Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 20, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | WidePoint Corporation | ||
Entity Central Index Key | 0001034760 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 8,843,673 | ||
Entity Public Float | $ 14.9 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Fin Stmt Error Correction Flag | false | ||
Entity File Number | 001-33035 | ||
Entity Incorporation State Country Code | DE | ||
Entity Tax Identification Number | 52-2040275 | ||
Entity Address Address Line 1 | 11250 Waples Mill Road | ||
Entity Address Address Line 2 | South Tower, Suite 210 | ||
Entity Address City Or Town | Fairfax | ||
Entity Address State Or Province | VA | ||
Entity Address Postal Zip Code | 22030 | ||
City Area Code | 703 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | San Diego, California | ||
Auditor Firm Id | 659 | ||
Local Phone Number | 349-2577 | ||
Security 12b Title | Common Stock, $0.001 par value per share | ||
Trading Symbol | WYY | ||
Security Exchange Name | NYSE | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS | ||
Cash | $ 6,921,160 | $ 7,530,864 |
Accounts receivable, net of allowance for credit losses of $81,359 and $51,666, respectively | 8,219,793 | 9,277,109 |
Unbilled accounts receivable | 16,618,639 | 10,244,101 |
Other current assets | 1,083,671 | 935,978 |
Total current assets | 32,843,263 | 27,988,052 |
NONCURRENT ASSETS | ||
Property and equipment, net | 780,800 | 978,218 |
Lease right of use asset | 4,045,222 | 4,723,899 |
Intangible assets, net | 7,336,348 | 7,398,160 |
Goodwill | 5,811,578 | 5,811,578 |
Deferred tax assets, net | 0 | 86,909 |
Other long-term assets | 483,288 | 2,025,845 |
Total assets | 51,300,499 | 49,012,661 |
CURRENT LIABILITIES | ||
Accounts payable | 12,633,658 | 12,515,081 |
Accrued expenses | 16,175,702 | 11,327,269 |
Current portion of deferred revenue | 2,009,343 | 1,704,933 |
Current portion of lease liabilities | 638,258 | 596,529 |
Total current liabilities | 31,456,961 | 26,143,812 |
NONCURRENT LIABILITIES | ||
Lease liabilities, net of current portion | 4,114,516 | 4,745,909 |
Contingent consideration | 6,900 | 6,900 |
Deferred revenue, net of current portion | 1,027,770 | 364,837 |
Deferred tax liabilities, net | 16,923 | 0 |
Total liabilities | 36,623,070 | 31,261,458 |
Commitments and contingencies (Note 18) | 0 | 0 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding | 0 | 0 |
Common stock, $0.001 par value; 30,000,000 shares authorized; 8,893,220 and 8,725,476 shares issued and outstanding, respectively | 8,894 | 8,726 |
Additional paid-in capital | 102,151,381 | 101,194,185 |
Accumulated other comprehensive loss | (334,899) | (350,234) |
Accumulated deficit | (87,147,947) | (83,101,474) |
Total stockholders' equity | 14,677,429 | 17,751,203 |
Total liabilities and stockholders' equity | $ 51,300,499 | $ 49,012,661 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
Allowance for doubtful accounts receivable | $ 81,359 | $ 51,666 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 2,045,714 | 2,045,714 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 8,893,220 | 8,725,476 |
Common stock, shares outstanding | 8,893,220 | 8,725,476 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Operations | ||
REVENUES | $ 106,026,360 | $ 94,103,365 |
COST OF REVENUES (including amortization and depreciation of $2,291,144 and $1,455,262, respectively) | 90,380,833 | 79,527,893 |
GROSS PROFIT | 15,645,527 | 14,575,472 |
OPERATING EXPENSES | ||
Sales and marketing | 2,191,838 | 2,134,240 |
General and administrative expenses (including share-based compensation of $960,991 and $528,582, respectively) | 15,882,415 | 14,720,497 |
Impairment charge - goodwill | 0 | 16,277,000 |
Impairment charge - definite-lived intangible assets | 193,336 | 0 |
Depreciation and amortization | 1,079,724 | 1,077,440 |
Total operating expenses | 19,347,313 | 34,209,177 |
LOSS FROM OPERATIONS | (3,701,786) | (19,633,705) |
OTHER INCOME (EXPENSE) INCOME | ||
Interest income | 90,679 | 41,831 |
Interest expense | (239,526) | (259,644) |
Other (expense) income, net | (62,597) | 1,344,102 |
Total other (expense) income, net | (211,444) | 1,126,289 |
LOSS BEFORE INCOME TAX PROVISION | (3,913,230) | (18,507,416) |
INCOME TAX PROVISION | 133,243 | 5,077,875 |
NET LOSS | $ (4,046,473) | $ (23,585,291) |
EARNINGS PER SHARE, BASIC AND DILUTED | $ (0.46) | $ (2.70) |
WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED | 8,830,709 | 8,732,203 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | 24 Months Ended |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Operations | ||
Amortization and depreciation | $ 2,291,144 | $ 1,455,262 |
Share-based compensation expense | $ 960,991 | $ 528,582 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Comprehensive Loss | ||
NET LOSS | $ (4,046,473) | $ (23,585,291) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments, net of tax | 15,335 | (108,648) |
Other comprehensive income (loss): | 15,335 | (108,648) |
COMPREHENSIVE LOSS | $ (4,031,138) | $ (23,693,939) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated other comprehensive loss | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2021 | 8,842,026 | ||||
Balance, amount at Dec. 31, 2021 | $ 41,675,995 | $ 8,842 | $ 101,424,922 | $ (241,586) | $ (59,516,183) |
Common stock repurchased, Shares | (196,586) | ||||
Common stock repurchased, Amount | (818,211) | $ (197) | (818,014) | 0 | 0 |
Issuance of common stock - restricted, Shares | 80,036 | ||||
Issuance of common stock - restricted, Amount | (49,224) | $ 81 | (49,305) | 0 | 0 |
Issuance of common stock - warrants, Amount | 108,000 | 0 | 108,000 | 0 | 0 |
Stock compensation expense - restricted | 528,582 | 0 | 528,582 | 0 | 0 |
Foreign currency translation - (loss) | (108,648) | 0 | 0 | (108,648) | 0 |
Net Income (Loss) | (23,585,291) | $ 0 | 0 | 0 | (23,585,291) |
Balance, shares at Dec. 31, 2022 | 8,725,476 | ||||
Balance, amount at Dec. 31, 2022 | 17,751,203 | $ 8,726 | 101,194,185 | (350,234) | (83,101,474) |
Issuance of common stock - restricted, Shares | 167,744 | ||||
Issuance of common stock - restricted, Amount | (3,627) | $ 168 | (3,795) | 0 | 0 |
Stock compensation expense - restricted | 914,194 | 0 | 914,194 | 0 | 0 |
Foreign currency translation - (loss) | 15,335 | 0 | 0 | 15,335 | 0 |
Net Income (Loss) | (4,046,473) | (4,046,473) | |||
Stock compensation expense - non-qualified stock options | 46,797 | $ 0 | 46,797 | 0 | 0 |
Balance, shares at Dec. 31, 2023 | 8,893,220 | ||||
Balance, amount at Dec. 31, 2023 | $ 14,677,429 | $ 8,894 | $ 102,151,381 | $ (334,899) | $ (87,147,947) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,046,473) | $ (23,585,291) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Deferred income tax expense | 107,157 | 5,034,385 |
Depreciation expense | 1,088,546 | 1,084,001 |
Impairment charge - goodwill | 0 | 16,277,000 |
Impairment charge - definite-lived intangible assets | 193,336 | 0 |
Provision for credit losses | 47,060 | 11,852 |
Amortization of intangibles | 2,282,322 | 1,451,091 |
Share-based compensation expense | 960,991 | 528,582 |
Change in fair value of contingent consideration | 0 | (1,340,100) |
Loss on disposal of fixed assets | 1,927 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable and unbilled receivables | (4,686,874) | 3,945,175 |
Inventories | (143,668) | 367,551 |
Other current assets | (3,171) | 1,887,717 |
Other assets | 33,574 | 27,967 |
Accounts payable and accrued expenses | 3,837,059 | 1,252,212 |
Income tax payable | (2,234) | 69,901 |
Deferred revenue and other liabilities | 955,696 | (585,816) |
Other liabilities | 0 | (358,000) |
Net cash provided by operating activities | 625,248 | 6,068,227 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (208,202) | (244,953) |
Capitalized hardware and software development costs | (881,887) | (3,163,726) |
Proceeds from beneficial interest in sold receivables | 469,104 | 0 |
Net cash used in investing activities | (620,985) | (3,408,679) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Advances on bank line of credit | 6,493,284 | 15,298,792 |
Repayments of bank line of credit advances | (6,493,284) | (15,298,792) |
Principal repayments under finance lease obligations | (586,525) | (600,438) |
Withholding taxes paid on behalf of employees on net settled restricted stock awards | (3,627) | (49,224) |
Common stock repurchased | 0 | (818,211) |
Net cash used in financing activities | (590,152) | (1,467,873) |
Net effect of exchange rate on cash | (23,815) | (140,791) |
NET (DECREASE) INCREASE IN CASH | (609,704) | 1,050,884 |
CASH, beginning of period | 7,530,864 | 6,479,980 |
CASH, end of period | 6,921,160 | 7,530,864 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Cash paid for interest | 223,307 | 194,754 |
Cash paid for income taxes | 0 | 27,559 |
NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Capitalized hardware and software development costs in accounts payable | 0 | 34,923 |
Leased assets and lease liabilities terminated | $ 0 | $ 876,281 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2023 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | 1. Organization and Nature of Operations Organization WidePoint Corporation (“WidePoint” or the “Company”) was incorporated in Delaware on May 30, 1997 and conducts operations through its wholly-owned operating subsidiaries in the United States, Ireland, the Netherlands and the United Kingdom. The Company’s principal executive and administrative headquarters is located in Fairfax, Virginia. Nature of Operations The Company is a leading provider of Technology Management as a Service (TMaaS). The Company’s TMaaS platform and service solutions enable its customers to efficiently secure, manage and analyze the entire lifecycle of their mobile communications assets through its federally compliant platform Intelligent Telecommunications Management System (ITMS™). The Company’s ITMS platform is SSAE 18 compliant and was granted an Authority to Operate by the U.S. Department of Homeland Security. Additionally, the Company was granted an Authority to Operate by the General Services Administration with regard to its identity credentialing component of its TMaaS platform. The Company’s TMaaS platform is internally hosted and accessible on-demand through a secure customer portal that is specially configured for each customer. The Company can deliver these solutions in a number of configurations ranging from utilizing the platform as a service to a full-service solution that includes full lifecycle support for all end users and the organization. A significant portion of the Company’s expenses, such as personnel and facilities costs, are fixed in the short term and may be not be easily modified to manage through changes in the Company’s market place that may create pressure on pricing and/or costs to deliver its services. The Company has periodic capital expense requirements to maintain and upgrade its internal technology infrastructure tied to its hosted solutions and other such costs may be significant when incurred in any given period. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the financial statement rules and regulations of the Securities and Exchange Commission. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation. Government Subsidies On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provides employer payroll tax credits for qualified wages and options to defer payroll tax payments for a limited period. The Company records government subsidies as offsets to the related operating expenses. During the year ended 12/31/22, the Company collected $1.6M payroll tax credits that were earned and recognized prior to fiscal year 2022. Accounting Standards Update Accounting Standards under Evaluation In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument (“Topic 326”). Topic 326 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. This ASU update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The Company adopted Topic 326 on January 1, 2023. The adoption of ASU 2016-03 did not have a material impact on the Company's consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impacts of the new standard. Foreign Currency Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive loss, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s Consolidated Statements of Operations, depending on the nature of the activity. See Note 17 for additional information. Segment Reporting Segments are defined by authoritative guidance as components of a company in which separate financial information is available and is evaluated by the chief operating decision maker (CODM), or a decision-making group, in deciding how to allocate resources and in evaluating financial performance. The Company’s CODM is its chief executive officer. The Company’s customers view our market as a singular business and demand an integrated and scalable suite of enterprise-wide solutions. The Company’s TMaaS offerings are substantially managed service driven solutions that use our proprietary technology platform to deliver our services. The amount of labor required to perform our contract obligations may vary significantly contract to contract depending on the customer’s specific requirements; however, the way in which we perform these services is consistent across the company and requires a connected group of internal subject matter experts and support personnel. In order to evaluate a managed service business model the Company’s CODM measures financial performance and allocates resources based on the overall consolidated results of managed and carrier services and related margins. These consolidated financial metrics provide a stronger indication of how the Company is managing its key customer relationships and assesses overall profitability. As a result, the Company comprises of one operating segment and presents single reporting segment for purposes of financial reporting and prepared its consolidated financial statements upon that basis. Use of Estimates and Critical Accounting Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates include the Company’s valuation of goodwill impairment. To estimate the fair value of its reporting unit, the Company projects future cash flows using management’s assumptions for revenue growth rate, operating margins, and a discount rate. These estimates can significantly affect the outcome of the Company’s impairment assessment. Other areas requiring use of estimates and judgment relate to revenue recognition, accounts receivable valuation reserves, ability to realize intangible assets, ability to realize deferred income tax assets, contingent consideration, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Fair Value Measurements 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, based on the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows: Level 1 Level 2 ■ Quoted prices for similar assets or liabilities in active markets ■ Quoted prices for identical or similar assets or liabilities in markets that are not active ■ Inputs other than quoted prices that are observable for the asset or liability ■ Inputs that are derived principally from or corroborated by observable market data by correlation or other means Level 3 The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred. Note 3 for changes in fair value of liabilities recorded in connection with certain liabilities that are measured at fair value on a recurring basis. Financial Instruments Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. Cash and Cash Equivalents The Company maintains interest-bearing cash deposits and short-term overnight investments with large financial institutions. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents for purposes of these consolidated financial statements. Interest-bearing cash deposits maintained by financial institutions in the United States of America are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. At December 31, 2023 and 2022, the Company had deposits in excess of FDIC limits of approximately $5.5 million and $5.1 million, respectively. Allowances for Credit Losses The Company determines its allowance for credit allowances by considering a number of factors, including the type of customer, credit worthiness, payment history, length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are deemed to be uncollectible, having exhausted all collection efforts. Inventories Inventories consist of mobile devices and accessories and identity credential hardware components. Inventories are valued at the lower of cost, using first-in, first-out method, or net realizable value. The Company may record a write-down for inventories which have become obsolete or are in excess of anticipated demand or net realizable value. If future demand or market conditions for our products are less favorable than forecasted or if unforeseen technological changes negatively impact the utility of inventory, we may be required to record additional write-downs, which would adversely affect our gross profit. For the years ended December 31, 2023 and 2022, there were no inventory write-downs. Property and Equipment Property and equipment are stated at historical cost, net of accumulated depreciation and amortization. Depreciation and amortization expense is computed using the straight-line method over the estimated useful lives based upon the classification of the property and/or equipment or lease period for assets acquired under lease arrangements. The estimated useful lives of the assets are as follows: Estimated Useful Life Computer hardware and software 3-5 years Furniture and fixtures 5 years Mobile equipment 3 years The Company assesses the recoverability of property and equipment by determining whether the depreciation of property and equipment over its remaining life can be recovered through projected undiscounted future cash flows. The amount of property and equipment impairment if any, is measured based on fair value and is charged to operations in the period in which property and equipment impairment is determined by management. As of December 31, 2023 and 2022, the Company’s management has not identified any material impairment of its property and equipment. Leases The Company has leases for corporate offices that are accounted for under ASC 842, Leases (Topic 842). The leases have remaining lease terms ranging from one year to eighteen years. The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset and that it has the right to control the use of such asset in determining whether the contract contains a lease. A right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and the lease liabilities represent its obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the lease commencement date in determining the present value of lease payments. The lease ROU assets include any lease payments made prior to the rent commencement date. Lease expense for lease payments are recognized on a straight-line basis over the lease term. Goodwill and Other Intangible Assets The Company accounts for goodwill and other indefinite-lived intangible assets in accordance with ASC 350, Intangibles (Topic 350). Under ASC Topic 350, goodwill and certain indefinite-lived intangible assets are not amortized but are subject to an annual impairment test as of December 31, and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company has a single reporting unit and all goodwill relates to that reporting unit. The Company recorded a non-cash goodwill impairment charge of $16.3 million during 2022 following goodwill impairment testing performed as a result of sustained decreases in our publicly quoted share price and market capitalization. There was no goodwill impairment during 2023. Impairment of long-lived assets The Company reviews long-lived assets such as property and equipment, right of use assets, and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable by comparing the net book value of the asset group to their estimated undiscounted future cash flows expected from their use and eventual disposition. Impaired assets are recorded at estimated fair value, determined principally by using the present value of estimated future cash flows expected from their use and eventual disposition. Revenue from Contracts with Customers Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company reports products and services under the categories managed services and carrier services as described below: Carrier Services. Managed Services. · Managed Service Fees: o Revenue for fixed price services are generally completed and billed in the same accounting period and we charge a fixed fee for each performance obligation which may be tied to the number of units managed, percentage of supplier spend and/or savings, units delivered, certificates issued by the Company, certificate validation services installed in a customer’s environment, accessories sold and billable hours. Revenue from this service requires accounting estimates due to delays between completion of the service and the normal billing cycle. o Revenue for fixed price software sold as a term license is recognized ratably over the license term from the date the software is accepted by the customer. Maintenance services, if contracted, are recognized ratably over the term of the maintenance agreement, generally twelve months. Revenue for fixed price software licenses that are sold as a perpetual license with no significant customization are recognized when the software is delivered. Implementation fees are recognized when the work is completed. Revenue from this service does not require significant accounting estimates. o Revenue is recognized from the sales of identity credentials to an individual or organization upon issuance less a portion deferred for monthly credential validation support services. In the case of bulk sales or credential management system revenue is recognized upon issue or availability to the customer for issuance. There is generally no significant performance obligation to provide post contract services in relation to identity consoles delivered. Identity certificates issued have a fixed life and cannot be modified once issued. · Billable Service Fees. · Reselling and Other Service Fees. Software Development Costs The Company applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use The Company also applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed Product Development Product development expenses include payroll, employee benefits, and other employee related expenses associated with product development. Product development expenses also include third-party development and programming costs, subject matter experts, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Costs related to product development are expensed until the point that preliminary project stage is complete or technological feasibility is reached. Costs incurred during the implementation of product development and enhancements are capitalized and amortized to cost of revenue over the estimated lives of the solution. For the years ended December 31, 2023 and 2022, the Company incurred product development costs associated with TMaaS platform application, Secure Identity Management Solutions, Unified Communications Analytics (UCAS) solution, and data center of approximately $0.9 million and $3.2 million, respectively, which were capitalized. See Note 9 to the consolidated financial statements for additional information about capitalization of product development costs. Judgments and Estimates The Company’s contracts with customers often include promises to transfer multiple products and services to a customer under a fixed rate or fixed fee arrangement. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Components of our managed service solution are generally distinct performance obligations that are not interdependent and can be completed within a month. The Company’s products are generally sold with a right of return. Historically the returns have been immaterial and recognized in the period which the products are returned. While historically immaterial as well, the Company may provide other event driven credits or disincentives for not meeting performance obligations which are accounted for as variable consideration and recognized in the period which the event occurs. Contract Balances A significant portion of contract balances represent revenues earned on federal government contracts. Timing of revenue recognition may differ materially from the timing of invoicing to customers due a long-standing practice of issuing a consolidated managed service invoice. A consolidated invoice usually requires data such as billable hours, units managed, credentials issued, accessories sold and usage data from telecommunications providers and other suppliers. As a result it could take between thirty (30) to sixty (60) days after all performance obligations have been met to deliver a complete customer invoice. As a result, the Company may have both accounts receivables (invoiced revenue) and unbilled receivables (revenue recognize but not yet invoiced) that could represent one or more months of revenue. Additionally, the Company may be required under contractual terms to bill for services in advance and deferred recognition of revenue until all performance obligations have been met. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within thirty (30) to ninety (90) days. Payment terms and conditions for government and commercial customers are described below: · Government contract billings are generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customer. · Commercial contracts are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers. The Company assesses its ability to collect outstanding receivables and contract assets and provides customer-specific allowances for credit losses and general allowances for the portion of receivables and contract assets that are estimated to be uncollectible. Allowances for credit losses are based on historical collection experience and expected credit losses, customer specific financial condition, current economic trends in the customer's industry and geographic region, changes in customer demand and the overall economic climate in the market the Company serves. Customer accounts receivable balances that remain uncollected for more than 45 days are further reviewed for collectability and are considered past due after 90 days unless different contractual repayment terms were extended under a contract with a customer. The Company will reserve such amounts estimated to be uncollectable. Costs to Obtain a Contract with a Customer The Company does not recognize assets from the costs to obtain a contract with a customer and generally expenses these costs as incurred. The Company primarily uses internal labor to manage and oversee the customer acquisition process and to finalize contract terms and conditions and commence customer start-up activities, if any. Internal labor costs would be incurred regardless of the outcome of a contract with a customer and as such those costs are not considered incremental to the cost to obtain a contract with a customer. The Company does not typically incur significant incremental costs to obtain a contract with a customer which may include payment of commissions to certain internal and/or external sales agents upon collection of invoiced sales from the customer. The Company does not typically prepay sales commissions in advance of being paid for services delivered. Income Taxes The Company accounts for income taxes in accordance with authoritative guidance which requires that deferred tax assets and liabilities be computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. The guidance requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Under existing income tax accounting standards such objective evidence is more heavily weighted in comparison to other subjective evidence such as our projections for future growth, tax planning and other tax strategies. The Company recognizes the impact of an uncertain tax position taken or expected to be taken on an income tax return in the financial statements at the amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained upon audit by the relevant taxing authority. Basic and Diluted Earnings Per Share (EPS) Basic EPS includes no dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution that could occur if securities or other contracts to issue common and restricted stock were exercised or converted into common and restricted stock. The number of incremental shares from assumed conversions of stock options and unvested restricted stock awards included in the calculation of diluted EPS was calculated using the treasury stock method. See Note 16 to the consolidated financial statements for computation of EPS. Employee Stock-Based Compensation The Company accounts for stock-based employee compensation arrangements under provisions of ASC 718-10. The Company recognizes the cost of employee stock awards granted in exchange for employee services based on the grant-date fair value of the award using a Black-Scholes option-pricing model, net of expected forfeitures. Those costs are recognized ratably over the vesting period. Each stock option has an exercise price equal to the market price of the Company’s common stock on the date of grant and a contractual term ranging from 3 to 10 years. See Note 15 to the consolidated financial statements for additional information about stock-based compensation programs. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements The consolidated financial statements include financial instruments for which the fair value may differ from amounts reflected on a historical basis. Financial Assets and Financial Liabilities Carried at Other Than Fair Value The Company’s financial instruments include cash equivalents, accounts receivable, short and long-term debt (except for contingent promissory notes) and other financial instruments associated with the issuance of the common stock. The carrying values of cash equivalents and accounts receivable approximate their fair value because of the short maturity of these instruments and past evidence indicates that these instruments settle for their carrying value. The carrying amounts of the Company’s bank borrowings under its credit facility approximate fair value because the interest rates reflect current market rates. The following table present information about the Company's liabilities measured at fair value on a recurring basis in the consolidated balance sheets: Quoted Prices in Significant Other DECEMBER 31, Active Markets Observable Inputs Unobservable Inputs Description 2023 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 Quoted Prices in Significant Other DECEMBER 31, Active Markets Observable Inputs Unobservable Inputs Description 2022 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 The Company’s contingent consideration is categorized as Level 3 within the fair value hierarchy. The contingent consideration has been recorded at their fair value using a Monte Carlo simulation model. This model incorporates probability of achievement of certain milestones, risk-free rates and volatility. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management with the assistance of a third-party valuation specialist. Management estimates the fair value of the contingent consideration liability based on financial projections of ITA’s business and forecasted results, including revenue growth rates, costs and expenses, volatility, and discount rates. The Company evaluates, on a routine, periodic basis, the estimated fair value of the contingent consideration and quarterly changes in estimated fair value are reflected in other income in the consolidated statements of operations. Changes in the fair value of contingent consideration obligations may result from changes in changes of any of the key assumptions that are used. Changes in the estimated fair value of contingent consideration liability may have a material impact on the Company’s operating results. There was no change in fair value of contingent consideration for the year ended December 31, 2023. During the year ended December 31, 2022, the Company recorded a gain of $1.3 million related to a change in fair value of contingent consideration. |
Accounts Receivable and Signifi
Accounts Receivable and Significant Concentrations | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Accounts Receivable and Significant Concentrations | 4. Accounts Receivable and Significant Concentrations A significant portion of the Company’s revenue arrangements consist of firm fixed price contracts with agencies of the U.S. federal government and several large multinational publicly traded and private corporations. Accounts receivable consist of the following by customer type in the table below as of the periods presented: DECEMBER 31, DECEMBER 31, 2023 2022 U.S. Federal, State, and Local Government (1) $ 6,402,922 $ 7,272,993 Commercial (2) 1,898,230 2,055,782 Gross accounts receivable 8,301,152 9,328,775 Less: allowances for credit losses (3) 81,359 51,666 Accounts receivable, net $ 8,219,793 $ 9,277,109 As of December 31, 2021, the Company had accounts receivable, net of $12.5 million. (1) Government contracts are generally firm fixed price not to exceed arrangements with a term of five (5) years, which consists of a base year and four (4) annual option year renewals. Government receivables are billed under a single consolidated monthly invoice and are billed approximately thirty (30) to sixty (60) days in arrears from the date of service and payment is generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customer. (2) Commercial contracts are generally fixed price arrangements with contract terms ranging from two (2) to three (3) years. Commercial accounts receivables are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. Commercial receivables are stated at amounts due from customers net of an allowance for credit losses if deemed necessary. (3) During the year ended December 31, 2023 and 2022, the Company did not recognize any material provisions of recoveries of existing provision for credit losses. The Company has not historically maintained an allowance for credit losses for its government customers as it has not experienced material or recurring bad debt charges and the nature and size of the contracts has not necessitated the Company’s establishment of such an allowance for credit losses. Significant Concentrations The following table presents revenue by customer for each of the periods presented: YEARS ENDED DECEMBER 31, Customer Type 2023 2022 U.S. Federal Government (1) 79.7 % 79.1 % U.S. State & Local and Foreign Governments 0.6 % 0.6 % (1) Sales to the U.S. federal government include sales from contracts for which we are the prime contractor, as well as those for which we are a subcontractor and the ultimate customer is the U.S. government. |
Unbilled Accounts Receivable an
Unbilled Accounts Receivable and Significant Concentrations | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Unbilled Accounts Receivable and Significant Concentrations | 5. Unbilled Accounts Receivable and Significant Concentrations Unbilled accounts receivable represent revenues earned in connection with products and/or services delivered for which we are unable to issue a formal billing to the customer at the balance sheet due to either timing of invoice processing or delays due to fixed contractual billing schedules. A significant portion of our unbilled accounts receivable consist of carrier services not invoiced at the end of the reporting period. An allowance for credit losses were insignificant for unbilled accounts receivable as of December 31, 2023 and 2022. The following table presents customers that represent ten (10) percent or more of consolidated unbilled accounts receivable as of the periods presented below: DECEMBER 31, DECEMBER 31, 2023 2022 As a % of As a % of Customer Type Receivables Receivables U.S. Federal Government 97 % 97 % As of December 31, 2021, the Company had unbilled accounts receivable of $10.9 million. |
Other Current Assets and Other
Other Current Assets and Other Long Term Assets | 12 Months Ended |
Dec. 31, 2023 | |
Other Current Assets and Other Long Term Assets | |
Other Current Assets and Other Long Term Assets | 6. Other Current Assets and Other Long Term Assets Other current assets consisted of the following as of the periods presented below: DECEMBER 31, DECEMBER 31, 2023 2022 Inventories $ 366,126 $ 222,279 Prepaid insurance and other assets 717,545 713,699 Total other current assets $ 1,083,671 $ 935,978 Other long term assets consisted of the following as of the periods presented below: DECEMBER 31, DECEMBER 31, 2023 2022 Security deposits $ 40,587 $ 67,748 Capital work in progress 442,701 1,958,097 Other long term assets $ 483,288 $ 2,025,845 Capitalized work in progress consists of internally developed software costs, primarily associated with upgrading our ITMS™ (Intelligent Technology Management System), secure identity management technology and secure network operations center of which $2.4 million was transferred from capital work in progress to internally developed software during the year ended December 31, 2023. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property and Equipment | 7. Property and Equipment Major classes of property and equipment consisted of the following as of the periods presented below: DECEMBER 31, DECEMBER 31, 2023 2022 Computer hardware and software $ 3,355,488 $ 3,158,428 Furniture and fixtures 503,913 502,391 Leasehold improvements 330,040 284,321 Automobiles 128,994 122,524 Gross property and equipment 4,318,435 4,067,664 Less: accumulated depreciation and amortization 3,537,635 3,089,446 Property and equipment, net $ 780,800 $ 978,218 During the years ended December 31, 2023 and 2022, the Company purchased for cash property and equipment totaling approximately $208,200 and $245,000, respectively. During the years ended December 31, 2023 and 2022, property and equipment depreciation expense was approximately $402,000 and $397,700, respectively. During the years ended December 31, 2023 and 2022, there were no material disposals of owned property and equipment. There were no changes in the estimated useful lives used to depreciate property and equipment during the years ended December 31, 2023 and 2022. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | 8. Leases The Company has leases for corporate and operational facilities (“real estate leases”). Real estate leases The components of lease expense were as follows: YEARS ENDED DECEMBER 31, 2023 2022 Operating lease expense $ 12,463 $ 16,351 Finance lease expense: Amortization of right of use assets $ 684,600 $ 682,102 Interest on finance lease liabilities 214,954 241,444 Total finance lease expense $ 899,554 $ 923,546 Lease expense is included in general and administrative expenses in the consolidated statement of operations. Amortization of right of use assets is include in depreciation and amortization in the consolidated statement of operations. Supplemental cash flow information related to leases was as follows: YEARS ENDED DECEMBER 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from leases $ 227,417 $ 257,795 Financing cash flows from leases 586,833 600,438 Supplemental balance sheet information related to leases was as follows: DECEMBER 31, 2023 2022 Lease right of use assets, net $ 4,045,222 $ 4,723,899 Current portion of lease liabilities 638,258 596,529 Lease liabilities, net of current portion 4,114,516 4,745,909 Weighted average remaining lease term Finance leases 10.2 11 Weighted average discount rate Finance leases 3.5 % 3.5 % Maturities of lease liabilities as of December 31, 2023, were as follows: 2024 $ 822,740 2025 730,500 2026 631,541 2027 633,663 2028 695,939 Thereafter 2,228,121 Total undiscounted finance lease payments 5,742,504 Less: Imputed interest 989,730 Total lease liability $ 4,752,774 On January 1, 2022, the Company entered into an amendment to its lease agreement for its Tampa office to amend the term and the extension option to June 30, 2022. As a result of the amendment, the Company removed the lease right of use asset and lease liability from its consolidated balance sheet and accounted for the lease as month to month and recorded the monthly rent expense in its consolidated statement of operations until termination on June 30, 2022. |
Intangibles Assets
Intangibles Assets | 12 Months Ended |
Dec. 31, 2023 | |
Intangibles Assets | |
Intangible Assets | 9. Intangible Assets The Company’s intangible assets are comprised of purchased intangibles consisting of customer relationships, channel relationships, telecommunications software, trade names and trademarks and non-compete agreements. Intangible assets acquired in connection with a business combination are valued at fair value and amortized on a straight-line basis over the expected useful life which may range from three (3) to fifteen (15) years or more depending on the intangible asset characteristics. The Company’s intangible assets also include internally developed software used in the sales and delivery of its information technology service offerings. The Company capitalizes certain internal costs related to software development to deliver its information technology services including but not limited to its Intelligent Telecommunications Management System (ITMS™), Public Key Infrastructure (PKI) and Optimiser Telecom Data Intelligence (TDI™) applications. Significant development costs are capitalized from the point of demonstrated technological feasibility until the point in time that the product is available for general release to customers. Once the product is available for general release, capitalized costs are amortized based on units sold, or on a straight-line basis generally over the expected functional life which may range from two (2) to five (5) years. The following tables summarize purchased and internally developed intangible assets subject to amortization as of the periods presented below: DECEMBER 31, 2023 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (538,200 ) $ 1,853,800 Channel Relationships 2,628,080 (1,693,652 ) 934,428 Internally Developed Software 7,892,045 (4,331,203 ) 3,560,842 Trade Name and Trademarks 1,330,472 (343,194 ) 987,278 $ 14,242,597 $ (6,906,249 ) $ 7,336,348 DECEMBER 31, 2022 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (299,000 ) $ 2,093,000 Channel Relationships 2,628,080 (1,518,446 ) 1,109,634 Internally Developed Software 5,665,957 (2,546,407 ) 3,119,550 Trade Name and Trademarks 1,330,472 (254,496 ) 1,075,976 $ 12,016,509 $ (4,618,349 ) $ 7,398,160 Purchased Intangibles For the year ended December 31, 2023, there were no disposals or sales of purchased intangible assets. Internally Developed For the year ended December 31, 2023, the Company capitalized $0.9 million of internally developed software costs, primarily associated with upgrading our ITMS™ (Intelligent Technology Management System), next generation TDI™ application, secure identity management technology and secure network operations center of which $2.4 million was transferred from capital work in progress to internally developed software. Capital work in progress is included in other long-term assets in the consolidated balance sheet. For the year ended December 31, 2022, the Company capitalized $3.2 million of internally developed software costs, primarily associated with upgrading our ITMS™ (Intelligent Technology Management System), next generation TDI™ application, secure identity management technology and secure network operations center of which $2.6 million was transferred from capital work in progress to internally developed software and $316,900 was transferred from capital work in progress to property and equipment during the year. Capital work in progress is included in other long-term assets in the consolidated balance sheet. The aggregate amortization expense recorded was approximately $2,282,300 and $1,451,100 for the years ended December 31, 2023 and 2022, respectively. The Company recorded an impairment charge of $0.2 million to for the year ended December 31, 2023 as part of its impairment assessment of long-lived assets and reduced the impaired internally developed software assets to the estimated fair value and adjusted the remaining useful lives as applicable on those assets as of December 31, 2023. As of December 31, 2023, estimated annual amortization for our intangible assets for each of the next five years and beyond is approximately: 2024 $ 2,445,034 2025 1,718,736 2026 930,582 2027 511,170 2028 511,170 Thereafter 1,219,656 Total $ 7,336,348 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill | |
Goodwill | 10. Goodwill The following table summarizes the changes in the carry amount of goodwill for the years ended December 31, 2023 and 2022: DECEMBER 31, DECEMBER 31, 2023 2022 Balances, January 1 $ 5,811,578 $ 22,088,578 Impairment - (16,277,000 ) Balances, December 31 $ 5,811,578 $ 5,811,578 As a result of the significant decrease in the Company’s publicly quoted share price and market capitalization, during the second quarter of 2022, the Company conducted additional testing of its goodwill, definite-lived intangibles, and other long-lived assets during the quarter ended June 30, 2022 As a result of this review and additional testing, the Company did not identify an impairment to its definite-lived intangible assets or other long lived assets, but the Company did identify an impairment to goodwill resulting in recording a $16.3 million non-cash goodwill impairment charge for the three month period ended June 30, 2022, and accordingly that amount was also reflected in the full year 2022 results. The Company performed its additional goodwill impairment test with support from an external consultant and estimated the fair value of its single reporting unit based on a combination of the income (estimates of future discounted cash flows) and the market approach (market multiples for similar companies). The income approach uses a discounted cash flow (DCF) method that utilizes the present value of cash flows to estimate fair value of our reporting unit. The future cash flows for the reporting unit were projected based upon our estimates of future revenue, operating income and other factors such as working capital and capital expenditures. As part of our DCF analysis, the Company projected revenue and operating profits, and assumed a long-term revenue growth rates in the terminal year. The market approach utilizes multiples of earnings before interest expense, taxes, depreciation and amortization (EBITDA) to estimate the fair value of our reporting unit. The market multiples used for our single reporting unit were based on a group of comparable companies’ market multiples applied to the Company’s revenue and EBITDA. The Company performed its annual impairment assessment as of December 31, 2023 and 2022, using the same external consultant as used in the previous impairment analyses. In connection with its annual budgeting and forecast process, the Company projected future cashflows based on existing business and margins, projected new business as well considering modifications to the Company’s cost structure. The market approach utilizes multiples of earnings before interest expense, taxes, depreciation and amortization (EBITDA) to estimate the fair value of our reporting unit. The market multiples used for our single reporting unit were based on a group of comparable companies’ market multiples applied to the Company’s revenue and EBITDA. The assessment did not result in any impairment of goodwill as of December 31, 2023 and 2022. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Other Current Liabilities | |
Other Current Liabilities | 11. Other Current Liabilities Accrued expenses consisted of the following as of the periods presented below: DECEMBER 31, DECEMBER 31, 2023 2022 Carrier service costs $ 12,959,350 $ 8,402,770 Salaries and payroll taxes 1,681,160 1,637,628 Inventory purchases, consultants and other costs 1,463,102 1,205,209 Other 72,090 81,662 $ 16,175,702 $ 11,327,269 |
Line of Credit and Factoring Ag
Line of Credit and Factoring Agreement | 12 Months Ended |
Dec. 31, 2023 | |
Line of Credit and Factoring Agreement | |
Line of Credit and Factoring Agreement | 12. Line of Credit and Factoring Agreement From June 15, 2017 to June 2023, the Company had a Loan and Security Agreement with Atlantic Union Bank (the “Loan Agreement”) that matured in June 2023 and was not renewed. On April 28, 2023, the Company entered into an Accounts Receivable Purchase Agreement (the “Purchase Agreement”) with Republic Capital Access, LLC (the “Buyer”) for the non-recourse sale of eligible accounts receivable relating to U.S. Government prime contracts or subcontracts of the Company (collectively, the “Purchased Receivables”) to replace the Company’s matured Loan and Security Agreement with Atlantic Union Bank. Upon purchase, Buyer becomes the absolute owner of any such Purchased Receivables, which are payable directly to the Buyer. The total amount of Purchased Receivables is subject to a maximum limit of $4 million outstanding Purchased Receivables at any time, with an available increase to $14 million, subject to adequate receivables. The Purchase Agreement contained customary fees, covenants and representations. Pursuant to the Purchase Agreement, the Company may from time to time offer and sell eligible accounts receivable to the Buyer. The Buyer pays the sales proceed of the purchase of the receivable invoices in two installments; first installment is Initial Purchase Price, which is 90% if the debtor is an agency of the U.S. Government, and 85% if the debtor is not an agency of the U.S. Government, of the invoice amount. The second and final installment is the residual purchase price that is the invoice amount less the initial purchase price less applicable discount factor and fees. During the year ended December 31, 2023, the Company sold a total of $5.2 million of receivables for $5.1 million in proceeds net of fees. As of December 31, 2023, there is no outstanding residual payment balance and availability under the Purchase Agreement of $4 million. Subsequent to year end the Company entered into a new revolving line of credit agreement (see Note 20) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | 13. Income Taxes Income tax provision is as follows for the years ended: DECEMBER 31, 2023 2022 Current provision State $ 30,000 $ 20,000 Foreign (3,914 ) 26,982 Total 26,086 46,982 Deferred provision (benefit) Federal 57,849 4,717,527 State 77,519 298,832 Foreign (28,211 ) 14,534 Total 107,157 5,030,893 Income tax provision $ 133,243 $ 5,077,875 Income tax provision effective rates, which differs from the federal and state statutory rate as follows for the years ended: DECEMBER 31, 2023 2022 Statutory federal income tax rate 21.0 % 21.0 % State, net of federal benefit 4.4 % 4.0 % Non-deductible expenses -1.3 % -5.7 % Valuation allowance -23.4 % -45.9 % Foreign rate differential -0.6 % 0.0 % Return to accrual difference true-ups -1.7 % 0.3 % Other -0.8 % -0.2 % Deferred tax adjustment and true-up 0.2 % -1.0 % Combined effective tax rate -2.2 % -27.4 % The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets (liabilities) consisted of the following: DECEMBER 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 11,836,460 $ 10,584,372 Alternative minimum tax credit 45,650 45,650 Share-based compensation 531,179 475,297 Intangible amortization (334,043 ) (48,740 ) Lease liability 1,581,946 1,555,503 Other assets 770,488 167,825 Total deferred tax assets 14,431,680 12,779,907 Less: valuation allowance (11,930,917 ) (10,503,243 ) Total deferred tax assets, net 2,500,763 2,276,664 Deferred tax liabilities: Goodwill amortization 366,764 116,530 Depreciation 456,913 324,959 Foreign intangible amortization 276,321 334,973 Other liabilities 15,052 11,354 Lease asset 1,402,636 1,401,939 Total deferred tax liabilities 2,517,686 2,189,755 Net deferred tax (liability) asset $ (16,923 ) $ 86,909 As of December 31, 2023, the Company had approximately $42.6 million in net operating loss (NOL) carry forwards available to offset future taxable income for federal income tax purposes that consist of $29.7 million that will expire between 2023 and 2036 and $12.9 million related to years after December 31, 2017 that does not have an expiration under current tax law. NOLs arising in tax years beginning in 2018 and after may only reduce 80 percent of taxable income every year but can be carried forward indefinitely. Included in the recorded deferred tax asset, the Company had a benefit of approximately $51.4 million available to offset future taxable income for state income tax purposes. These state NOL carry forwards expire between 2024 and 2043. Under the provisions of the Internal Revenue Code, the net operating losses (“NOL”) and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Utilization of the net operating loss and tax credits carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses and credits before utilization. Changes in the valuation allowance for the years ended were as follows: DECEMBER 31, 2023 2022 Beginning balance $ (10,503,243 ) $ (1,999,630 ) Increases (1,427,674 ) (8,503,613 ) Ending balance $ (11,930,917 ) $ (10,503,243 ) As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On the basis of this evaluation, management recorded a valuation allowance against a portion of domestic deferred tax assets because management has determined that it is more likely than not that the Company will not earn income sufficient to realize the deferred tax assets during the carry forward period. During the year ended December 31, 2023, the Company increased the valuation allowance by $1.4 million. If management’s assumptions change and we determine we will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction of income tax expense. The Company files U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as well as income tax returns in various states and certain foreign countries. The Company may be subject to examination by the IRS for tax years 2003 and forward. The Company may be subject to examinations by various state taxing jurisdictions for tax years 2003 and forward. The Company may be subject to examination by various foreign countries for tax years 2019 forward. As of December 31, 2023, the Company is currently not under examination by the IRS, any state or foreign tax jurisdiction. The Company did not have any unrecognized tax benefits at either December 31, 2023 or 2022. In the future, any interest and penalties related to uncertain tax positions will be recognized in income tax expense. |
Stockholders Equity
Stockholders Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders Equity | |
Stockholders' Equity | 14. Stockholders’ Equity Preferred Stock The Company’s Certificate of Incorporation authorizes the Company to issue up to 10,000,000 shares of preferred stock, $0.001 par value per share. Under the terms of the Company’s Certificate of Incorporation, the board of directors is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue such shares of preferred stock in one or more series. Each such series of preferred stock shall have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the board of directors. As of December 31, 2023, there were 7,954,286 undesignated shares of preferred stock remaining available for issuance. There were no issuances of or outstanding preferred stock during the years ended December 31, 2023 and 2022. Common Stock The Company is authorized to issue 30,000,000 shares of common stock, $.001 par value per share. As of December 31, 2023, there were 8,893,220 shares issued and outstanding. Common Stock Issuances - Employee Stock Option Exercises There were no stock option exercises during the years ended December 31, 2023 and 2022. Common Stock Issuances – Restricted Stock Awards During the year ended December 31, 2023, there were 169,737 shares of common stock vested in accordance with the vesting terms of the RSAs. Two employees received less than the shares vested because they elected to have a total of 1,993 shares withheld in satisfaction of the employees corresponding tax liability of approximately $3,600. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows. During the year ended December 31, 2022, there were 91,316 shares of common stock vested in accordance with the vesting terms of the RSAs. Three employees received less than the shares vested because they elected to have a total of 11,280 shares withheld in satisfaction of the employees corresponding tax liability of approximately $49,300. The Company’s payment of this tax liability was recorded as a cash flow from financing activity on the consolidated statement of cash flows. See Note 15 for additional information regarding stock option plans. Warrants Issued On March 31, 2022, the Company issued a warrant to purchase 75,000 shares of common stock as part of the contingent consideration earned by ITA for 2021 EBITDA achievement. The warrant contains a strike price of $5.33 and has a four-year contractual term. The warrant is classified within stockholders’ equity at its fair value. The fair value of the warrant was determined to be $108,000 utilizing the Black-Scholes-Merton option-pricing model at the time of issuance. Following such issuance, the Company has outstanding warrants to acquire 150,000 shares of common stock at a strike price of $5.33 that expire at terms through October 1, 2025. Stock Repurchase Program On October 7, 2019, the Company announced that its Board of Directors approved a stock repurchase plan (the “Repurchase Plan”) to purchase up to $2.5 million of the Company’s common stock. Any repurchases will be made in compliance with the SEC’s Rule 10b-18 if applicable, and may be made in the open market or in privately negotiated transactions, including the entry into derivatives transactions. During November 2021, the Board increased the size of the Repurchase Plan to up to $5.0 million of the Company’s common stock, increasing the amount available for future purchases under the Repurchase Plan to $4.6 million. During the three month period ended March 31, 2022, we repurchased 196,586 shares of our common stock for a total of $818,200 and subsequently in March of 2022, the Board suspended the repurchase plan in order to use the company’s excess funds to invest into the business. The Company retired all common stock it repurchased. At The Market Offering Agreement On August 18, 2020, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley FBR”), The Benchmark Company, LLC (“Benchmark”) and Spartan Capital Securities, LLC (“Spartan”, and together with B. Riley FBR and Benchmark, the “Sales Agents”) which establishes an at-the-market equity program pursuant to which the Company may offer and sell shares of our common stock, par value $0.001 per share, from time to time as set forth in the Sales Agreement. The Sales Agreement provides for the sale of shares of the Company’s common stock (“Shares”) having an aggregate offering price of up to $24,000,000. Effective March 27, 2023, the Company provided notice to the sales agents under its At the Market Sales Agreement that it was terminating the agreement. No shares were offered during the years ended December 31, 2023 and 2022. Accordingly, no additional sales of shares of common stock will be offered pursuant to such an agreement. |
Stock Options and Award Program
Stock Options and Award Programs | 12 Months Ended |
Dec. 31, 2023 | |
Stock Options and Award Programs | |
Stock Options and Award Programs | 15. Stock Options and Award Programs The Company’s stock incentive plan is administered by the Compensation Committee and authorizes the grant or award of incentive stock options, non-qualified stock options (NQSO), restricted stock awards (RSA), stock appreciation rights, dividend equivalent rights, performance unit awards and phantom shares. The Company issues new shares of common stock upon the exercise of stock options. Any shares associated with options forfeited are added back to the number of shares that underlie stock options to be granted under the stock incentive plan. The Company has issued restricted stock awards and non-qualified stock option awards as described below. Valuation of Stock Awards Restricted Stock Non-Qualified Stock Options Option pricing model assumptions for NQSO awards granted were valued using the following assumptions for the years then ended as set forth below: YEARS ENDED DECEMBER 31, 2023 2022 Stock options granted 288,570 -- Expected dividend yield -- -- Expected volatility 61.6% - 62.2% -- Risk-free interest rate 4.1% -- Term 4 years -- Non-Qualified Stock Option Awards A summary of NQSO activity as of December 31, 2023 and 2022, and changes during the years then ended are set forth below: 2023 2022 Weighted Weighted Average Average Grant Date Grant Date NON-VESTED OPTIONS Shares Fair Value Shares Fair Value Non-vested balances, January 1, - - 25,000 $ 3.98 Granted (+) 288,570 $ 0.91 - - Expired (-) - - 25,000 $ 3.98 Vested/Excercised (-) - - - - Non-vested balances, December 31, 288,570 $ 0.91 - - 2023 2022 Weighted Weighted Average Average OUTSTANDING AND EXERCISABLE OPTIONS Shares Exercise Price Shares Exercise Price Awards outstanding, January 1, 7,500 $ 4.90 140,000 $ 5.79 Granted (+) 288,570 $ 2.04 - - Cancelled (-) - - 5,000 $ 4.40 Expired (-) 7,500 $ 4.90 127,500 $ 5.89 Awards outstanding, December 31, 288,570 $ 2.04 7,500 $ 4.90 Awards vested and expected to vest, December 31, 285,923 $ 2.04 7,500 $ 4.90 Awards outstanding and exercisable, December 31, - - 7,500 $ 4.90 The weighted-average remaining contractual life and the aggregate intrinsic value (the amount by which the fair value of the Company’s stock exceeds the exercise price of the option) of the stock options outstanding, exercisable, and vested and expected to vest as of December 31, 2023 are as follows: Outstanding Expected to and Outstanding Vest Exercisable Weighted-average remaining contractual life (in years) 4.73 4.73 0.00 Aggregate intrinsic value $ 79,485 $ 78,756 $ - Restricted Stock Awards A summary of RSA activity as of December 31, 2023 and 2022, and changes for the years then ended are set forth below: 2023 2022 VESTED AND NON-VESTED AWARDS Non-vested awards outstanding, January 1, 188,903 121,316 Granted (+) 628,572 163,903 Cancelled (-) 31,746 5,000 Vested (-) 169,737 91,316 Non-vested awards outstanding, December 31, 615,992 188,903 Weighted-average remaining contractual life (in years) 0.3 0.7 Unamortized RSA compensation expense $ 483,416 $ 28,440 Aggregate intrinsic value of RSAs non-vested, December 31 $ 1,429,101 $ 343,822 Aggregate intrinsic value of RSAs vested, December 31 $ 326,628 $ 346,694 Long-Term Incentive Plan The Company maintains a long-term incentive plan (LTIP) that covers the period of January 1, 2023 through January 1, 2026. The plan was approved by the Board of Directors in August 2023. The LTIP has two components of equity-based compensation. The first is 250,000 Restricted Stock Awards (RSAs) that will be awarded to management and which will be issued to management in upcoming months, based on Board and management agreement. Of the 250,000 RSAs awarded, 83,333 are expected to vest on April 1, 2024. With the remaining awards vesting 83,333 on both January 1, 2025 and January 1, 2026. The second is 250,000 Performance- based Restricted Stock Units (PSRUs) that would vest upon meeting, by January 1, 2026, certain revenue, and adjusted EBITDA performance targets. As of December 31, 2023, the Company has not awarded the RSAs or PRSUs under this plan. Stock Compensation Expense Share-based compensation recognized under ASC 718-10 (including restricted stock awards) represents both stock options-based expense and stock grant expense. The Company recognized share-based compensation expense for the years then ended December 31 as set forth below: YEAR ENDED DECEMBER 31, 2023 YEAR ENDED DECEMBER 31, 2022 Shared-Based Compensation Expense Shared-Based Compensation Expense Employees Directors Total Employees Directors Total Restricted share-based compensation expense $ 641,730 $ 272,464 $ 914,194 $ 265,704 $ 262,878 $ 528,582 Non-qualified option share-based compensation expense 46,797 - 46,797 - - - Total share-based compensation before taxes $ 688,527 $ 272,464 $ 960,991 $ 265,704 $ 262,878 $ 528,582 At December 31, 2023, the Company had approximately $0.7 million of total unrecognized share-based compensation expense, net of estimated forfeitures, related to share-based compensation that will be recognized over the weighted average remaining period of 1.0 years. |
Earnings Per Common Share (EPS)
Earnings Per Common Share (EPS) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Common Share (EPS) | |
Earnings Per Common Share (EPS) | 16. Earnings Per Common Share (EPS) The computations of basic and diluted EPS for the years ended were as follows: YEARS ENDED DECEMBER 31, 2023 2022 Basic and Diluted Earnings Per Share Computation: Net loss $ (4,046,473 ) $ (23,585,291 ) Weighted average number of common shares 8,830,709 8,732,203 Basic and Diluted Loss Per Share $ (0.46 ) $ (2.70 ) For the year ended December 31, 2023 the Company had unexercised stock options of 288,570, RSAs of 615,992 and warrants to purchase 150,000 shares of common stock, outstanding, that were anti-dilutive. For the year ended December 31, 2022 the Company had unexercised stock options of 106,685, RSAs of 49,777 and warrants to purchase 150,000 shares of common stock, outstanding, that were anti-dilutive. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | 17. Accumulated Other Comprehensive Loss Changes in the Company’s cumulative foreign currency translation adjustments due to translation of its foreign subsidiaries’ Euro currency financial statements into the Company’s reporting currency were as and for the periods presented below: YEAR ENDED DECEMBER 31, 2023 2022 Balances, January 1 $ (350,234 ) $ (241,586 ) Net foreign currency translation gain (loss) 15,335 (108,648 ) Balances, December 31 $ (334,899 ) $ (350,234 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 18. Commitments and Contingencies Employment Agreements The Company has employment agreements with certain executives that set forth compensation levels and provide for severance payments in certain instances. Legal Matters The Company is not involved in any material legal proceedings. |
Revenue by Service Type Custome
Revenue by Service Type Customer Type and by Geographic Region | 12 Months Ended |
Dec. 31, 2023 | |
Revenue by Service Type Customer Type and by Geographic Region | |
Revenue by Service Type, Customer Type and by Geographic Region | 19. Revenue by Service Type, Customer Type and by Geographic Region The Company recognized revenues by the following broad service types: YEARS ENDED DECEMBER 31, 2023 2022 Carrier Services $ 58,229,511 $ 53,339,950 Managed Services 47,796,849 40,763,415 $ 106,026,360 $ 94,103,365 The Company recognized revenues for the following customer types as set forth below: YEARS ENDED DECEMBER 31, 2023 2022 U.S. Federal Government $ 84,475,325 $ 74,416,288 U.S. State and Local Governments 561,378 411,511 Foreign Governments 79,556 146,538 Commercial Enterprises 20,910,101 19,129,028 $ 106,026,360 $ 94,103,365 The Company recognized revenues from customers in the following geographic regions: YEARS ENDED DECEMBER 31, 2023 2022 United States $ 102,017,851 $ 90,786,554 Europe 4,008,509 3,316,811 $ 106,026,360 $ 94,103,365 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 20. Subsequent Events On February 29, 2024, the Company entered into a Loan and Security Agreement (the “Loan”) and Promissory Note (the “Note,” and, together with the Loan, the “Agreements”) with Old Dominion National Bank. The Agreements provide for a new $4,000,000 revolving line of credit facility (the “Credit Facility”). Advances under the Credit Facility are subject to a borrowing base equal to the lesser of (i) $4,000,000 or (ii) 80% of billed accounts receivable less than 90 days outstanding. Interest accrues on the outstanding principal balance of the Credit Facility at an annual rate equal to the Prime Rate published in The Wall Street Journal, subject to a floor rate of 7.25%. Outstanding interest on the amount borrowed is payable monthly and all outstanding interest and principal is due on the maturity date of February 28, 2025. The Credit Facility includes customary covenants and events of default, including the following items that are measured annually commencing December 31, 2024: (i) a minimum tangible net worth of $2.0 million; (ii) a minimum annual EBITDA of $1.0 million and (iii) a ratio of current assets to current liabilities of not less than 1.0 to 1.0. The terms of new Credit Facility prohibit the use of our Factoring Arrangement. The Company has not had material borrowings on its Credit Facility through March 26, 2024. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Significant Accounting Policies | |
Basis of Presentation | The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the financial statement rules and regulations of the Securities and Exchange Commission. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and acquired entities since their respective dates of acquisition. All significant inter-company amounts were eliminated in consolidation. |
Government Subsidies | On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provides employer payroll tax credits for qualified wages and options to defer payroll tax payments for a limited period. The Company records government subsidies as offsets to the related operating expenses. During the year ended 12/31/22, the Company collected $1.6M payroll tax credits that were earned and recognized prior to fiscal year 2022. |
Accounting Standards under Evaluation | In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument (“Topic 326”). Topic 326 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. This ASU update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The Company adopted Topic 326 on January 1, 2023. The adoption of ASU 2016-03 did not have a material impact on the Company's consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impacts of the new standard. |
Foreign Currency | Assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon exchange rates prevailing at the end of each reporting period. The resulting translation adjustments, along with any related tax effects, are included in accumulated other comprehensive loss, a component of stockholders’ equity. Translation adjustments are reclassified to earnings upon the sale or substantial liquidation of investments in foreign operations. Revenues and expenses are translated at the average month-end exchange rates during the year. Gains and losses related to transactions in a currency other than the functional currency, including operations outside the U.S. where the functional currency is the U.S. dollar, are reported net in the Company’s Consolidated Statements of Operations, depending on the nature of the activity. See Note 17 for additional information. |
Segment Reporting | Segments are defined by authoritative guidance as components of a company in which separate financial information is available and is evaluated by the chief operating decision maker (CODM), or a decision-making group, in deciding how to allocate resources and in evaluating financial performance. The Company’s CODM is its chief executive officer. The Company’s customers view our market as a singular business and demand an integrated and scalable suite of enterprise-wide solutions. The Company’s TMaaS offerings are substantially managed service driven solutions that use our proprietary technology platform to deliver our services. The amount of labor required to perform our contract obligations may vary significantly contract to contract depending on the customer’s specific requirements; however, the way in which we perform these services is consistent across the company and requires a connected group of internal subject matter experts and support personnel. In order to evaluate a managed service business model the Company’s CODM measures financial performance and allocates resources based on the overall consolidated results of managed and carrier services and related margins. These consolidated financial metrics provide a stronger indication of how the Company is managing its key customer relationships and assesses overall profitability. As a result, the Company comprises of one operating segment and presents single reporting segment for purposes of financial reporting and prepared its consolidated financial statements upon that basis. |
Use of Estimates and Critical Accounting Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates include the Company’s valuation of goodwill impairment. To estimate the fair value of its reporting unit, the Company projects future cash flows using management’s assumptions for revenue growth rate, operating margins, and a discount rate. These estimates can significantly affect the outcome of the Company’s impairment assessment. Other areas requiring use of estimates and judgment relate to revenue recognition, accounts receivable valuation reserves, ability to realize intangible assets, ability to realize deferred income tax assets, contingent consideration, fair value of certain financial instruments and the evaluation of contingencies and litigation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
Fair Value Measurements | 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, based on the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability. GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows: Level 1 Level 2 ■ Quoted prices for similar assets or liabilities in active markets ■ Quoted prices for identical or similar assets or liabilities in markets that are not active ■ Inputs other than quoted prices that are observable for the asset or liability ■ Inputs that are derived principally from or corroborated by observable market data by correlation or other means Level 3 The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred. Note 3 for changes in fair value of liabilities recorded in connection with certain liabilities that are measured at fair value on a recurring basis. |
Financial Instruments | Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. |
Cash and Cash Equivalents | The Company maintains interest-bearing cash deposits and short-term overnight investments with large financial institutions. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents for purposes of these consolidated financial statements. Interest-bearing cash deposits maintained by financial institutions in the United States of America are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to a maximum of $250,000. At December 31, 2023 and 2022, the Company had deposits in excess of FDIC limits of approximately $5.5 million and $5.1 million, respectively. |
Allowances for Credit Losses | The Company determines its allowance for credit allowances by considering a number of factors, including the type of customer, credit worthiness, payment history, length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are deemed to be uncollectible, having exhausted all collection efforts. |
Inventories | Inventories consist of mobile devices and accessories and identity credential hardware components. Inventories are valued at the lower of cost, using first-in, first-out method, or net realizable value. The Company may record a write-down for inventories which have become obsolete or are in excess of anticipated demand or net realizable value. If future demand or market conditions for our products are less favorable than forecasted or if unforeseen technological changes negatively impact the utility of inventory, we may be required to record additional write-downs, which would adversely affect our gross profit. For the years ended December 31, 2023 and 2022, there were no inventory write-downs. |
Property and Equipment | Property and equipment are stated at historical cost, net of accumulated depreciation and amortization. Depreciation and amortization expense is computed using the straight-line method over the estimated useful lives based upon the classification of the property and/or equipment or lease period for assets acquired under lease arrangements. The estimated useful lives of the assets are as follows: Estimated Useful Life Computer hardware and software 3-5 years Furniture and fixtures 5 years Mobile equipment 3 years The Company assesses the recoverability of property and equipment by determining whether the depreciation of property and equipment over its remaining life can be recovered through projected undiscounted future cash flows. The amount of property and equipment impairment if any, is measured based on fair value and is charged to operations in the period in which property and equipment impairment is determined by management. As of December 31, 2023 and 2022, the Company’s management has not identified any material impairment of its property and equipment. |
Leases | The Company has leases for corporate offices that are accounted for under ASC 842, Leases (Topic 842). The leases have remaining lease terms ranging from one year to eighteen years. The Company determines if an arrangement is a lease at inception. The Company considers any contract where there is an identified asset and that it has the right to control the use of such asset in determining whether the contract contains a lease. A right-of-use (“ROU”) asset represents the Company’s right to use an underlying asset for the lease term and the lease liabilities represent its obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the lease commencement date in determining the present value of lease payments. The lease ROU assets include any lease payments made prior to the rent commencement date. Lease expense for lease payments are recognized on a straight-line basis over the lease term. |
Goodwill and Other Intangible Assets | The Company accounts for goodwill and other indefinite-lived intangible assets in accordance with ASC 350, Intangibles (Topic 350). Under ASC Topic 350, goodwill and certain indefinite-lived intangible assets are not amortized but are subject to an annual impairment test as of December 31, and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company has a single reporting unit and all goodwill relates to that reporting unit. The Company recorded a non-cash goodwill impairment charge of $16.3 million during 2022 following goodwill impairment testing performed as a result of sustained decreases in our publicly quoted share price and market capitalization. There was no goodwill impairment during 2023. |
Impairment of long-lived assets | The Company reviews long-lived assets such as property and equipment, right of use assets, and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable by comparing the net book value of the asset group to their estimated undiscounted future cash flows expected from their use and eventual disposition. Impaired assets are recorded at estimated fair value, determined principally by using the present value of estimated future cash flows expected from their use and eventual disposition. |
Revenues from Contracts with Customers | Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company reports products and services under the categories managed services and carrier services as described below: Carrier Services. Managed Services. · Managed Service Fees: o Revenue for fixed price services are generally completed and billed in the same accounting period and we charge a fixed fee for each performance obligation which may be tied to the number of units managed, percentage of supplier spend and/or savings, units delivered, certificates issued by the Company, certificate validation services installed in a customer’s environment, accessories sold and billable hours. Revenue from this service requires accounting estimates due to delays between completion of the service and the normal billing cycle. o Revenue for fixed price software sold as a term license is recognized ratably over the license term from the date the software is accepted by the customer. Maintenance services, if contracted, are recognized ratably over the term of the maintenance agreement, generally twelve months. Revenue for fixed price software licenses that are sold as a perpetual license with no significant customization are recognized when the software is delivered. Implementation fees are recognized when the work is completed. Revenue from this service does not require significant accounting estimates. o Revenue is recognized from the sales of identity credentials to an individual or organization upon issuance less a portion deferred for monthly credential validation support services. In the case of bulk sales or credential management system revenue is recognized upon issue or availability to the customer for issuance. There is generally no significant performance obligation to provide post contract services in relation to identity consoles delivered. Identity certificates issued have a fixed life and cannot be modified once issued. · Billable Service Fees. · Reselling and Other Service Fees. |
Software Development Costs | The Company applies the principles of FASB ASC 350-40, Accounting for the Cost of Computer Software Developed or Obtained for Internal Use The Company also applies the principles of FASB ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed |
Product Development | Product development expenses include payroll, employee benefits, and other employee related expenses associated with product development. Product development expenses also include third-party development and programming costs, subject matter experts, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Costs related to product development are expensed until the point that preliminary project stage is complete or technological feasibility is reached. Costs incurred during the implementation of product development and enhancements are capitalized and amortized to cost of revenue over the estimated lives of the solution. For the years ended December 31, 2023 and 2022, the Company incurred product development costs associated with TMaaS platform application, Secure Identity Management Solutions, Unified Communications Analytics (UCAS) solution, and data center of approximately $0.9 million and $3.2 million, respectively, which were capitalized. See Note 9 to the consolidated financial statements for additional information about capitalization of product development costs. |
Judgments and Estimates | The Company’s contracts with customers often include promises to transfer multiple products and services to a customer under a fixed rate or fixed fee arrangement. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Components of our managed service solution are generally distinct performance obligations that are not interdependent and can be completed within a month. The Company’s products are generally sold with a right of return. Historically the returns have been immaterial and recognized in the period which the products are returned. While historically immaterial as well, the Company may provide other event driven credits or disincentives for not meeting performance obligations which are accounted for as variable consideration and recognized in the period which the event occurs. |
Contract Balances | A significant portion of contract balances represent revenues earned on federal government contracts. Timing of revenue recognition may differ materially from the timing of invoicing to customers due a long-standing practice of issuing a consolidated managed service invoice. A consolidated invoice usually requires data such as billable hours, units managed, credentials issued, accessories sold and usage data from telecommunications providers and other suppliers. As a result it could take between thirty (30) to sixty (60) days after all performance obligations have been met to deliver a complete customer invoice. As a result, the Company may have both accounts receivables (invoiced revenue) and unbilled receivables (revenue recognize but not yet invoiced) that could represent one or more months of revenue. Additionally, the Company may be required under contractual terms to bill for services in advance and deferred recognition of revenue until all performance obligations have been met. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within thirty (30) to ninety (90) days. Payment terms and conditions for government and commercial customers are described below: · Government contract billings are generally due within thirty (30) days of the invoice date. Government accounts receivable payments could be delayed due to administrative processing delays by the government agency, continuing budget resolutions that may delay availability of contract funding, and/or administrative only invoice correction requests by contracting officers that may delay payment processing by our government customer. · Commercial contracts are billed based on the underlying contract terms and conditions which generally have repayment terms that range from thirty (30) to ninety (90) days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers. The Company assesses its ability to collect outstanding receivables and contract assets and provides customer-specific allowances for credit losses and general allowances for the portion of receivables and contract assets that are estimated to be uncollectible. Allowances for credit losses are based on historical collection experience and expected credit losses, customer specific financial condition, current economic trends in the customer's industry and geographic region, changes in customer demand and the overall economic climate in the market the Company serves. Customer accounts receivable balances that remain uncollected for more than 45 days are further reviewed for collectability and are considered past due after 90 days unless different contractual repayment terms were extended under a contract with a customer. The Company will reserve such amounts estimated to be uncollectable. Costs to Obtain a Contract with a Customer The Company does not recognize assets from the costs to obtain a contract with a customer and generally expenses these costs as incurred. The Company primarily uses internal labor to manage and oversee the customer acquisition process and to finalize contract terms and conditions and commence customer start-up activities, if any. Internal labor costs would be incurred regardless of the outcome of a contract with a customer and as such those costs are not considered incremental to the cost to obtain a contract with a customer. The Company does not typically incur significant incremental costs to obtain a contract with a customer which may include payment of commissions to certain internal and/or external sales agents upon collection of invoiced sales from the customer. The Company does not typically prepay sales commissions in advance of being paid for services delivered. |
Income Taxes | The Company accounts for income taxes in accordance with authoritative guidance which requires that deferred tax assets and liabilities be computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. The guidance requires that the net deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Under existing income tax accounting standards such objective evidence is more heavily weighted in comparison to other subjective evidence such as our projections for future growth, tax planning and other tax strategies. The Company recognizes the impact of an uncertain tax position taken or expected to be taken on an income tax return in the financial statements at the amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained upon audit by the relevant taxing authority. |
Basic and Diluted Earnings Per Share (EPS) | Basic EPS includes no dilution and is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS includes the potential dilution that could occur if securities or other contracts to issue common and restricted stock were exercised or converted into common and restricted stock. The number of incremental shares from assumed conversions of stock options and unvested restricted stock awards included in the calculation of diluted EPS was calculated using the treasury stock method. See Note 16 to the consolidated financial statements for computation of EPS. |
Employee Stock-Based Compensation | The Company accounts for stock-based employee compensation arrangements under provisions of ASC 718-10. The Company recognizes the cost of employee stock awards granted in exchange for employee services based on the grant-date fair value of the award using a Black-Scholes option-pricing model, net of expected forfeitures. Those costs are recognized ratably over the vesting period. Each stock option has an exercise price equal to the market price of the Company’s common stock on the date of grant and a contractual term ranging from 3 to 10 years. See Note 15 to the consolidated financial statements for additional information about stock-based compensation programs. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Significant Accounting Policies | |
Schedule of property plant and equipment estimated useful lives | Estimated Useful Life Computer hardware and software 3-5 years Furniture and fixtures 5 years Mobile equipment 3 years |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Schedule of liabilities measured at fair value on a recurring basis | Quoted Prices in Significant Other DECEMBER 31, Active Markets Observable Inputs Unobservable Inputs Description 2023 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 Quoted Prices in Significant Other DECEMBER 31, Active Markets Observable Inputs Unobservable Inputs Description 2022 (Level 1) (Level 2) (Level 3) Liabilities: Contingent consideration - cash settled $ 6,500 - - $ 6,500 Contingent consideration - warrants 400 - - 400 Total liabilities measured and recorded at fair value $ 6,900 $ - $ - $ 6,900 |
Accounts Receivable and Signi_2
Accounts Receivable and Significant Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Schedule of accounts receivable | DECEMBER 31, DECEMBER 31, 2023 2022 U.S. Federal, State, and Local Government (1) $ 6,402,922 $ 7,272,993 Commercial (2) 1,898,230 2,055,782 Gross accounts receivable 8,301,152 9,328,775 Less: allowances for credit losses (3) 81,359 51,666 Accounts receivable, net $ 8,219,793 $ 9,277,109 |
Schedule of concentration of risk | YEARS ENDED DECEMBER 31, Customer Type 2023 2022 U.S. Federal Government (1) 79.7 % 79.1 % U.S. State & Local and Foreign Governments 0.6 % 0.6 % |
Unbilled Accounts Receivable _2
Unbilled Accounts Receivable and Significant Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounts Receivable and Significant Concentrations | |
Schedule of concentration of risk | DECEMBER 31, DECEMBER 31, 2023 2022 As a % of As a % of Customer Type Receivables Receivables U.S. Federal Government 97 % 97 % |
Other Current Assets and Othe_2
Other Current Assets and Other Long Term Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Current Assets and Other Long Term Assets | |
Schedule of Other current assets | DECEMBER 31, DECEMBER 31, 2023 2022 Inventories $ 366,126 $ 222,279 Prepaid insurance and other assets 717,545 713,699 Total other current assets $ 1,083,671 $ 935,978 |
Schedule of other long term assets | DECEMBER 31, DECEMBER 31, 2023 2022 Security deposits $ 40,587 $ 67,748 Capital work in progress 442,701 1,958,097 Other long term assets $ 483,288 $ 2,025,845 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property, plant and equipment | DECEMBER 31, DECEMBER 31, 2023 2022 Computer hardware and software $ 3,355,488 $ 3,158,428 Furniture and fixtures 503,913 502,391 Leasehold improvements 330,040 284,321 Automobiles 128,994 122,524 Gross property and equipment 4,318,435 4,067,664 Less: accumulated depreciation and amortization 3,537,635 3,089,446 Property and equipment, net $ 780,800 $ 978,218 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Lease cost | YEARS ENDED DECEMBER 31, 2023 2022 Operating lease expense $ 12,463 $ 16,351 Finance lease expense: Amortization of right of use assets $ 684,600 $ 682,102 Interest on finance lease liabilities 214,954 241,444 Total finance lease expense $ 899,554 $ 923,546 |
Supplemental information related to leases | YEARS ENDED DECEMBER 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from leases $ 227,417 $ 257,795 Financing cash flows from leases 586,833 600,438 DECEMBER 31, 2023 2022 Lease right of use assets, net $ 4,045,222 $ 4,723,899 Current portion of lease liabilities 638,258 596,529 Lease liabilities, net of current portion 4,114,516 4,745,909 Weighted average remaining lease term Finance leases 10.2 11 Weighted average discount rate Finance leases 3.5 % 3.5 % |
Maturities of lease liabilities | 2024 $ 822,740 2025 730,500 2026 631,541 2027 633,663 2028 695,939 Thereafter 2,228,121 Total undiscounted finance lease payments 5,742,504 Less: Imputed interest 989,730 Total lease liability $ 4,752,774 |
Intangibles Assets (Tables)
Intangibles Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Intangibles Assets | |
Schedule of finite-lived intangible assets | DECEMBER 31, 2023 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (538,200 ) $ 1,853,800 Channel Relationships 2,628,080 (1,693,652 ) 934,428 Internally Developed Software 7,892,045 (4,331,203 ) 3,560,842 Trade Name and Trademarks 1,330,472 (343,194 ) 987,278 $ 14,242,597 $ (6,906,249 ) $ 7,336,348 DECEMBER 31, 2022 Gross Carrying Accumulated Net Book Amount Amortization Value Customer Relationships $ 2,392,000 $ (299,000 ) $ 2,093,000 Channel Relationships 2,628,080 (1,518,446 ) 1,109,634 Internally Developed Software 5,665,957 (2,546,407 ) 3,119,550 Trade Name and Trademarks 1,330,472 (254,496 ) 1,075,976 $ 12,016,509 $ (4,618,349 ) $ 7,398,160 |
Schedule of finite-lived intangible assets, future amortization expense | 2024 $ 2,445,034 2025 1,718,736 2026 930,582 2027 511,170 2028 511,170 Thereafter 1,219,656 Total $ 7,336,348 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill | |
Schedule of goodwill | DECEMBER 31, DECEMBER 31, 2023 2022 Balances, January 1 $ 5,811,578 $ 22,088,578 Impairment - (16,277,000 ) Balances, December 31 $ 5,811,578 $ 5,811,578 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Current Liabilities | |
Schedule of accrued liabilities | DECEMBER 31, DECEMBER 31, 2023 2022 Carrier service costs $ 12,959,350 $ 8,402,770 Salaries and payroll taxes 1,681,160 1,637,628 Inventory purchases, consultants and other costs 1,463,102 1,205,209 Other 72,090 81,662 $ 16,175,702 $ 11,327,269 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of components of income tax expense (benefit) | DECEMBER 31, 2023 2022 Current provision State $ 30,000 $ 20,000 Foreign (3,914 ) 26,982 Total 26,086 46,982 Deferred provision (benefit) Federal 57,849 4,717,527 State 77,519 298,832 Foreign (28,211 ) 14,534 Total 107,157 5,030,893 Income tax provision $ 133,243 $ 5,077,875 |
Schedule of effective income tax rate reconciliation | DECEMBER 31, 2023 2022 Statutory federal income tax rate 21.0 % 21.0 % State, net of federal benefit 4.4 % 4.0 % Non-deductible expenses -1.3 % -5.7 % Valuation allowance -23.4 % -45.9 % Foreign rate differential -0.6 % 0.0 % Return to accrual difference true-ups -1.7 % 0.3 % Other -0.8 % -0.2 % Deferred tax adjustment and true-up 0.2 % -1.0 % Combined effective tax rate -2.2 % -27.4 % |
Schedule of deferred tax assets and liabilities | DECEMBER 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 11,836,460 $ 10,584,372 Alternative minimum tax credit 45,650 45,650 Share-based compensation 531,179 475,297 Intangible amortization (334,043 ) (48,740 ) Lease liability 1,581,946 1,555,503 Other assets 770,488 167,825 Total deferred tax assets 14,431,680 12,779,907 Less: valuation allowance (11,930,917 ) (10,503,243 ) Total deferred tax assets, net 2,500,763 2,276,664 Deferred tax liabilities: Goodwill amortization 366,764 116,530 Depreciation 456,913 324,959 Foreign intangible amortization 276,321 334,973 Other liabilities 15,052 11,354 Lease asset 1,402,636 1,401,939 Total deferred tax liabilities 2,517,686 2,189,755 Net deferred tax (liability) asset $ (16,923 ) $ 86,909 |
Summary of valuation allowance | DECEMBER 31, 2023 2022 Beginning balance $ (10,503,243 ) $ (1,999,630 ) Increases (1,427,674 ) (8,503,613 ) Ending balance $ (11,930,917 ) $ (10,503,243 ) |
Stock Options and Award Progr_2
Stock Options and Award Programs (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stock Options and Award Programs | |
Schedule of assumptions | YEARS ENDED DECEMBER 31, 2023 2022 Stock options granted 288,570 -- Expected dividend yield -- -- Expected volatility 61.6% - 62.2% -- Risk-free interest rate 4.1% -- Term 4 years -- |
Schedule of non qualified stock option awards | 2023 2022 Weighted Weighted Average Average Grant Date Grant Date NON-VESTED OPTIONS Shares Fair Value Shares Fair Value Non-vested balances, January 1, - - 25,000 $ 3.98 Granted (+) 288,570 $ 0.91 - - Expired (-) - - 25,000 $ 3.98 Vested/Excercised (-) - - - - Non-vested balances, December 31, 288,570 $ 0.91 - - 2023 2022 Weighted Weighted Average Average OUTSTANDING AND EXERCISABLE OPTIONS Shares Exercise Price Shares Exercise Price Awards outstanding, January 1, 7,500 $ 4.90 140,000 $ 5.79 Granted (+) 288,570 $ 2.04 - - Cancelled (-) - - 5,000 $ 4.40 Expired (-) 7,500 $ 4.90 127,500 $ 5.89 Awards outstanding, December 31, 288,570 $ 2.04 7,500 $ 4.90 Awards vested and expected to vest, December 31, 285,923 $ 2.04 7,500 $ 4.90 Awards outstanding and exercisable, December 31, - - 7,500 $ 4.90 |
Schedule of weighted-average remaining contractual life and the aggregate intrinsic value | Outstanding Expected to and Outstanding Vest Exercisable Weighted-average remaining contractual life (in years) 4.73 4.73 0.00 Aggregate intrinsic value $ 79,485 $ 78,756 $ - |
Schedule of restricted stock awards | 2023 2022 VESTED AND NON-VESTED AWARDS Non-vested awards outstanding, January 1, 188,903 121,316 Granted (+) 628,572 163,903 Cancelled (-) 31,746 5,000 Vested (-) 169,737 91,316 Non-vested awards outstanding, December 31, 615,992 188,903 Weighted-average remaining contractual life (in years) 0.3 0.7 Unamortized RSA compensation expense $ 483,416 $ 28,440 Aggregate intrinsic value of RSAs non-vested, December 31 $ 1,429,101 $ 343,822 Aggregate intrinsic value of RSAs vested, December 31 $ 326,628 $ 346,694 |
Schedule of share-based compensation expense | YEAR ENDED DECEMBER 31, 2023 YEAR ENDED DECEMBER 31, 2022 Shared-Based Compensation Expense Shared-Based Compensation Expense Employees Directors Total Employees Directors Total Restricted share-based compensation expense $ 641,730 $ 272,464 $ 914,194 $ 265,704 $ 262,878 $ 528,582 Non-qualified option share-based compensation expense 46,797 - 46,797 - - - Total share-based compensation before taxes $ 688,527 $ 272,464 $ 960,991 $ 265,704 $ 262,878 $ 528,582 |
Earnings Per Common Share (EP_2
Earnings Per Common Share (EPS) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Common Share (EPS) | |
Schedule of earnings per share, basic and diluted | YEARS ENDED DECEMBER 31, 2023 2022 Basic and Diluted Earnings Per Share Computation: Net loss $ (4,046,473 ) $ (23,585,291 ) Weighted average number of common shares 8,830,709 8,732,203 Basic and Diluted Loss Per Share $ (0.46 ) $ (2.70 ) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Loss | |
Schedule of accumulated other comprehensive income (loss) | YEAR ENDED DECEMBER 31, 2023 2022 Balances, January 1 $ (350,234 ) $ (241,586 ) Net foreign currency translation gain (loss) 15,335 (108,648 ) Balances, December 31 $ (334,899 ) $ (350,234 ) |
Revenue by Service Type Custo_2
Revenue by Service Type Customer Type and by Geographic Region (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue by Service Type Customer Type and by Geographic Region | |
Schedule of revenues from different type services | YEARS ENDED DECEMBER 31, 2023 2022 Carrier Services $ 58,229,511 $ 53,339,950 Managed Services 47,796,849 40,763,415 $ 106,026,360 $ 94,103,365 |
Revenue from external customers by customers type | YEARS ENDED DECEMBER 31, 2023 2022 U.S. Federal Government $ 84,475,325 $ 74,416,288 U.S. State and Local Governments 561,378 411,511 Foreign Governments 79,556 146,538 Commercial Enterprises 20,910,101 19,129,028 $ 106,026,360 $ 94,103,365 |
Revenue from external customers by geographic areas | YEARS ENDED DECEMBER 31, 2023 2022 United States $ 102,017,851 $ 90,786,554 Europe 4,008,509 3,316,811 $ 106,026,360 $ 94,103,365 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Furniture and Fixtures | |
Estimated useful life | 5 years |
Mobile Equipment | |
Estimated useful life | 3 years |
Minimum | Computer Equipment | |
Estimated useful life | 3 years |
Maximum | Computer Equipment | |
Estimated useful life | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2022 EUR (€) | |
Cash, uninsured amount | $ 5,500,000 | $ 5,100,000 | |
Cash, FDIC Insured Amount | 250,000 | ||
Inventory write-downs | 0 | 0 | |
Impairment of goodwill and other indefinite-lived intangible assets | 16,300,000 | ||
Product development costs | $ 900,000 | 3,200,000 | |
Deferred payroll tax payments | 1,600,000 | ||
Description of Employee Stock-Based Compensation | Each stock option has an exercise price equal to the market price of the Company’s common stock on the date of grant and a contractual term ranging from 3 to 10 years | ||
Foreign | |||
Cash, uninsured amount | $ 600,000 | 1,300,000 | |
Ireland | |||
Cash, FDIC Insured Amount | € | € 100,000 | ||
United Kingdom | |||
Cash, FDIC Insured Amount | $ 75,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Contingent consideration - cash settled | $ 6,500 | $ 6,500 |
Contingent consideration - warrants | 400 | 400 |
Total liabilities measured and recorded at fair value | 6,900 | 6,900 |
Fair Value, Inputs, Level 3 | ||
Contingent consideration - cash settled | 6,500 | 6,500 |
Contingent consideration - warrants | 400 | 400 |
Total liabilities measured and recorded at fair value | 6,900 | 6,900 |
Fair Value, Inputs, Level 1 | ||
Contingent consideration - cash settled | 0 | 0 |
Contingent consideration - warrants | 0 | 0 |
Total liabilities measured and recorded at fair value | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Contingent consideration - cash settled | 0 | 0 |
Contingent consideration - warrants | 0 | 0 |
Total liabilities measured and recorded at fair value | $ 0 | $ 0 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Fair Value Measurements | |
change in fair value of contingent consideration | $ 1.3 |
Accounts Receivable and Signi_3
Accounts Receivable and Significant Concentrations (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Accounts Receivable Gross | $ 8,301,152 | $ 9,328,775 |
Less: allowances for doubtful accounts | 81,359 | 51,666 |
Accounts receivable, net | 8,219,793 | 9,277,109 |
Government | ||
Accounts Receivable Gross | 6,402,922 | 7,272,993 |
Commercial | ||
Accounts Receivable Gross | $ 1,898,230 | $ 2,055,782 |
Accounts Receivable and Signi_4
Accounts Receivable and Significant Concentrations (Details 1) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
U.S Federal Government | ||
Concentration risk | 79.70% | 79.10% |
Trade Accounts Receivables | ||
Concentration risk | 0.60% | 0.60% |
Accounts Receivable and Signi_5
Accounts Receivable and Significant Concentrations (Details Narrative) $ in Millions | Dec. 31, 2021 USD ($) |
Accounts Receivable and Significant Concentrations | |
Accounts receivable | $ 12.5 |
Unbilled Accounts Receivable (D
Unbilled Accounts Receivable (Details) | Dec. 31, 2023 | Dec. 31, 2022 |
U.S Federal Government | ||
Concentration Risk of receivable | 97% | 97% |
Other Current Assets and Othe_3
Other Current Assets and Other Long Term Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Other Current Assets | ||
Inventories | $ 366,126 | $ 222,279 |
Prepaid insurance and other assets | 717,545 | 713,699 |
Total other current assets | $ 1,083,671 | $ 935,978 |
Other Current Assets and Othe_4
Other Current Assets and Other Long Term Assets (Details 1) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Other Current Assets and Other Long Term Assets | ||
Security deposits | $ 40,587 | $ 67,748 |
Capital work in progress | 442,701 | 1,958,097 |
Other long term assets | $ 483,288 | $ 2,025,845 |
Other Current Assets and Othe_5
Other Current Assets and Other Long Term Assets (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Other Current Assets and Other Long Term Assets | |
Management technology and secure network operations | $ 2.4 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Gross property and equipment | $ 4,318,435 | $ 4,067,664 |
Less: accumulated depreciation and amortization | 3,537,635 | 3,089,446 |
Property and equipment, net | 780,800 | 978,218 |
Furniture and Fixtures | ||
Gross property and equipment | 503,913 | 502,391 |
Computer Hardware Software | ||
Gross property and equipment | 3,355,488 | 3,158,428 |
Leasehold Improvements | ||
Gross property and equipment | 330,040 | 284,321 |
Automobiles | ||
Gross property and equipment | $ 128,994 | $ 122,524 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property and Equipment | ||
Purchase of property and equipment | $ 208,200 | $ 245,000 |
Property and equipment depreciation expense | $ 402,000 | $ 397,700 |
Leases (Details)
Leases (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating lease expense | $ 12,463 | $ 16,351 |
Amortization of right of use assets | 684,600 | 682,102 |
Interest on finance lease liabilities | 214,954 | 241,444 |
Total finance lease expense | $ 899,554 | $ 923,546 |
Leases (Details 1)
Leases (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating cash flows from leases | $ 227,417 | $ 257,795 |
Financing cash flows from leases | $ 586,833 | $ 600,438 |
Leases (Details 2)
Leases (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Lease right of use assets, net | $ 4,045,222 | $ 4,723,899 |
Current portion of lease liabilities | 638,258 | 596,529 |
Lease liabilities, net of current portion | $ 4,114,516 | $ 4,745,909 |
Weighted average remaining lease term finance leases (in years) | 10 years 2 months 12 days | 11 years |
Weighted average discount rate finance leases | 3.50% | 3.50% |
Leases (Details 3)
Leases (Details 3) | Dec. 31, 2023 USD ($) |
Leases | |
2024 | $ 822,740 |
2025 | 730,500 |
2026 | 631,541 |
2027 | 633,663 |
2028 | 695,939 |
Thereafter | 2,228,121 |
Total undiscounted finance lease payments | 5,742,504 |
Less: imputed interest | 989,730 |
Total lease liability | $ 4,752,774 |
Leases (Details Narrative)
Leases (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Maximum | |
Real estate leases | $ 0.8 |
Annual lease payment escalation per year | 4% |
Government | |
Real estate leases | $ 0.2 |
Annual lease payment escalation per year | 3% |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Gross carrying amount | $ 14,242,597 | $ 12,016,509 |
Accumulated amortization | (6,906,249) | (4,618,349) |
Net book value | 7,336,348 | 7,398,160 |
Trademarks and Trade Names | ||
Gross carrying amount | 1,330,472 | 1,330,472 |
Accumulated amortization | (343,194) | (254,496) |
Net book value | 987,278 | 1,075,976 |
Customer Relationships | ||
Gross carrying amount | 2,392,000 | 2,392,000 |
Accumulated amortization | (538,200) | (299,000) |
Net book value | 1,853,800 | 2,093,000 |
Channel Relationships | ||
Gross carrying amount | 2,628,080 | 2,628,080 |
Accumulated amortization | (1,693,652) | (1,518,446) |
Net book value | 934,428 | 1,109,634 |
Internally Developed Software | ||
Gross carrying amount | 7,892,045 | 5,665,957 |
Accumulated amortization | (4,331,203) | (2,546,407) |
Net book value | $ 3,560,842 | $ 3,119,550 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Intangible Assets (Details) | ||
2024 | $ 2,445,034 | |
2025 | 1,718,736 | |
2026 | 930,582 | |
2027 | 511,170 | |
2028 | 511,170 | |
Thereafter | 1,219,656 | |
Total | $ 7,336,348 | $ 7,398,160 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Aggregate amortization expense | $ 2,282,300 | $ 1,451,100 |
Impairment charge | 200,000 | |
Capitalized Software Development Costs | 900,000 | 3,200,000 |
Property, Plant and Equipment | ||
Capitalized Software Development Costs | 316,900 | |
Internally Developed Software | ||
Capitalized Software Development Costs | $ 2,400,000 | $ 2,600,000 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill | ||
Begin Balance, January 1 | $ 5,811,578 | $ 22,088,578 |
Impairment | 0 | (16,277,000) |
End Balance, December 31 | $ 5,811,578 | $ 5,811,578 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill | |||
Impairment charges | $ 16,300,000 | $ 0 | $ 16,277,000 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Other Current Liabilities | ||
Carrier service costs | $ 12,959,350 | $ 8,402,770 |
Salaries and payroll taxes | 1,681,160 | 1,637,628 |
Inventory purchases, consultants and other costs | 1,463,102 | 1,205,209 |
Other | 72,090 | 81,662 |
Total Accrued expenses | $ 16,175,702 | $ 11,327,269 |
Line of Credit and Factoring _2
Line of Credit and Factoring Agreement (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Apr. 28, 2023 | Dec. 31, 2023 | |
Receivable sold during period | $ 5.2 | |
Proceeds net of fees | 5.1 | |
Outstanding residual payment balance | $ 4 | |
Maximum | Purchase Agreement | ||
Outstanding Purchased Receivables | $ 4 | |
Increase in receivable | $ 14 | |
Receivable description | which is 90% if the debtor is an agency of the U.S. Government, and 85% if the debtor is not an agency of the U.S. Government |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current provision (benefit) | ||
State | $ 30,000 | $ 20,000 |
Foreign | (3,914) | 26,982 |
Total | 26,086 | 46,982 |
Deferred provision (benefit) | ||
Federal | 57,849 | 4,717,527 |
State | 77,519 | 298,832 |
Foreign | (28,211) | 14,534 |
Total | 107,157 | 5,030,893 |
Income tax (benefit) provision | $ 133,243 | $ 5,077,875 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Statutory federal income tax rate | 21% | 21% |
State, net of federal benefit | 4.40% | 4% |
Non-deductible expenses | (1.30%) | (5.70%) |
Change in valuation allowance | (23.40%) | (45.90%) |
Foreign rate differential | (0.60%) | 0% |
Return to accrual difference true-ups | (1.70%) | 0.30% |
Other | (0.80%) | (0.20%) |
Deferred tax adjustment and true-up | 0.20% | (1.00%) |
Combined effective tax rate | (2.20%) | (27.40%) |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 11,836,460 | $ 10,584,372 |
Alternative minimum tax credit | 45,650 | 45,650 |
Share-based compensation | 531,179 | 475,297 |
Intangible amortization | (334,043) | (48,740) |
Lease liability | 1,581,946 | 1,555,503 |
Other assets | 770,488 | 167,825 |
Total deferred tax assets | 14,431,680 | 12,779,907 |
Less: valuation allowance | (11,930,917) | (10,503,243) |
Total deferred tax assets, net | 2,500,763 | 2,276,664 |
Deferred tax liabilities: | ||
Goodwill amortization | 366,764 | 116,530 |
Depreciation | 456,913 | 324,959 |
Foreign intangible amortization | 276,321 | 334,973 |
Other liabilities | 15,052 | 11,354 |
Lease asset | 1,402,636 | 1,401,939 |
Total deferred tax liabilities | 2,517,686 | 2,189,755 |
Net deferred tax asset | $ (16,923) | $ 86,909 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
Beginning balance | $ (10,503,243) | $ (1,999,630) |
Increases | (1,427,674) | (8,503,613) |
Ending balance | $ (11,930,917) | $ (10,503,243) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2023 | Dec. 31, 2017 | |
Income Taxes | |||
Offset future taxable income | $ 29.7 | $ 12.9 | |
Net operating loss carryforwards | 42.6 | ||
Valuation allowance | $ 1.4 | ||
Deferred tax assets, operating loss carryforwards, State | $ 51.4 |
Stockholders Equity (Details Na
Stockholders Equity (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Nov. 30, 2021 | Aug. 18, 2020 | Oct. 07, 2019 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Undesignated shares of preferred stock | 7,954,286 | ||||
Preferred stock, par value | $ 0.001 | ||||
Common stock, shares authorized | 30,000,000 | 30,000,000 | |||
Common stock, par value | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 8,893,220 | ||||
Aggregate offering price | $ 24,000,000 | ||||
Stock repurchase Amount | $ 818,211 | ||||
Repurchase Plan | |||||
Stock repurchase plan of common stock | $ 818,200 | $ 5,000,000 | $ 2,500,000 | ||
Stock repurchase shares | 196,586 | ||||
Stock repurchase Amount | $ 818,200 | ||||
Common stock increase amount for future purchases | $ 4,600,000 | ||||
Warrants | |||||
Issued warrants to purchase | 75,000 | ||||
Strike price | $ 5.33 | ||||
Warrants Fair Value | $ 108,000 | ||||
Warrants Term | 5.33 | ||||
Restricted Stock Units (RSUs) | |||||
common stock vested sharaes | 169,737 | 91,316 | |||
Share-Based Payment Arrangement, Decrease for Tax Withholding Obligation | $ 3,600 | $ 49,300 |
Stock Options and Award Progr_3
Stock Options and Award Programs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Risk-free interest rate | 4.10% | 0% |
Expected dividend yield | 0% | 0% |
Stock options granted | $ 288,570 | $ 0 |
Term | 4 years | |
Maximum | ||
Expected volatility | 62.20% | 0% |
Minimum | ||
Expected volatility | 61.60% | 0% |
Stock Options and Award Progr_4
Stock Options and Award Programs (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restricted Stock | ||
Non-vested awards outstanding opening | 188,903 | 121,316 |
Granted | 628,572 | 163,903 |
Cancelled | 31,746 | 5,000 |
Vested | 169,737 | 91,316 |
Non-vested awards outstanding ending | 615,992 | 188,903 |
Weighted-average remaining contractual life (in years) | 3 months 18 days | 8 months 12 days |
Unamortized RSA compensation expense | $ 483,416 | $ 28,440 |
Aggregate intrinsic value of RSAs non-vested | 1,429,101 | 343,822 |
Aggregate intrinsic value of RSAs vested | $ 326,628 | $ 346,694 |
Employee Stock Option | ||
Non-vested awards outstanding opening | 0 | 25,000 |
Granted | 288,570 | 0 |
Vested | 0 | 0 |
Non-vested awards outstanding ending | 288,570 | 0 |
Expired | 0 | 25,000 |
Weighted average grant date fair value per share, non-vested beginning balance | $ 0 | $ 3.98 |
Weighted average grant date fair value per share, Granted | 0.91 | 0 |
Weighted average grant date fair value per share, expired | 0 | 3.98 |
Weighted average grant date fair value per share, vested/excercised | 0 | 0 |
Weighted average grant date fair value per share, non-vested ending balance | $ 0.91 | $ 0 |
Stock Options and Award Progr_5
Stock Options and Award Programs (Details 2) - Employee Stock Option - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Number of shares, outstanding and exercisable, options outstanding, Opening balance | 7,500 | 140,000 |
Number of shares, cancelled | 5,000 | |
Number of shares, expired | 7,500 | 127,500 |
Number of shares, exercised | 288,570 | |
Number of shares, outstanding and exercisable, options outstanding, ending balance | 288,570 | 7,500 |
Number of shares, options vested and expected to vest, ending balance | 285,923 | 7,500 |
Number of shares, options outstanding and exercisable, ending balance | 7,500 | |
Weighted average exercise price per share, outstanding and exercisable, options outstanding, beginning balance | $ 4.90 | $ 5.79 |
Weighted average exercise price per share, cancelled | 0 | 4.40 |
Weighted average exercise price per share, expired | 4.90 | 5.89 |
Weighted average exercise price per share, exercised | 2.04 | 0 |
Weighted average exercise price per share, outstanding and exercisable, options outstanding, ending balance | 2.04 | 4.90 |
Number of shares, vested and expected to vest, outstanding, weighted average exercise price, ending balance | 4.90 | |
Weighted average exercise price per share, options outstanding and exercisable, ending balance | $ 0 | $ 4.90 |
Stock Options and Award Progr_6
Stock Options and Award Programs (Details 3) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Stock Options and Award Programs | |
Weighted-Average remaining contractual life (in years), outstanding | 4 years 8 months 23 days |
Weighted-Average remaining contractual life (in years), Vested and Expected to vest | 4 years 8 months 23 days |
Weighted-average remaining contractual life (in years), Outstanding and Exercisable | 0 years |
Aggregate intrinsic value, outstanding | $ 79,485 |
Aggregate intrinsic value, Vested and expected to Vest | 78,756 |
Aggregate intrinsic value, outstanding and Exercisable | $ 0 |
Stock Options and Award Progr_7
Stock Options and Award Programs (Details 4) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2022 | |
Restricted stock compensation expense | $ 914,194 | $ 528,582 | |
Non-qualified option share-based compensation expense | 46,797 | 0 | |
Total share-based compensation before taxes | 960,991 | 528,582 | $ 528,582 |
Board of Directors Option | |||
Restricted stock compensation expense | 272,464 | 262,878 | |
Non-qualified option share-based compensation expense | 0 | 0 | |
Total share-based compensation before taxes | 272,464 | 262,878 | |
Employee Stock Option | |||
Restricted stock compensation expense | 641,730 | 265,704 | |
Non-qualified option share-based compensation expense | 46,797 | 0 | |
Total share-based compensation before taxes | $ 688,527 | $ 265,704 |
Stock Options and Award Progr_8
Stock Options and Award Programs (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) shares | |
Restricted stock awards granted | 628,572 |
Stock option awards granted | 163,903 |
Unrecognized share-based compensation expense | $ | $ 0.7 |
Weighted average remaining | 1 year |
Restricted Stock Units (RSUs) | |
Restricted stock awards granted | 250,000 |
Stock option awards granted | 288,570 |
Descripton of equity-based compensation | The first is 250,000 Restricted Stock Awards (RSAs) that will be awarded to management and which will be issued to management in upcoming months, based on Board and management agreement. Of the 250,000 RSAs awarded, 83,333 are expected to vest on April 1, 2024. With the remaining awards vesting 83,333 on both January 1, 2025 and January 1, 2026. The second is 250,000 Performance- based Restricted Stock Units (PSRUs) that would vest upon meeting, by January 1, 2026 |
Earnings Per Common Share (EP_3
Earnings Per Common Share (EPS) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Basic and Diluted EPS Computation: | ||
Net loss | $ (4,046,473) | $ (23,585,291) |
Weighted average number of common shares | 8,830,709 | 8,732,203 |
Basic and Diluted Loss Per Share | $ (0.46) | $ (2.70) |
Earnings Per Common Share (EP_4
Earnings Per Common Share (EPS) (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Earnings Per Common Share (EPS) | ||
Unexercised stock options | 288,570 | 106,685 |
RSAs shares | 615,992 | 49,777 |
Warrants to purchase | 150,000 | 150,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accumulated Other Comprehensive Loss | ||
Balances beginning of the period | $ (350,234) | $ (241,586) |
Net foreign currency translation gain (loss) | 15,335 | (108,648) |
Balances ending of the period | $ (334,899) | $ (350,234) |
Revenue by Service Type Custo_3
Revenue by Service Type Customer Type and by Geographic Region (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue, net | $ 106,026,360 | $ 94,103,365 |
Carrier Services | ||
Revenue, net | 58,229,511 | 53,339,950 |
Managed Services | ||
Revenue, net | $ 47,796,849 | $ 40,763,415 |
Revenue by Service Type Custo_4
Revenue by Service Type Customer Type and by Geographic Region (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue, net | $ 106,026,360 | $ 94,103,365 |
U.S. State and Local Governments | ||
Revenue, net | 561,378 | 411,511 |
Foreign Governments | ||
Revenue, net | 79,556 | 146,538 |
Commercial Enterprises | ||
Revenue, net | 20,910,101 | 19,129,028 |
U.S Federal Government | ||
Revenue, net | $ 84,475,325 | $ 74,416,288 |
Revenue by Service Type Custo_5
Revenue by Service Type Customer Type and by Geographic Region (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue, net | $ 106,026,360 | $ 94,103,365 |
United States | ||
Revenue, net | 102,017,851 | 90,786,554 |
Europe | ||
Revenue, net | $ 4,008,509 | $ 3,316,811 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Loan Agreement - Subsequent Event | 1 Months Ended |
Feb. 29, 2024 USD ($) | |
Line of credit borrowing capacity | $ 40,000,000,000 |
Borrowing base amount | 4,000,000 |
Working capital revolving line of credit | $ 1,000,000 |
Description of Borrowing term | a ratio of current assets to current liabilities of not less than 1.0 to 1.0 |
Description of date of maturity extention | Outstanding interest on the amount borrowed is payable monthly and all outstanding interest and principal is due on the maturity date of February 28, 2025 |
Quarterly minimum tangible net worth | $ 2,000,000 |
Percentage of unpaid balance of eligible accounts receivable | 7.25% |