Current assets:
Cash and cash equivalents	$	21,727	$	31,504


Accounts receivable, net	48,172		47,586
Prepaid & other current assets	46,738		42,901


Total current assets	116,637		121,991
Non-current assets:

Property and equipment, net	5,945		6,979
Operating lease right-of-use assets	24,606		26,399
Goodwill	223,712		224,577
Intangible assets, net	58,323		60,335
Loan receivable	4,834		4,834

Other assets, non-current	5,027		5,619



Total non-current assets	322,447		328,743
Total assets	$	439,084	$	450,734
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,095	$	11,097
Accrued expenses	60,027		61,916
Deferred revenues, current	19,468		22,368




Total current liabilities	91,590		95,381



Long-term debt, net of debt issuance costs	133,462		133,104
Deferred tax liabilities	559		560
Deferred revenues, non-current	769		548

Leases, non-current	34,498		36,095
Other non-current liabilities	9,217		9,218

Total liabilities	270,095		274,906
Commitments and contingencies:	0		0

Series B Non-Convertible Perpetual Preferred Stock, $0.0001 par value; 150 shares authorized, 75 and 75 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	72,505		72,505
Redeemable noncontrolling interest	12,500		12,500
Stockholders’ equity:
Common stock, $0.0001 par value; 100,000 shares authorized, 88,244 and 88,305 issued and outstanding at March 31, 2022 and December 31, 2021, respectively	9		9

Additional paid-in capital	491,966		492,512
Accumulated other comprehensive loss	(36,126)		(32,985)
Accumulated deficit	(371,865)		(368,713)
Total stockholders’ equity	83,984		90,823
Total liabilities and stockholders’ equity	$	439,084	$	450,734

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021

Net revenues	Net revenues	$	69,753	$	68,636	$	206,784	$	222,293		Net revenues	$	65,866	$	65,499
Costs and expenses:	Costs and expenses:										Costs and expenses:
Cost of revenues1	Cost of revenues1	27,245		28,452		83,024		93,403			Cost of revenues1	24,839		28,637
Research and development	Research and development	15,368		20,885		49,962		59,769			Research and development	15,791		17,397
Selling, general and administrative	Selling, general and administrative	27,953		23,265		67,790		74,249			Selling, general and administrative	17,897		17,928
Restructuring charges	Restructuring charges	1,485		820		3,075		6,763			Restructuring charges	685		713
Depreciation and amortization	Depreciation and amortization	8,215		12,212		26,567		33,852			Depreciation and amortization	8,034		9,867
Total costs and expenses	Total costs and expenses	80,266		85,634		230,418		268,036			Total costs and expenses	67,246		74,542
Loss from continuing operations		(10,513)		(16,998)		(23,634)		(45,743)
Loss from operations											Loss from operations	(1,380)		(9,043)
Interest income	Interest income	24		20		54		1,587			Interest income	92		5
Interest expense	Interest expense	(2,933)		(72)		(3,172)		(401)			Interest expense	(3,325)		(95)

Other Income (expense)		(1,669)		2,684		(3,489)		5,743
Other income (expense), net											Other income (expense), net	1,704		(3,396)

Loss from continuing operations, before taxes		(15,091)		(14,366)		(30,241)		(38,814)
Benefit for income taxes		6,982		8,744		7,346		29,148
Net loss from continuing operations		(8,109)		(5,622)		(22,895)		(9,666)
Loss from operations, before taxes											Loss from operations, before taxes	(2,909)		(12,529)
(Provision) benefit for income taxes											(Provision) benefit for income taxes	(128)		163

Net income (loss) attributable to redeemable noncontrolling interests		—		(60)		286		(242)
Net loss											Net loss	(3,037)		(12,366)
Net (loss) income attributable to redeemable noncontrolling interests											Net (loss) income attributable to redeemable noncontrolling interests	(115)		336
Preferred stock dividend	Preferred stock dividend	(1,722)		(9,685)		(33,728)		(27,882)			Preferred stock dividend	(2,438)		(10,530)
Net loss attributable to Synchronoss	Net loss attributable to Synchronoss	$	(9,831)	$	(15,367)	$	(56,337)	$	(37,790)		Net loss attributable to Synchronoss	$	(5,590)	$	(22,560)

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

Basic	Basic	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)		Basic	$	(0.07)	$	(0.53)

Diluted	Diluted	$	(0.11)	$	(0.36)	$	(0.98)	$	(0.90)		Diluted	$	(0.07)	$	(0.53)
Weighted-average common shares outstanding:	Weighted-average common shares outstanding:										Weighted-average common shares outstanding:
Basic	Basic	85,646		42,360		57,662		41,777			Basic	85,866		42,737
Diluted	Diluted	85,646		42,360		57,662		41,777			Diluted	85,866		42,737

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

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited) (In thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net loss	Net loss	$	(8,109)	$	(5,622)	$	(22,895)	$	(9,666)		Net loss	$	(3,037)	$	(12,366)
Other comprehensive (loss) income, net of tax
Other comprehensive loss, net of tax:											Other comprehensive loss, net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(1,827)		1,343		(3,595)		(726)			Foreign currency translation adjustments	(3,159)		(1,888)
Unrealized gain on available for sale securities		—		—		—		751

Net income on inter-company foreign currency transactions	Net income on inter-company foreign currency transactions	358		864		897		1,046			Net income on inter-company foreign currency transactions	18		752
Total other comprehensive (loss) income		(1,469)		2,207		(2,698)		1,071
Total other comprehensive loss											Total other comprehensive loss	(3,141)		(1,136)
Comprehensive loss	Comprehensive loss	(9,578)		(3,415)		(25,593)		(8,595)			Comprehensive loss	(6,178)		(13,502)
Comprehensive (loss) income attributable to redeemable noncontrolling interests	Comprehensive (loss) income attributable to redeemable noncontrolling interests	—		(60)		286		(242)			Comprehensive (loss) income attributable to redeemable noncontrolling interests	(115)		336
Comprehensive loss attributable to Synchronoss	Comprehensive loss attributable to Synchronoss	$	(9,578)	$	(3,475)	$	(25,307)	$	(8,837)		Comprehensive loss attributable to Synchronoss	$	(6,293)	$	(13,166)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited) (In thousands)

Three Months Ended September 30, 2021
Common Stock Treasury Stock Additional Accumulated Other Total
Shares Amount Shares Amount Paid-In Capital Comprehensive Income (Loss) Accumulated deficit Stockholders' Equity
Balance at June 30, 2021 88,121 $ 9 — $ — $ 491,660 $ (29,442) $ (360,271) $ 101,956
Stock based compensation — — — — 2,438 — — 2,438
Issuance of restricted stock (122) — — — — — — —
Preferred stock dividend — — — — (1,722) — — (1,722)
Net income (loss) attributable to Synchronoss — — — — — — (8,109) (8,109)
Total other comprehensive income (loss) — — — — — (1,469) — (1,469)
Balance at September 30, 2021 87,999 $ 9 — $ — $ 492,376 $ (30,911) $ (368,380) $ 93,094


	Three Months Ended March 31, 2022
	Common Stock			Treasury Stock			Additional		Accumulated Other				Total
	Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at December 31, 2021	88,305	$	9	—	$	—	$	492,512	$	(32,985)	$	(368,713)	$	90,823
Stock based compensation	—	—		—	—		1,777		—		—		1,777
Issuance of restricted stock	(61)	—		—	—		—		—		—		—

Preferred stock dividend	—	—		—	—		(2,438)		—		—		(2,438)










Net income (loss) attributable to Synchronoss	—	—		—	—		—		—		(3,037)		(3,037)
Non-controlling interest	—	—		—	—		115		—		(115)		—
Total other comprehensive income (loss)	—	—		—	—		—		(3,141)		—		(3,141)







Balance at March 31, 2022	88,244	$	9	—	$	—	$	491,966	$	(36,126)	$	(371,865)	$	83,984

Three Months Ended September 30, 2020
Common Stock Treasury Stock Additional Accumulated Other Total
Shares Amount Shares Amount Paid-In Capital Comprehensive Income (Loss) Accumulated deficit Stockholders' Equity
Balance at June 30, 2020 51,619 $ 5 (7,162) $ (82,087) $ 517,794 $ (34,397) $ (339,313) $ 62,002
Stock based compensation — — — — 4,336 — — 4,336
Issuance of restricted stock (105) — — — — — — —
Preferred stock dividends accrued — — — — (8,761) — — (8,761)
Amortization of preferred stock issuance costs — — — — (925) — — (925)
Net income attributable to Synchronoss — — — — — — (5,622) (5,622)
Non-controlling interest — — — — 60 — (60) —
Total other comprehensive income (loss) — — — — — 2,207 — 2,207
Adoption of new credit loss accounting standard — — — — — — 18 18
Balance at September 30, 2020 51,514 $ 5 (7,162) $ (82,087) $ 512,504 $ (32,190) $ (344,977) $ 53,255

~~Table of Contents~~

Nine Months Ended September 30, 2021
Common Stock Treasury Stock Additional Accumulated Other Total
Shares Amount Shares Amount Paid-In Capital Comprehensive Income (Loss) Accumulated deficit Stockholders' Equity
Balance at December 31, 2020 51,177 $ 5 (7,162) $ (82,087) $ 499,348 $ (28,213) $ (345,771) $ 43,282
Stock based compensation — — — — 7,472 — — 7,472
Issuance of restricted stock 1,676 — — — 1 — — 1
Preferred stock dividend — — — — (20,937) — — (20,937)
Amortization of preferred stock issuance costs — — — — (12,791) — — (12,791)
Common stock issuance - Public Offering 42,308 4 — — 109,996 — — 110,000
Treasury shares used in Public Offering (7,162) — 7,162 82,087 (82,087) — — —
Common Stock - Issuance Costs — — — — (8,340) — — (8,340)
Net income (loss) attributable to Synchronoss — — — — — — (22,895) (22,895)
Non-controlling interest — — — — (286) — 286 —
Total other comprehensive income (loss) — — — — — (2,698) — (2,698)
Balance at September 30, 2021 87,999 $ 9 — $ — $ 492,376 $ (30,911) $ (368,380) $ 93,094

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


		Nine Months Ended September 30, 2020															Three Months Ended March 31, 2021
		Common Stock			Treasury Stock			Additional		Accumulated Other				Total			Common Stock			Treasury Stock			Additional		Accumulated Other				Total
		Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity			Shares	Amount		Shares	Amount		Paid-In Capital		Comprehensive Income (Loss)		Accumulated deficit		Stockholders' Equity
Balance at December 31, 2019		51,704	$	5	(7,162)	$	(82,087)	$	525,739	$	(33,261)	$	(334,319)	$	76,077
Balance at December 31, 2020																Balance at December 31, 2020	51,177	$	5	(7,162)	$	(82,087)	$	499,348	$	(28,213)	$	(345,771)	$	43,282
Stock based compensation	Stock based compensation	—	—		—	—		14,406		—		—		14,406		Stock based compensation	—	—		—	—		2,813		—		—		2,813
Issuance of restricted stock	Issuance of restricted stock	(188)	—		—	—		—		—		—		—		Issuance of restricted stock	154	—		—	—		—		—		—		—

Preferred stock dividends accrued	Preferred stock dividends accrued	—	—		—	—		(25,373)		—		—		(25,373)		Preferred stock dividends accrued	—	—		—	—		(9,407)		—		—		(9,407)
Amortization of preferred stock issuance costs	Amortization of preferred stock issuance costs	—	—		—	—		(2,510)		—		—		(2,510)		Amortization of preferred stock issuance costs	—	—		—	—		(1,123)		—		—		(1,123)

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

Net income attributable to Synchronoss	Net income attributable to Synchronoss	—	—		—	—		—		—		(9,666)		(9,666)		Net income attributable to Synchronoss	—	—		—	—		—		—		(12,366)		(12,366)
Non-controlling interest	Non-controlling interest	—	—		—	—		242		—		(242)		—		Non-controlling interest	—	—		—	—		(336)		—		336		—
Total other comprehensive income (loss)	Total other comprehensive income (loss)	—	—		—	—		—		1,071		—		1,071		Total other comprehensive income (loss)	—	—		—	—		—		(1,136)		—		(1,136)

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

Balance at September 30, 2020		51,514	$	5	(7,162)	$	(82,087)	$	512,504	$	(32,190)	$	(344,977)	$	53,255
Balance at March 31, 2021																Balance at March 31, 2021	51,331	$	5	(7,162)	$	(82,087)	$	491,295	$	(29,349)	$	(357,801)	$	22,063

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SYNCHRONOSS TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2021		2020				2022		2021
Operating activities:	Operating activities:						Operating activities:
Net loss continuing operations	Net loss continuing operations	$	(22,895)	$	(9,666)		Net loss continuing operations	$	(3,037)	$	(12,366)

Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:						Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	26,567		33,852			Depreciation and amortization	8,034		9,867

Amortization of debt issuance costs	Amortization of debt issuance costs	305		—			Amortization of debt issuance costs	335		—

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

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

Amortization of bond discount (premium)							Amortization of bond discount (premium)	22		—

Deferred income taxes	Deferred income taxes	(1,574)		356			Deferred income taxes	(11)		(1,037)

Stock-based compensation	Stock-based compensation	7,230		14,547			Stock-based compensation	1,927		2,721

Operating lease impairment		1,794		6,232
Operating lease impairment, net							Operating lease impairment, net	443		555
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	8,905		11,357			Accounts receivable, net	(703)		3,214
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(7,275)		(5,426)			Prepaid expenses and other current assets	(3,969)		(445)
Accounts payable	Accounts payable	(6,441)		(8,400)			Accounts payable	1,019		3,752
Accrued expenses	Accrued expenses	8,237		10,063			Accrued expenses	(2,356)		(3,762)

Deferred revenues	Deferred revenues	(13,338)		(36,924)			Deferred revenues	(2,617)		(6,648)
Other liabilities	Other liabilities	4,528		(5,178)			Other liabilities	(1,780)		6,419

Net cash provided by (used in) operating activities		5,551		8,661
Net cash (used in) provided by operating activities							Net cash (used in) provided by operating activities	(2,693)		2,261

Investing activities:	Investing activities:						Investing activities:
Purchases of fixed assets	Purchases of fixed assets	(1,386)		(571)			Purchases of fixed assets	(154)		(721)
Additions to capitalized software	Additions to capitalized software	(17,004)		(12,610)			Additions to capitalized software	(5,245)		(5,042)

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

Maturity of marketable securities available for sale		—		11

Net cash used in investing activities	Net cash used in investing activities	(17,840)		(11,406)			Net cash used in investing activities	(5,399)		(5,763)

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

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

Proceeds from issuance of long term debt		125,000		—

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

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

Proceeds from issuance of preferred stock		75,000		—

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

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

Series B preferred dividend paid in the form of cash							Series B preferred dividend paid in the form of cash	(1,781)		—

Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(1,781)		—

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	72		112			Effect of exchange rate changes on cash	96		(351)

Net (decrease) increase in cash and cash equivalents		(9,530)		7,358
Net decrease in cash and cash equivalents							Net decrease in cash and cash equivalents	(9,777)		(3,853)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	33,671		39,001			Cash and cash equivalents, beginning of period	31,504		33,671
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	24,141	$	46,359		Cash and cash equivalents, end of period	$	21,727	$	29,818

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

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

See accompanying notes to condensed consolidated financial statements.

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1. Description of Business

General

Synchronoss Technologies, Inc. (“Synchronoss” or the ~~“Company”~~“Company”) ~~Digital, Cloud, Messaging~~is a leading provider of white label cloud, messaging, digital and ~~Total Network Management platforms help the world’s leading companies, including operators, original equipment manufacturers (“OEMs”), and Media and Technology providers~~network management solutions that enable our customers to ~~deliver continuously transformative customer experiences that create high value engagement and new monetization opportunities.~~

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

~~The Company delivers platforms, products and solutions including:~~

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

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

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

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

in sync.

The Synchronoss Personal Cloud™ platform is a secure and highly scalable white label platform designed to store and sync subscriber’s personally created content seamlessly to and from current and new devices. This allows a carrier’s customers to protect, engage with and manage their personal content and gives the Company’s Operator customers the ability to increase average revenue per user (“ARPU”) through a new monthly recurring charge (“MRC”) and opportunities to mine valuable data that will give subscribers access to new, beneficial services. ~~Additionally, the Company’s~~

The Synchronoss Personal ~~Cloud Platform performs an expanding set of value-add services including facilitating an Operator’s initial device setup~~Cloud™ platform is specifically designed to support smartphones, tablets and ~~enhancing visibility~~wirelessly enabled consumer electronics such as wearables for health and ~~control across disparate~~wellness, cameras, tablets, e-readers, personal navigation devices, ~~within subscribers’ smart~~and GPS enabled devices, as well as connected automobiles and homes.

The Synchronoss Messaging Platform powers mobile messaging and mailboxes for hundreds of millions of ~~subscribers’ mail boxes worldwide.~~telecommunication subscribers. The ~~Company’s~~ Advanced Messaging ~~Product~~platform is a powerful, secure, ~~and~~ intelligent, ~~white label~~white-label messaging platform that expands capabilities for ~~Operators~~communications service provider and ~~TMT companies~~multi-service providers to offer P2P messaging via Rich Communications Services (“RCS”). ~~Additionally, the Company’s Advanced~~The Mobile Messaging ~~Product powers commerce and~~Platform (“MMP”) provides a ~~robust~~single standard ecosystem for ~~Operators,~~onboarding and management to brands, advertisers and ~~advertisers to execute Application to Person (“A2P”) commerce and data-rich dialogue with subscribers.~~message wholesalers.

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

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

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

2. Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared by Synchronoss and in the opinion of management, include all adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021.~~2022.

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary and entities in which the Company has a controlling interest. Investments in less than majority-owned companies in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. Investments in less than majority-owned companies in which the Company does not have the ability to exert significant influence over the operating and financial

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policies of the investee are accounted for using the cost method. All material intercompany transactions and accounts are eliminated in consolidation.

For further information about the Company’s basis of presentation and consolidation or its significant accounting policies, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Risks and Uncertainties

There continue to be uncertainties regarding the current coronavirus ("COVID-19") pandemic, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, suppliers, vendors, business partners and distribution channels. While the pandemic did not materially affect the Company’s financial results and business operations for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the Company is unable to predict the impact that COVID-19 will have on its financial position and operating results due to numerous uncertainties. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.

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Recently Issued Accounting Standards

Recent accounting pronouncements adopted

Standard

Description

Effect on the financial statements

~~Update 2019-12 - Income Taxes~~ASU 2021-04 Earnings Per Share (Topic ~~740) Simplifying the Accounting for Income Taxes~~260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)

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

We adopted this standard on January 1, 2022. The Company ~~adopted the new standard as of January 1, 2021. The standard~~evaluated these changes and concluded that they did not have aany material impact on the Company’s consolidated financial position or results of operations upon adoption.

~~Date of adoption: January 1, 2021.~~

~~Standards issued not yet adopted~~

~~Standard~~

~~Description~~

~~Effect on the financial statements~~

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

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

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

Date of adoption: January 1, 2022.

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ASU 2021-05 Leases (Topic 842). Lessors—Certain Leases with Variable Lease Payments

The amendments in this Update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. FASB amends lessor classification guidance to prevent selling losses on leases with variable payments.

We adopted this standard on January 1, 2022. The Company evaluated these changes and concluded that they did not have any material impact on the Company’s consolidated financial position or results of operations upon adoption.

Date of adoption: January 1, 2022.

ASU 2021-08 Business Combinations (Topic 805). Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers

The amendments in this Update primarily address the accounting for contract assets and contract liabilities from revenue contracts with customers in a business combination. However, the amendments also apply to contract assets and contract liabilities from other contracts to which the provisions of Topic 606 apply, such as contract liabilities from the sale of nonfinancial assets within the scope of Subtopic 610-20, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets.

Date of adoption: January 1, 2022.

Digital Experience Platform and Activation Solutions Sale

On March 8, 2022, the Company announced that it has entered into a definitive agreement to sell its Digital Experience Platform as well as its Activation Solutions to iQmetrix. The transaction value is up to $14 million and is expected to close in the second quarter, subject to customary closing contingencies.

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3. Revenue

Disaggregation of revenue

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

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Cloud Digital Messaging Total Cloud Digital Messaging Total
Geography
Americas $ 41,090 $ 12,486 $ 2,426 $ 56,002 $ 37,806 $ 10,211 $ 4,249 $ 52,266
APAC 245 1,123 6,929 8,297 — 791 8,280 9,071
EMEA 1,789 756 2,909 5,454 1,678 1,633 3,988 7,299
Total $ 43,124 $ 14,365 $ 12,264 $ 69,753 $ 39,484 $ 12,635 $ 16,517 $ 68,636
Service Line
Professional Services $ 3,542 $ 1,983 $ 3,709 $ 9,234 $ 5,253 $ 2,891 $ 3,262 $ 11,406
Transaction Services 1,237 1,113 2 2,352 1,345 1,715 — 3,060
Subscription Services 38,345 9,456 7,830 55,631 32,886 8,001 11,236 52,123
License — 1,813 723 2,536 — 28 2,019 2,047
Total $ 43,124 $ 14,365 $ 12,264 $ 69,753 $ 39,484 $ 12,635 $ 16,517 $ 68,636


		Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020									Three Months Ended March 31, 2022								Three Months Ended March 31, 2021
		Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total			Cloud		Digital		Messaging		Total		Cloud		Digital		Messaging		Total
Geography
Geography:																		Geography:
Americas	Americas	$	115,192	$	34,329	$	17,207	$	166,728	$	117,889	$	33,785	$	23,652	$	175,326	Americas	$	39,715	$	10,455	$	2,692	$	52,862	$	37,031	$	11,240	$	3,516	$	51,787
APAC	APAC	245		3,166		19,878		23,289		—		2,368		24,163		26,531		APAC	56		759		6,816		7,631		—		1,128		6,700		7,828
EMEA	EMEA	5,474		1,978		9,315		16,767		5,086		4,237		11,113		20,436		EMEA	1,730		950		2,693		5,373		1,865		609		3,410		5,884
Total	Total	$	120,911	$	39,473	$	46,400	$	206,784	$	122,975	$	40,390	$	58,928	$	222,293	Total	$	41,501	$	12,164	$	12,201	$	65,866	$	38,896	$	12,977	$	13,626	$	65,499

Service Line
Service Line:																		Service Line:
Professional Services	Professional Services	$	11,351	$	6,212	$	8,907	$	26,470	$	14,398	$	10,163	$	14,464	$	39,025	Professional Services	$	3,354	$	1,636	$	3,141	$	8,131	$	3,925	$	2,111	$	2,611	$	8,647
Transaction Services	Transaction Services	4,533		4,326		5		8,864		4,126		5,004		—		9,130		Transaction Services	336		1,028		23		1,387		1,975		2,268		1		4,244
Subscription Services	Subscription Services	105,027		26,435		36,365		167,827		104,451		24,254		32,965		161,670		Subscription Services	37,811		8,210		8,515		54,536		32,996		8,433		10,614		52,043
License	License	—		2,500		1,123		3,623		—		969		11,499		12,468		License	—		1,290		522		1,812		—		165		400		565
Total	Total	$	120,911	$	39,473	$	46,400	$	206,784	$	122,975	$	40,390	$	58,928	$	222,293	Total	$	41,501	$	12,164	$	12,201	$	65,866	$	38,896	$	12,977	$	13,626	$	65,499

Trade Accounts Receivable and Contract balances

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

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

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. For example, the Company would record a contract asset if it records revenue on a professional services engagement but are not entitled to bill until the Company achieves specified milestones. Contract assets balance at ~~September 30, 2021~~March 31, 2022 is ~~$7.5~~$12.5 million.

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

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

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


	Contract Liabilities1
Balance - January 1, ~~2021~~2022	$	~~45,614~~22,916
Revenue recognized in the period	~~(207,027)~~(65,860)
Amounts billed but not recognized as revenue	~~193,764~~63,181


Balance - ~~September 30, 2021~~March 31, 2022	$	~~32,351~~20,237

1 Comprised of Deferred Revenue

Transaction price allocated to the remaining performance obligations

Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of ~~September 30, 2021.~~March 31, 2022. The Company has elected not to disclose transaction price allocated to remaining performance obligations for:

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

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

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

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

•consideration for future transactions, above any contractual minimums

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

•credits for failure to meet future service level requirements

As of ~~September 30, 2021,~~March 31, 2022, the aggregate amount of transaction price allocated to remaining performance obligations, other than those meeting the exclusion criteria above, was ~~$240.4~~$184.4 million, of which approximately ~~85.5~~91.5 percent is expected to be recognized as revenues within 2 years, and the remainder thereafter.

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

4. Fair Value Measurements

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

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

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

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

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


		September 30, 2021									March 31, 2022
		Total		(Level 1)		(Level 2)		(Level 3)			Total		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash and cash equivalents1		$	24,141	$	24,141	$	—	$	—

Cash and cash equivalents										Cash and cash equivalents	$	21,727	$	21,727	$	—	$	—

Total assets	Total assets	$	24,141	$	24,141	$	—	$	—	Total assets	$	21,727	$	21,727	$	—	$	—

Temporary equity	Temporary equity									Temporary equity
Redeemable noncontrolling interests2		$	12,500	$	—	$	—	$	12,500
Redeemable noncontrolling interests1										Redeemable noncontrolling interests1	$	12,500	$	—	$	—	$	12,500
Total temporary equity	Total temporary equity	$	12,500	$	—	$	—	$	12,500	Total temporary equity	$	12,500	$	—	$	—	$	12,500


		December 31, 2020									December 31, 2021
		Total		(Level 1)		(Level 2)		(Level 3)			Total		(Level 1)		(Level 2)		(Level 3)
Assets	Assets									Assets
Cash and cash equivalents1		$	33,671	$	33,671	$	—	$	—
Cash and cash equivalents										Cash and cash equivalents	$	31,504	$	31,504	$	—	$	—

Total assets	Total assets	$	33,671	$	33,671	$	—	$	—	Total assets	$	31,504	$	31,504	$	—	$	—

Temporary Equity	Temporary Equity									Temporary Equity
Redeemable noncontrolling interests2		$	12,500	$	—	$	—	$	12,500
Redeemable noncontrolling interests1										Redeemable noncontrolling interests1	$	12,500	$	—	$	—	$	12,500
Total temporary equity	Total temporary equity	$	12,500	$	—	$	—	$	12,500	Total temporary equity	$	12,500	$	—	$	—	$	12,500

1 ~~Cash equivalents includes money market funds.~~

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

Redeemable Noncontrolling Interests

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

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

The changes in fair value of the Company’s Level 3 redeemable noncontrolling interests during the three months ended March 31, 2022 were as follows:


	Redeemable noncontrolling interests
Balance at December 31, 2021	$	12,500
Fair value adjustment	(115)
Net loss attributable to redeemable noncontrolling interests	115
Balance at March 31, 2022	$	12,500

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

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


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

5. Leases

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

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

The Company reflects finance leases as a component of Leases, non-current on the Condensed Consolidated Balance Sheet. The finance leases were not material for the period ended ~~September 30, 2021.~~March 31, 2022.

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The following table presents information about the Company's Right of Use (ROU) assets and lease liabilities at ~~September 30, 2021:~~March 31, 2022:



ROU assets:
Non-current operating lease ROU assets	$	~~27,629~~24,606



Operating lease liabilities:
Current operating lease liabilities1	$	~~8,037~~7,026
Non-current operating lease liabilities	~~37,572~~34,014
Total operating lease liabilities	$	~~45,609~~41,040

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

The following table presents information about lease expense and sublease income for the three ~~and nine~~ months ended ~~September 30, 2021:~~March 31, 2022:

Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
Operating lease cost1
$ 2,235 $ 7,268
Other lease costs and income:
Variable lease costs1
85 501
Operating lease impairments1, 2
642 1,794
Sublease income1
(693) (2,471)
Total net lease cost $ 2,269 $ 7,092



Operating lease cost1	$	2,042
Other lease costs and income:
Variable lease costs1	435
Operating lease impairments1, 2	443
Sublease income1	(646)

Total net lease cost	$	2,274

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

2 As part of the Company’s continued cost savings initiatives, the Company closed certain office spaces and terminated various lease agreements. These actions resulted in a$0.4 million ROU asset impairment charge for the period, which was determined by the present value of the forecasted future cash flows for the remaining lease term.

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

The following table provides the undiscounted amount of future cash flows included in our lease liabilities at ~~September 30, 2021~~March 31, 2022 for each of the five years subsequent to December 31, ~~2020~~2021 and thereafter, as well as a reconciliation of such undiscounted cash flows to our lease liabilities at ~~September 30, 2021:~~March 31, 2022:


		Operating Leases			Operating Leases
Remaining 2021		$	2,975
2022	2022	10,870		2022	$	7,809
2023	2023	8,552		2023	8,450
2024	2024	8,308		2024	8,302
2025	2025	8,193		2025	8,134
2026				2026	7,957
Thereafter	Thereafter	18,562		Thereafter	10,501
Total future lease payments	Total future lease payments	57,460		Total future lease payments	51,153
Less: amount representing interest	Less: amount representing interest	(11,851)		Less: amount representing interest	(10,113)
Present value of future lease payments (lease liability)	Present value of future lease payments (lease liability)	$	45,609	Present value of future lease payments (lease liability)	$	41,040

The following table provides the weighted-average remaining lease term and weighted-average discount rates for our leases as of ~~September 30, 2021:~~March 31, 2022:


Operating Leases:
Weighted-average remaining lease term (years), weighted based on lease liability balances			~~6.06~~5.69
Weighted-average discount rate (percentages), weighted based on the remaining balance of lease payments			~~8.1%~~8.2%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:



Operating Leases:
Cash paid for amounts included in the measurement of lease liabilities	$	~~10,437~~2,603

6. Investments in Affiliates and Related Transactions

Sequential Technology International, LLC

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

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

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

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transaction date to be approximately $4.8 million. The Company determined the fair value of the Note using a discounted cash flow analysis, which discounts the expected future cash flows of the asset to determine its fair value. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. No gain or loss was recognized as a result of the transaction. As of ~~September 30, 2021~~March 31, 2022, the Company reassessed the fair value of the Note and there were no material changes.

7. Debt

Offering of Senior Notes

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

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

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

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

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

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

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

~~Senior Notes~~

~~September 30, 2021~~

~~December 31, 2020~~

~~8.375% Senior Notes due 2026~~

~~125,000~~

—

~~Unamortized discount and debt issuance cost~~1

~~(7,506)~~

—

~~Carrying value of Senior Notes~~

~~117,494~~

—

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

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

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

During the fourth quarter of 2021, the Company sold an additional $16.1 million aggregate principal amount of Senior Notes pursuant to the Sales Agreement. The additional Senior Notes sold pursuant to the Sales Agreement will be issued pursuant to a prospectus dated August 28, 2020, as supplemented by a prospectus supplement dated October 25, 2021, in each case filed with the Securities and Exchange Commission (the “Commission”) pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-248133), which was declared effective by the Commission on August 28, 2020, and the Registration Statement on Form S-3 (File No. 333-260482), filed with the Commission pursuant to Rule 462(b) under the Securities Act on October 25, 2021. The additional Senior Notes will be issued pursuant to the Indenture, dated June 30, 2021 (the “Base Indenture”), as supplemented by the First Supplemental Indenture, dated June 30, 2021 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) between The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), and the Company.

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

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


Senior Notes	March 31, 2022		December 31, 2021
8.375% Senior Notes due 2026	$	141,077	$	141,077
Unamortized discount and debt issuance cost1	(7,615)		(7,973)
Carrying value of Senior Notes	$	133,462	$	133,104

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

The total fair value of the outstanding Senior Notes was $119.9 million as of March 31, 2022. The Company is in compliance with its debt covenants as of March 31, 2022.

2019 Revolving Credit Facility

On October 4, 2019, the Company entered into a Credit Agreement with Citizens Bank, N.A., for a $10.0 million Revolving Credit Facility. Borrowings under the Revolving Credit Facility bore interest at a rate equal to, at the Company’s option, either (1) the arithmetic average of the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period (one, three or six months (or 12 months if agreed to by all applicable Lenders)) as selected by the Company relevant to such borrowing plus the applicable margin, or (2) a base rate determined by reference to the greatest of the

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

On June 30, 2021, the Company paid off the outstanding balance and closed the Revolving Credit Facility.

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Interest expense

The following table summarizes the Company’s interest expense:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
2021 Senior Notes due 2026
Amortization of debt issuance costs $ 306 $ — $ 306 $ —
Interest on borrowings 2,617 — 2,617 —
2019 Revolving Credit Facility
Amortization of debt issuance costs — 12 84 40
Commitment fee — — — 4
Interest on borrowings — 59 126 141
Other1
10 1 39 216
Total $ 2,933 $ 72 $ 3,172 $ 401

1 ~~Mainly finance leases’ related interest expense~~

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


	Three Months Ended March 31,
	2022		2021
2021 Non-Convertible Senior Notes due 2026:
Amortization of debt issuance costs	$	335	$	—
Interest on borrowings	2,954		—
Amortization of debt discount	22		—
2019 Revolving Credit Facility:
Amortization of debt issuance costs	—		12

Interest on borrowings	$	—	$	63

Other	$	14	$	20
Total	$	3,325	$	95

8. Accumulated Other Comprehensive (Loss) / Income

The changes in accumulated other comprehensive (loss) income during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 were as follows:


		Balance at December 31, 2020		Other comprehensive (loss) income		Tax effect		Balance at September 30, 2021			Balance at December 31, 2021		Other comprehensive (loss) income		Tax effect		Balance at March 31, 2022
Foreign currency	Foreign currency	$	(26,076)	$	(3,595)	$	—	$	(29,671)	Foreign currency	$	(29,350)	$	(3,159)	$	—	$	(32,509)
Unrealized loss on intra-entity foreign currency transactions	Unrealized loss on intra-entity foreign currency transactions	(2,137)		1,361		(464)		(1,240)		Unrealized loss on intra-entity foreign currency transactions	(3,635)		29		(11)		(3,617)

Total	Total	$	(28,213)	$	(2,234)	$	(464)	$	(30,911)	Total	$	(32,985)	$	(3,130)	$	(11)	$	(36,126)

9. ~~Stockholders’ Equity~~Capital Structure

Common Stock

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

Common Stock Offering

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

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

Shelf Registration Statement

On August 19, 2020, the Company filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, debt securities, guarantees of debt securities, warrants and units up to an aggregate amount of $250.0 million (“the 2020 Shelf Registration Statement”). On August 28, 2020, the 2020 Shelf Registration Statement was declared effective by the SEC. As of March 31, 2022, except for the Common Stock offering and the issuance of Senior Notes, the Company has not raised additional capital using the 2020 Shelf Registration Statement.

Preferred Stock

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

Series B Non-Convertible Preferred Stock

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

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

Certificate of Designation of the Series B Preferred Stock

The rights, preferences, privileges, qualifications, restrictions and limitations of the shares of Series B Preferred Stock are set forth in the Series B Certificate. Under the Series B Certificate, the holders of the Series B Preferred Stock are entitled to receive, on each share of Series B Preferred Stock on a quarterly basis, an amount equal to the dividend rate, as described in the following sentence, divided by four and multiplied by the then-applicable Liquidation Preference per share of Series B Preferred Stock (collectively, the “Preferred Dividends”). The dividend rate is (1) 9.5% per annum for the period commencing on June 30, 2021 and ending on and including December 31, 2021, (2) 13% per annum for the year commencing on January 1, 2022 and ending on and including December 31, 2022; and (3) 14% per annum for the year commencing on January 1, 2023 and thereafter. The Preferred Dividends will be due in cash on January 1, April 1, July 1 and October 1 of each year (each, a “Series B Dividend Payment Date”). The Company may choose to pay the Series B Preferred Dividends in cash or in additional shares of Series B Preferred Stock. In the event the Company does not declare and pay a dividend in cash on any Series B Dividend Payment Date, the unpaid amount of the Preferred Dividend will be added to the Liquidation Preference. As of ~~September 30, 2021,~~March 31, 2022, the Liquidation Value and Redemption Value of the Series B Preferred Shares was ~~$76.8~~$77.4 million.

On and after the fifth anniversary of the date of issuance, holders of shares of Series B Preferred Stock will have the right to cause the Company to redeem each share of Series B Preferred Stock for cash in an amount equal to the sum of the current liquidation preference and any accrued dividends. Each share of Series B Preferred Stock will also be redeemable at the option of the holder upon the occurrence of a “Fundamental Change” at (i) par in the case of a payment in cash or (ii) 1.5 times par in the case of payment in shares of Common Stock (such shares being, “Registrable Securities”), subject to certain limitations on the amount of stock that could be issued to the holders of Series B Stock. In addition, the Company will be permitted to redeem outstanding shares of the Series B Preferred Stock at any time for the sum of the then-applicable Liquidation Preference and the accrued but unpaid dividends. Pursuant to the Series B Certificate, the Company will be required to use (i) the first $50.0 million of proceeds from certain transactions (i.e., disposition, sale of assets, tax refunds) received by the Company to

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redeem for cash, shares of the Series B Preferred Stock, on a pro rata basis among each holder of Series B Preferred Stock and (ii) the next $25.0 million of proceeds from certain transactions received by the Company may be used by the Company to buy back shares of Common Stock and to the extent, not used for such purpose by the Company, to redeem, for cash, shares of the Series B Preferred Stock, on a pro rata basis among each holder of the Series B Preferred Stock.

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

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

Investor Rights Agreement

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

A summary of the Company’s Series B Perpetual Non-Convertible Preferred Stock balance at ~~September 30, 2021~~March 31, 2022 and changes during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, are presented below:

Series B Preferred Stock
Shares Amount
Balance at December 31, 2020 — $ —
Issuance of Series B preferred stock 75 75,000
Issuance costs related to preferred stock — (2,495)
Balance at September 30, 2021 75 $ 72,505


	Series B Preferred Stock
	Shares	Amount
Balance at December 31, 2021	75	$	72,505


Amortization of preferred stock issuance costs	—	—
Issuance of preferred PIK dividend	—	—




Balance at March 31, 2022	75	$	72,505

On ~~October~~April 1, ~~2021~~2022 the Company paid in-kind the accrued Series B Perpetual Non-Convertible Preferred Stock dividend of ~~$1.8~~$2.4 million. On April 18, 2022, the Company made a $2.5 million principal payment on the Series B Preferred Stock. On May 10, 2022, the Company made an additional principal payment on the Series B Preferred Stock of $4.4 million.

Series A Convertible Preferred Stock

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

Redemption of Series A Preferred Stock

The net proceeds from the common stock public offering, Senior Note offering and the Series B transaction was used in part to fully redeem all outstanding shares of the Company’s Series A Preferred Stock on June 30, 2021 (the “Redemption”). The Company redeemed in full all of the 268,917 outstanding shares of the Series A Preferred Stock for an aggregate Redemption Price of $278.7 million and all rights under the Investor Rights Agreement relating to the Series A Preferred Stock ~~were terminated effective with the Redemption. No Series A Preferred Stock remain outstanding or authorized as of September 30, 2021.~~

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~~A summary of~~were terminated effective with the ~~Company’s~~Redemption. No Series A ~~Convertible Participating Perpetual~~ Preferred Stock ~~balance at September 30, 2021 and changes during the nine months ended September 30, 2021, are presented below:~~

Series A Preferred Stock
Shares Amount
Balance at December 31, 2020 250 $ 237,641
Amortization of preferred stock issuance costs — 12,791
Issuance of preferred PIK dividend 19 18,485
Payment of preferred dividend — 9,748
Redemption of Series A preferred shares (269) (278,665)
Balance at September 30, 2021 — $ —

~~The Company and Siris Capital Group, LLC (“Siris”) entered into an Advisory Services Agreement dated~~remain outstanding or authorized as of May 18, 2020 under which Siris may provide consulting and advisory services to the Company on operational, business, financial and strategic matters. All obligations related to this Advisory Services Agreement were paid by the Company and the Advisory Services Agreement was terminated as of June 30, 2021.March 31, 2022.

Registration Rights

The Investor Rights Agreement entered into on June 30, 2021 provides that in the event Synchronoss issues Registrable Securities to the holders of Series B Preferred Stock, such holders will have certain demand and piggy-back registration rights with respect to such Registrable Securities. In addition, on June 30, 2021, in connection with the redemption of the Series A Preferred Stock, the Investor Rights Agreement between the Company and Silver terminated.

Stock Plans

On June 10, 2021, the Company’s stockholders approved the amendment and restatement of the Company’s 2015 Equity Incentive Plan to increase the number of shares issuable thereunder by 3.0 million shares. There were no significant changes to ~~Synchronoss Technologies, Inc. 2017 New Hire Equity Incentive Plan (the “Incentive Plan”)~~the Company’s Stock Plans during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. As of ~~September 30, 2021,~~March 31, 2022, there were ~~1.2~~1.9 million shares available for the grant or award under the Company’s 2015 Equity Incentive Plan and ~~0.4~~0.6 million shares available for the grant or award under the Company’s 2017 New Hire Equity Incentive Plan.

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

The Company’s performance cash awards granted to executives under the Long Term Incentive (“LTI”) Plans have been accounted for as liability awards, due to the Company’s intent and the ability to settle such awards in cash upon vesting and the Company has reflected such awards in accrued expenses. As of ~~September 30, 2021,~~March 31, 2022, the liability for such awards is approximately ~~$0.2~~$0.5 million.

Stock-Based Compensation

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


	Three Months Ended March 31,
	2022		2021
Cost of revenues	$	221	$	478
Research and development	556		855
Selling, general and administrative	1,150		1,388
Total stock-based compensation expense	$	1,927	$	2,721

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


	Three Months Ended March 31,
	2022		2021
Stock options	$	794	$	955
Restricted stock awards	878		1,710
Performance Based Cash Units	255		56

Total stock-based compensation before taxes	$	1,927	$	2,721
Tax benefit	$	377	$	497

The total stock-based compensation cost related to unvested equity awards as of March 31, 2022 was approximately $7.3 million. The expense is expected to be recognized over a weighted-average period of approximately 1.1 years.

The total stock-based compensation cost related to unvested performance based cash units as of March 31, 2022 was approximately $1.0 million. The expense is expected to be recognized over a weighted-average period of approximately 1.5 years.

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~~Stock-Based Compensation~~

~~The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by operating expense categories, as follows:~~
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Cost of revenues $ 432 $ 505 $ 1,289 $ 1,899
Research and development 725 890 2,276 3,392
Selling, general and administrative 1,132 2,996 3,790 9,256
Total stock-based compensation expense $ 2,289 $ 4,391 $ 7,355 $ 14,547

~~The following table summarizes stock-based compensation expense related to all of the Company’s stock awards included by award type, as follows:~~
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Stock options $ 1,064 $ 1,701 $ 2,912 $ 5,289
Restricted stock awards 1,373 2,626 4,412 8,922
Performance Based Cash Units (148) 64 31 336
Total stock-based compensation before taxes $ 2,289 $ 4,391 $ 7,355 $ 14,547
Tax benefit $ 420 $ 604 $ 1,357 $ 2,192

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

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

Stock Options

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2021			2020				2021			2020					2022			2021
Expected stock price volatility	Expected stock price volatility	78.5		%	78.3		%		82.9		%	74.5		%		Expected stock price volatility	71.9		%	83.0		%
Risk-free interest rate	Risk-free interest rate	0.6		%	0.2		%		0.6		%	1.0		%		Risk-free interest rate	1.5		%	0.6		%
Expected life of options (in years)	Expected life of options (in years)	4.20			4.52				4.24			4.47				Expected life of options (in years)	4.15			4.18
Expected dividend yield	Expected dividend yield	0.0		%	0.0		%		0.0		%	0.0		%		Expected dividend yield	0.0		%	0.0		%
Weighted-average fair value (PSV) of the options	Weighted-average fair value (PSV) of the options	$	1.72		$	2.23			$	1.88		$	2.80			Weighted-average fair value (PSV) of the options	$	1.13		$	2.42

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~~SYNCHRONOSS TECHNOLOGIES, INC.~~

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

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

The following table summarizes information about stock options outstanding as of ~~September 30, 2021:~~March 31, 2022:


Options	Options	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value		Options	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2020		4,423	$	9.60
Outstanding at December 31, 2021								Outstanding at December 31, 2021	4,715	$	6.53
Options Granted	Options Granted	1,966	3.08					Options Granted	2	2.06
Options Exercised	Options Exercised	—	—					Options Exercised	—	—
Options Cancelled	Options Cancelled	(1,395)	9.81					Options Cancelled	(234)	8.93
Outstanding at September 30, 2021		4,994	$	6.97	5.07	$	—
Vested and exercisable at September 30, 2021		1,696	$	12.76	3.14	$	—
Outstanding at March 31, 2022								Outstanding at March 31, 2022	4,483	$	6.37	4.80	$	—
Vested and exercisable at March 31, 2022								Vested and exercisable at March 31, 2022	1,776	$	10.71	3.43	$	—

The total intrinsic value of stock options exercisable ~~at September 30, 2021 and 2020~~ was nil at March 31, 2022 and ~~nil,~~2021, respectively. The total intrinsic value of stock options exercised was nil during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020 was nil and nil,~~ respectively.

Awards of Restricted Stock and Performance Stock

A summary of the Company’s unvested restricted stock at ~~September 30, 2021,~~March 31, 2022, and changes during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, is presented below:


Unvested Restricted Stock	Unvested Restricted Stock	Number of Awards	Weighted- Average Grant Date Fair Value		Unvested Restricted Stock	Number of Awards	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2020		1,510	$	7.05
Unvested at December 31, 2021					Unvested at December 31, 2021	2,574	$	3.57
Granted	Granted	2,000	3.11		Granted	71	1.63
Vested	Vested	(837)	7.56		Vested	(351)	5.03
Forfeited	Forfeited	(354)	4.38		Forfeited	(132)	3.44
Unvested at September 30, 2021		2,319	$	3.84
Unvested at March 31, 2022					Unvested at March 31, 2022	2,162	$	3.24

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

~~Performance Based Cash Units~~

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

2522

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

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

Performance Based Cash Units

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

A summary of the Company’s unvested performance-based cash units at ~~September 30, 2021~~March 31, 2022 and changes during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, is presented below:


Unvested Cash Units	Unvested Cash Units	Number of Units	Period End Fair Value		Unvested Cash Units	Number of Units	Period End Fair Value
Unvested at December 31, 2020		907	$	4.70
Unvested at December 31, 2021					Unvested at December 31, 2021	1,996	$	2.44
Granted	Granted	1,556	—		Granted	—	—
Granted adjustment1	Granted adjustment1	(307)	0		Granted adjustment1	(73)	0
Vested	Vested	(30)	—		Vested	—	—
Forfeited	Forfeited	(564)	—		Forfeited	(62)	—
Unvested at September 30, 2021		1,562	$	2.40
Unvested at March 31, 2022					Unvested at March 31, 2022	1,861	$	1.73

___________________________

1 Includes changes in the unvested units due to performance adjustments

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

10. Income Taxes

The Company recognized an income tax expense of approximately $0.1 million and an income tax benefit of approximately ~~$7.3 million and $29.1~~$0.2 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The effective tax rate was approximately ~~24.3%~~(4.4)% for the ~~nine~~three months ended ~~September 30, 2021,~~ March 31, 2022, which was ~~higher~~lower than the U.S. federal statutory rate primarily due to discrete income tax benefit recorded in the current quarter associated with the finalization of the Company’s U.S. federal income tax return, which reflected a net operating loss that was carried back to prior tax years. Based on the final carryback claim, the Company recorded a discrete income tax benefit of $7.4 million and discrete income tax expense related to a liability for unrecognized tax benefits in the amount of $2.1 million, all of which, if recognized, would impact the Company’s effective tax rate. This increase was partially offset by pre-tax losses in jurisdictions where full valuation allowances have been recorded ~~pre-tax losses in jurisdictions which have a zero tax rate,~~ and certain foreign jurisdictions projecting current income tax expense. This decrease was partially offset by a discrete income tax benefit recorded in the period associated with the release of certain reserves for uncertain tax benefits. The Company’s effective tax rate was approximately ~~75.3%~~1.3% for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, which was ~~higher~~lower than the U.S. federal statutory rate primarily due to ~~the Company’s ability to recognize certain loss carrybacks as a result of the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”)~~pre-tax losses in ~~the first quarter of 2020, the impact of the redemption of the Company’s interest in STIN and~~jurisdictions where full valuation allowances have been recorded and in ~~domestic and foreign jurisdictions, partially offset by the impact of permanent book-tax differences.~~zero rate jurisdictions. The Company continues to consider all available evidence, including historical profitability and projections of future taxable income together with new evidence, both positive and negative, that could affect the view of the future realization of deferred tax assets. As a result of the assessment, no change was recorded by the Company to the valuation allowance during the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

On March 11, 2021 the American Rescue Plan Act ("ARPA") was signed into law which is aimed at addressing the continuing economic and health impacts of the COVID-19 pandemic. This legislation relief, along with the previous governmental relief packages provide for numerous changes to current tax law. The ~~Company~~ARPA does not ~~anticipate that ARPA will~~ have a material impact on ~~its~~the Company’s financial statements in the period ending ~~September 30, 2021.~~March 31, 2022.

During ~~the quarter,~~2021 the Internal Revenue Service commenced an audit of certain of the Company’s prior year U.S. federal income tax filings, including the 2015 through 2020 tax years. The audit is currently ongoing and the Company does not believe that the results of this audit will have a material effect on its financial position or results of operations.

Subsequent to March 31, 2022, the Company received $4.3 million in federal tax refunds. There is no change to the Company’s position on the remaining tax refunds.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

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

11. Restructuring

The Company continues to execute certain restructurings to identify workforce optimization opportunities to better align the Company’s resources with its key strategic priorities. A summary of the Company’s restructuring accrual at ~~September 30, 2021~~March 31, 2022 and changes during the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, are presented below:

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


	Balance at December 31, 2021		Charges		Payments		Other Adjustments		Balance at March 31, 2022
Employment termination costs	$	3,247	$	685	$	(1,836)	$	(11)	$	2,085

12. Earnings per Common Share (“EPS”)

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

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~~SYNCHRONOSS TECHNOLOGIES, INC.~~

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Numerator - Basic:
Net loss from continuing operations $ (8,109) $ (5,622) $ (22,895) $ (9,666)
Net income (loss) attributable to redeemable noncontrolling interests — (60) 286 (242)
Preferred stock dividend 1
(1,722) (9,685) (33,728) (27,882)
Net loss attributable to Synchronoss $ (9,831) $ (15,367) $ (56,337) $ (37,790)
Numerator - Diluted:
Net loss from continuing operations attributable to Synchronoss $ (9,831) $ (15,367) $ (56,337) $ (37,790)
Denominator:
Weighted average common shares outstanding — basic 85,646 42,360 57,662 41,777
Dilutive effect of:
Shares from assumed conversion of preferred stock2
— — — —
Shares from assumed conversion of Performance Based Cash Units3
— — — —
Weighted average common shares outstanding — diluted 85,646 42,360 57,662 41,777
Basic EPS
Earnings per share:
Basic $ (0.11) $ (0.36) $ (0.98) $ (0.90)
Diluted $ (0.11) $ (0.36) $ (0.98) $ (0.90)
Anti-dilutive stock options excluded — — — —
Unvested shares of restricted stock awards 2,319 1,952 2,319 1,952

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


	Three Months Ended March 31,
	2022		2021
Numerator - Basic:
Net loss from operations	$	(3,037)	$	(12,366)
Net (loss) income attributable to redeemable noncontrolling interests	(115)		336
Preferred stock dividend	(2,438)		(10,530)



Net loss attributable to Synchronoss	$	(5,590)	$	(22,560)

Numerator - Diluted:
Net loss from operations attributable to Synchronoss	$	(5,590)	$	(22,560)




Net loss attributable to Synchronoss	$	(5,590)	$	(22,560)

Denominator:
Weighted average common shares outstanding — basic	85,866		42,737








Earnings (loss) per share:
Basic	$	(0.07)	$	(0.53)



Diluted	$	(0.07)	$	(0.53)





Anti-dilutive stock options excluded	—		—

2 The calculation does not include the effect of assumed conversion of preferred stock of nil and 13,426,155 shares for the three months ended September 30, 2021 and 2020, respectively; and 14,767,557 and 12,963,664 shares for the nine months ended September 30, 2021 and 2020, respectively; which is based on 55.5556 shares per $1,000 principal amount of the preferred stock, because the effect would have been anti–dilutive.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

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

13. Commitments, Contingencies and Other

~~Purchase Obligations~~Non-cancelable agreements

The Company has various non-cancelable arrangements such as services for hosting, support, and software that expire at various dates, with the latest expiration in 2025.

Aggregate annual future minimum payments under non-cancelable agreements as of March 31, 2022 are as follows:


Year	Year	Non-cancelable agreements		Year	Non-cancelable agreements
2021		$	4,788
2022	2022	21,696		2022	$	16,473
2023	2023	14,541		2023	16,294
2024 and thereafter		21,995
2024				2024	13,343
2025				2025	9,699
Total	Total	$	63,020	Total	$	55,809

Legal Matters

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

On May 1, 2017, May 2, 2017, June 8, 2017 and June 14, 2017, 4 putative class actions were filed against the Company and certain of its current and former officers and directors in the United States District Court for the District of New Jersey (the “Securities Law Action”). After these cases were consolidated, the court appointed as lead plaintiff Employees’ Retirement System of the State of Hawaii, which filed, on November 20, 2017, a consolidated complaint purportedly on behalf of purchasers of the Company’s common stock between February 3, 2016 and June 13, 2017. On February 2, 2018, the defendants moved to dismiss the consolidated complaint in its entirety, with prejudice. Before that motion was decided, on August 24, 2018, lead plaintiff filed a consolidated amended complaint purportedly on behalf of purchasers of the Company’s common stock between October 28, 2014 and June 13, 2017. On June 28, 2019, the Court granted defendants’ motion to dismiss the consolidated amended complaint in its entirety, without prejudice, allowing lead plaintiff leave to amend its complaint.On August 14, 2019, lead plaintiff filed a second amended complaint. The second amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and it alleges, among other things, that the defendants made false and misleading statements of material information concerning the Company’s financial results, business operations, and prospects. The plaintiff seeks unspecified damages, fees, interest, and costs. On October 4, 2019, the defendants moved to dismiss the second amended complaint in its entirety.On May 29, 2020, the Court granted in part and denied in part defendants’ motion to dismiss the second amended complaint, without prejudice. Plaintiff filed its motion for class certification on October 30, 2020.

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

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

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

the Court granted the defendants’ motion for reconsideration and dismissed the remaining claim without prejudice, allowing lead plaintiff leave to amend her complaint. On July 13, 2020, lead plaintiff filed an amended complaint. The amended complaint alleges claims related to breaches of fiduciary duties and unjust enrichment. The amended complaint’s allegations relate to substantially the same facts as those underlying the Securities Law Action described above. On April 30, 2021, the Court dismissed Plaintiff’s amended complaint in its entirety.~~Plaintiff filed a notice of appeal on May 28, 2021.~~

On March 7, 2019, Synchronoss shareholders, Beth Daniel and Juan Solis, filed a separate derivative lawsuit against certain of the Company’s current and former officers and directors and the Company (as nominal defendant) in the Court of Chancery of the State of Delaware, asserting substantially the same allegations as those underlying the Derivative Suits and the Securities Law Action described above (the “Delaware Litigation”). Plaintiffs seek unspecified damages and for the Company to take steps to improve its corporate governance and internal procedures. On May 20, 2019, the parties stipulated to a stay of the action pending a ruling on the pending motion to dismiss in the Derivative Suits.

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

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

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

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

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

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

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SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED

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

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

14. Additional Financial Information

Other Income (expense), net

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

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
FX gains (losses)1
$ (1,752) $ 2,228 $ (4,055) $ 2,330
Government refunds 195 322 199 874
Income from sale of intangible assets2
— — 550 2,164
Other3
(112) 134 (183) 375
Total $ (1,669) $ 2,684 $ (3,489) $ 5,743


	Three Months Ended March 31,
	2022		2021
FX gains (losses)1	$	1,718	$	(3,274)


Other2	(14)		(122)
Total	$	1,704	$	(3,396)

1 Fair value of foreign exchange gains and losses

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

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

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

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

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

Overview

Synchronoss ~~Technologies, Inc. (“Synchronoss” or the “Company”)~~ is a ~~global software~~leading provider of white label cloud, messaging, digital and ~~services company~~network management solutions that ~~provides essential technologies for~~enable our customers to keep subscribers, systems, networks and content in sync. We help our customers to connect, engage and monetize subscribers in more meaningful ways by providing trusted platforms through which end users can sync and store content and connect with one another and the mobile transformation of business. The Company’s portfolio contains offerings such as personal cloud, secure-mobility, identity management and scalable messaging platforms, products and solutions. These essential technologies create a better way of delivering the transformative mobile experiences that the Company’s customers needbrands they love. Our mission is to help ~~them stay ahead~~our customers create new revenue streams, reduce the cost of ~~the curve in competition,~~ innovation, ~~productivity, growth~~ and ~~operational efficiency.~~captivate their subscribers.

~~Synchronoss’ products~~Our core product sets allow our customers to create a positive experience throughout their subscribers’ lifecycle by engaging, onboarding and ~~platforms are designed~~managing the network to ~~be carrier-grade, flexible~~ensure reliable service.

•ENGAGE:

Table of Contents

◦Personal Cloud: Backup, manage and ~~scalable, enabling multiple converged communication services to be managed~~engage with content.

◦Advanced Messaging: multi-channel messaging, peer-to-peer (“P2P”) communications and application-to-person (“A2P”) commerce solutions.

◦Email Suite: White label consumer email solutions.

•ONBOARD:

◦Backup and Restore: Backup, view and restore subscriber content across ~~a range~~operating systems and devices.

◦Out of ~~distribution channels including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets. This business model allows~~Box Experience: Streamline the ~~Company to meet the rapidly changing converged~~activation of new services and ~~connected devices offered by their customers. Synchronoss’ products, platforms~~devices.

◦Content Transfer: Effortlessly move content between mobile devices.

◦Digital Experience Platform: Customer journey and ~~solutions enable its customers to acquire, retain~~workflow design, development, orchestration and ~~service subscribers~~experience management.

•NETWORK:

◦Total Network Management (“TNM”): integrated application suite that designs, procures, manages and employees quickly, reliably and cost-effectively with white label and custom-branded solutions. Synchronoss’ customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, backing-up, synchronizing and sharing/collaboration with connected devices and contents from these devices and associated services. The extensibility, scalability, reliability and relevance of the Company’s platforms enable new revenue streams and retention opportunities for their customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud. By using the Company’s technologies, Synchronoss’ customers can optimize their cost of operations while enhancing their customer experience.optimizes telecom network infrastructure.

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

~~Impacts of COVID-19~~

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

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

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

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

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

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

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

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

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

Revenues

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

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

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

Our top five customers accounted for ~~69.2%~~71.4% and ~~69.0%~~68.3% of net revenues for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ respectively. Contracts with these customers typically run for three to five years. Of these customers, Verizon accounted for more than 10% of our revenues in ~~2021~~2022 and ~~2020.~~2021. The loss of Verizon as a customer would have a material negative impact on our company. However, we believe that the costs incurred and subscriber disruption by Verizon to replace Synchronoss’ solutions would be substantial.

Current Trends Affecting Our Results of Operations

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

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

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

Business from our traditional Synchronoss Messaging business (Email) has been driven by a resurgence in the need for white label secure messaging platforms that favor the Mobile Network Operator’s (“MNO”) business objectives and are not beholden to the objectives of a sponsoring over-the-top (“OTT”) platform. We believe that messaging drives higher subscriber engagement than any other application in the market today and holds the potential to stimulate new revenue from traditional services and third-party brands. OTT global success has driven MNOs to look at opportunities to preempt and compete with the

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OTTs which ~~has~~provides a potential opportunity for Synchronoss’ future growth to be driven by the need of TMT companies including (and especially) MNOs to embrace Messaging as a Platform (“MaaP”). MaaP will allow TMT and ~~MNO’s~~MNOs to converse with subscribers in an efficient, automated way by streamlining the costs and increasing the effectiveness of self-care, as well as yielding cross-sell upselling of service plans, devices, bundles, etc. The Synchronoss Advanced Messaging Platform provides state of the art RCS-driven features including the ability to support advanced Peer to Peer communications and introduce new revenue streams driven by commerce and advertising via Application-to-Person capabilities.

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

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

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

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Discussion of the Condensed Consolidated Statements of Operations

Three months ended ~~September 30, 2021~~March 31, 2022 compared to the three months ended ~~September 30, 2020~~March 31, 2021

The following table presents an overview of our results of operations for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):


		Three Months Ended September 30, 2021				$ Change			Three Months Ended March 31,				$ Change
		2021		2020			2021 vs 2020				2022		2021		2022 vs 2021
Net revenues	Net revenues	$	69,753	$	68,636		$	1,117		Net revenues	$	65,866	$	65,499	$	367
Cost of revenues1	Cost of revenues1	27,245		28,452			(1,207)			Cost of revenues1	24,839		28,637		(3,798)
Research and development	Research and development	15,368		20,885			(5,517)			Research and development	15,791		17,397		(1,606)
Selling, general and administrative	Selling, general and administrative	27,953		23,265			4,688			Selling, general and administrative	17,897		17,928		(31)
Restructuring charges	Restructuring charges	1,485		820			665			Restructuring charges	685		713		(28)
Depreciation and amortization	Depreciation and amortization	8,215		12,212			(3,997)			Depreciation and amortization	8,034		9,867		(1,833)
Total costs and expenses	Total costs and expenses	80,266		85,634			(5,368)			Total costs and expenses	67,246		74,542		(7,296)
Loss from continuing operations		$	(10,513)	$	(16,998)		$	6,485
Loss from operations										Loss from operations	$	(1,380)	$	(9,043)	$	7,663

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

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Net revenues increased ~~$1.1~~$0.4 million to ~~$69.8~~$65.9 million for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to the same period in ~~2020.~~2021. The increase in revenue ~~is primarily driven by~~was the result of continued strong subscriber growth in ~~cloud subscribers~~the Company’s Cloud business and ~~new digital license sales~~the launch of an RCS platform. Revenue growth was partially offset by revenue received from a non-recurring advanced messaging ~~deals~~contract in the ~~prior period.~~previous year and the sunsetting of legacy products.

Cost of revenues decreased ~~$1.2~~$3.8 million to ~~$27.2~~$24.8 million for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to the same period in ~~2020.~~2021. The ~~2021~~2022 decrease was primarily attributable to continued efforts to streamline our business operations and reduce ~~costs.~~costs as well as the continued realization of a more profitable revenue mix.

Research and development expense decreased ~~$5.5~~$1.6 million to ~~$15.4~~$15.8 million for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to the same period in ~~2020.~~2021. The research and development costs decreased year over year mainly as a result of executed cost savings initiatives to streamline our workforce, ~~and~~ reduce vendor ~~spend.~~spend and overhead costs.

Selling, general and administrative expense ~~increased $4.7 million~~decreased slightly to ~~$28.0~~$17.9 million for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to the same period in ~~2020. Our~~2021. We executed significant strategic cost reductions since 2019 reducing our selling, general and administrative ~~expense excluding legal reserves decreased period over period as a result of the continued~~costs $11.3 million or 39% by optimizing our workforce, reducing vendor spend and lowering facility costs. These strategic cost savings ~~initiatives executed in year which included headcount reductions, reduced vendor spending~~have favorably impacted our current and ~~lower facility~~prior period selling, general and administrative costs.

Restructuring charges were $~~1.5~~0.7 million and $~~0.8~~0.7 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively, which primarily related to employment termination costs as a result of the work-force reductions initiated ~~in the current year~~ to reduce operating costs and align our resources with our key strategic priorities.

Depreciation and amortization expense decreased ~~$4.0~~$1.8 million to ~~$8.2~~$8.0 million for the three months ended ~~September 30, 2021,~~March 31, 2022, compared to the same period in ~~2020.~~2021. The ~~2021~~2022 decrease was primarily attributable to the expiration of amortizable acquired assets in combination with reduced capital expenditures mainly as a result of ~~the data center consolidation project and~~ efforts to streamline business operations, partially offset by the increased amortization of capitalized software.

Income tax. The Company recognized an income tax ~~benefit~~expense of approximately ~~$7.0~~$0.1 million and ~~$8.7~~$0.2 million during the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The effective tax rate was approximately ~~46.3%~~(4.4)% for the three months ended ~~September 30, 2021,~~ March 31, 2022, which was ~~higher~~lower than the U.S. federal statutory rate primarily due to discrete income tax benefit recorded in the current quarter associated with the finalization of the Company’s U.S. federal income tax return, which reflected a net operating loss that was carried back to prior tax years. Based on the final carryback claim, the Company recorded a discrete income tax benefit of $7.4 million and discrete income tax expense related to a liability for unrecognized tax benefits in the amount of $2.1 million, all of which, if recognized, would impact our effective tax rate. This increase was partially offset

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by pre-tax losses in jurisdictions where full valuation allowances have been recorded ~~pre-tax losses in jurisdictions which have a zero tax rate,~~ and certain foreign jurisdictions projecting current income tax expense. This decrease was partially offset by a discrete income tax benefit recorded in the period associated with the release of certain reserves for uncertain tax benefits. The Company’s effective tax rate was approximately ~~60.9%~~1.3% for the three months ended ~~September 30, 2020,~~March 31, 2021, which was ~~higher~~lower than the U.S. federal statutory rate primarily due to the Company’s ability to recognize certain loss carrybacks as a result of the enactment of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) in the first quarter of 2020, the impact of the redemption of the Company’s interest in STIN and valuation allowances recorded in domestic and foreign jurisdictions, partially offset by the impact of permanent book-tax differences.

~~Discussion of the Condensed Consolidated Statements of Operations~~

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

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

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

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

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

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

~~Selling, general and administrative~~ ~~expense decreased $6.5 million to $67.8 million for the nine months ended September 30, 2021, compared to the same period in 2020.~~ ~~The 2021 decrease was primarily driven by cost savings initiatives that resulted in a decrease in employee costs, facilities, and external costs related to outside consultants and legal fees.~~

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

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

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

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

Liquidity and Capital Resources

As of ~~September 30, 2021,~~March 31, 2022, our principal sources of liquidity were cash provided by operations and the remaining proceeds from the financing transactions. Our cash and cash equivalents balance was ~~$24.1~~$21.7 million at ~~September 30, 2021.~~March 31, 2022. We anticipate that our principal uses of cash and cash equivalents will be to fund our business, including technology expansion and working capital.

At ~~September 30, 2021,~~March 31, 2022, our non-U.S. subsidiaries held approximately ~~$9.0~~$6.7 million of cash and cash equivalents that are available for use by our operations around the world. At this time, we believe the funds held by all non-U.S. subsidiaries will be permanently reinvested outside of the U.S. However, if these funds were repatriated to the U.S. or used for U.S. operations, certain amounts could be subject to U.S. tax for the incremental amount in excess of the foreign tax paid. Due to the timing and circumstances of repatriation of these earnings, if any, it is not practical to determine the unrecognized deferred tax liability related to the amount.

We believe that our cash, cash equivalents, financing sources, and our ability to manage working capital and expected positive cash flows generated from operations in combination with continued expense reductions will be sufficient to fund our operations for the next twelve months from the filing date of this Form 10-Q based on our current business plans. However, asgiven the impact of the COVID-19 pandemic on the economy and our operations ~~evolves,~~as well as geopolitical developments, we will

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continue to assess our liquidity needs. Given the economic uncertainty as a result of the pandemic, we have taken actions to improve our current liquidity position, including, reducing working capital, reducing operating costs and substantially reducing discretionary spending. Even with these actions however, an extended period of economic disruption ~~as a result of the continued global impact of COVID-19~~ could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, some of which are outside of our control.

~~Redemption of Series A Preferred Stock~~

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

For further details, see Note7. Debt and Note 9. ~~Stockholders’ Equity~~ ~~of the Notes to Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.~~

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~~Series B Preferred Stock~~

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

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

~~Revolving Credit Facility~~

~~We repaid in full and closed our Revolving Credit Facility as of June 30, 2021. For further details, see~~ ~~Note7. Debt~~Capital Structure of the Notes to Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.

~~Shelf Registration Statement~~

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

~~Offering of Additional Senior Notes~~

On October 25, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) between the Company and B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to $18.0 million of the Company’s 8.375% Senior Notes due 2026.

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Discussion of Cash Flows

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


		Nine Months Ended September 30,				Change			Three Months Ended March 31,
		2021		2020			2021 vs 2020				2022		2021
Net cash provided by (used in):	Net cash provided by (used in):									Net cash provided by (used in):
Operating activities	Operating activities	$	5,551	$	8,661		$	(3,110)		Operating activities	$	(2,693)	$	2,261
Investing activities	Investing activities	(17,840)		(11,406)			(6,434)			Investing activities	(5,399)		(5,763)
Financing activities	Financing activities	2,687		9,991			(7,304)			Financing activities	$	(1,781)	$	—

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

Cash ~~flows from~~used in operating activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$5.6~~$2.7 million ~~cash provided by operating activities,~~ as compared to ~~$8.7~~$2.3 million of cash provided by operating activities for the same period in ~~2020.~~ ~~Excluding~~2021. In the ~~effects of~~current period, the ~~tax refunds received in~~Company generated more cash from earnings compared to the prior ~~period,~~year however, the increased cash ~~provided~~earnings were offset by ~~operations increased from~~earlier vendor and bonus payments that were paid in subsequent periods in the prior year as ~~a result of our continued efforts to streamline our business operations and reduce costs and favorable working capital changes.~~well as interest from the senior notes.

Cash ~~flows from~~used in investing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$17.8~~$5.4 million ~~cash used in investing,~~ as compared to ~~$11.4~~$5.8 million in cash used in investing activities during the same period in ~~2020.~~2021. The cash used for investing activities in the current year ~~was primarily related to the purchase of fixed assets~~ and ~~investment in capitalized software. The net decrease in~~ ~~cash used for investing in the~~ prior year was primarily related to ~~the~~increased investment in ~~capitalized software offset by~~product development for our Cloud offering and capitalization of associated labor costs, in addition to annual vendor payments made in the ~~sale of certain IP address assets.~~first quarter.

Cash ~~flows from~~used in financing activities for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was ~~$2.7~~$1.8 million of cash ~~provided, as compared~~used to ~~$10.0 million of cash provided by financing activities for~~pay the ~~same period in 2020. In 2021,~~dividend on the ~~net proceeds from our public offering of common stock, Senior Note offering and~~ Series B Preferred ~~Stock transaction~~Stock. There was ~~primarily used to fully redeem all outstanding shares of the Company’s Series A Preferred Stock and repay and close the Revolving Credit Facility on June 30, 2021. The cash provided from~~no financing ~~activities~~activity in the comparable prior ~~year was attributable to the drawdown from our Revolving Credit Facility.~~period.

Effect of Inflation

~~While inflationary~~Inflationary increases in certain input costs, such as occupancy, labor and benefits, and general administrative costs, have ~~an impact on our operating results, inflation has had minimal net effect on~~not significantly impacted our results of operations during the three ~~or nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021. We cannot assure you, however, that we will not be affected by general inflation in the future.

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Contractual Obligations

Our contractual obligations consist of contingent consideration, office equipment and colocation services and contractual commitments under third-party hosting, software licenses and maintenance agreements. The following table summarizes our long-term contractual obligations as of ~~September 30, 2021~~March 31, 2022 (in thousands).:


		Payments Due by Period											Payments Due by Period
		Total		2021		2022-2024		2025-2026		Thereafter			Total		2022		2023-2025		2026-2027		Thereafter
Capital lease obligations		$	738	$	65	$	599	$	74	$	—
Finance lease obligations												Finance lease obligations	$	897	$	278	$	600	$	19	$	—

Interest												Interest	53,168		8,861		35,446		8,861		—
Operating lease obligations	Operating lease obligations	57,460		2,975		27,730		16,213		10,542		Operating lease obligations	51,153		7,809		24,886		14,181		4,277
Purchase obligations1	Purchase obligations1	63,020		4,788		48,533		9,699		—		Purchase obligations1	55,809		16,473		39,336		—		—
Senior Note Payable	Senior Note Payable	125,000		—		—		125,000		—		Senior Note Payable	141,077		—		—		141,077		—
Total	Total	$	247,963	$	9,573	$	76,862	$	150,986	$	10,542	Total	$	302,104	$	33,421	$	100,268	$	164,138	$	4,277

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

Uncertain Tax Positions

Unrecognized tax positions of ~~$4.6~~$4.1 millionat ~~September 30, 2021~~ March 31, 2022 are excluded from the table above as we are not able to reasonably estimate when we would make any cash payments required to settle these liabilities, but we do not believe that the ultimate settlement of our obligations will materially affect our liquidity. We anticipate that the balance of unrecognized tax benefits will decrease by approximately $0.6 million over the next twelve months.

Critical Accounting Policies and Estimates

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

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

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, there were no significant changes in our critical accounting policies and estimates discussed in our Form 10-K for the year ended December 31, ~~2020.~~2021. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a more complete discussion of our critical accounting policies and estimates.

Recently Issued Accounting Standards

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

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Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

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

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations, while at the same time maximizing the income, we receive from our investments without significantly increasing risk. To achieve these objectives, our investment policy allows us to maintain a portfolio of cash equivalents and short- and long-term investments in a variety of securities, which could include commercial paper, money market funds and corporate and government debt securities. Our cash, cash equivalents and marketable securities at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were invested in liquid money market accounts, certificates of deposit and government securities. All market-risk sensitive instruments were entered into for non-trading purposes.

Foreign Currency Exchange Risk

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

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

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

Interest Rate Risk

We are exposed to the risk of interest rate fluctuations on the interest income earned on our cash and cash equivalents. A hypothetical 100 basis point movement in interest rates applicable to our cash and cash equivalents outstanding at ~~September 30, 2021~~March 31, 2022 would increase interest income by approximately $0.2 million on an annual basis.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this quarterly report, that ensure that information relating to the registrant which is required to be disclosed in this report is recorded, processed, summarized and reported within required time periods using the criteria for effective internal control established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the registrant’s disclosure controls and procedures were effective as of ~~September 30, 2021.~~March 31, 2022.

Changes in Internal Control Over Financial Reporting

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

Limitations on Effectiveness of Controls and Procedures

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

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of our material pending legal proceedings that could impact our results of operations, financial condition or cash flows see Note13. Commitments, Contingencies and Other included in Part I, Item 1. “Notes to Condensed Consolidated Financial Statements (unaudited)” of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

Other than set forth below, there have been no material changes to our risk factors as previously disclosed in Part I, Item 1A. included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Due to the global nature of our operations, political or economic changes or other factors in a specific country or region could harm our operating results and financial condition.

We conduct significant sales and customer support operations in countries around the world. As such, our growth depends in part on our increasing sales into emerging countries. We also depend on, and many of our customers depend on, non-U.S. operations of our contract manufacturers, component suppliers and distribution partners. ~~Risks Related~~Emerging countries in the aggregate experienced a decline in orders during fiscal 2021 and certain prior periods. We continue to assess the sustainability of any improvements in these countries and there can be no assurance that our investments in these countries will be successful. Our future results could be materially adversely affected by a variety of political, economic or other factors relating to our ~~Senior Notes, Series B Preferred Stock~~operations inside and ~~Common Stock~~

~~We are subject~~outside the United States, including impacts from global central bank monetary policy; issues related to ~~investigations relating~~the political relationship between the United States and other countries that can affect the willingness of customers in those countries to ~~certain transactions in 2015 and 2016 that resulted~~purchase products from companies headquartered in the ~~restatement~~United States; business interruptions resulting from regional or larger scale conflicts or geo-political actions; the impact of the COVID-19 or other public health epidemics or concerns on our ~~financial statements in 2018,~~customer’s component suppliers, and the ~~Securities~~challenging and ~~Exchange Commission staff has preliminarily determined to recommend the initiation of an enforcement action against us in connection with that matter.~~

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

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

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

~~Downgrades in our credit ratings may increase our future borrowing costs, limit our ability to raise capital, cause our stock price to decline or reduce analyst coverage, any~~all of which could have a material adverse ~~impact~~effect on our ~~business.~~operating results and financial condition, including, among others things:

~~Credit rating agencies review their ratings periodically and, therefore, the credit rating assigned to us by each~~•Current or future supply chain interruptions;

•Foreign currency exchange rates;

•Political or social unrest or instability, including effects of the ~~rating agencies~~recent conflict between Russia and Ukraine, and the possibility of a wider European or global conflict, and global sanctions imposed in response thereto;

•Economic instability or weakness, including inflation, or natural disasters in a specific country or region, including the current economic or health challenges in China and global economic ramifications of Chinese economic difficulties;

•Environmental and trade protection measures and other legal and regulatory requirements, some of which may ~~be subject to revision at any time. Factors that can~~ affect our credit ratings include changes in our operating performance, the economic environment, our financial position, conditions in and periods of disruption in any of our principal markets and changes in our business strategy. If weak financial market conditions or competitive dynamics cause any of these factors to deteriorate, we could see a reduction in our corporate credit rating. Since investors, analysts and financial institutions often rely on credit ratings to assess a company’s creditworthiness and risk profile, make investment decisions and establish threshold requirements for investment guidelines, our ability to ~~raise capital,~~import our ~~access~~products, to ~~external financing,~~export our ~~stock price~~products from, or sell our products in various countries;

•Political considerations that affect service provider and ~~analyst coverage~~government spending patterns;

•Health or similar issues and the responses thereto, such as a pandemic or epidemic, including the COVID-19 pandemic and responses taken thereto;

•Natural disasters, terrorism, war or other military conflict, telecommunication and electrical failures;

•Difficulties in staffing and managing international operations; or

•Adverse tax consequences, including imposition of withholding or other taxes on our ~~stock could be negatively impacted by a downgrade to our credit rating.~~global operations.

~~Our current~~Concerns over economic recession, the COVID-19 pandemic, interest rate increases and inflation, supply chain delays and disruptions, policy priorities of the U.S. presidential administration, trade wars, unemployment, or ~~future debt securities or preferred equity securities, which would be senior~~prolonged government shutdown may contribute to ~~our common stock,~~increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may ~~adversely affect~~also contribute to prolonged market volatility and instability. For example, the ~~market price~~conflict between Russia and Ukraine could lead to disruption, instability and volatility in global markets and industries. The U.S. government and other governments in jurisdictions have imposed severe economic sanctions and export controls against Russia and Russian interests, have removed Russia from the Society for Worldwide Interbank Financial Telecommunication system, and have threatened additional sanctions and controls. The impact of ~~our common stock.~~

~~Our Senior Notes and Series B Preferred Stock are senior~~these measures, as well as potential responses to ~~our common stock. In addition, in the future, we may attempt to increase our capital resources~~them by ~~offering debt or preferred equity securities, including medium term notes, senior or~~Russia, is unknown.

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~~subordinated notes~~

We must recruit and ~~classes of preferred stock. Debt securities or shares of preferred stock will generally be entitled~~retain our key management and other key personnel and our failure to ~~receive interest payments or distributions, both current~~recruit and ~~in connection with any liquidation or sale, prior to the holders of~~retain qualified employees could have a negative impact on our common stock. We are not required to offer any such additional debt or preferred equity securities to existing common stockholders on a preemptive basis, and we may generally issue any such debt or preferred equity securities in the future without obtaining the consent of our common stockholders. As a result, any such future offerings of debt securities or preferred equity securities may adversely affect the market price of the common stock.business.

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

~~As of June 30, 2021, BRS owned 19.2%~~our success depends in part on the continued contributions of our ~~outstanding common stock~~senior management and ~~all of our Series B Preferred Stock. As a result, BRS holds significant influence over us as a significant shareholder~~other key personnel to generate business and ~~may have conflicts of interest that arise out of current or future contractual relationships it or its affiliates may have with us.~~execute programs successfully. In addition, ~~for so long as BRS~~the relationships and ~~its affiliates beneficially own at least 10% of~~reputation that these individuals have established and maintain with our ~~outstanding common stock, BRS will have~~customers and within the ~~right~~industries in which we operate contribute to ~~nominate one member of our board of directors pursuant to an investor rights agreement.~~

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

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

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

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

•~~it could affect~~ our ability to ~~satisfy~~maintain good relations with our ~~financial obligations, including~~customers and others within those ~~relating to the Senior Notes;~~

•~~a substantial portion~~industries. The loss of ~~our cash flows from operations would have to be dedicated to interest and principal payments and may not be available for operations, capital expenditures, expansion, acquisitions or general corporate~~any members of senior management or other ~~purposes;~~

•~~it may~~key personnel could materially impair our ability to identify and secure new contracts and otherwise effectively manage our business. In order to attract and retain executives and other key employees in a competitive marketplace, we must provide a competitive compensation package, including cash- and equity-based compensation. If we do not obtain ~~additional debt or~~the stockholder approval needed to continue granting equity ~~financing~~compensation in ~~the future;~~

•~~it may limit~~a competitive manner, our ability to ~~refinance all~~attract, retain, and motivate executives and key employees could be weakened. Further, in the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. We may be unable to attract or retain qualified personnel because their salaries and other compensation may increase to levels that we are unwilling or unable to provide. Competition for qualified personnel at times can be intense and as a ~~portion of our indebtedness on or before maturity;~~

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

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

~~Our operations~~result we may not ~~generate sufficient cash~~be successful in attracting and retaining the personnel we require, which could have a material adverse effect on our ability to ~~enable us to service~~meet our ~~debt.~~commitments and new product delivery objectives. If we ~~fail~~are unable to make a payment on the Senior Notes, we could be in default on the Senior Notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding. Conversely, a default under any other indebtedness, if not waived, could result in acceleration of the debt outstanding under the related agreement and entitle the holders thereof to bring suit for the enforcement thereofmaintain or exercise other remedies provided thereunder. In addition, such default or acceleration may result in an event of default and acceleration of other indebtedness of the Company, entitling the holders thereof to bring suit for the enforcement thereof or exercise other remedies provided thereunder. If a judgment is obtained by any such holders, such holders could seek to collect on such judgment from the assets of the Company. If that should occur,expand our direct sales capabilities, we may not be able to ~~pay all such debt~~generate anticipated revenues. In addition, if we are unable to maintain or ~~to borrow sufficient funds to refinance it. Even if new financing were then available, it~~expand our product development capabilities, we may not be able to meet our product development goals.Further, we rely on ~~terms that are acceptable~~the expertise and experience of our senior management team. Although we have employment agreements with our executive officers, none of them or any of our other management personnel is obligated to remain employed by us. The loss of services of any key management personnel could lower productive output, interrupt our strategic vision and make it more difficult to pursue our business goals successfully.

~~However,~~Economic, political and market conditions can adversely affect our results of operations, financial condition and business.

Our business is influenced by a range of factors that are beyond our control and that we have no ~~event~~comparative advantage in forecasting. These include but are not limited to general economic and business conditions, the overall demand for cloud-based products and services, general political developments and currency exchange rate fluctuations. Economic uncertainty, including interest rate increases and inflation, may exacerbate negative trends in consumer spending and may negatively impact the businesses of ~~default under the Senior Notes would result from a default or acceleration of, or suit, other exercise of remedies or collection proceeding by holders~~certain of our customers, which may cause a reduction in their use of our platforms or increase the likelihood of defaulting on their payment obligations, and therefore cause a reduction in our revenues. These conditions and uncertainty about future economic conditions may make it challenging for us to forecast our operating results, make business decisions and identify the risks that may affect our business, financial conditions and results of operations and may result in a more competitive environment, resulting in possible pricing pressures.Our business could be affected by acts of war or other ~~outstanding debt, if any. As~~military actions, terrorism, natural disasters and the widespread outbreak of infectious diseases. Current world tensions could escalate, and this could have unpredictable consequences on the world economy and on our business.

The COVID-19 pandemic has created significant uncertainty in the global economy. The COVID-19 pandemic and health measures taken by governments and private industry in response to the pandemic, including stay-at-home orders, restrictions on business operations, and travel restrictions, have had significant negative effects on the economy, including disruptions impacting various supply chains. Continued uncertainty about the pandemic, associated economic consequences, and potential relief measures may have a long-term adverse effect on the economy, our sellers, customers, suppliers, and our business. For example, we are currently subletting some of our office space. An economic downturn or our work from home practices may cause us to need less office space than we are contractually committed to leasing and prevent us from finding subtenants for such unused office space, causing us to pay for unused office space. Rising tensions in the geopolitical climate, including effects of the recent conflict between Russia and Ukraine, and the possibility of a wider European or global conflict, and global sanctions imposed in response thereto, have created significant uncertainty in the global economy. These or any further political or governmental developments or health concerns in countries could result in social, economic and labor instability.If, as a result ~~all~~of such events, we experience a reduction in demand for our products, platforms or ~~substantially all~~services, or the supply of products or components to our customers, our business, results of operations and financial condition may be materially and adversely affected.

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~~assets~~We have, and in the future may be, ~~used to satisfy claims~~the target of ~~holders~~stockholder derivative complaints or other securities related legal actions that could adversely affect our results of operations and our ~~other outstanding debt, if any, without the holders of the Senior Notes having any rights to such assets.~~business.

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

The Senior Notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, the Senior Notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future ~~(or any indebtedness that is initially unsecured to which we subsequently grant security) to~~may be, the ~~extent~~target of the value of the assets securing such indebtedness. The indenture governing the Senior Notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness in the future. In any liquidation, dissolution, bankruptcystockholder derivative complaints or other ~~similar proceeding, the holders~~securities related legal actions.The existence of any oflitigation may have an adverse effect on our ~~existing or future secured indebtedness~~reputation with referral sources and ~~the secured indebtedness of~~ our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of the Senior Notes.

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

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

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

The indenture under which the Senior Notes were issued offers limited protection to holders of the Senior Notes. The terms of the indenture and the Senior Notes does not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse ~~impact on your investment in the Senior Notes. In particular, the terms of the indenture and the Senior Notes do not place any restrictions~~effect on our results of operations and financial condition.The outcome and amount of resources needed to respond to, defend or resolve lawsuits is unpredictable and may remain unknown for long periods of time. Our exposure under these matters may also include our ~~subsidiaries’ ability to:~~

•~~issue debt securities or otherwise incur additional indebtedness or other~~indemnification obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Senior Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Senior Notes to the extent we have any, to current and former officers and directors and, in some cases former underwriters, against losses incurred in connection with these matters, including reimbursement of legal fees and other expenses. Although we maintain insurance for claims of this nature, our insurance coverage does not apply in all circumstances and may be denied or insufficient to cover the ~~values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior~~costs related to the ~~Senior Notes~~class action and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Senior Notes with respect to the assets of our subsidiaries;

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

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

•~~enter into transactions with affiliates;~~

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

•~~make investments; or~~

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

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

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Senior Notes may have important consequences for you as a holder of the Senior Notes, including makingotherwise make it more difficult for us to ~~satisfy~~maintain or obtain adequate insurance coverage on acceptable terms, if at all. Moreover, adverse publicity associated with negative developments in any such legal proceedings could decrease customer demand for our ~~obligations with respect to the Senior Notes~~services. As a result, future lawsuits involving us, or ~~negatively affecting~~our officers or directors, could have a material adverse effect on our business, reputation, financial condition, results of operations, liquidity and the trading ~~value~~price of ~~the Senior Notes.~~our common stock.

~~Other debt we issue~~Our stock price may continue to experience significant fluctuations and could subject us to litigation.

Our stock price, like that of other technology companies, continues to fluctuate greatly. Our stock price, and demand for our stock, can be affected by many factors, such as unanticipated changes in management, quarterly increases or ~~incur~~decreases in our earnings, speculation in the investment community about our financial condition or results of operations and changes in revenue or earnings estimates, announcement of new services, technological developments, alliances, or acquisitions by us. Additionally, the price of our common stock may continue to fluctuate greatly in the future ~~could contain more protections for its holders than~~due to factors that are non-company specific, such as the ~~indenture~~decline in the United States and/or international economies, acts of terror against the United States or other jurisdictions where we conduct business, war or other military conflict or due to a variety of company specific factors, including quarter to quarter variations in our operating results, shortfalls in revenue, gross margin or earnings from levels projected by securities analysts and the ~~Senior Notes, including~~other factors discussed in these risk factors. Concerns over economic recession, the COVID-19 pandemic, interest rate increases and inflation, supply chain delays and disruptions, policy priorities of the U.S. presidential administration, trade wars, unemployment, or prolonged government shutdown may contribute to increased volatility and diminished expectations for the economy and markets. Additionally, concern over geopolitical issues may also contribute to prolonged market volatility and instability. The U.S. government and other governments in jurisdictions have imposed severe economic sanctions and export controls against Russia and Russian interests, have removed Russia from the SWIFT system, and have threatened additional ~~covenants~~sanctions and ~~events~~controls. The impact of ~~default. The issuance or incurrence of any such debt with incremental protections could affect~~these measures, as well as potential responses to them by Russia, is unknown. In addition, if the market for ~~and trading levels and prices of~~technology stocks or the ~~Senior Notes.~~

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

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

~~An active trading market for the Senior Notes may not develop, which could limit~~experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. Fluctuation in market price and demand for our common stock may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the ~~Senior Notes or your ability~~liquidity of our common stock. Causes of volatility in the market price of our stock could subject us to ~~sell them.~~securities class action litigation. We were previously, and may in the future be, the subject of lawsuits that could require us to incur substantial costs defending against those lawsuits and divert the time and attention of our management.

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

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

~~We may issue additional Senior Notes.~~

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

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

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

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

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

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

~~Exhibit No.~~

~~Description~~

~~3.1~~

~~Restated Certificate of Incorporation of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S‑1 (Commission File No. 333‑132080).~~

~~3.2~~

~~Amended and Restated Bylaws of the Registrant, incorporated by reference to Registrant’s Registration Statement on Form S‑1 (Commission File No. 333‑132080).~~

~~3.3~~

~~Amendment No. 1 to Amended and Restated Bylaws of Registration, incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on February 20, 2018.~~

~~3.4~~

~~Amendment No. 2 to the Amended and Restated Bylaws of Synchronoss Technologies, Inc., incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on June 30, 2021.~~

Incorporated by Reference

Exhibit No.

Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Restated Certificate of Incorporation of the Registrant.

S-1

333-132080

3.2

May 9, 2006

3.2

Amended and Restated Bylaws of the Registrant.

S-1

333-132080

3.4

May 9, 2006

3.3

Amendment No. 1 to Amended and Restated Bylaws of the Registrant.

8-K

000-52049

3.2

February 20, 2018

3.4

Amendment No. 2 to the Amended and Restated Bylaws of the Registrant.

8-K

000-52049

3.3

June 30, 2021

31.1

Certification of Principal Executive Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002.

32.1

Certification of Principal Executive Officer pursuant to Rule 13a‑14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes‑Oxley Act of 2002.

32.2

Certification of Principal Financial Officer pursuant to Rule 13a‑14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes‑Oxley Act of 2002.

101.INS

XBRL Instance Document

101.SCH

XBRL Schema Document

101.CAL

XBRL Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Labels Linkbase Document

101.PRE

XBRL Presentation Linkbase Document

~~3.5~~

~~Certificate of Designations of the Series B Perpetual Non-Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on June 30, 2021.~~

~~10.1†~~

~~Transition and Separation Agreement dated September 2, 2021 between the Registrant and Ronald Prague~~

~~10.2†~~

~~Tier One Executive Employment Plan dated July 27, 2021 between the Registrant and Christina Gabrys~~

~~31.1~~

~~Certification of Principal Executive Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002 (filed herewith)~~

~~31.2~~

~~Certification of Principal Financial Officer pursuant to Rule 13a‑14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes‑Oxley Act of 2002 (filed herewith)~~

~~32.1~~

~~32.2~~

~~101.INS~~

~~XBRL Instance Document~~

~~101.SCH~~

~~XBRL Schema Document~~

~~101.CAL~~

~~XBRL Calculation Linkbase Document~~

~~101.DEF~~

~~XBRL Taxonomy Extension Definition Linkbase~~

~~101.LAB~~

~~XBRL Labels Linkbase Document~~

~~101.PRE~~

~~XBRL Presentation Linkbase Document~~

~~† Compensation Arrangement.~~

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SIGNATURES

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


						Synchronoss Technologies, Inc.



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


						/s/ Taylor Greenwald
						Taylor Greenwald
						Chief Financial Officer

~~November 9, 2021~~May 10, 2022

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

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









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


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




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


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

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


	Series A Preferred Stock
	Shares	Amount
Balance at December 31, 2020	250	$	237,641


Amortization of preferred stock issuance costs	—	12,791
Issuance of preferred PIK dividend	19	18,485


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