Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 15, 2024 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-35384 | |
Entity Registrant Name | DATA STORAGE CORPORATION | |
Entity Central Index Key | 0001419951 | |
Entity Tax Identification Number | 98-0530147 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 225 Broadhollow Road | |
Entity Address, Address Line Two | Suite 307 | |
Entity Address, City or Town | Melville | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11747 | |
City Area Code | 212 | |
Local Phone Number | 564-4922 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,970,943 | |
Common Stock, par value $0.001 per share [Member] | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | DTST | |
Security Exchange Name | NASDAQ | |
Warrants to purchase shares of Common Stock, par value $0.001 per share [Member] | ||
Title of 12(b) Security | Warrants to purchase shares of Common Stock, par value $0.001 per share | |
Trading Symbol | DTSTW | |
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Current Assets: | ||
Cash and cash equivalents | $ 640,742 | $ 1,428,730 |
Accounts receivable (less provision for credit losses of $62,051 and $7,915 in 2024 and 2023, respectively) | 4,437,666 | 1,259,972 |
Marketable securities | 11,261,565 | 11,318,196 |
Prepaid expenses and other current assets | 666,957 | 513,175 |
Total Current Assets | 17,006,930 | 14,520,073 |
Property and Equipment: | ||
Property and equipment | 8,196,862 | 7,838,225 |
Less—Accumulated depreciation | (5,331,503) | (5,105,451) |
Net Property and Equipment | 2,865,359 | 2,732,774 |
Other Assets: | ||
Goodwill | 4,238,671 | 4,238,671 |
Operating lease right-of-use assets | 36,160 | 62,981 |
Other assets | 48,436 | 48,436 |
Intangible assets, net | 1,628,937 | 1,698,084 |
Total Other Assets | 5,952,204 | 6,048,172 |
Total Assets | 25,824,493 | 23,301,019 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 4,835,868 | 2,608,938 |
Deferred revenue | 310,123 | 336,201 |
Finance leases payable | 214,961 | 263,600 |
Finance leases payable related party | 155,164 | 235,944 |
Operating lease liabilities short term | 36,733 | 63,983 |
Total Current Liabilities | 5,552,849 | 3,508,666 |
Finance leases payable | 0 | 17,641 |
Finance leases payable related party | 0 | 20,297 |
Total Long-Term Liabilities | 0 | 37,938 |
Total Liabilities | 5,552,849 | 3,546,604 |
Commitments and contingencies (Note 7) | ||
Stockholders’ Equity: | ||
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023 | 0 | 0 |
Common stock, par value $.001; 250,000,000 shares authorized; 6,929,950 and 6,880,460 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 6,930 | 6,881 |
Additional paid in capital | 39,661,561 | 39,490,285 |
Accumulated deficit | (19,148,701) | (19,505,803) |
Total Data Storage Corporation Stockholders’ Equity | 20,519,790 | 19,991,363 |
Non-controlling interest in consolidated subsidiary | (248,146) | (236,948) |
Total Stockholder’s Equity | 20,271,644 | 19,754,415 |
Total Liabilities and Stockholders’ Equity | $ 25,824,493 | $ 23,301,019 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Less provision for credit losses | $ 62,051 | $ 7,915 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 6,929,950 | 6,880,460 |
Common stock, shares outstanding | 6,929,950 | 6,880,460 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Sales | $ 8,235,747 | $ 6,879,723 |
Cost of sales | 5,269,275 | 4,789,978 |
Gross Profit | 2,966,472 | 2,089,745 |
Selling, general and administrative | 2,752,677 | 2,130,759 |
Income (loss) from Operations | 213,795 | (41,014) |
Other Income (Expense) | ||
Interest income | 143,369 | 103,424 |
Interest expense | (11,260) | (27,347) |
Total Other Income (Expense) | 132,109 | 76,077 |
Income before provision for income taxes | 345,904 | 35,063 |
Provision from income taxes | 0 | 0 |
Net Income | 345,904 | 35,063 |
Loss in Non-controlling interest in consolidated subsidiary | 11,198 | 15,603 |
Net Income Attributable to Common Stockholders | $ 357,102 | $ 50,666 |
Earnings per Share – Basic | $ 0.05 | $ 0.01 |
Earnings per Share – Diluted | $ 0.05 | $ 0.01 |
Weighted Average Number of Shares – Basic | 7,090,389 | 6,822,127 |
Weighted Average Number of Shares – Diluted | 7,259,472 | 6,954,320 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2022 | $ 6,822 | $ 38,982,440 | $ (19,887,378) | $ (154,689) | $ 18,947,195 | |
Beginning balance, shares at Dec. 31, 2022 | 6,822,127 | |||||
Stock-based compensation | $ 13 | 86,456 | 86,469 | |||
Stock-based compensation, shares | 12,500 | |||||
Net Income (Loss) | 50,666 | (15,603) | 35,063 | |||
Ending balance, value at Mar. 31, 2023 | $ 6,835 | 39,068,896 | (19,836,712) | (170,292) | 19,068,727 | |
Ending balance, shares at Mar. 31, 2023 | 6,834,627 | |||||
Beginning balance, value at Dec. 31, 2023 | $ 6,881 | 39,490,285 | (19,505,803) | (236,948) | 19,754,415 | |
Beginning balance, shares at Dec. 31, 2023 | 6,880,460 | |||||
Stock-based compensation | $ 49 | 171,276 | 171,325 | |||
Stock-based compensation, shares | 49,490 | |||||
Net Income (Loss) | 357,102 | (11,198) | 345,904 | |||
Ending balance, value at Mar. 31, 2024 | $ 6,930 | $ 39,661,561 | $ (19,148,701) | $ (248,146) | $ 20,271,644 | |
Ending balance, shares at Mar. 31, 2024 | 6,929,950 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flows from Operating Activities: | ||
Net income | $ 345,904 | $ 35,063 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 295,198 | 288,710 |
Stock based compensation | 171,325 | 86,469 |
Changes in Assets and Liabilities: | ||
Accounts receivable | (3,177,694) | (168,334) |
Other assets | 0 | (17,300) |
Prepaid expenses and other current assets | (153,782) | (293,794) |
Right of use asset | 26,821 | 50,659 |
Accounts payable and accrued expenses | 2,226,932 | 491,669 |
Deferred revenue | (26,078) | 28,213 |
Operating lease liability | (27,250) | (52,216) |
Net Cash (Used in) Provided by Operating Activities | (318,624) | 449,139 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (358,637) | (426,671) |
Sale of marketable securities | 200,000 | 0 |
Purchase of marketable securities | (143,369) | (103,423) |
Net Cash Used in Investing Activities | (302,006) | (530,094) |
Cash Flows from Financing Activities: | ||
Repayments of finance lease obligations related party | (66,280) | (183,464) |
Repayments of finance lease obligations | (101,078) | (140,264) |
Net Cash Used in Financing Activities | (167,358) | (323,728) |
Decrease in Cash and Cash Equivalents | (787,988) | (404,683) |
Cash and Cash Equivalents, Beginning of Period | 1,428,730 | 2,286,722 |
Cash and Cash Equivalents, End of Period | 640,742 | 1,882,039 |
Supplemental Disclosures: | ||
Cash paid for interest | 8,855 | 24,863 |
Cash paid for income taxes | $ 0 | $ 0 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure [Table] | ||
Net Income (Loss) Attributable to Parent | $ 357,102 | $ 50,666 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation, Organiza
Basis of Presentation, Organization and Other Matters | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation, Organization and Other Matters | Note 1 – Basis of Presentation, Organization and Other Matters Data Storage Corporation (“DSC” or the “Company”) provides subscription based, long term agreements for disaster recovery solutions, cloud infrastructure, Cyber Security and Voice and Data solutions. Headquartered in Melville, NY, DSC offers solutions and services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government industries. DSC derives its revenues from subscription services and solutions, managed services, software and maintenance, equipment, and onboarding provisioning. DSC maintains infrastructure and storage equipment in six technical centers in New York, Massachusetts, Texas, North Carolina, and Canada. On May 31, 2021, the Company completed a merger of Flagship Solutions, LLC (“Flagship”) (a Florida limited liability company) and the Company’s wholly-owned subsidiary, Data Storage FL, LLC. Flagship is a provider of Hybrid Cloud solutions, managed services, and cloud solutions. On January 1, 2024 Flagship Solutions, LLC was consolidated into CloudFirst Technologies Corporation. On January 27, 2022, the Company formed Information Technology Acquisition Corporation a special purpose acquisition company for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization, or other similar business combination with one or more businesses or entities. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2023 Form 10-K and are updated, as necessary, in this Form 10-Q. The December 31, 2023 condensed consolidated balance sheet data presented for comparative purposes was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Principles of Consolidation The Condensed Reclassifications Certain prior year amounts in the Condensed Consolidated Financial Statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ equity, net income, or net cash provided by operating activities. During the three months ended March 31, 2024, the Company adopted a change in presentation on its Condensed Consolidated Financial Statements in order to present segments in line with how its Chief Operating Decision Maker (“CODM”) evaluates performance of each segment. Prior periods have been revised to reflect this change in the presentation. Recently Issued and Newly Adopted Accounting Pronouncements In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” The new accounting rules require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. These leases should also be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The Company adopted ASU 2023-01 and it did not have a material impact to our Condensed Consolidated Financial statement. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the ASU and expects to include updated segment expense disclosures in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU and expects to include updated income tax disclosures. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 revenue and expenses during the reporting period. Actual results could differ from these estimates. Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and lease commitments. Management believes the estimated fair value of these accounts on March 31, 2024, approximate their carrying value as reflected in the balance sheet due to their short-term nature. The carrying values of certain of the Company’s notes payable and capital lease obligations approximate their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace. The fair value measurement disclosures are grouped into three levels based on valuation factors: ● Level 1 – quoted prices in active markets for identical investments ● Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) ● Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) The Company’s Level 1 assets/liabilities include cash, accounts receivable, marketable securities, accounts payable, prepaid, and other current assets. Management believes the estimated fair value of these accounts at March 31, 2024, approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments. The Company’s Level 2 assets/liabilities includes the Company’s finance and operating lease assets and liabilities. Their carrying value approximates their fair values based upon a comparison of the interest rate and terms of the leases. The Company’s Level 3 assets/liabilities include goodwill and intangible assets. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are measured at fair value on a nonrecurring basis. Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, operating lease right-of-use assets, goodwill, and other intangible assets. These assets are measured using Level 3 inputs, if determined to be impaired. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity, or remaining maturity at the time of purchase, of three months or less, to be cash equivalents. As of March 31, 2024, and December 31, 2023, the Company had cash and cash equivalents of $ 640,742 1,428,730 Investments Marketable securities that are bought and held principally for the purpose of selling them in the near term and are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. The following table sets forth a summary of the changes in equity investments during the three months ended March 31, 2024, and the year ended December 31, 2023: Schedule of changes in equity investments measured at fair value For the year ended December 31, 2023 Total As of January 1, 2023 $ 9,010,968 Purchase of equity investments 2,307,228 Unrealized gains — As of December 31, 2023 $ 11,318,196 For the three months ended March 31, 2024 Total As of December 31, 2023 $ 11,318,196 Purchase of equity investments 143,369 Unrealized gains — Sale of equity investments (200,000 ) As of March 31, 2024 $ 11,261,565 Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments and assets subjecting the Company to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, and trade accounts receivable. The Company’s cash and cash equivalents are maintained at major U.S. financial institutions. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company’s customers are primarily concentrated in the United States. As of March 31, 2024, DSC had one customer with an accounts receivable balance representing 59 20 For the three months ended March 31, 2024, the Company had one customer that accounted for 32 For the three months ended March 31, 2023, the Company had one customer that accounted for 33 Accounts Receivable / Provision for Credit Losses The Company sells its services to customers on an open credit basis. Accounts receivables are uncollateralized, non-interest-bearing customer obligations. Accounts receivable are typically due within 30 days. ASU 2016-13 requires the recognition of lifetime estimated credit losses expected to occur for trade accounts receivable. The guidance also requires we pool assets with similar risk characteristics and consider current economic conditions when estimating losses. During the three months ended March 31, 2024 and 2023 the Company recorded $ 54,136 3,886 Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives or the term of the lease using the straight-line method for financial statement purposes. Estimated useful lives in years for depreciation are five to seven years for property and equipment. Additions, betterments, and replacements are capitalized, while expenditures for repairs and maintenance are charged to operations when incurred. As units of property are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income. Goodwill and Other Intangibles The Company tests goodwill and other intangible assets for impairment on at least an annual basis. Impairment exists if the carrying value of a reporting unit exceeds its estimated fair value. To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using an income-based approach that directly impacts the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management. The Company tests goodwill for impairment on an annual basis on December 31, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company has four reporting units. The Company uses an income-based approach to determine the fair value of the reporting units. This approach uses a discounted cash flow methodology and the ability of the Company’s reporting units to generate cash flows as measures of fair value of its reporting units. Revenue Recognition Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: 1) Cloud Infrastructure and Disaster Recovery Revenue Cloud Infrastructure provides clients with the ability to migrate their on-premises computing and digital storage to DSC’s enterprise-level technical compute and digital storage assets located in Tier 3 data centers. DSC owns the assets and provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, x86/intel, flash digital storage, while providing disaster recovery and cyber security while eliminating client capital expenditures. The client pays a monthly fee and can increase capacity as required. Clients can subscribe to an array of disaster recovery solutions without subscribing to cloud infrastructure. Product offerings provided directly from DSC are High Availability, Data Vaulting, and retention solutions, including standby servers which allows clients to centralize and streamline their mission-critical digital information and technical environment while ensuring business continuity if they experience a cyber-attack or natural disaster. Client’s data is vaulted at two data centers with the maintenance of retention schedules for corporate governances and regulations all to meet their back to work objective in a disaster. 2) Managed Services These services are performed at the inception of a contract. The Company provides professional assistance to its clients during the implementation processes. On-boarding and set-up services ensure that the solution or software is installed properly and function as designed to provide clients with the best solutions. In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing supplementing the client’s staff. The Company also derives both one-time and subscription-based revenue from providing support, management and renewal of software, hardware, third party maintenance contracts and third-party cloud services to clients. The managed services include help desk, remote access, operating system and software patch management, annual recovery tests and manufacturer support for equipment and on-going monitoring of client system performance. 3) Equipment and Software The Company provides equipment and software and actively participates in collaboration with IBM to provide innovative business solutions to clients. The Company is a partner of IBM and the various software, infrastructure and hybrid cloud solutions provided to clients. 4) Nexxis Voice over Internet and Direct Internet Access The Company provides VoIP, Internet access and data transport services to ensure businesses are fully connected to the internet from any location, remote and on premise. The Company provides Hosted VoIP solutions with equipment options for IP phones and internet speeds of up to 10Gb delivered over fiber optics. Disaggregation of revenue In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition. Schedule of revenue is disaggregated by major product For the Three Months Ended March 31, 2024 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,853,249 $ 99,646 $ 2,952,895 Equipment and Software 4,084,647 — 4,084,647 Managed Services 843,407 — 843,407 Nexxis VoIP Services 276,467 — 276,467 Other 67,893 10,438 78,331 Total Revenue $ 8,125,663 $ 110,084 $ 8,235,747 For the Three Months Ended March 31, 2023 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,137,317 $ 52,324 $ 2,189,641 Equipment and Software 3,504,796 — 3,504,796 Managed Services 876,423 35,107 911,530 Nexxis VoIP Services 231,772 — 231,772 Other 41,984 — 41,984 Total Revenue $ 6,792,292 $ 87,431 $ 6,879,723 For the Three Months Ended March 31, Timing of revenue recognition 2024 2023 Products transferred at a point in time $ 1,045,977 $ 3,564,543 Products and services transferred over time 7,189,770 3,315,180 Total Revenue $ 8,235,747 $ 6,879,723 Contract receivables are recorded at the invoiced amount and are uncollateralized, non-interest-bearing client obligations. Provisions for estimated uncollectible accounts receivable are made for individual accounts based upon specific facts and circumstances including criteria such as their age, amount, and client standing. Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract. Transaction price allocated to the remaining performance obligations The Company has the following performance obligations: 1) Data Vaulting 2) High Availability 3) Cloud Infrastructure 4) Internet 5) Support and Maintenance 6) Implementation / Set-Up Fees 7) Equipment sales 9) License Disaster Recovery and Business Continuity Solutions Subscription services allow clients to access data or receive services for a predetermined period of time. As the client obtains access at a point in time and continues to have access for the remainder of the subscription period, the client is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the related performance obligation is considered to be satisfied ratably over the contract term. As the performance obligation is satisfied evenly across the term of the contract, revenue is recognized on a straight-line basis over the contract term. Initial Set-Up Fees The Company accounts for set-up fees as a separate performance obligation. Set-up services are performed one-time and accordingly the revenue is recognized at the point in time, and is non-refundable, and the Company is entitled to the payment. Equipment Sales The obligation for the equipment sales is such that the control of the product transfer is at a point in time (i.e., when the goods have been shipped or delivered to the client’s location, depending on shipping terms). Noting that the satisfaction of the performance obligation, in this sense, does not occur over time, the performance obligation is considered to be satisfied at a point in time when the obligation to the client has been fulfilled (i.e., when the goods have left the shipping facility or delivered to the client, depending on shipping terms). License - granting SSL certificates and other licenses Performance obligations as it relates to licensing is when the control of the product transfers, either at a point in time or over time, depending on the nature of the license. The revenue standard identifies two types of licenses of IP: (i) a right to access IP; and (ii) a right to use IP. To assist in determining whether a license provides a right to use or a right to access IP, ASC 606 defines two categories of IP: Functional and Symbolic. The Company’s license arrangements typically do not require the Company to make its proprietary content available to the client either through a download or through a direct connection. Throughout the life of the contract the Company does not continue to provide updates or upgrades to the license granted. Based on the guidance, the Company considers its license offerings to be akin to functional IP and recognizes revenue at the point in time the license is granted and/or renewed for a new period. Payment Terms The typical terms of subscription contracts range from 12 to 36 months, with auto-renew options extending the contract for an additional term. The Company invoices clients one month in advance for its services, in addition to any contractual data overages or for additional services. Warranties The Company offers guaranteed service levels and service guarantees on some of its contracts. These warranties are not sold separately and are accounted as “assurance warranties.” Significant Judgement In the instance where contracts have multiple performance obligations the Company uses judgment to establish a stand-alone price for each performance obligation. The price for each performance obligation is determined by reviewing market data for similar services as well as the Company’s historical pricing of each individual service. The sum of each performance obligation is calculated to determine the aggregate price for the individual services. The proportion of each individual service to the aggregate price is determined. The ratio is applied to the total contract price in order to allocate the transaction price to each performance obligation. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated un-discounted future cash flows. Advertising Costs The Company expenses the costs associated with advertising as they are incurred. The Company incurred $ 232,240 189,878 Stock-Based Compensation The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments The valuation methodology used to determine the fair value of the options issued during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment. Estimated volatility is a measure of the amount by which DSC’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards. Net Income Per Common Share Basic income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The following table sets forth the information needed to compute basic and diluted earnings per share for the three months ended March 31, 2024, and 2023: Schedule of earning per share basic and diluted Three Months ended March 31, 2024 2023 Net Income Available to Common Shareholders $ 357,102 $ 50,666 Weighted average number of common shares - basic 7,090,389 6,822,127 Dilutive securities Options 169,083 130,526 Warrants — 1,667 Weighted average number of common shares - diluted 7,259,472 6,954,320 Earnings per share, basic $ 0.05 $ 0.01 Earnings per share, diluted $ 0.05 $ 0.01 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share because their effect was anti-dilutive: Schedule of anti-dilutive shares Three Months ended March 31, 2024 2023 Options 560,071 385,257 Warrants 2,415,860 2,415,860 2,975,931 2,801,117 |
Prepaids and other current asse
Prepaids and other current assets | 3 Months Ended |
Mar. 31, 2024 | |
Prepaids And Other Current Assets | |
Prepaids and other current assets | Note 3 - Prepaids and other current assets Prepaids and other current assets consist of the following: Schedule of prepaids and other current assets March 31, December 31, 2024 2023 Prepaid marketing & promotion $ 53,350 $ 13,525 Prepaid subscriptions and license 452,610 362,760 Prepaid maintenance 31,532 31,311 Prepaid insurance 93,589 63,247 Other 35,876 42,332 Total prepaids and other current assets $ 666,957 $ 513,175 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4- Property and Equipment Property and equipment, at cost, consist of the following: Schedule of property and equipment March 31, December 31, 2024 2023 Storage equipment $ 60,288 $ 60,288 Furniture and fixtures 21,625 21,625 Leasehold improvements 20,983 20,983 Computer hardware and software 123,792 117,379 Data center equipment 7,970,174 7,617,950 Gross Property and equipment 8,196,862 7,838,225 Less: Accumulated depreciation (5,331,503 ) (5,105,451 ) Net property and equipment $ 2,865,359 $ 2,732,774 Depreciation expense for the three months ended March 31, 2024, and 2023 was $ 226,051 218,979 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5 - Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following: Schedule of goodwill and intangible assets Estimated life in years Gross amount December 31, 2023, Accumulated Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 4,238,671 $ — $ 4,238,671 Trademarks Indefinite 514,268 — 514,268 Total intangible assets not subject to amortization 4,752,939 — 4,752,939 Intangible assets subject to amortization Customer lists 7 2,614,099 1,434,218 1,179,881 ABC acquired contracts 5 310,000 310,000 — SIAS acquired contracts 5 660,000 660,000 — Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 29,067 3,935 Total intangible assets subject to amortization 3,889,248 2,705,432 1,183,816 Total Goodwill and Intangible Assets $ 8,642,187 $ 2,705,432 $ 5,936,755 Estimated life in years Gross amount March 31, 2024, Net Intangible assets not subject to amortization Goodwill Indefinite $ 4,238,671 $ — $ 4,238,671 Trademarks Indefinite 514,268 — 514,268 Total intangible assets not subject to amortization 4,752,939 — 4,752,939 Intangible assets subject to amortization Customer lists 7 2,614,099 1,501,004 1,113,095 ABC acquired contracts 5 310,000 310,000 — SIAS acquired contracts 5 660,000 660,000 — Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 31,428 1,574 Total intangible assets subject to amortization 3,889,248 2,774,579 1,114,669 Total Goodwill and Intangible Assets $ 8,642,187 $ 2,774,579 $ 5,867,608 Scheduled amortization over the next five years are as follows: Schedule of amortization over the next five years Period ending December 31, 2024 $ 201,931 2025 267,143 2026 267,143 2027 267,143 2028 111,309 Thereafter — Total $ 1,114,669 Amortization expense for the three months ended March 31, 2024, and 2023 was $ 69,147 69,731 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
Leases | Note 6- Leases Operating Leases The Company currently maintains three leases for office space located in Melville, NY. The first lease for office space in Melville, NY commenced on September 1, 2019. The term of this lease is for three years and eleven months and runs co-terminus with the Company’s existing lease in the same building. The base annual rent is $ 11,856 988 On July 31, 2021, the Company signed a three-year lease for approximately 2,880 square feet of office space at 980 North Federal Highway, Boca Raton, FL. The commencement date of the lease was August 2, 2021. The monthly rent is approximately $ 4,965 On January 1, 2022, the Company entered into a lease agreement for office space with WeWork in Austin, TX. The lease term is six months and requires monthly payments of $ 1,470 June 30, 2022 3,073 On January 17, 2024, the Company entered into a lease agreement for office space in Melville, NY. The lease commences on April 1, 2024, and has a term of sixty-seven months and requires monthly payments of $ 11,931 October 30, 2029 On April 10, 2024, the Company entered into a lease agreement for storage space in Melville, NY. The lease commences on May 15, 2024, and requires monthly payments of $ 355 3 October 30, 2029 Finance Lease Obligations On November 1, 2021, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $ 3,152 6 November 1, 2024 On January 1, 2022, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $ 17,718 5 February 1, 2025 On January 1, 2022, the Company entered into a technical equipment lease with a finance company. The lease obligation is payable in monthly installments of $ 2,037 6 January 1, 2025 On May 7, 2024, the Company entered into a technical equipment lease with a finance company. The lease obligation is payable in monthly installments of $ 51,680 June 1, 2029 Finance Lease Obligations – Related Party On March 4, 2021, the Company entered into a lease agreement with Systems Trading effective April 1, 2021. This lease obligation is payable to Systems Trading with monthly installments of $ 1,567 March 1, 2024 8 On January 1, 2022, the Company entered into a lease agreement with Systems Trading effective January 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $ 7,145 February 1, 2025 8 On April 1, 2022, the Company entered into a lease agreement with Systems Trading effective May 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $ 6,667 March 1, 2025 8 The Company determines if an arrangement contains a lease at inception. Right of Use “ROU” assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. A discount rate of 5 The components of lease expense were as follows: Schedule of components of lease expense Three Months Ended March 31, 2024 Finance leases: Amortization of assets, included in depreciation and amortization expense $ 196,069 Interest on lease liabilities, included in interest expense 8,855 Operating lease: Amortization of assets, included in total operating expense 27,250 Interest on lease liabilities, included in total operating expense 515 Total net lease cost $ 232,689 Supplemental balance sheet information related to leases was as follows: Operating Leases: Operating lease right-of-use asset $ 36,160 Current operating lease liabilities $ 36,733 Noncurrent operating lease liabilities — Total operating lease liabilities $ 36,733 March 31, 2024 Finance leases: Property and equipment, at cost $ 5,521,716 Accumulated amortization (4,689,273 ) Property and equipment, net $ 832,443 Current obligations of finance leases $ 370,125 Finance leases, net of current obligations — Total finance lease liabilities $ 370,125 Supplemental cash flow and other information related to leases were as follows: Schedule of supplemental cash flow and other information related to leases Three Months Ended March 31, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 27,250 Financing cash flows related to finance leases $ 167,358 Weighted average remaining lease term (in years): Operating leases 0.84 Finance leases 0.80 Weighted average discount rate: Operating leases 4 % Finance leases 7 % Long-term obligations under the operating and finance leases at March 31, 2024, mature as follows: Schedule of long term obligations operating and finance leases For the Twelve Months Ended March 31, Operating Finance 2024 37,020 381,829 2025 — — Total lease payments 37,020 381,829 Less: Amounts representing interest (287 ) (11,704 ) Total lease obligations 36,733 370,125 Less: long-term obligations — — Total current $ 36,733 $ 370,125 As of March 31, 2024, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the three months ended March 31, 2024 and 2023 was $ 73,303 60,572 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 - Commitments and Contingencies As part of the Flagship acquisition the Company acquired a licensing agreement for marketing related materials with a National Football League team. The Company has approximately $ 0.6 3 Subsequent to March 31, 2024, the Company received communication regarding state sales and use taxes. The Company is in discussions with the agency and evaluating the amount owed. Based on an examination of all information currently available to the Company, the Company has determined that it is probable that an accrual is needed related to this issue. After our analysis, the Company expects the liability range to be between $ 75,000 97,000 89,000 |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 8 - Stockholders’ Equity Capital Stock The Company has 260,000,000 250,000,000 .001 10,000,000 .001 Common Stock Options A summary of the Company’s options activity and related information follows: Schedule of options activity and related information Number of Weighted Weighted Shares Average Average Under Exercise Contractual Options Price Life Options Outstanding at December 31, 2023 595,347 $ 3.46 5.82 Options Granted 136,255 3.32 5.15 Exercised — — — Expired/Cancelled (2,448 ) 5.41 — Options Outstanding at March 31, 2024 729,154 $ 2.66 6.83 Options Exercisable at March 31, 2024 282,072 $ 2.97 5.91 Share-based compensation expense for options totaling $ 104,163 54,433 The intrinsic value of outstanding options as of March 31, 2024 and December 31, 2023, was $ 653,725 391,283 The valuation methodology used to determine the fair value of the options issued during the year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. The risk-free interest rate assumption is based upon observed interest rates on zero-coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices of the Company over a period equal to the expected life of the awards. As of March 31, 2024, there was $ 851,984 1.6 The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the three months ended March 31, 2024, and 2023, are set forth in the table below. Schedule of weighted average fair value of options granted 2024 2023 Weighted average fair value of options granted $ 3.32 $ 1.77 Risk-free interest rate 3.94 4.21 % 3.48 4.01 % Volatility 126 159 % 196 199 % Expected life (years) 3.5 6 10 Dividend yield — % — % Share-based awards, restricted stock award (“RSAs”) On January 2, 2024, the Company granted certain employees an aggregate of 53,328 156,251 On March 31, 2024, the Board resolved that the Company shall issue to Board members an aggregate of 14,166 81,030 A summary of the activity related to RSUs for the three months ended March 31, 2024, is presented below: Schedule of non-vested restricted stock units Restricted Stock Units (RSUs) Shares Weighted Average Fair Value $ RSUs non-vested at January 1, 2024 208,472 1.90 RSUs granted 84,559 3.40 RSUs vested 49,490 1.74 RSUs forfeited — — RSUs non-vested at March 31, 2024 243,541 2.45 Stock-based compensation for RSU’s has been recorded in the consolidated statements of operations and totaled $ 67,162 52,285 As of March 31, 2024, there was $ 505,795 1.5 |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Note 9 – Litigation The Company is currently not involved in any litigation that it believes could have a materially adverse effect on its financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting DSC, its common stock, any of its subsidiaries or of DSC’s or DSC’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 – Related Party Transactions Nexxis Capital LLC Charles M. Piluso (Chairman and CEO) and Harold Schwartz (President) collectively own 100% of Nexxis Capital LLC (“Nexxis Capital”). Nexxis Capital was formed to purchase equipment and provide leases to Nexxis Inc.’s customers. The Company did no Eisner & Maglione CPA’s LLC Lawrence Maglione, a member of the Board of Directors, is a partner of Eisner & Maglione CPA’s LLC. The Company paid Mr. Maglione’s firm $ 3,700 495 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment Information | Note 12 – Segment Information The Company operates in two reportable segments: CloudFirst, and Nexxis. Its segments were determined based on the Company’s internal organizational structure, the manner in which its operations are managed, and the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate performance, which is generally the segment’s assets, liabilities, and operating income or losses. The FSG acquisition in June of 2021 has benefited DSC with a client base, experienced sales and marketing talent, and a strong experienced technical team. Based on over two years of information and our experience with FSG the Company decided, based on the services and product set, as well as the talented team at FSG, to bring together both CloudFirst and FSG. This unification on January 2024 has strengthened our overall technical teams and provided for cross selling opportunities while reducing overall expenses. Schedule of segment reporting income or losses Operations of: Products and services provided: CloudFirst Technologies Corporation CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts. Nexxis Inc. Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment. The following tables present certain financial information related to the Company’s reportable segments and Corporate: Schedule of financial information related to reportable segments As of March 31, 2024 CloudFirst Technologies Nexxis Inc. Corporate Total Accounts receivable $ 4,388,536 $ 49,130 — $ 4,437,666 Prepaid expenses and other current assets 459,130 29,498 178,329 666,957 Net property and equipment 2,860,215 2,694 2,450 2,865,359 Intangible assets, net 1,628,937 — — 1,628,937 Goodwill 4,238,671 — — 4,238,671 Operating lease right-of-use assets 36,160 — — 36,160 All other assets — — 11,950,743 11,950,743 Total assets $ 13,611,649 $ 81,322 $ 12,131,522 $ 25,824,493 Accounts payable and accrued expenses $ 4,483,430 $ 75,203 $ 277,235 $ 4,835,868 Deferred revenue 310,123 — — 310,123 Finance leases payable 214,961 — — 214,961 Finance leases payable related party 155,164 — — 155,164 Operating lease liabilities 36,733 — — 36,733 Total liabilities $ 5,200,411 $ 75,203 $ 277,235 $ 5,552,849 As of December 31, 2023 CloudFirst Technologies Nexxis Inc. Corporate Total Accounts receivable $ 1,229,820 $ 30,152 — $ 1,259,972 Prepaid expenses and other current assets 419,254 18,157 75,764 513,175 Net property and equipment 2,727,225 2,905 2,644 2,732,774 Intangible assets, net 1,698,084 — — 1,698,084 Goodwill 4,238,671 — — 4,238,671 Operating lease right-of-use assets 62,981 — — 62,981 All other assets — — 12,795,362 12,795,362 Total assets $ 10,376,035 $ 51,214 $ 12,873,770 $ 23,301,019 Accounts payable and accrued expenses $ 2,020,963 $ 65,161 $ 522,814 $ 2,608,938 Deferred revenue 336,201 — — 336,201 Finance leases payable 281,241 — — 281,241 Finance leases payable related party 256,241 — — 256,241 Operating lease liabilities 63,983 — — 63,983 Total liabilities $ 2,958,629 $ 65,161 $ 522,814 $ 3,546,604 For the three months ended March 31, 2024 CloudFirst Technologies Nexxis Inc. Corporate Total Sales $ 7,954,958 $ 280,789 $ — $ 8,235,747 Cost of sales 5,102,635 166,640 — 5,269,275 Gross profit 2,852,323 114,149 — 2,966,472 Selling, general and administrative 1,631,897 176,879 648,703 2,457,479 Depreciation and amortization 294,794 211 193 295,198 Total operating expenses 1,926,691 177,090 648,896 2,752,677 Income (loss) from operations 925,632 (62,941 ) (648,896 ) 213,795 Interest income — — 143,369 143,369 Interest expense (11,260 ) — — (11,260 ) Total other income (expense) (11,260 ) — 143,369 132,109 Income (Loss) before provision for income taxes $ 914,372 $ (62,941 ) $ (505,527 ) $ 345,904 For the three months ended March 31, 2023 CloudFirst Technologies Nexxis Inc. Corporate Total Sales $ 6,614,927 $ 264,796 $ — $ 6,879,723 Cost of sales 4,611,857 178,121 — 4,789,978 Gross profit 2,003,070 86,675 — 2,089,745 Selling, general and administrative 1,146,779 124,750 570,520 1,842,049 Depreciation and amortization 288,525 71 114 288,710 Total operating expenses 1,435,304 124,821 570,634 2,130,759 Income (loss) from operations 567,766 (38,146 ) (570,634 ) (41,014 ) Interest income — 103,423 103,423 Interest expense (27,346 ) — — (27,346 ) Total Other Income (Expense) (27,346 ) — 103,423 76,077 Income (loss) before provision for income taxes $ 540,420 $ (38,146 ) $ (467,211 ) $ 35,063 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 - Subsequent Events Subsequent to March 31, 2024, options were exercised to obtain 21,667 50,209 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Condensed |
Reclassifications | Reclassifications Certain prior year amounts in the Condensed Consolidated Financial Statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ equity, net income, or net cash provided by operating activities. During the three months ended March 31, 2024, the Company adopted a change in presentation on its Condensed Consolidated Financial Statements in order to present segments in line with how its Chief Operating Decision Maker (“CODM”) evaluates performance of each segment. Prior periods have been revised to reflect this change in the presentation. |
Recently Issued and Newly Adopted Accounting Pronouncements | Recently Issued and Newly Adopted Accounting Pronouncements In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” The new accounting rules require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. These leases should also be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The Company adopted ASU 2023-01 and it did not have a material impact to our Condensed Consolidated Financial statement. In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the ASU and expects to include updated segment expense disclosures in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU and expects to include updated income tax disclosures. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 revenue and expenses during the reporting period. Actual results could differ from these estimates. |
Estimated Fair Value of Financial Instruments | Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and lease commitments. Management believes the estimated fair value of these accounts on March 31, 2024, approximate their carrying value as reflected in the balance sheet due to their short-term nature. The carrying values of certain of the Company’s notes payable and capital lease obligations approximate their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace. The fair value measurement disclosures are grouped into three levels based on valuation factors: ● Level 1 – quoted prices in active markets for identical investments ● Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs) ● Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments) The Company’s Level 1 assets/liabilities include cash, accounts receivable, marketable securities, accounts payable, prepaid, and other current assets. Management believes the estimated fair value of these accounts at March 31, 2024, approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments. The Company’s Level 2 assets/liabilities includes the Company’s finance and operating lease assets and liabilities. Their carrying value approximates their fair values based upon a comparison of the interest rate and terms of the leases. The Company’s Level 3 assets/liabilities include goodwill and intangible assets. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. |
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are measured at fair value on a nonrecurring basis. Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, operating lease right-of-use assets, goodwill, and other intangible assets. These assets are measured using Level 3 inputs, if determined to be impaired. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity, or remaining maturity at the time of purchase, of three months or less, to be cash equivalents. As of March 31, 2024, and December 31, 2023, the Company had cash and cash equivalents of $ 640,742 1,428,730 |
Investments | Investments Marketable securities that are bought and held principally for the purpose of selling them in the near term and are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. The following table sets forth a summary of the changes in equity investments during the three months ended March 31, 2024, and the year ended December 31, 2023: Schedule of changes in equity investments measured at fair value For the year ended December 31, 2023 Total As of January 1, 2023 $ 9,010,968 Purchase of equity investments 2,307,228 Unrealized gains — As of December 31, 2023 $ 11,318,196 For the three months ended March 31, 2024 Total As of December 31, 2023 $ 11,318,196 Purchase of equity investments 143,369 Unrealized gains — Sale of equity investments (200,000 ) As of March 31, 2024 $ 11,261,565 |
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments and assets subjecting the Company to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, and trade accounts receivable. The Company’s cash and cash equivalents are maintained at major U.S. financial institutions. Deposits in these institutions may exceed the amount of insurance provided on such deposits. The Company’s customers are primarily concentrated in the United States. As of March 31, 2024, DSC had one customer with an accounts receivable balance representing 59 20 For the three months ended March 31, 2024, the Company had one customer that accounted for 32 For the three months ended March 31, 2023, the Company had one customer that accounted for 33 |
Accounts Receivable / Provision for Credit Losses | Accounts Receivable / Provision for Credit Losses The Company sells its services to customers on an open credit basis. Accounts receivables are uncollateralized, non-interest-bearing customer obligations. Accounts receivable are typically due within 30 days. ASU 2016-13 requires the recognition of lifetime estimated credit losses expected to occur for trade accounts receivable. The guidance also requires we pool assets with similar risk characteristics and consider current economic conditions when estimating losses. During the three months ended March 31, 2024 and 2023 the Company recorded $ 54,136 3,886 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives or the term of the lease using the straight-line method for financial statement purposes. Estimated useful lives in years for depreciation are five to seven years for property and equipment. Additions, betterments, and replacements are capitalized, while expenditures for repairs and maintenance are charged to operations when incurred. As units of property are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income. |
Goodwill and Other Intangibles | Goodwill and Other Intangibles The Company tests goodwill and other intangible assets for impairment on at least an annual basis. Impairment exists if the carrying value of a reporting unit exceeds its estimated fair value. To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using an income-based approach that directly impacts the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management. The Company tests goodwill for impairment on an annual basis on December 31, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company has four reporting units. The Company uses an income-based approach to determine the fair value of the reporting units. This approach uses a discounted cash flow methodology and the ability of the Company’s reporting units to generate cash flows as measures of fair value of its reporting units. |
Revenue Recognition | Revenue Recognition Nature of goods and services The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: 1) Cloud Infrastructure and Disaster Recovery Revenue Cloud Infrastructure provides clients with the ability to migrate their on-premises computing and digital storage to DSC’s enterprise-level technical compute and digital storage assets located in Tier 3 data centers. DSC owns the assets and provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, x86/intel, flash digital storage, while providing disaster recovery and cyber security while eliminating client capital expenditures. The client pays a monthly fee and can increase capacity as required. Clients can subscribe to an array of disaster recovery solutions without subscribing to cloud infrastructure. Product offerings provided directly from DSC are High Availability, Data Vaulting, and retention solutions, including standby servers which allows clients to centralize and streamline their mission-critical digital information and technical environment while ensuring business continuity if they experience a cyber-attack or natural disaster. Client’s data is vaulted at two data centers with the maintenance of retention schedules for corporate governances and regulations all to meet their back to work objective in a disaster. 2) Managed Services These services are performed at the inception of a contract. The Company provides professional assistance to its clients during the implementation processes. On-boarding and set-up services ensure that the solution or software is installed properly and function as designed to provide clients with the best solutions. In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing supplementing the client’s staff. The Company also derives both one-time and subscription-based revenue from providing support, management and renewal of software, hardware, third party maintenance contracts and third-party cloud services to clients. The managed services include help desk, remote access, operating system and software patch management, annual recovery tests and manufacturer support for equipment and on-going monitoring of client system performance. 3) Equipment and Software The Company provides equipment and software and actively participates in collaboration with IBM to provide innovative business solutions to clients. The Company is a partner of IBM and the various software, infrastructure and hybrid cloud solutions provided to clients. 4) Nexxis Voice over Internet and Direct Internet Access The Company provides VoIP, Internet access and data transport services to ensure businesses are fully connected to the internet from any location, remote and on premise. The Company provides Hosted VoIP solutions with equipment options for IP phones and internet speeds of up to 10Gb delivered over fiber optics. Disaggregation of revenue In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition. Schedule of revenue is disaggregated by major product For the Three Months Ended March 31, 2024 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,853,249 $ 99,646 $ 2,952,895 Equipment and Software 4,084,647 — 4,084,647 Managed Services 843,407 — 843,407 Nexxis VoIP Services 276,467 — 276,467 Other 67,893 10,438 78,331 Total Revenue $ 8,125,663 $ 110,084 $ 8,235,747 For the Three Months Ended March 31, 2023 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,137,317 $ 52,324 $ 2,189,641 Equipment and Software 3,504,796 — 3,504,796 Managed Services 876,423 35,107 911,530 Nexxis VoIP Services 231,772 — 231,772 Other 41,984 — 41,984 Total Revenue $ 6,792,292 $ 87,431 $ 6,879,723 For the Three Months Ended March 31, Timing of revenue recognition 2024 2023 Products transferred at a point in time $ 1,045,977 $ 3,564,543 Products and services transferred over time 7,189,770 3,315,180 Total Revenue $ 8,235,747 $ 6,879,723 Contract receivables are recorded at the invoiced amount and are uncollateralized, non-interest-bearing client obligations. Provisions for estimated uncollectible accounts receivable are made for individual accounts based upon specific facts and circumstances including criteria such as their age, amount, and client standing. Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract. Transaction price allocated to the remaining performance obligations The Company has the following performance obligations: 1) Data Vaulting 2) High Availability 3) Cloud Infrastructure 4) Internet 5) Support and Maintenance 6) Implementation / Set-Up Fees 7) Equipment sales 9) License |
Disaster Recovery and Business Continuity Solutions | Disaster Recovery and Business Continuity Solutions Subscription services allow clients to access data or receive services for a predetermined period of time. As the client obtains access at a point in time and continues to have access for the remainder of the subscription period, the client is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the related performance obligation is considered to be satisfied ratably over the contract term. As the performance obligation is satisfied evenly across the term of the contract, revenue is recognized on a straight-line basis over the contract term. |
Initial Set-Up Fees | Initial Set-Up Fees The Company accounts for set-up fees as a separate performance obligation. Set-up services are performed one-time and accordingly the revenue is recognized at the point in time, and is non-refundable, and the Company is entitled to the payment. |
Equipment Sales | Equipment Sales The obligation for the equipment sales is such that the control of the product transfer is at a point in time (i.e., when the goods have been shipped or delivered to the client’s location, depending on shipping terms). Noting that the satisfaction of the performance obligation, in this sense, does not occur over time, the performance obligation is considered to be satisfied at a point in time when the obligation to the client has been fulfilled (i.e., when the goods have left the shipping facility or delivered to the client, depending on shipping terms). |
License - granting SSL certificates and other licenses | License - granting SSL certificates and other licenses Performance obligations as it relates to licensing is when the control of the product transfers, either at a point in time or over time, depending on the nature of the license. The revenue standard identifies two types of licenses of IP: (i) a right to access IP; and (ii) a right to use IP. To assist in determining whether a license provides a right to use or a right to access IP, ASC 606 defines two categories of IP: Functional and Symbolic. The Company’s license arrangements typically do not require the Company to make its proprietary content available to the client either through a download or through a direct connection. Throughout the life of the contract the Company does not continue to provide updates or upgrades to the license granted. Based on the guidance, the Company considers its license offerings to be akin to functional IP and recognizes revenue at the point in time the license is granted and/or renewed for a new period. |
Payment Terms | Payment Terms The typical terms of subscription contracts range from 12 to 36 months, with auto-renew options extending the contract for an additional term. The Company invoices clients one month in advance for its services, in addition to any contractual data overages or for additional services. |
Warranties | Warranties The Company offers guaranteed service levels and service guarantees on some of its contracts. These warranties are not sold separately and are accounted as “assurance warranties.” |
Significant Judgement | Significant Judgement In the instance where contracts have multiple performance obligations the Company uses judgment to establish a stand-alone price for each performance obligation. The price for each performance obligation is determined by reviewing market data for similar services as well as the Company’s historical pricing of each individual service. The sum of each performance obligation is calculated to determine the aggregate price for the individual services. The proportion of each individual service to the aggregate price is determined. The ratio is applied to the total contract price in order to allocate the transaction price to each performance obligation. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated un-discounted future cash flows. |
Advertising Costs | Advertising Costs The Company expenses the costs associated with advertising as they are incurred. The Company incurred $ 232,240 189,878 |
Stock-Based Compensation | Stock-Based Compensation The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments The valuation methodology used to determine the fair value of the options issued during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment. Estimated volatility is a measure of the amount by which DSC’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards. |
Net Income Per Common Share | Net Income Per Common Share Basic income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The following table sets forth the information needed to compute basic and diluted earnings per share for the three months ended March 31, 2024, and 2023: Schedule of earning per share basic and diluted Three Months ended March 31, 2024 2023 Net Income Available to Common Shareholders $ 357,102 $ 50,666 Weighted average number of common shares - basic 7,090,389 6,822,127 Dilutive securities Options 169,083 130,526 Warrants — 1,667 Weighted average number of common shares - diluted 7,259,472 6,954,320 Earnings per share, basic $ 0.05 $ 0.01 Earnings per share, diluted $ 0.05 $ 0.01 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share because their effect was anti-dilutive: Schedule of anti-dilutive shares Three Months ended March 31, 2024 2023 Options 560,071 385,257 Warrants 2,415,860 2,415,860 2,975,931 2,801,117 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of changes in equity investments measured at fair value | Schedule of changes in equity investments measured at fair value For the year ended December 31, 2023 Total As of January 1, 2023 $ 9,010,968 Purchase of equity investments 2,307,228 Unrealized gains — As of December 31, 2023 $ 11,318,196 For the three months ended March 31, 2024 Total As of December 31, 2023 $ 11,318,196 Purchase of equity investments 143,369 Unrealized gains — Sale of equity investments (200,000 ) As of March 31, 2024 $ 11,261,565 |
Schedule of revenue is disaggregated by major product | Schedule of revenue is disaggregated by major product For the Three Months Ended March 31, 2024 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,853,249 $ 99,646 $ 2,952,895 Equipment and Software 4,084,647 — 4,084,647 Managed Services 843,407 — 843,407 Nexxis VoIP Services 276,467 — 276,467 Other 67,893 10,438 78,331 Total Revenue $ 8,125,663 $ 110,084 $ 8,235,747 For the Three Months Ended March 31, 2023 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 2,137,317 $ 52,324 $ 2,189,641 Equipment and Software 3,504,796 — 3,504,796 Managed Services 876,423 35,107 911,530 Nexxis VoIP Services 231,772 — 231,772 Other 41,984 — 41,984 Total Revenue $ 6,792,292 $ 87,431 $ 6,879,723 For the Three Months Ended March 31, Timing of revenue recognition 2024 2023 Products transferred at a point in time $ 1,045,977 $ 3,564,543 Products and services transferred over time 7,189,770 3,315,180 Total Revenue $ 8,235,747 $ 6,879,723 |
Schedule of earning per share basic and diluted | Schedule of earning per share basic and diluted Three Months ended March 31, 2024 2023 Net Income Available to Common Shareholders $ 357,102 $ 50,666 Weighted average number of common shares - basic 7,090,389 6,822,127 Dilutive securities Options 169,083 130,526 Warrants — 1,667 Weighted average number of common shares - diluted 7,259,472 6,954,320 Earnings per share, basic $ 0.05 $ 0.01 Earnings per share, diluted $ 0.05 $ 0.01 |
Schedule of anti-dilutive shares | Schedule of anti-dilutive shares Three Months ended March 31, 2024 2023 Options 560,071 385,257 Warrants 2,415,860 2,415,860 2,975,931 2,801,117 |
Prepaids and other current as_2
Prepaids and other current assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Prepaids And Other Current Assets | |
Schedule of prepaids and other current assets | Schedule of prepaids and other current assets March 31, December 31, 2024 2023 Prepaid marketing & promotion $ 53,350 $ 13,525 Prepaid subscriptions and license 452,610 362,760 Prepaid maintenance 31,532 31,311 Prepaid insurance 93,589 63,247 Other 35,876 42,332 Total prepaids and other current assets $ 666,957 $ 513,175 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment March 31, December 31, 2024 2023 Storage equipment $ 60,288 $ 60,288 Furniture and fixtures 21,625 21,625 Leasehold improvements 20,983 20,983 Computer hardware and software 123,792 117,379 Data center equipment 7,970,174 7,617,950 Gross Property and equipment 8,196,862 7,838,225 Less: Accumulated depreciation (5,331,503 ) (5,105,451 ) Net property and equipment $ 2,865,359 $ 2,732,774 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and intangible assets | Schedule of goodwill and intangible assets Estimated life in years Gross amount December 31, 2023, Accumulated Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 4,238,671 $ — $ 4,238,671 Trademarks Indefinite 514,268 — 514,268 Total intangible assets not subject to amortization 4,752,939 — 4,752,939 Intangible assets subject to amortization Customer lists 7 2,614,099 1,434,218 1,179,881 ABC acquired contracts 5 310,000 310,000 — SIAS acquired contracts 5 660,000 660,000 — Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 29,067 3,935 Total intangible assets subject to amortization 3,889,248 2,705,432 1,183,816 Total Goodwill and Intangible Assets $ 8,642,187 $ 2,705,432 $ 5,936,755 Estimated life in years Gross amount March 31, 2024, Net Intangible assets not subject to amortization Goodwill Indefinite $ 4,238,671 $ — $ 4,238,671 Trademarks Indefinite 514,268 — 514,268 Total intangible assets not subject to amortization 4,752,939 — 4,752,939 Intangible assets subject to amortization Customer lists 7 2,614,099 1,501,004 1,113,095 ABC acquired contracts 5 310,000 310,000 — SIAS acquired contracts 5 660,000 660,000 — Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 31,428 1,574 Total intangible assets subject to amortization 3,889,248 2,774,579 1,114,669 Total Goodwill and Intangible Assets $ 8,642,187 $ 2,774,579 $ 5,867,608 |
Schedule of amortization over the next five years | Schedule of amortization over the next five years Period ending December 31, 2024 $ 201,931 2025 267,143 2026 267,143 2027 267,143 2028 111,309 Thereafter — Total $ 1,114,669 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
Schedule of components of lease expense | Schedule of components of lease expense Three Months Ended March 31, 2024 Finance leases: Amortization of assets, included in depreciation and amortization expense $ 196,069 Interest on lease liabilities, included in interest expense 8,855 Operating lease: Amortization of assets, included in total operating expense 27,250 Interest on lease liabilities, included in total operating expense 515 Total net lease cost $ 232,689 Supplemental balance sheet information related to leases was as follows: Operating Leases: Operating lease right-of-use asset $ 36,160 Current operating lease liabilities $ 36,733 Noncurrent operating lease liabilities — Total operating lease liabilities $ 36,733 March 31, 2024 Finance leases: Property and equipment, at cost $ 5,521,716 Accumulated amortization (4,689,273 ) Property and equipment, net $ 832,443 Current obligations of finance leases $ 370,125 Finance leases, net of current obligations — Total finance lease liabilities $ 370,125 |
Schedule of supplemental cash flow and other information related to leases | Schedule of supplemental cash flow and other information related to leases Three Months Ended March 31, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 27,250 Financing cash flows related to finance leases $ 167,358 Weighted average remaining lease term (in years): Operating leases 0.84 Finance leases 0.80 Weighted average discount rate: Operating leases 4 % Finance leases 7 % |
Schedule of long term obligations operating and finance leases | Schedule of long term obligations operating and finance leases For the Twelve Months Ended March 31, Operating Finance 2024 37,020 381,829 2025 — — Total lease payments 37,020 381,829 Less: Amounts representing interest (287 ) (11,704 ) Total lease obligations 36,733 370,125 Less: long-term obligations — — Total current $ 36,733 $ 370,125 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of options activity and related information | Schedule of options activity and related information Number of Weighted Weighted Shares Average Average Under Exercise Contractual Options Price Life Options Outstanding at December 31, 2023 595,347 $ 3.46 5.82 Options Granted 136,255 3.32 5.15 Exercised — — — Expired/Cancelled (2,448 ) 5.41 — Options Outstanding at March 31, 2024 729,154 $ 2.66 6.83 Options Exercisable at March 31, 2024 282,072 $ 2.97 5.91 |
Schedule of weighted average fair value of options granted | Schedule of weighted average fair value of options granted 2024 2023 Weighted average fair value of options granted $ 3.32 $ 1.77 Risk-free interest rate 3.94 4.21 % 3.48 4.01 % Volatility 126 159 % 196 199 % Expected life (years) 3.5 6 10 Dividend yield — % — % |
Schedule of non-vested restricted stock units | Schedule of non-vested restricted stock units Restricted Stock Units (RSUs) Shares Weighted Average Fair Value $ RSUs non-vested at January 1, 2024 208,472 1.90 RSUs granted 84,559 3.40 RSUs vested 49,490 1.74 RSUs forfeited — — RSUs non-vested at March 31, 2024 243,541 2.45 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting income or losses | Schedule of segment reporting income or losses Operations of: Products and services provided: CloudFirst Technologies Corporation CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts. Nexxis Inc. Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment. |
Schedule of financial information related to reportable segments | Schedule of financial information related to reportable segments As of March 31, 2024 CloudFirst Technologies Nexxis Inc. Corporate Total Accounts receivable $ 4,388,536 $ 49,130 — $ 4,437,666 Prepaid expenses and other current assets 459,130 29,498 178,329 666,957 Net property and equipment 2,860,215 2,694 2,450 2,865,359 Intangible assets, net 1,628,937 — — 1,628,937 Goodwill 4,238,671 — — 4,238,671 Operating lease right-of-use assets 36,160 — — 36,160 All other assets — — 11,950,743 11,950,743 Total assets $ 13,611,649 $ 81,322 $ 12,131,522 $ 25,824,493 Accounts payable and accrued expenses $ 4,483,430 $ 75,203 $ 277,235 $ 4,835,868 Deferred revenue 310,123 — — 310,123 Finance leases payable 214,961 — — 214,961 Finance leases payable related party 155,164 — — 155,164 Operating lease liabilities 36,733 — — 36,733 Total liabilities $ 5,200,411 $ 75,203 $ 277,235 $ 5,552,849 As of December 31, 2023 CloudFirst Technologies Nexxis Inc. Corporate Total Accounts receivable $ 1,229,820 $ 30,152 — $ 1,259,972 Prepaid expenses and other current assets 419,254 18,157 75,764 513,175 Net property and equipment 2,727,225 2,905 2,644 2,732,774 Intangible assets, net 1,698,084 — — 1,698,084 Goodwill 4,238,671 — — 4,238,671 Operating lease right-of-use assets 62,981 — — 62,981 All other assets — — 12,795,362 12,795,362 Total assets $ 10,376,035 $ 51,214 $ 12,873,770 $ 23,301,019 Accounts payable and accrued expenses $ 2,020,963 $ 65,161 $ 522,814 $ 2,608,938 Deferred revenue 336,201 — — 336,201 Finance leases payable 281,241 — — 281,241 Finance leases payable related party 256,241 — — 256,241 Operating lease liabilities 63,983 — — 63,983 Total liabilities $ 2,958,629 $ 65,161 $ 522,814 $ 3,546,604 For the three months ended March 31, 2024 CloudFirst Technologies Nexxis Inc. Corporate Total Sales $ 7,954,958 $ 280,789 $ — $ 8,235,747 Cost of sales 5,102,635 166,640 — 5,269,275 Gross profit 2,852,323 114,149 — 2,966,472 Selling, general and administrative 1,631,897 176,879 648,703 2,457,479 Depreciation and amortization 294,794 211 193 295,198 Total operating expenses 1,926,691 177,090 648,896 2,752,677 Income (loss) from operations 925,632 (62,941 ) (648,896 ) 213,795 Interest income — — 143,369 143,369 Interest expense (11,260 ) — — (11,260 ) Total other income (expense) (11,260 ) — 143,369 132,109 Income (Loss) before provision for income taxes $ 914,372 $ (62,941 ) $ (505,527 ) $ 345,904 For the three months ended March 31, 2023 CloudFirst Technologies Nexxis Inc. Corporate Total Sales $ 6,614,927 $ 264,796 $ — $ 6,879,723 Cost of sales 4,611,857 178,121 — 4,789,978 Gross profit 2,003,070 86,675 — 2,089,745 Selling, general and administrative 1,146,779 124,750 570,520 1,842,049 Depreciation and amortization 288,525 71 114 288,710 Total operating expenses 1,435,304 124,821 570,634 2,130,759 Income (loss) from operations 567,766 (38,146 ) (570,634 ) (41,014 ) Interest income — 103,423 103,423 Interest expense (27,346 ) — — (27,346 ) Total Other Income (Expense) (27,346 ) — 103,423 76,077 Income (loss) before provision for income taxes $ 540,420 $ (38,146 ) $ (467,211 ) $ 35,063 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Accounting Policies [Abstract] | ||
Fair value of investments, beginning balance | $ 11,318,196 | $ 9,010,968 |
Purchase of equity investments | 143,369 | 2,307,228 |
Unrealized gains | 0 | 0 |
Sale of equity investments | (200,000) | |
Fair value of investments, ending balance | $ 11,261,565 | $ 11,318,196 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Product Information [Line Items] | ||
Disaggregation of revenue | $ 8,235,747 | $ 6,879,723 |
Transferred at Point in Time [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 1,045,977 | 3,564,543 |
Transferred over Time [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 7,189,770 | 3,315,180 |
UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 8,125,663 | 6,792,292 |
International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 110,084 | 87,431 |
Service [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 2,952,895 | 2,189,641 |
Service [Member] | UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 2,853,249 | 2,137,317 |
Service [Member] | International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 99,646 | 52,324 |
Equipment and Software [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 4,084,647 | 3,504,796 |
Equipment and Software [Member] | UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 4,084,647 | 3,504,796 |
Equipment and Software [Member] | International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 0 | 0 |
Managed Services [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 843,407 | 911,530 |
Managed Services [Member] | UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 843,407 | 876,423 |
Managed Services [Member] | International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 0 | 35,107 |
Nexxis Voip Services [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 276,467 | 231,772 |
Nexxis Voip Services [Member] | UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 276,467 | 231,772 |
Nexxis Voip Services [Member] | International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 0 | 0 |
Other [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 78,331 | 41,984 |
Other [Member] | UNITED STATES | ||
Product Information [Line Items] | ||
Disaggregation of revenue | 67,893 | 41,984 |
Other [Member] | International [Member] | ||
Product Information [Line Items] | ||
Disaggregation of revenue | $ 10,438 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounting Policies [Abstract] | ||
Net Income Available to Common Shareholders | $ 357,102 | $ 50,666 |
Weighted average number of common shares - basic | 7,090,389 | 6,822,127 |
Dilutive securities | ||
Options | 169,083 | 130,526 |
Warrants | 0 | 1,667 |
Weighted average number of common shares - diluted | 7,259,472 | 6,954,320 |
Earnings per share, basic | $ 0.05 | $ 0.01 |
Earnings per share, diluted | $ 0.05 | $ 0.01 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Anti-dilutive shares | 2,975,931 | 2,801,117 |
Warrant [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Anti-dilutive shares | 2,415,860 | 2,415,860 |
Options Held [Member] | ||
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||
Anti-dilutive shares | 560,071 | 385,257 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Product Information [Line Items] | |||
Cash and cash equivalents | $ 640,742 | $ 1,428,730 | |
Bad debt expense | 54,136 | $ 3,886 | |
Advertising Expense | $ 232,240 | $ 189,878 | |
One Customer [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration Risk, Percentage | 59% | 20% | |
One Customer [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||
Product Information [Line Items] | |||
Concentration Risk, Percentage | 32% | 33% |
Prepaids and other current as_3
Prepaids and other current assets (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaids And Other Current Assets | ||
Prepaid marketing & promotion | $ 53,350 | $ 13,525 |
Prepaid subscriptions and license | 452,610 | 362,760 |
Prepaid maintenance | 31,532 | 31,311 |
Prepaid insurance | 93,589 | 63,247 |
Other | 35,876 | 42,332 |
Total prepaids and other current assets | $ 666,957 | $ 513,175 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 8,196,862 | $ 7,838,225 |
Less: Accumulated depreciation | (5,331,503) | (5,105,451) |
Net property and equipment | 2,865,359 | 2,732,774 |
Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 60,288 | 60,288 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 21,625 | 21,625 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 20,983 | 20,983 |
Computer Hardware And Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 123,792 | 117,379 |
Data Center Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,970,174 | $ 7,617,950 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 226,051 | $ 218,979 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets not subject to amortization, gross amount | $ 4,752,939 | $ 4,752,939 |
Total intangible assets not subject to amortization, accumulated amortization | 0 | 0 |
Total intangible assets not subject to amortization, net | 4,752,939 | 4,752,939 |
Total intangible assets subject to amortization, gross amount | 3,889,248 | 3,889,248 |
Total intangible assets subject to amortization, accumulated amortization | 2,774,579 | 2,705,432 |
Total intangible assets subject to amortization, net | 1,114,669 | 1,183,816 |
Total goodwill and intangible assets, gross amount | 8,642,187 | 8,642,187 |
Total goodwill and intangible assets, accumulated amortization | 2,774,579 | 2,705,432 |
Total goodwill and intangible assets, net | $ 5,867,608 | $ 5,936,755 |
Goodwill [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life in years | Indefinite | Indefinite |
Total intangible assets not subject to amortization, gross amount | $ 4,238,671 | $ 4,238,671 |
Total intangible assets not subject to amortization, accumulated amortization | 0 | 0 |
Total intangible assets not subject to amortization, net | $ 4,238,671 | $ 4,238,671 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated life in years | Indefinite | Indefinite |
Total intangible assets not subject to amortization, gross amount | $ 514,268 | $ 514,268 |
Total intangible assets not subject to amortization, accumulated amortization | 0 | 0 |
Total intangible assets not subject to amortization, net | $ 514,268 | $ 514,268 |
Customer Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets subject to amortization, estimated life in years | 7 years | 7 years |
Total intangible assets subject to amortization, gross amount | $ 2,614,099 | $ 2,614,099 |
Total intangible assets subject to amortization, accumulated amortization | 1,501,004 | 1,434,218 |
Total intangible assets subject to amortization, net | $ 1,113,095 | $ 1,179,881 |
ABC Acquired Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets subject to amortization, estimated life in years | 5 years | 5 years |
Total intangible assets subject to amortization, gross amount | $ 310,000 | $ 310,000 |
Total intangible assets subject to amortization, accumulated amortization | 310,000 | 310,000 |
Total intangible assets subject to amortization, net | $ 0 | $ 0 |
SIAS Acquired Contracts [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets subject to amortization, estimated life in years | 5 years | 5 years |
Total intangible assets subject to amortization, gross amount | $ 660,000 | $ 660,000 |
Total intangible assets subject to amortization, accumulated amortization | 660,000 | 660,000 |
Total intangible assets subject to amortization, net | $ 0 | $ 0 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets subject to amortization, estimated life in years | 4 years | 4 years |
Total intangible assets subject to amortization, gross amount | $ 272,147 | $ 272,147 |
Total intangible assets subject to amortization, accumulated amortization | 272,147 | 272,147 |
Total intangible assets subject to amortization, net | $ 0 | $ 0 |
Website And Digital Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total intangible assets subject to amortization, estimated life in years | 3 years | 3 years |
Total intangible assets subject to amortization, gross amount | $ 33,002 | $ 33,002 |
Total intangible assets subject to amortization, accumulated amortization | 31,428 | 29,067 |
Total intangible assets subject to amortization, net | $ 1,574 | $ 3,935 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) | Mar. 31, 2024 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 201,931 |
2025 | 267,143 |
2026 | 267,143 |
2027 | 267,143 |
2028 | 111,309 |
Thereafter | 0 |
Total | $ 1,114,669 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 69,147 | $ 69,731 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Leases | ||
Amortization of assets, included in depreciation and amortization expense | $ 196,069 | |
Interest on lease liabilities, included in interest expense | 8,855 | |
Amortization of assets, included in total operating expense | 27,250 | |
Interest on lease liabilities, included in total operating expense | 515 | |
Total net lease cost | 232,689 | |
Operating lease right-of-use asset | 36,160 | $ 62,981 |
Current operating lease liabilities | 36,733 | 63,983 |
Noncurrent operating lease liabilities | 0 | |
Total operating lease liabilities | 36,733 | $ 63,983 |
Property and equipment, at cost | 5,521,716 | |
Accumulated amortization | (4,689,273) | |
Property and equipment, net | 832,443 | |
Current obligations of finance leases | 370,125 | |
Finance leases, net of current obligations | 0 | |
Total finance lease liabilities | $ 370,125 |
Leases (Details 1)
Leases (Details 1) | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Leases | |
Operating cash flows related to operating leases | $ 27,250 |
Financing cash flows related to finance leases | $ 167,358 |
Weighted average remaining lease term (in years): Operating leases | 10 months 2 days |
Weighted average remaining lease term (in years): Finance leases | 9 months 18 days |
Weighted average discount rate: Operating leases | 4% |
Weighted average discount rate: Finance leases | 7% |
Leases (Details 2)
Leases (Details 2) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Leases | ||
Operating Leases 2024 | $ 37,020 | |
Finance Leases 2024 | 381,829 | |
Operating Leases 2025 | 0 | |
Finance Leases 2025 | 0 | |
Operating leases total lease payments | 37,020 | |
Finance leases total lease payments | 381,829 | |
Operating leases less: amounts representing interest | (287) | |
Finance leases less: amounts representing interest | (11,704) | |
Operating leases total lease obligations | 36,733 | $ 63,983 |
Finance leases total lease obligations | 370,125 | |
Operating leases less: long-term obligations | 0 | |
Finance leases less: long-term obligations | 0 | |
Operating leases total current | 36,733 | |
Finance leases total current | $ 370,125 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | ||||||||||
May 07, 2024 | Apr. 10, 2024 | Jan. 17, 2024 | Apr. 02, 2022 | Jan. 02, 2022 | Nov. 01, 2021 | Jul. 31, 2021 | Mar. 04, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Jul. 01, 2022 | |
Subsequent Event [Line Items] | |||||||||||
Annual rent | $ 11,856 | ||||||||||
Operating leases contingent monthly rental payments | $ 988 | ||||||||||
Monthly lease rent | $ 4,965 | ||||||||||
Annual base rent | $ 355 | $ 11,931 | $ 1,470 | ||||||||
Lease expiration date | Oct. 30, 2029 | Oct. 30, 2029 | Jun. 30, 2022 | ||||||||
Month to month lease payment | $ 3,073 | ||||||||||
Interest rate | 3% | ||||||||||
Discount rate | 5% | ||||||||||
Operating leases rent expenses net | $ 73,303 | $ 60,572 | |||||||||
Systems Trading [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Operating leases contingent monthly rental payments | $ 6,667 | $ 7,145 | $ 1,567 | ||||||||
Lease expiration date | Mar. 01, 2025 | Feb. 01, 2025 | Mar. 01, 2024 | ||||||||
Interest rate | 8% | 8% | 8% | ||||||||
Technical Equipment [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Lease expiration date | Feb. 01, 2025 | Nov. 01, 2024 | |||||||||
Interest rate | 5% | 6% | |||||||||
Finance leases contingent monthly rental payments | $ 17,718 | $ 3,152 | |||||||||
Technical Equipment [Member] | Subsequent Event [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Lease expiration date | Jun. 01, 2029 | ||||||||||
Finance leases contingent monthly rental payments | $ 51,680 | ||||||||||
Technical Equipment 1 [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Lease expiration date | Jan. 01, 2025 | ||||||||||
Interest rate | 6% | ||||||||||
Finance leases contingent monthly rental payments | $ 2,037 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Loss Contingencies [Line Items] | |
Accrued expenses | $ 89,000 |
Minimum [Member] | |
Loss Contingencies [Line Items] | |
Accrued expenses | 75,000 |
Maximum [Member] | |
Loss Contingencies [Line Items] | |
Accrued expenses | 97,000 |
Flagship Acquisition [Member] | |
Loss Contingencies [Line Items] | |
Business acquisition | $ 600,000 |
Business acquisition period | 3 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Share-Based Payment Arrangement, Option [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares under options outstanding, beginning | 595,347 | |
Weighted average exercise price outstanding, beginning | $ 3.46 | |
Weighted average contractual life | 6 years 9 months 29 days | 5 years 9 months 25 days |
Number of shares under options, granted | 136,255 | |
Weighted average exercise price, granted | $ 3.32 | |
Weighted average contractual life, granted | 5 years 1 month 24 days | |
Number of shares under options, exercised | 0 | |
Weighted average exercise price, exercised | $ 0 | |
Number of shares under options, expired/cancelled | (2,448) | |
Weighted average exercise price, expired/cancelled | $ 5.41 | |
Number of shares under options outstanding, ending | 729,154 | 595,347 |
Weighted average exercise price outstanding, ending | $ 2.66 | $ 3.46 |
Number of shares under options, exercisable | 282,072 | |
Weighted average exercise price, exercisable | $ 2.97 | |
Weighted average contractual life, exercisable | 5 years 10 months 28 days |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Weighted average fair value of options granted | $ 3.32 | $ 1.77 |
Expected life (years) | 10 years | |
Dividend yield | 0% | 0% |
Minimum [Member] | ||
Risk-free interest rate | 3.94% | 3.48% |
Volatility | 126% | 196% |
Expected life (years) | 3 years 6 months | |
Maximum [Member] | ||
Risk-free interest rate | 4.21% | 4.01% |
Volatility | 159% | 199% |
Expected life (years) | 6 years |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Equity [Abstract] | |
RSUs non-vested shares, beginning | shares | 208,472 |
Weighted average fair value, beginning | $ / shares | $ 1.90 |
RSUs granted shares | shares | 84,559 |
Weighted average fair value, granted | $ / shares | $ 3.40 |
RSUs vested shares | shares | 49,490 |
Weighted average fair value, vested | $ / shares | $ 1.74 |
RSUs forfeited shares | shares | 0 |
Weighted average fair value, forfeited | $ / shares | $ 0 |
RSUs non-vested shares, ending | shares | 243,541 |
Weighted average fair value, ending | $ / shares | $ 2.45 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 3 Months Ended | |||
Jan. 02, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Class of Stock [Line Items] | ||||
Capital stock authorized | 260,000,000 | |||
Common stock, authorized | 250,000,000 | 250,000,000 | ||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Share-based compensation expense for options | $ 104,163 | $ 54,433 | ||
Intrinsic value of stock options outstanding | 653,725 | $ 391,283 | ||
Total unrecognized compensation expense | $ 851,984 | |||
Weighted average period expected to recognized compensation expense (in years) | 1 year 7 months 6 days | |||
Restricted Stock Units (RSUs) [Member] | ||||
Class of Stock [Line Items] | ||||
Share-based compensation expense for options | $ 67,162 | $ 52,285 | ||
Total unrecognized compensation expense | $ 505,795 | |||
Weighted average period expected to recognized compensation expense (in years) | 1 year 6 months | |||
Shares granted | 53,328 | 14,166 | ||
Restricted stock expense | $ 156,251 | $ 81,030 | ||
Series A Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred stock, authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Proceeds from related party debt | $ 0 | $ 0 |
Eisner Maglione CPAs LLC [Member] | ||
Repayment of related party | $ 3,700 | $ 495 |
Segment Information (Details)
Segment Information (Details) | 3 Months Ended |
Mar. 31, 2024 | |
Cloud First Technologies Corporation [Member] | |
Revenue from External Customer [Line Items] | |
Products and services provided | CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts. |
Nexxis Inc [Member] | |
Revenue from External Customer [Line Items] | |
Products and services provided | Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment. |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Segment Reporting Information [Line Items] | |||
Accounts receivable | $ 4,437,666 | $ 1,259,972 | |
Prepaid expenses and other current assets | 666,957 | 513,175 | |
Net property and equipment | 2,865,359 | 2,732,774 | |
Intangible assets, net | 1,628,937 | 1,698,084 | |
Goodwill | 4,238,671 | 4,238,671 | |
Operating lease right-of-use assets | 36,160 | 62,981 | |
All other assets | 11,950,743 | 12,795,362 | |
Total assets | 25,824,493 | 23,301,019 | |
Accounts payable and accrued expenses | 4,835,868 | 2,608,938 | |
Deferred revenue | 310,123 | 336,201 | |
Finance leases payable | 214,961 | 281,241 | |
Finance leases payable related party | 155,164 | 256,241 | |
Operating lease liabilities | 36,733 | 63,983 | |
Total liabilities | 5,552,849 | 3,546,604 | |
Sales | 8,235,747 | $ 6,879,723 | |
Cost of sales | 5,269,275 | 4,789,978 | |
Gross profit | 2,966,472 | 2,089,745 | |
Selling, general and administrative | 2,457,479 | 1,842,049 | |
Depreciation and amortization | 295,198 | 288,710 | |
Total operating expenses | 2,752,677 | 2,130,759 | |
Income (loss) from operations | 213,795 | (41,014) | |
Interest income | 143,369 | 103,423 | |
Interest expense | (11,260) | (27,346) | |
Total Other Income (Expense) | 132,109 | 76,077 | |
Income (loss) before provision for income taxes | 345,904 | 35,063 | |
Cloud First Technologies [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts receivable | 4,388,536 | 1,229,820 | |
Prepaid expenses and other current assets | 459,130 | 419,254 | |
Net property and equipment | 2,860,215 | 2,727,225 | |
Intangible assets, net | 1,628,937 | 1,698,084 | |
Goodwill | 4,238,671 | 4,238,671 | |
Operating lease right-of-use assets | 36,160 | 62,981 | |
All other assets | 0 | 0 | |
Total assets | 13,611,649 | 10,376,035 | |
Accounts payable and accrued expenses | 4,483,430 | 2,020,963 | |
Deferred revenue | 310,123 | 336,201 | |
Finance leases payable | 214,961 | 281,241 | |
Finance leases payable related party | 155,164 | 256,241 | |
Operating lease liabilities | 36,733 | 63,983 | |
Total liabilities | 5,200,411 | 2,958,629 | |
Sales | 7,954,958 | 6,614,927 | |
Cost of sales | 5,102,635 | 4,611,857 | |
Gross profit | 2,852,323 | 2,003,070 | |
Selling, general and administrative | 1,631,897 | 1,146,779 | |
Depreciation and amortization | 294,794 | 288,525 | |
Total operating expenses | 1,926,691 | 1,435,304 | |
Income (loss) from operations | 925,632 | 567,766 | |
Interest income | 0 | ||
Interest expense | (11,260) | (27,346) | |
Total Other Income (Expense) | (11,260) | (27,346) | |
Income (loss) before provision for income taxes | 914,372 | 540,420 | |
Nexxis Inc [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts receivable | 49,130 | 30,152 | |
Prepaid expenses and other current assets | 29,498 | 18,157 | |
Net property and equipment | 2,694 | 2,905 | |
Intangible assets, net | 0 | 0 | |
Goodwill | 0 | 0 | |
Operating lease right-of-use assets | 0 | 0 | |
All other assets | 0 | 0 | |
Total assets | 81,322 | 51,214 | |
Accounts payable and accrued expenses | 75,203 | 65,161 | |
Deferred revenue | 0 | 0 | |
Finance leases payable | 0 | 0 | |
Finance leases payable related party | 0 | 0 | |
Operating lease liabilities | 0 | 0 | |
Total liabilities | 75,203 | 65,161 | |
Sales | 280,789 | 264,796 | |
Cost of sales | 166,640 | 178,121 | |
Gross profit | 114,149 | 86,675 | |
Selling, general and administrative | 176,879 | 124,750 | |
Depreciation and amortization | 211 | 71 | |
Total operating expenses | 177,090 | 124,821 | |
Income (loss) from operations | (62,941) | (38,146) | |
Interest income | 0 | 0 | |
Interest expense | 0 | 0 | |
Total Other Income (Expense) | 0 | 0 | |
Income (loss) before provision for income taxes | (62,941) | (38,146) | |
Corporate Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Accounts receivable | 0 | 0 | |
Prepaid expenses and other current assets | 178,329 | 75,764 | |
Net property and equipment | 2,450 | 2,644 | |
Intangible assets, net | 0 | 0 | |
Goodwill | 0 | 0 | |
Operating lease right-of-use assets | 0 | 0 | |
All other assets | 11,950,743 | 12,795,362 | |
Total assets | 12,131,522 | 12,873,770 | |
Accounts payable and accrued expenses | 277,235 | 522,814 | |
Deferred revenue | 0 | 0 | |
Finance leases payable | 0 | 0 | |
Finance leases payable related party | 0 | 0 | |
Operating lease liabilities | 0 | 0 | |
Total liabilities | 277,235 | $ 522,814 | |
Sales | 0 | 0 | |
Cost of sales | 0 | 0 | |
Gross profit | 0 | 0 | |
Selling, general and administrative | 648,703 | 570,520 | |
Depreciation and amortization | 193 | 114 | |
Total operating expenses | 648,896 | 570,634 | |
Income (loss) from operations | (648,896) | (570,634) | |
Interest income | 143,369 | 103,423 | |
Interest expense | 0 | 0 | |
Total Other Income (Expense) | 143,369 | 103,423 | |
Income (loss) before provision for income taxes | $ (505,527) | $ (467,211) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] | Apr. 02, 2024 USD ($) shares |
Subsequent Event [Line Items] | |
Options exercised, shares | shares | 21,667 |
Options exercised, value | $ | $ 50,209 |