UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
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code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Capital Market | ||||
| The Capital Market |
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
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Indicate by check mark whether the registrant has
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The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of November 14, 2023, was .
DATA STORAGE CORPORATION
FORM 10-Q
INDEX
1
| DATA STORAGE CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable (less allowance for credit losses of $ | ||||||||
| Marketable securities | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment: | ||||||||
| Property and Equipment | ||||||||
| Less—Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Property and Equipment | ||||||||
| Other Assets: | ||||||||
| Goodwill | ||||||||
| Operating Lease Right-of-Use Assets | ||||||||
| Other Assets | ||||||||
| Intangible Assets, net | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable and Accrued Expenses | $ | $ | ||||||
| Deferred Revenue | ||||||||
| Finance Leases Payable Short Term | ||||||||
| Finance Leases Payable Related Party Short Term | ||||||||
| Operating Lease Liabilities Short Term | ||||||||
| Total Current Liabilities | ||||||||
| Operating Lease Liabilities | ||||||||
| Finance Leases Payable | ||||||||
| Finance Leases Payable Related Party | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred Stock, Series A par value $; shares authorized; and shares issued and outstanding in 2023 and 2022, respectively | ||||||||
| Common Stock, par value $; shares authorized; and shares issued and outstanding in 2023 and 2022, respectively | ||||||||
| Additional Paid in Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Data Storage Corporation Stockholders’ Equity | ||||||||
| Non-Controlling Interest in Consolidated Subsidiary | ( | ) | ( | ) | ||||
| Total Stockholder’s Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed consolidated Financial Statements. |
2
| DATA STORAGE CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||
| Income (Loss) from Operations | ( | ) | ( | ) | ||||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest Income (Expense), net | ( | ) | ( | ) | ||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| Income (Loss) Before Provision for Income Taxes | ( | ) | ( | ) | ||||||||||||
| Benefit from Income Taxes | ||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||
| Loss in Non-Controlling Interest of Consolidated Subsidiary | ||||||||||||||||
| Net Income (Loss) attributable to Data Storage Corporation | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings Per Share – Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings Per Share – Diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted Average Number of Shares - Basic | ||||||||||||||||
| Weighted Average Number of Shares - Diluted | ||||||||||||||||
| The accompanying notes are an integral part of these condensed consolidated Financial Statements. |
3
| DATA STORAGE CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |
| FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 |
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non-Controlling | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Equity | |||||||||||||||||||||||||
| Balance July 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-Based Compensation | — | — | ||||||||||||||||||||||||||||||
| Net Income (Loss) | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance July 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-Based Compensation | — | |||||||||||||||||||||||||||||||
| Net Income (Loss) | — | — | ( | ) | ||||||||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| The accompanying notes are an integral part of these condensed consolidated Financial Statements |
4
| DATA STORAGE CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY |
| FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 |
| (Unaudited) |
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Non-Controlling | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Equity | |||||||||||||||||||||||||
| Balance January 1, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock Options Exercise | — | |||||||||||||||||||||||||||||||
| Stock-Based Compensation | — | |||||||||||||||||||||||||||||||
| Net Income (Loss) | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Stock-Based Compensation | — | |||||||||||||||||||||||||||||||
| Net Income (Loss) | — | — | ( | ) | ||||||||||||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| The accompanying notes are an integral part of these condensed consolidated Financial Statements |
5
| DATA STORAGE CORPORATION AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income (Loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Changes in Assets and Liabilities: | ||||||||
| Accounts receivable | ||||||||
| Other assets | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Right of use asset | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash Provided by Operating Activities | ||||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Purchase of marketable securities | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Repayments of finance lease obligations related party | ( | ) | ( | ) | ||||
| Repayments of finance lease obligations | ( | ) | ( | ) | ||||
| Cash received for the exercised of options | ||||||||
| Net Cash Used in Financing Activities | ( | ) | ( | ) | ||||
| Decrease in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents, Beginning of Period | ||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | ||||||
| Supplemental Disclosures: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Assets acquired by finance lease | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed consolidated Financial Statements. |
6
DATA STORAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023
(Unaudited)
Note 1 – Basis of Presentation, Organization and Other Matters
Data Storage Corporation (“DSC” or the “Company”) headquartered in Melville, NY, provides cloud-based solutions and IT services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government industries. DSC derives its revenues from subscription managed cloud services and solutions, IT managed services, equipment, software and maintenance, and onboarding implementation. DSC maintains cloud-based infrastructure and storage equipment in seven technical centers in New York, Massachusetts, Texas, Florida, North Carolina, and Canada.
On May 31, 2021, the Company completed an acquisition of Flagship Solutions, LLC (“Flagship”) (a Florida limited liability company) and its wholly-owned subsidiary, Data Storage FL, LLC. Flagship is a provider of Hybrid Cloud solutions, IT managed services and equipment.
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, 2022 (“2022 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2022 Form 10-K and are updated, as necessary, in this Form 10-Q. The December 31, 2022, 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 and nine months ended September 30, 2023, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial statements include the accounts of the Company and its wholly-owned subsidiaries, (i) CloudFirst Technologies Corporation, a Delaware corporation (“CloudFirst”), (ii) Data Storage FL, LLC, a Florida limited liability company, (iii) Flagship Solutions, LLC, a Florida limited liability company, (iv) Information Technology Acquisition Corporation, a Delaware Corporation, and (v) its majority-owned subsidiary, Nexxis Inc., a Nevada corporation. All inter-company transactions and balances have been eliminated in consolidation.
7
Use of Estimates
The preparation of financial statements in conformity with US 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 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 the Company’s 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 September 30, 2023 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 include certain of the Company’s operating lease right-of-use assets. Their carrying value approximates 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 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 determined using model-based techniques, including discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.
The Company’s marketable
equity securities are publicly traded stocks measured at fair value using quoted prices for identical assets in active markets and classified
as Level 1 within the fair value hierarchy. Marketable equity securities as of September 30,
2023 and December 31, 2022 are $
Recently adopted accounting standards:
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company determined that this change does not have a material impact to the financial statements or financial statement disclosures.
8
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.
Investments
The Company invests in equity securities and reports them in accordance with ASU 2016-01. Equity securities are reported at fair value with unrealized gains and losses, net of the related tax effect, reflected as a gain or loss on the statement of operations. Dividends and interest are recognized when earned.
The following table sets forth a summary of the changes in equity investments, at cost that are measured at fair value on a non-recurring basis:
| For the nine months ended September 30, 2023 | ||||
| Total | ||||
| As of January 1, 2023 | $ | |||
| Purchase of equity investments | ||||
| As of March 31, 2023 | ||||
| Purchase of equity investments | ||||
| As of June 30, 2023 | $ | |||
| Purchase of equity investments | ||||
| As of September 30, 2023 | $ | |||
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 September 30, 2023, the Company had three customers
with an accounts receivable balance representing
For the three months ended September 30, 2023, the
Company had one customer that accounted for
9
Accounts Receivable/Allowance 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 receivables are typically
due within
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 a market participant approach that directly impact 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 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. Data Storage Corporation 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. 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.
10
| 2) | Managed Services |
These services are performed at the inception and continue through the term of the agreement. 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-gong monitoring of client system performance.
| 3) | Equipment and Software |
The Company provides equipment and software and actively participates in collaboration with IBM and other equipment manufacturers and software companies to provide innovative business solutions 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.
| For the Three Months |
| Ended September 30, 2023 |
| United States | International | Total | ||||||||||
| Infrastructure & Disaster Recovery/Cloud Service | $ | $ | $ | |||||||||
| Equipment and Software | ||||||||||||
| Managed Services | ||||||||||||
| Nexxis VoIP Services | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| For the Three Months |
| Ended September 30, 2022 |
| United States | International | Total | ||||||||||
| Infrastructure & Disaster Recovery/Cloud Service | $ | $ | $ | |||||||||
| Equipment and Software | ||||||||||||
| Managed Services | ||||||||||||
| Nexxis VoIP Services | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
11
| For the Three Months | ||||||||
| Ended September 30, | ||||||||
| Timing of revenue recognition | 2023 | 2022 | ||||||
| Products transferred at a point in time | $ | $ | ||||||
| Products and services transferred over time | ||||||||
| Total Revenue | $ | $ | ||||||
| For the Nine Months | ||||||||||||
| Ended September 30, 2023 | ||||||||||||
| United States | International | Total | ||||||||||
| Infrastructure & Disaster Recovery/Cloud Service | $ | $ | $ | |||||||||
| Equipment and Software | ||||||||||||
| Managed Services | ||||||||||||
| Nexxis VoIP Services | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| For the Nine Months | ||||||||||||
| Ended September 30, 2022 | ||||||||||||
| United States | International | Total | ||||||||||
| Infrastructure & Disaster Recovery/Cloud Service | $ | $ | $ | |||||||||
| Equipment and Software | ||||||||||||
| Managed Services | ||||||||||||
| Nexxis VoIP Services | ||||||||||||
| Other | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| For the Nine Months | ||||||||
| Ended September 30, | ||||||||
| Timing of revenue recognition | 2023 | 2022 | ||||||
| Products transferred at a point in time | $ | $ | ||||||
| Products and services transferred over time | ||||||||
| Total Revenue | $ | $ | ||||||
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: Subscription-based cloud service that encrypts and transfers data to a secure Tier 3 data center and further replicates the data to a second Tier 3 DSC technical center where it remains encrypted. Ensuring client retention schedules for corporate compliance and disaster recovery. Provides for twenty-four (24) hour or less recovery time and utilizes advanced data reduction, reduplication technology to shorten back-up and restore time. |
12
| 2) | High Availability: A managed cloud subscription-based service that provides cost-effective mirroring software replication technology and provides one (1) hour or less recovery time for a client to be back in business. |
| 3) | Cloud Infrastructure: Subscription-based cloud service provides for “capacity on-demand” for IBM Power and X86 Intel server systems. |
| 4) | Internet: Subscription-based service, offering continuous internet connection combined with FailSAFE which provides disaster recovery for both a clients’ voice and data environments. |
| 5) | Support and Maintenance: Subscription based service offers support for clients on their servers, firewalls, desktops, or software. Services are provided 24x7x365 to the Company’s clients. |
| 6) | Implementation / Set-Up Fees: Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security. |
| 7) | Equipment sales: Sale of servers and data storage equipment to the client. |
| 9) | License: Granting SSL certificates and licenses. |
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 means that 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.
13
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. Equipment, software, and managed services are typically invoiced on net 30-day terms and are non-subscription based.
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 $
The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees. The Company has agreements and arrangements that call for stock to be awarded to the employees and consultants at various times as compensation and periodic bonuses. The expense for this stock-based compensation is equal to the fair value of the stock price on the day the stock was awarded multiplied by the number of shares awarded. The Company has a relatively low forfeiture rate of stock-based compensation and forfeitures are recognized as they occur.
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.
14
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 and nine months ended September 30, 2023, and 2022:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Income (Loss) Available to Common Shareholders | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Weighted average number of common shares - basic | ||||||||||||||||
| Dilutive Securities | ||||||||||||||||
| Options | ||||||||||||||||
| Warrants | ||||||||||||||||
| Weighted average number of common shares - diluted | ||||||||||||||||
| Earnings (Loss) per share, basic | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| Earnings (Loss) per share, diluted | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||
The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income (loss) per share because their effect was anti-dilutive:
| Three Months ended September 30, | Nine Months ended September 30, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Options | |||||||||||||||||
| Warrants | |||||||||||||||||
15
Note 3 - Prepaids and other current assets
Prepaids and other current assets consist of the following:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Prepaid Marketing & Promotion | $ | $ | ||||||
| Prepaid Subscriptions and Licenses | ||||||||
| Prepaid Maintenance | ||||||||
| Prepaid Insurance | ||||||||
| Other | ||||||||
| Total prepaid and other current assets | $ | $ | ||||||
Note 4- Property and Equipment
Property and equipment, at cost, consist of the following:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Storage Equipment | $ | $ | ||||||
| Furniture and Fixtures | ||||||||
| Leasehold Improvements | ||||||||
| Computer Hardware and Software | ||||||||
| Data Center Equipment | ||||||||
| Gross Property and equipment | ||||||||
| Less: Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Property and Equipment | $ | $ | ||||||
Depreciation
expense for the three months ended September 30, 2023, and 2022 was $
Note 5 - Goodwill and Intangible Assets
Goodwill and intangible assets consisted of the following:
| Estimated life in years | Gross amount | December 31, 2022, Accumulated Amortization | Net | |||||||||||||
| Intangible assets not subject to amortization | ||||||||||||||||
| Goodwill | $ | $ | $ | |||||||||||||
| Trademarks | ||||||||||||||||
| Total intangible assets not subject to amortization | ||||||||||||||||
| Intangible assets subject to amortization | ||||||||||||||||
| Customer lists | ||||||||||||||||
| ABC acquired contracts | ||||||||||||||||
| SIAS acquired contracts | ||||||||||||||||
| Non-compete agreements | ||||||||||||||||
| Website and Digital Assets | ||||||||||||||||
| Total intangible assets subject to amortization | ||||||||||||||||
| Total Goodwill and Intangible Assets | $ | $ | $ | |||||||||||||
16
| Estimated life in years | Gross amount | September 30, 2023, Accumulated Amortization | Net | |||||||||||||
| Intangible assets not subject to amortization | ||||||||||||||||
| Goodwill | $ | $ | $ | |||||||||||||
| Trademarks | ||||||||||||||||
| Total intangible assets not subject to amortization | ||||||||||||||||
| Intangible assets subject to amortization | ||||||||||||||||
| Customer lists | ||||||||||||||||
| ABC acquired contracts | ||||||||||||||||
| SIAS acquired contracts | ||||||||||||||||
| Non-compete agreements | ||||||||||||||||
| Website and digital assets | ||||||||||||||||
| Total intangible assets subject to amortization | ||||||||||||||||
| Total Goodwill and Intangible Assets | $ | $ | $ | |||||||||||||
Scheduled amortization over the next five years are as follows:
| Twelve months ending September 30, | |||||
| 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total | $ | ||||
Amortization
expense for the three months ended September 30, 2023, and 2022 was $
Note 6-Leases
Operating Leases
The Company currently maintains two 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 $
17
A second lease
for office space in Melville, NY, was entered into on November 20, 2017, which commenced on April 2, 2018. The term of this lease is five
years and three months at $
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
The Company
leases cages and racks for technical space in Tier 3 data centers in New York, Massachusetts, and North Carolina. These leases are month
to month. The monthly rent is approximately $
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 $
Finance Lease Obligations
On June 1, 2020,
the Company entered into a lease agreement with a finance company to lease technical equipment. The lease obligation is payable in monthly
installments of $
On June 29,
2020, the Company entered into a lease agreement for technical equipment with a finance company. The lease obligation is payable in monthly
installments of $
On July 31,
2020, the Company entered into a lease agreement for technical equipment with a finance company. The lease obligation is payable in monthly
installments of $
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 $
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 $
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 $
Finance Lease Obligations – Related Party
On January 1,
2019, the Company entered into a lease agreement with Systems Trading. This lease obligation is payable to Systems Trading with monthly
installments of $
18
On January 1,
2020, the Company entered into a lease agreement with Systems Trading to lease equipment. The lease obligation is payable to Systems Trading
with monthly installments of $
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 $
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 $
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 $
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
The components of lease expense were as follows and include both related party and non-related finance leases combined:
| Three Months Ended September 30, 2023 | ||||
| Finance Leases: | ||||
| Amortization of assets, included in depreciation and amortization expense | $ | |||
| Interest on lease liabilities, included in interest expense | ||||
| Operating Lease: | ||||
| Amortization of assets, included in total operating expense | ||||
| Interest on lease liabilities, included in total operating expense | ||||
| Total net lease cost | $ | |||
| Nine Months Ended September 30, 2023 | ||||
| Finance Leases: | ||||
| Amortization of assets, included in depreciation and amortization expense | $ | |||
| Interest on lease liabilities, included in interest expense | ||||
| Operating Lease: | ||||
| Amortization of assets, included in total operating expense | ||||
| Interest on lease liabilities, included in total operating expense | ||||
| Total net lease cost | $ | |||
| Supplemental balance sheet information related to leases was as follows: | ||||
| Operating Leases: | ||||
| Operating lease right-of-use asset | $ | |||
| Current operating lease liabilities | $ | |||
| Noncurrent operating lease liabilities | ||||
| Total operating lease liabilities | $ | |||
19
| September 30, 2023 | ||||
| Finance Leases: | ||||
| Property and equipment, at cost | $ | |||
| Accumulated amortization | ( |
) | ||
| Property and equipment, net | $ | |||
| Current obligations of finance leases | $ | |||
| Finance leases, net of current obligations | ||||
| Total finance lease liabilities | $ | |||
Supplemental cash flow and other information related to leases were as follows and include both related party and non-related finance leases combined:
| Nine Months Ended September 30, 2023 | ||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows related to operating leases | $ | |||
| Financing cash flows related to finance leases | $ | |||
| Weighted average remaining lease term (in years): | ||||
| Operating Leases | ||||
| Finance Leases | ||||
| Weighted average discount rate: | ||||
| Operating Leases | % | |||
| Finance Leases | % | |||
Long-term obligations under the operating and finance leases at September 30, 2023, mature as follows and include both related party and non-related finance leases combined:
| For the Twelve Months Ended September 30, | Operating Leases | Finance Leases | ||||||
| 2023 | $ | $ | ||||||
| 2024 | ||||||||
| Total lease payments | ||||||||
| Less: Amounts representing interest | ( |
) | ( |
) | ||||
| Total lease obligations | ||||||||
| Less: long-term obligations | ( |
) | ||||||
| Total current | $ | $ | ||||||
20
As of September
30, 2023, 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 September 30, 2023, and 2022 was $
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 $
Note 8 – Stockholders’ (Deficit)
Capital Stock
The Company
has
Common Stock Options
On June 2, 2023 the Company registered an additional shares of common stock under the 2021 Stock Incentive Plan.
A summary of the Company’s options activity and related information follows:
| Number of | Weighted | Weighted | ||||||||||||||
| Shares | Range of | Average | Average | |||||||||||||
| Under | Option Price | Exercise | Contractual | |||||||||||||
| Options | Per Share | Price | Life | |||||||||||||
| Options Outstanding at January 1, 2023 | $ | - | $ | |||||||||||||
| Options Granted | - | |||||||||||||||
| Exercised | — | |||||||||||||||
| Expired/Cancelled | ( | ) | - | — | ||||||||||||
| Options Outstanding at September 30, 2023 | $ | - | $ | |||||||||||||
| Options Exercisable at September 30, 2023 | $ | - | $ | |||||||||||||
Share-based compensation expense for options totaling $ and $ was recognized in the Company’s results for the three months ended September 30, 2023, and 2022, respectively. Share-based compensation expense for options totaling $ and $ was recognized in the Company’s results for the nine months ended September 30, 2023, and 2022, respectively.
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.
21
As of September 30, 2023, there was $ of total unrecognized compensation expense related to unvested employee options granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately years.
The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the three months ended September 30, 2023, and 2022, are set forth in the table below.
| 2023 | 2022 | |||||||
| Weighted average fair value of options granted | $ | $ | ||||||
| Risk-free interest rate | %- | % | % – | % | ||||
| Volatility | %- | % | % – | % | ||||
| Expected life (years) | years | years | ||||||
| Dividend yield | $ | % | $ | % | ||||
Share-based awards, restricted stock award (“RSAs”)
On
March 1, 2023, the Company granted certain employees an aggregate of
RSAs. Compensation expense as a group amounted to $
On
March 28, 2023, the Company granted certain employees an aggregate of
RSAs. Compensation expense as a group amounted to $
On
March 31, 2023, the Board resolved that the Company shall issue to Board members an aggregate of
RSAs. Compensation expense as a group amounted to $
On
April 10, 2023, the Company granted certain employees an aggregate of
RSA’s. Compensation expense as a group amounted to $
On June 30, 2023, the Board resolved that the Company shall issue to Board members an aggregate of 12,500 RSAs. Compensation expense as a group amounted to $29,125. The shares vest one year after issuance.
On
September 30, 2023, the Board resolved that the Company shall issue to Board members an aggregate of
RSAs to each member of the Board. Compensation expense as a group amounted to $
A summary of the activity related to RSUs for the nine months ended September 30, 2023, is presented below:
| Total | Grant Date | |||||||
| Restricted Stock Units (RSUs) | Shares | Fair Value | ||||||
| RSU’s non-vested at January 1, 2023 | $ | - | ||||||
| RSU’s granted | $ | - | ||||||
| RSU’s vested | ( | ) | $ |
| ||||
| RSU’s forfeited | $ | |||||||
| RSU’s non-vested September 30, 2023 | $ | - | ||||||
22
Stock-based compensation for RSUs has been recorded in the consolidated statements of operations and totaled $ and $ for the three months ended September 30, 2023 and 2022, respectively. Stock-based compensation for RSUs has been recorded in the consolidated statements of operations and totaled $ and $ for the nine months ended September 30, 2023 and 2022, respectively.
As of September
30, 2023, there was $
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’s 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.
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 received funds from
Nexxis Capital of $
Note 11 – Segment Information
The Company operates in three reportable segments: Nexxis Inc., Flagship Solutions Group, and CloudFirst. The Company’s segments were determined based on its 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 operating income or losses.
| Operations of: | Products and services provided: | |
| Nexxis Inc. | ||
| Flagship Solutions, LLC | ||
| CloudFirst Technologies Corporation |
The following tables present certain financial information related to the Company’s reportable segments and Corporate:
23
| As of September 30, 2023 | ||||||||||||||||||||
| CloudFirst Technologies Corporation | Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Accounts receivable | $ | $ | $ | $ | $ | |||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||||||||
| Net Property and Equipment | ||||||||||||||||||||
| Intangible assets, net | ||||||||||||||||||||
| Goodwill | ||||||||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||||||||
| All other assets | ||||||||||||||||||||
Total Assets
| $ | $ | $ | $ | $ | |||||||||||||||
| Accounts payable and accrued expenses | $ | $ | $ | $ | $ | |||||||||||||||
| Deferred revenue | ||||||||||||||||||||
| Total Finance leases payable | ||||||||||||||||||||
| Total Finance leases payable related party | ||||||||||||||||||||
| Total Operating lease liabilities | ||||||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| As of December 31, 2022 | ||||||||||||||||||||
| CloudFirst Technologies Corporation | Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Accounts receivable | $ | $ | $ | $ | $ | |||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||||||||
| Net Property and Equipment | ||||||||||||||||||||
| Intangible assets, net | ||||||||||||||||||||
| Goodwill | ||||||||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||||||||
| All other assets | ||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | $ | |||||||||||||||
| Accounts payable and accrued expenses | $ | $ | $ | $ | $ | |||||||||||||||
| Deferred revenue | ||||||||||||||||||||
| Total Finance leases payable | ||||||||||||||||||||
| Total Finance leases payable related party | ||||||||||||||||||||
| Total Operating lease liabilities | ||||||||||||||||||||
| Total Liabilities | $ | $ | $ | $ | $ | |||||||||||||||
24
| For the three months ended September 30, 2023 | ||||||||||||||||||||
| CloudFirst Technologies Corporation | Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of Sales | ||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||
| Income (Loss) from Operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Interest Expense, net | ( | ) | ||||||||||||||||||
| Other Expense | ||||||||||||||||||||
| Total Other Income (Expense) | ( | ) | ||||||||||||||||||
| Income (Loss) before provision for income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| CloudFirst Technologies Corporation | Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of Sales | ||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||
| Income (Loss) from Operations | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Interest Expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Loss on Disposal of Equipment | ||||||||||||||||||||
| Gain on Forgiveness of Debt | ||||||||||||||||||||
| All Other Expenses | ||||||||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Income (Loss) before Provision for Income Taxes | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||
25
| For the nine months ended September 30, 2023 | ||||||||||||||||||||
| CloudFirst Technologies Corporation |
Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of Sales | ||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||
| Total Operating Expenses | ||||||||||||||||||||
| Income (Loss) from Operations | ( |
) | ( |
) | ||||||||||||||||
| Interest Expense, net | ( |
) | ||||||||||||||||||
| Total Other Income (Expense) | ( |
) | ||||||||||||||||||
| Income (Loss) before Provision for Income Taxes | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| CloudFirst Technologies Corporation | Flagship Solutions LLC | Nexxis Inc. | Corporate | Total | ||||||||||||||||
| Sales | $ | $ | $ | $ | $ | |||||||||||||||
| Cost of Sales | ||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||
| Selling, General and Administrative | ||||||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||||||