Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 16, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Data Storage Corp | |
Entity Central Index Key | 0001419951 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity File Number | 001-35384 | |
Entity Incorporation, State or Country Code | NV | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 128,539,418 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 604,763 | $ 326,561 |
Accounts receivable (less allowance for doubtful accounts of $30,000 in 2020 and 2019) | 933,111 | 691,436 |
Prepaid expenses and other current assets | 206,214 | 80,728 |
Total Current Assets | 1,744,088 | 1,098,725 |
Property and Equipment: | ||
Property and equipment | 7,829,148 | 6,894,087 |
Less-Accumulated depreciation | (5,313,999) | (4,705,256) |
Net Property and Equipment | 2,515,149 | 2,188,831 |
Other Assets: | ||
Goodwill | 3,015,700 | 3,015,700 |
Operating lease right-of-use assets | 263,034 | 324,267 |
Other assets | 49,308 | 65,433 |
Intangible assets, net | 504,435 | 649,934 |
Total Other Assets | 3,832,477 | 4,055,334 |
Total Assets | 8,091,714 | 7,342,890 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,187,649 | 906,716 |
Dividend payable | 1,076,874 | 970,997 |
Deferred revenue | 494,629 | 432,942 |
Line of credit | 24 | 75,000 |
Finance leases payable | 161,144 | |
Finance leases payable related party | 978,683 | 833,148 |
Operating lease liabilities short term | 103,780 | 101,505 |
Note payable | 294,541 | 350,000 |
Total Current Liabilities | 4,297,324 | 3,670,308 |
Note payable long term | 187,436 | |
Operating lease liabilities long term | 168,390 | 231,312 |
Finance leases payable, long term | 286,633 | |
Finance leases payable related party, long term | 1,222,982 | 1,713,122 |
Total Long-Term Liabilities | 1,865,441 | 1,944,434 |
Total Liabilities | 6,162,765 | 5,614,742 |
Stockholders' Equity | ||
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 1,401,786 shares issued and outstanding in each year | 1,402 | 1,402 |
Common stock, par value $.001; 250,000,000 shares authorized; 128,539,418 and 128,439,418 shares issued and outstanding in 2020 and 2019, respectively | 128,539 | 128,439 |
Additional paid in capital | 17,578,288 | 17,456,431 |
Accumulated deficit | (15,693,399) | (15,790,076) |
Total Data Storage Corp Stockholders' Equity | 2,014,830 | 1,796,196 |
Non-controlling interest in consolidated subsidiary | (85,881) | (68,048) |
Total Stockholder's Equity | 1,928,949 | 1,728,148 |
Total Liabilities and Stockholders' Equity | $ 8,091,714 | $ 7,342,890 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts related to accounts receivable | $ 30,000 | $ 30,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 1,401,786 | 1,401,786 |
Preferred stock, outstanding | 1,401,786 | 1,401,786 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 128,539,418 | 128,439,418 |
Common stock, outstanding | 128,539,418 | 128,439,418 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales | $ 2,723,532 | $ 2,013,662 | $ 6,827,867 | $ 6,046,531 |
Cost of Sales | 1,621,008 | 1,232,633 | 3,977,546 | 3,410,835 |
Gross Profit | 1,102,524 | 781,029 | 2,850,321 | 2,635,696 |
Selling, General and Administrative | 1,017,863 | 884,650 | 2,882,755 | 2,565,252 |
Income (loss) from Operations | 84,661 | (103,621) | (32,434) | 70,444 |
Other Income (Expense) | ||||
Interest income | 1 | 21 | 220 | |
Interest expense | (42,727) | (41,120) | (132,866) | (137,425) |
Gain on contingent liability | 350,000 | |||
Other income | 11,453 | 23,054 | ||
Total Other Income (Expense) | (42,726) | (29,667) | 217,155 | (114,151) |
Income (loss) before provision for income taxes | 41,935 | (133,288) | 184,721 | (43,707) |
Provision for Income Taxes | ||||
Net Income | 41,935 | (133,288) | 184,721 | (43,707) |
Non-controlling interest in consoldiated subsidiary | 4,283 | 11,693 | 17,833 | 33,282 |
Net Income attributable to Data Storage Corp | 46,218 | (121,595) | 202,554 | (10,425) |
Preferred Stock Dividend | (36,650) | (31,078) | (105,877) | (93,234) |
Net Income (Loss) Attributable to Common Stockholders | $ 9,568 | $ (152,673) | $ 96,677 | $ (103,659) |
Earning (Loss) per Share - Basic | $ 0 | $ 0 | $ 0 | $ 0 |
Earning (Loss) per Share - Diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted Average Number of Shares - Basic | 128,539,418 | 128,139,418 | 128,521,836 | 128,139,418 |
Weighted Average Number of Shares - Diluted | 135,339,979 | 128,139,418 | 134,635,987 | 128,139,418 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Noncontrolling Interest | Total |
Balance at beginning at Dec. 31, 2018 | $ 1,402 | $ 128,139 | $ 17,409,989 | $ (15,735,624) | $ (27,511) | $ 1,776,395 |
Balance at beginning (in shares) at Dec. 31, 2018 | 1,401,786 | 128,139,418 | ||||
Stock based compensation | 6,525 | 6,525 | ||||
Net Income (Loss) | (10,425) | (33,282) | (43,707) | |||
Preferred stock | (93,234) | (93,324) | ||||
Balance at end at Sep. 30, 2019 | $ 1,402 | $ 128,139 | 17,416,514 | (15,839,283) | (60,793) | 1,645,979 |
Balance at end (in shares) at Sep. 30, 2019 | 1,401,786 | 128,139,418 | ||||
Balance at beginning at Jun. 30, 2019 | $ 1,402 | $ 128,139 | 17,414,339 | (15,686,608) | (49,100) | 1,808,172 |
Stock based compensation | 2,175 | 2,175 | ||||
Net Income (Loss) | (121,597) | (11,693) | (133,290) | |||
Preferred stock | (31,078) | (31,078) | ||||
Balance at end at Sep. 30, 2019 | $ 1,402 | $ 128,139 | 17,416,514 | (15,839,283) | (60,793) | 1,645,979 |
Balance at end (in shares) at Sep. 30, 2019 | 1,401,786 | 128,139,418 | ||||
Balance at beginning at Dec. 31, 2019 | $ 1,402 | $ 128,439 | 17,456,431 | (15,790,076) | (68,048) | 1,728,148 |
Balance at beginning (in shares) at Dec. 31, 2019 | 1,401,786 | 128,439,418 | ||||
Stock based compensation | 116,557 | 116,557 | ||||
Stock Options Exercise | 100 | 5,300 | $ 5,400 | |||
Stock Options Exercise (in shares) | 100,000 | |||||
Net Income (Loss) | 202,554 | (17,833) | $ 184,721 | |||
Preferred stock | (105,877) | (105,877) | ||||
Balance at end at Sep. 30, 2020 | $ 1,402 | $ 128,539 | 17,578,288 | (15,693,399) | (85,881) | 1,928,949 |
Balance at end (in shares) at Sep. 30, 2020 | 1,401,786 | 128,539,418 | ||||
Balance at beginning at Jun. 30, 2020 | $ 1,402 | $ 128,539 | 17,536,117 | (15,702,967) | (81,598) | 1,881,493 |
Balance at beginning (in shares) at Jun. 30, 2020 | 1,401,786 | 128,539,418 | ||||
Stock based compensation | 42,171 | 42,171 | ||||
Net Income (Loss) | 46,218 | (4,283) | 41,935 | |||
Preferred stock | (36,650) | (36,650) | ||||
Balance at end at Sep. 30, 2020 | $ 1,402 | $ 128,539 | $ 17,578,288 | $ (15,693,399) | $ (85,881) | $ 1,928,949 |
Balance at end (in shares) at Sep. 30, 2020 | 1,401,786 | 128,539,418 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Flows from Operating Activities: | ||
Net Income (Loss) | $ 184,721 | $ (43,707) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 754,243 | 678,927 |
Stock-based compensation | 116,557 | 6,525 |
Gain on contingent liability | (350,000) | |
Changes in Assets and Liabilities: | ||
Accounts receivable | (241,675) | 2,248 |
Other assets | 16,125 | |
Prepaid expenses and other current assets | (98,874) | 76,116 |
Right of use asset | 61,233 | (344,716) |
Accounts payable and accrued expenses | 252,717 | (137,683) |
Deferred revenue | 61,687 | 63,260 |
Deferred rent | (18,890) | |
Operating lease liability | (60,647) | 352,348 |
Net Cash Provided by Operating Activities | 696,087 | 634,428 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (164,796) | (33,354) |
Net Cash Used in Investing Activities | (164,796) | (33,354) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of note payable | 481,977 | |
Repayments of finance lease obligations related party | (641,170) | (546,182) |
Repayments of finance lease obligations | (24,320) | |
Cash received for the exercised of options | 5,400 | |
Repayment of line of credit | (74,976) | |
Net Cash Provided by (Used) in Financing Activities | (253,089) | (546,182) |
Increase in Cash and Cash Equivalents | 278,202 | 54,892 |
Cash and Cash Equivalents, Beginning of Period | 326,561 | 228,790 |
Cash and Cash Equivalents, End of Period | 604,763 | 283,682 |
Supplemental Disclosures: | ||
Cash paid for interest | 124,297 | 137,425 |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Accrual of preferred stock dividend | 105,877 | 93,234 |
Assets acquired by finance lease | $ 808,261 | $ 1,560,021 |
Basis of Presentation, Organiza
Basis of Presentation, Organization and Other Matters | 9 Months Ended |
Sep. 30, 2020 | |
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, Infrastructure as a Service (IaaS) and VoIP type solutions. Headquartered in Melville, NY, with additional offices in Warwick, RI, 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 several technical centers in New York, New Jersey, Massachusetts, Texas and North Carolina. Going Concern Analysis Under ASU 2014-15 Presentation of Financial Statements-Going Concern (Subtopic 205-40) (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued. As required by ASC 205-40, this evaluation shall initially not take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. Management has assessed the Company’s ability to continue as a going concern in accordance with the requirement of ASC 205-40. As reflected in the Condensed Consolidated Financial statements, the Company had a net income available to shareholders of $96,677 and ($103,659) for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, DSC had cash of $604,763 and a working capital deficiency of $2,553,236. As a result, these conditions raised substantial doubt regarding our ability to continue as a going concern. During the nine months ended September 30, 2020, the Company provided cash from operations of $696,087 with continued revenue growth of subscription solutions. Further, the Company has no capital expenditure commitments and the Company’s offices have been consolidated and fully staffed and with sufficient room for growth. If necessary, management also determined that it is probable that related party sources of debt financing and capitalized leases can be renegotiated based on management’s history of being able to raise and refinance debt through related parties. As a result of the current favorable trends of improving cash flow, the Company concluded that the initial conditions which raised substantial doubt regarding the ability to continue as a going concern has been mitigated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Principles of Consolidation The Condensed Consolidated Financial statements include the accounts of (i) the Company, (ii) its wholly-owned subsidiary, Data Storage Corporation, a Delaware corporation, and (iii) its majority-owned subsidiary, Nexxis Inc, a Nevada corporation. All significant inter-company transactions and balances have been eliminated in consolidation. Business combinations. We account for business combinations under the acquisition method of accounting, which requires us to recognize separately from goodwill, the assets acquired, and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets, acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in our consolidated statements of operations. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies, and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets we have acquired include future expected cash flows from product sales, customer contracts and acquired technologies, and estimated cash flows from the projects when completed and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. Reclassifications Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net income or net cash used in operating activities. Recently Issued and Newly Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04 Intangibles-Goodwill and Other (“ASC 350”): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019 and an entity should apply the amendments of ASU 2017-04 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 did not have a material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This guidance requires companies to apply the internal-use software guidance in Accounting Standards Codification (“ASC”) 350-40 to implementation costs incurred in a hosting arrangement that is a service contract to determine whether to capitalize certain implementation costs or expense them as incurred. The new guidance, is effective for fiscal years beginning after December 15, 2019. The adoption of ASU 2018-15 did not have a material impact on its condensed consolidated financial statements. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its Condensed Consolidated Financial statements. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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, line of credit and due to related parties. Management believes the estimated fair value of these accounts at September 30, 2020 approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments. 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. Cash, Cash Equivalents and Short-Term Investments 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. 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. The Company provides credit in the normal course of business. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts on factors surrounding the credit risk of specific customers, historical trends, and other information. As of September 30, 2020, DSC had four customers with an accounts receivable balance representing 65% of total accounts receivable. One of the clients is a Valued Added Reseller (VAR) with multiple clients under the DSC VAR partnership. As of December 31, 2019, DSC had three customers with an accounts receivable balance representing 38% of total accounts receivable. During the nine months ended September 30, 2020 the Company had the above-mentioned Value-Added Reseller with multiple clients accounting for 10% of revenue. During the nine months ended September 30, 2019 that specific VAR had accounted for 31% of revenue. Accounts Receivable/Allowance for Doubtful Accounts The Company sells its services to customers on an open credit basis. Accounts receivable are uncollateralized, non-interest-bearing customer obligations. Accounts receivables are typically due within 30 days. The allowance for doubtful accounts reflects the estimated accounts receivable that will not be collected due to credit losses and allowances. 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 customer standing. Provisions are also made for other accounts receivable not specifically reviewed based upon historical experience. Clients are invoiced in advance for services as reflected in deferred revenue on the Company’s balance sheet. Property and Equipment Property and equipment is 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. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At September 30, 2020 and December 31, 2019, the Company had a full valuation allowance against its deferred tax assets. Per FASB ASC 740-10, disclosure is not required of an uncertain tax position unless it is considered probable that a claim will be asserted and there is a more-likely-than-not possibility that the outcome will be unfavorable. Using this guidance, as of December 31, 2019 and 2018, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company’s 2018, 2017 and 2016 Federal and State tax returns remain subject to examination by their respective taxing authorities. Neither of the Company’s Federal or State tax returns are currently under examination. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (”2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision. Goodwill and Other Intangibles In accordance with GAAP, the Company tests goodwill and other intangible assets for impairment on at least an annual basis. Goodwill impairment exists if the net book value of a reporting unit exceeds its estimated fair value. The impairment testing is performed in two steps: (i) the Company determines impairment by comparing the fair value of a reporting unit with its carrying value, and (ii) if there is impairment, the Company measures the amount of impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. To determine the fair value of these 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. 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) Infrastructure as a Service (IaaS) and Disaster Recovery Revenue Subscription services such as Infrastructure as a Service, Platform as a Service and Disaster Recovery, High Availability, Data Vault Services and DRaaS type solutions (cloud) allows clients to centralize and streamline their technical and mission critical digital information and technical environment. Client’s data can be backed up, replicated, archived and restored to meet their back to work objective in a disaster. Infrastructure as a Service (IaaS) assist clients to achieve reliable and cost-effective computing and high availability solutions while eliminating or supplementing Capex. 2) Managed Services These services are performed at the inception of a contract. The Company offers professional assistance to its clients during the installation 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. The Company also derives revenues in the area from providing support and management of its software to clients. The managed services include help desk, remote access, annual recovery tests and manufacturer support for equipment and on-gong monitoring of client system performance. 3) Equipment and Software Revenue The Company provides equipment and software and actively participate in collaboration with IBM to provide innovative business solutions to clients. The Company is a partner of IBM and the various software solutions provided to clients. 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, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 169,565 — 169,565 Nexxis VoIP Services 180,225 — 180,225 Total Revenue $ 2,702,981 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,273,147 $ 63,201 $ 1,336,348 Equipment and Software 350,339 — 350,339 Managed Services 195,847 — 195,847 Nexxis VoIP Services 131,128 — 131,129 Total Revenue $ 1,950,461 $ 63,201 $ 2,013,662 For the Three Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 936,344 $ 410,238 Products and services transferred over time 1,787,188 1,603,424 Total Revenue $ 2,723,532 $ 2,013,662 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 3,849,252 $ 111,214 $ 3,960,466 Equipment and Software 1,285,297 — 1,285,297 Managed Services 322,133 — 322,133 Nexxis VoIP Services 478,635 — 478,635 Total Revenue $ 5,935,317 $ 111,214 $ 6,046,531 For the Nine Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 1,544,786 $ 1,285,297 Products and services transferred over time 5,283,081 4,761,234 Total Revenue $ 6,827,867 $ 6,046,531 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) Disaster Recovery (“DR”) 2) Data Vaulting 3) High Availability (“HA”) 4) Infrastructure as a Service (“IaaS”) 5) Message Logic 6) Internet 7) Support and Maintenance 8) Initial Set-Up Fees 9) Equipment sales 10) License Disaster Recovery with Stand-By Servers, High Availability, Data Vaulting, IaaS, Message Logic, Support and Maintenance, and Internet Subscription services such as the above allows clients to access a set of data or receive services for a predetermined period of time. As the client obtains access at a point in time but 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 should be recognized on a straight-line basis over the contract term. Initial Set-Up Fees The Company accounts for set-up fees as separate performance obligation. Set-up services are performed one time and accordingly the revenue should be recognized at the point in time that the service is performed, and the Company is entitled to the payment. Equipment sales For the Equipment sales performance obligation, the control of the product transfers 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 as defined within ASC 606-10-25-27 through 29, the performance obligation is considered to be satisfied at a point in time (ASC 606-10-25-30) 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 In the case of Licensing performance obligation, the control of the product transfers either at point in time or over time depending on the nature of the license. The revenue standard identifies two types of licenses of IP: a right to access IP and 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 will recognize revenue at the point in time the license is granted and/or renewed for a new period. Payment terms The terms of the contracts typical range from 12 to 36 months with auto-renew options. The Company invoices clients one month in advance for its services plus any overages or additional services provided. Warranties The Company offers guaranteed service levels and performance and service guarantees on some of its contracts. These warrantees are not sold separately and according to ASC 606-10-50-12(a) are accounted as “assurance warranties”. Significant judgement In the instances that contract have multiple performance obligation, the Company uses judgment to establish stand-alone price for each performance obligation separately. 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 was calculated to determine the aggregate price for the individual services. Next the proportion of each individual service to the aggregate price was determined. That ratio was applied to the total contract price in order to allocate the transaction price to each performance obligation. Impairment of Long-Lived Assets In accordance with FASB ASC 360-10-35, we review our 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 undiscounted future cash flows. Advertising Costs The Company expenses the costs associated with advertising as they are incurred. The Company incurred a net impact of $234,565 and $188,249 for advertising costs for the nine months ended September 30, 2020 and 2019, respectively. Stock-Based Compensation DSC 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 year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including 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 estimate. 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. DSC’s calculation of estimated volatility is based on historical stock prices of these entities over a period equal to the expected life of the awards. DSC uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. Net Income (Loss) Per Common Share In accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) 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, 2020 and 2019: For the Three Months For the Nine Months September 30, September 30, 2020 2019 2020 2019 Net Income (Loss) Available to Common Shareholders $ 9,568 (152,673 ) $ 96,677 $ (103,659 ) Weighted average number of common shares - basic 128,539,418 128,139,418 128,521,836 128,139,418 Dilutive securities Options 6,667,227 — 5,980,817 — Warrants 133,334 — 133,334 — Weighted average number of common shares - diluted 135,339,979 128,139,418 134,635,987 128,139,418 Earnings (Loss) per share, basic $ 0.00 $ 0.00 $ 0.00 $ 0.00 Earnings (Loss) per share, diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income (loss) per share net income (loss) per share because their effect was anti-dilutive: Three Months ended Nine Months ended 2020 2019 2020 2019 Options 1,758,597 6,015,518 2,445,007 6,015,518 Warrants — 133,334 — 133,334 1,758,597 6,148,852 2,445,007 6,148,852 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment Property and equipment, at cost, consist of the following: September 30, December 31, 2020 2019 Storage equipment $ 756,236 $ 756,236 Website and software 533,417 533,417 Furniture and fixtures 27,131 27,131 Leasehold improvements 20,983 16,846 Computer hardware and software 1,224,591 1,218,464 Data center equipment 5,266,790 4,341,993 7,829,148 6,894,087 Less: Accumulated depreciation (5,313,999 ) (4,705,256 ) Net property and equipment $ 2,515,149 $ 2,188,831 Depreciation expense for the nine months ended September 30, 2020 and 2019 was $608,743 and $530,927, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 4 - Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following: Estimated September 30, 2020 life Gross amount Accumulated Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 3,015,700 $ — $ 3,015,700 Trademarks Indefinite 294,268 — 294,268 Total intangible assets not subject to amortization 3,309,968 — 3,309,968 Intangible assets subject to amortization Customer lists 5-15 897,274 897,274 — ABC acquired contracts 5 310,000 242,833 67,167 SIAS acquired contracts 5 660,000 517,000 143,000 Non-compete agreements 4 272,147 272,147 — Total intangible assets subject to amortization 2,139,421 1,929,254 210,167 Total Goodwill and Intangible Assets $ 5,449,389 $ 1,929,254 $ 3,520,135 Scheduled amortization over the next two years as follows: Twelve months ending September 30, 2021 $ 194,000 2022 16,167 Total $ 210,167 Amortization expense for the nine months ended September 30, 2020 and 2019 were $145,500 and $148,000 respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Note 5 –Leases Operating Leases The Company currently has three leases for office space, with two offices located in Melville, NY, and one office in Warwick, RI. A 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 $86,268 per year with an escalation of 3% per year with an ending date of July 31, 2023. The Company entered into a lease agreement for a technology lab in Melville, NY, that commenced on September 1, 2019. The term of this lease is for three years and 11 months and runs co-terminus with our existing lease in the same building. The base annual rent is $10,764 payable in equal monthly installments of $897. The lease for office space in Warwick, RI, was extended until January 31, 2021. The annual base rent shall be $31,176 payable in equal monthly installments of $2,598. The Company leases rack space in New York, New Jersey, Massachusetts, Texas and North Carolina. These leases are month to month and the monthly rent is approximately $25,000. Finance Lease Obligations On June 1, 2020, the Company entered into a lease agreement with Arrow Capital Solutions, Inc. to lease equipment. The lease obligation is payable to Arrow Capital Solutions with monthly installments of $5,008. The lease carries an interest rate of 7% and is a three-year lease. The term of the lease ends June 1, 2023. On June 29, 2020, the Company entered into a lease agreement with Arrow Capital Solutions, Inc. to lease equipment. The lease obligation is payable to Arrow Capital Solutions with monthly installments of $5,050. The lease carries an interest rate of 7% and is a three-year lease. The term of the lease ends June 29, 2023. On July 31, 2020, the Company entered into a lease agreement with Arrow Capital Solutions, Inc. to lease equipment under a finance lease. The lease obligation is payable to Arrow Capital Solutions with monthly installments of $4,524. The lease carries an interest rate of 7% and is a three-year lease. Finance Lease Obligations – Related Party On April 1, 2018, the Company entered into a lease agreement with Systems Trading Inc. (“Systems Trading”) to refinance all leases into one lease. This lease obligation is payable to Systems Trading with bi-monthly installments of $23,475. The lease carries an interest rate of 5% and is a four -year lease. The term of the lease ends April 16, 2022. Systems Trading is owned and operated by the Company’s President, Hal Schwartz. 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 $29,592. The lease carries an interest rate of 6.75% and is a five-year lease. The term of the lease ends December 31, 2023. On April 1, 2019, the Company entered into two lease agreements with Systems Trading to add new data center equipment. The first lease calls for monthly payments of $1,328 and expires on March 1, 2022. It carries an interest rate of 7%. The second lease calls for monthly payments of $461 and expires on March 1, 2022. It carries an interest rate of 6.7%. On January 1, 2020, the Company entered into a new lease agreement with Systems Trading Inc. to lease equipment. The lease obligation is payable to Systems Trading with monthly installments of $10,534. The lease carries an interest rate of 6% and is a three-year lease. The term of the lease ends January 1, 2023. We determine if an arrangement contains a lease at inception. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our 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. Our lease term includes options to extend the lease when it is reasonably certain that we 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 noted above. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We recognize lease expense for these leases on a straight-line basis over the lease term. We recognize 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 7% was used in preparation of the ROU asset and operating liabilities. The components of lease expense were as follows: Nine Months Ended Finance lease: Amortization of assets, included in depreciation and amortization expense $ 608,743 Interest on lease liabilities, included in interest expense 124,300 Operating lease: Amortization of assets, included in total operating expense 57,709 Interest on lease liabilities, included in total operating expense 16,106 Total net lease cost $ 806,858 Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease ROU asset $ 263,034 Current operating lease liabilities 103,780 Noncurrent operating lease liabilities 168,390 Total operating lease liabilities $ 272,170 September 30, Finance leases: Property and equipment, at cost $ 4,366,665 Accumulated amortization (3,172,342 ) Property and equipment, net 1,194,323 Current obligations of finance leases $ 1,139,828 Finance leases, net of current obligations, 1,509,614 Total finance lease liabilities $ 2,649,441 Supplemental cash flow and other information related to leases was as follows: Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 75,852 Financing cash flows related to finance leases $ 829,391 Weighted average remaining lease term (in years): Operating leases 1.72 Finance leases 2.33 Weighted average discount rate: Operating leases 7 % Finance leases 6 % Long-term obligations under the operating and finance leases at September 30, 2020 mature as follows: For the Twelve Months Ended September 30, Operating Leases Finance Leases 2021 $ 103,780 348,440 2022 106,901 1,241,361 2023 90,696 849,426 2024 - 441,725 Total lease payments 301,377 2,880,952 Less: Amounts representing interest (29,207 ) (231,509 ) Total lease obligations 272,170 2,649,443 Less: Current (103,780 ) (1,139,828 ) $ 168,390 1,509,615 As of September 30, 2020, we had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the nine months ended September 30, 2020 and 2019 was $127,268 and $191,377, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 - Commitments and Contingencies COVID 19 Disclosure Business interruptions, including any interruptions resulting from COVID-19, could significantly disrupt our operations and could have a material adverse impact on DSC if the situation continues. Under NYS Executive Order 202.6, “Essential Business,” DSC is an “Essential Business” based on the following in the Executive order number 2: Essential infrastructure including telecommunications and data centers; and, number 12: Vendors that provide essential services or products, including logistics and technology support. Further, all employees, including our specialized technical staff, are working from home or in a virtual environment. DSC always maintains the ability for team members to work virtual and we will continue to stay virtual, until the State and or the Federal government indicate the environment is safe to return to work. The ongoing coronavirus outbreak which began in China at the beginning of 2020 has impacted various businesses throughout the world, including travel restrictions and the extended shutdown of certain businesses in impacted geographic regions. If the coronavirus outbreak situation should worsen, we may experience disruptions to our business including, but not limited to equipment, to our workforce, or to our business relationships with other third parties. The extent to which the coronavirus impacts our operations or those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Any such disruptions or losses we incur could have a material adverse effect on our financial results and our ability to conduct business as expected. Revolving Credit Facility On January 31, 2008, the Company entered into a revolving credit line with a bank. The credit facility provides for $100,000 at prime plus 0.5% and is secured by all assets of the Company and personally guaranteed by the Company’s CEO. As of September 30, 2020 and December 31, 2019 the balance was $24 and $75,000 respectively. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Long Term Debt | Note 7 – Long Term Debt Note Payable In connection with the Company’s October 2012 acquisition of certain assets (the “ML Assets”) of Message Logic, Inc. (“Message Logic”), the Company maintains ownership of the ML Assets subject to a security interest in the ML Assets held by a third party banking institution (the “Bank”) in connection with a secured loan made by the Bank to Message Logic in June 2012 in the amount of $350,000 (the “ML Loan”). The Bank filed a UCC-1 Financing Statement with the Secretary of State of Delaware perfecting its interest in the ML Assets (the “UCC-1 Filing”). On September 5, 2014, the Company entered into an agreement with Message Logic and the Bank pursuant to which the Company paid to the Bank the outstanding interest amount due on the ML Loan over seven months at $3,910 per month. In addition, the Company agreed to continue to make monthly interest-only payments to the Bank at $1,553 per month. The Company assumed these liabilities as part of its option to pay off the ML Loan, terminate the UCC-1 Filing and own the ML Assets free of all liens and encumbrances. The Company stopped making interest-only payments on October 25, 2018. During the nine months ended September 30, 2020, the Company made a strategic decision to cease utilizing the ML Assets in its operations and advised the Bank of such information. In connection with this and as a result, the Company recorded a gain on contingent liability in the amount of $350,000 on the condensed consolidated statements of operations. On April 30, 2020, the Company was granted a loan from a banking institution, in the principal amount of $481,977 (the “Loan”), pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. The Loan, which was in the form of a Note dated April 30, 2020, matures on April 30, 2022 and bears interest at a fixed rate of 1.00% per annum, payable monthly commencing on November 5, 2020. Funds from the loan may only be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments. Management intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. As of September 30, 2020, remaining scheduled principal payments due on notes payable are as follows: Twelve months ended September 30, 2021 $ 294,541 2022 187,436 $ 481,977 |
Stockholders' (Deficit)
Stockholders' (Deficit) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Stockholders' (Deficit) | Note 8 - Stockholders’ (Deficit) Capital Stock The Company has 260,000,000 authorized shares of capital stock, consisting of 250,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of Preferred Stock, par value $0.001 per share. During the nine months ended September 30, 2020, the Company received cash of $5,400 from the exercise of 100,000 options. Common Stock Options A summary of the Company’s option activity and related information follows: Number of Range of Weighted Options Outstanding at December 31, 2019 8,425,824 $ 0.05 – 0.65 $ 0.17 Options Granted 350,000 0.13 0.13 Exercised (100,000 ) 0.05 0.05 Expire/Cancelled (250,000 ) 0.36 0.36 Options Outstanding at September 30, 2020 8,425,824 $ 0.05 – 0.65 $ 0.13 Options Exercisable at September 30, 2020 4,869,403 $ 0.05 – 0.65 $ 0.19 Share-based compensation expense for options totaling $116,559 was recognized in our results for the nine months ended September 30, 2020 based on awards vested. 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 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 these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. As of September 30, 2020, there was $306,282 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 2.25 year. The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the nine months ended September 30, 2020 are set forth in the table below. 2020 Weighted average fair value of options granted $0.13 Risk-free interest rate 0.66% - 0.83% Volatility 221% - 223% Expected life (years) 10 Dividend yield 0.00% Dividends Each share of Series A Preferred Stock, in preference to the holders of all Common Stock (as defined below), shall entitle its holder to receive, but only out of funds that are legally available therefore, cash dividends at the rate of ten percent (10%) per annum from the Original Issue Date on the Original Issue Price for such share of Series A Preferred Stock, compounding annually unless paid by the Corporation. Accrued dividends at September 30, 2020 and December 31, 2019 were $1,076,874 and $970,997 respectively. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Note 9 - Litigation We are currently not involved in any litigation that we believe could have a materially adverse effect on our 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 our company or any of our 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 | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 – Related Party Transactions Finance Lease Obligations – Related Party During the nine months ended September 30, 2020, the Company entered into one related party finance lease obligations. See Note 5 for details. Nexxis Capital LLC Charles Piluso and Harold Schwartz 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 not receive any funds from Nexxis Capital during the nine months ended September 30, 2020 and 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The Condensed Consolidated Financial statements include the accounts of (i) the Company, (ii) its wholly-owned subsidiary, Data Storage Corporation, a Delaware corporation, and (iii) its majority-owned subsidiary, Nexxis Inc, a Nevada corporation. All significant inter-company transactions and balances have been eliminated in consolidation. |
Business combinations | Business combinations. We account for business combinations under the acquisition method of accounting, which requires us to recognize separately from goodwill, the assets acquired, and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets, acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in our consolidated statements of operations. Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, restructuring liabilities, pre-acquisition contingencies, and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets we have acquired include future expected cash flows from product sales, customer contracts and acquired technologies, and estimated cash flows from the projects when completed and discount rates. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. |
Reclassifications | Reclassifications Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net income or net cash used in operating activities. |
Recently Issued and Newly Adopted Accounting Pronouncements | Recently Issued and Newly Adopted Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04 Intangibles-Goodwill and Other (“ASC 350”): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests for fiscal years beginning after December 15, 2019 and an entity should apply the amendments of ASU 2017-04 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 did not have a material impact on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This guidance requires companies to apply the internal-use software guidance in Accounting Standards Codification (“ASC”) 350-40 to implementation costs incurred in a hosting arrangement that is a service contract to determine whether to capitalize certain implementation costs or expense them as incurred. The new guidance, is effective for fiscal years beginning after December 15, 2019. The adoption of ASU 2018-153 did not have a material impact on its condensed consolidated financial statements. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its Condensed Consolidated Financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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, line of credit and due to related parties. Management believes the estimated fair value of these accounts at September 30, 2020 approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments or the use of market interest rates for debt instruments. 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. |
Cash, Cash Equivalents and Short-Term Investments | Cash, Cash Equivalents and Short-Term Investments 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. |
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. The Company provides credit in the normal course of business. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts on factors surrounding the credit risk of specific customers, historical trends, and other information. As of September 30, 2020, DSC had four customers with an accounts receivable balance representing 65% of total accounts receivable. One of the clients is a Valued Added Reseller (VAR) with multiple clients under the DSC VAR partnership. As of December 31, 2019, DSC had three customers with an accounts receivable balance representing 38% of total accounts receivable. During the nine months ended September 30, 2020 the Company had the above-mentioned Value-Added Reseller with multiple clients accounting for 10% of revenue. During the nine months ended September 30, 2019 that specific VAR had accounted for 31% of revenue. |
Accounts Receivable/Allowance for Doubtful Accounts | Accounts Receivable/Allowance for Doubtful Accounts The Company sells its services to customers on an open credit basis. Accounts receivable are uncollateralized, non-interest-bearing customer obligations. Accounts receivables are typically due within 30 days. The allowance for doubtful accounts reflects the estimated accounts receivable that will not be collected due to credit losses and allowances. 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 customer standing. Provisions are also made for other accounts receivable not specifically reviewed based upon historical experience. Clients are invoiced in advance for services as reflected in deferred revenue on the Company’s balance sheet. |
Property and Equipment | Property and Equipment Property and equipment is 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. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At September 30, 2020 and December 31, 2019, the Company had a full valuation allowance against its deferred tax assets. Per FASB ASC 740-10, disclosure is not required of an uncertain tax position unless it is considered probable that a claim will be asserted and there is a more-likely-than-not possibility that the outcome will be unfavorable. Using this guidance, as of December 31, 2019 and 2018, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company’s 2018, 2017 and 2016 Federal and State tax returns remain subject to examination by their respective taxing authorities. Neither of the Company’s Federal or State tax returns are currently under examination. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (”2017 Tax Act”). Corporate taxpayers may carryback net operating losses (NOLs) originating between 2018 and 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to our income tax provision. |
Goodwill and Other Intangibles | Goodwill and Other Intangibles In accordance with GAAP, the Company tests goodwill and other intangible assets for impairment on at least an annual basis. Goodwill impairment exists if the net book value of a reporting unit exceeds its estimated fair value. The impairment testing is performed in two steps: (i) the Company determines impairment by comparing the fair value of a reporting unit with its carrying value, and (ii) if there is impairment, the Company measures the amount of impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. To determine the fair value of these 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. |
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) Infrastructure as a Service (IaaS) and Disaster Recovery Revenue Subscription services such as Infrastructure as a Service, Platform as a Service and Disaster Recovery, High Availability, Data Vault Services and DRaaS type solutions (cloud) allows clients to centralize and streamline their technical and mission critical digital information and technical environment. Client’s data can be backed up, replicated, archived and restored to meet their back to work objective in a disaster. Infrastructure as a Service (IaaS) assist clients to achieve reliable and cost-effective computing and high availability solutions while eliminating or supplementing Capex. 2) Managed Services These services are performed at the inception of a contract. The Company offers professional assistance to its clients during the installation 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. The Company also derives revenues in the area from providing support and management of its software to clients. The managed services include help desk, remote access, annual recovery tests and manufacturer support for equipment and on-gong monitoring of client system performance. 3) Equipment and Software Revenue The Company provides equipment and software and actively participate in collaboration with IBM to provide innovative business solutions to clients. The Company is a partner of IBM and the various software solutions provided to clients. 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, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 170 — 169.565 Nexxis VoIP Services 180,226 — 180,226 Total Revenue $ 2,533,587 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,273,147 $ 63,201 $ 1,336,348 Equipment and Software 350,339 — 350,339 Managed Services 195,847 — 195,847 Nexxis VoIP Services 131,128 — 131,129 Total Revenue $ 1,950,461 $ 63,201 $ 2,013,662 For the Three Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 936,344 $ 410,238 Products and services transferred over time 1,787,188 1,603,424 Total Revenue $ 2,723,532 $ 2,013,662 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 3,849,252 $ 111,214 $ 3,960,466 Equipment and Software 1,285,297 — 1,285,297 Managed Services 322,133 — 322,133 Nexxis VoIP Services 478,635 — 478,635 Total Revenue $ 5,935,317 $ 111,214 $ 6,046,531 For the Nine Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 1,544,786 $ 1,285,297 Products and services transferred over time 5,283,081 4,761,234 Total Revenue $ 6,827,867 $ 6,046,531 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) Disaster Recovery (“DR”) 2) Data Vaulting 3) High Availability (“HA”) 4) Infrastructure as a Service (“IaaS”) 5) Message Logic 6) Internet 7) Support and Maintenance 8) Initial Set-Up Fees 9) Equipment sales 10) License Disaster Recovery with Stand-By Servers, High Availability, Data Vaulting, IaaS, Message Logic, Support and Maintenance, and Internet Subscription services such as the above allows clients to access a set of data or receive services for a predetermined period of time. As the client obtains access at a point in time but 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 should be recognized on a straight-line basis over the contract term. Initial Set-Up Fees The Company accounts for set-up fees as separate performance obligation. Set-up services are performed one time and accordingly the revenue should be recognized at the point in time that the service is performed, and the Company is entitled to the payment. Equipment sales For the Equipment sales performance obligation, the control of the product transfers 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 as defined within ASC 606-10-25-27 through 29, the performance obligation is considered to be satisfied at a point in time (ASC 606-10-25-30) 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 In the case of Licensing performance obligation, the control of the product transfers either at point in time or over time depending on the nature of the license. The revenue standard identifies two types of licenses of IP: a right to access IP and 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 will recognize revenue at the point in time the license is granted and/or renewed for a new period. |
Payment terms | Payment terms The terms of the contracts typical range from 12 to 36 months with auto-renew options. The Company invoices clients one month in advance for its services plus any overages or additional services provided. |
Warranties | Warranties The Company offers guaranteed service levels and performance and service guarantees on some of its contracts. These warrantees are not sold separately and according to ASC 606-10-50-12(a) are accounted as “assurance warranties”. |
Significant judgement | Significant judgement In the instances that contract have multiple performance obligation, the Company uses judgment to establish stand-alone price for each performance obligation separately. 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 was calculated to determine the aggregate price for the individual services. Next the proportion of each individual service to the aggregate price was determined. That ratio was 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 In accordance with FASB ASC 360-10-35, we review our 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 undiscounted future cash flows. |
Advertising Costs | Advertising Costs The Company expenses the costs associated with advertising as they are incurred. The Company incurred a net impact of $234,565 and $188,249 for advertising costs for the nine months ended September 30, 2020 and 2019, respectively. |
Stock-Based Compensation | Stock-Based Compensation DSC 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 year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including 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 estimate. 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. DSC’s calculation of estimated volatility is based on historical stock prices of these entities over a period equal to the expected life of the awards. DSC uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share In accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) 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, 2020 and 2019: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net Income (Loss) Available to Common Shareholders $ 9,568 (152,673 ) $ 96,677 $ (103,659 ) Weighted average number of common shares - basic 128,539,418 128,139,418 128,521,836 128,139,418 Dilutive securities Options 6,667,227 — 5,980,817 — Warrants 133,334 — 133,334 — Weighted average number of common shares - diluted 135,339,979 128,139,418 134,635,987 128,139,418 Earnings (Loss) per share, basic $ 0.00 $ 0.00 $ 0.00 $ 0.00 Earnings (Loss) per share, diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income (loss) per share net income (loss) per share because their effect was anti-dilutive: Three Months ended September 30, Nine Months ended September 30, 2020 2019 2020 2019 Options 1,758,597 6,015,518 2,445,007 6,015,518 Warrants — 133,334 — 133,334 1,758,597 6,148,852 2,445,007 6,148,852 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary Of Significant Accounting Policies | |
Schedule of revenue is disaggregated by major product | In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition. For the Three Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 169,565 — 169,565 Nexxis VoIP Services 180,225 — 180,225 Total Revenue $ 2,702,981 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,273,147 $ 63,201 $ 1,336,348 Equipment and Software 350,339 — 350,339 Managed Services 195,847 — 195,847 Nexxis VoIP Services 131,128 — 131,129 Total Revenue $ 1,950,461 $ 63,201 $ 2,013,662 For the Three Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 936,344 $ 410,238 Products and services transferred over time 1,787,188 1,603,424 Total Revenue $ 2,723,532 $ 2,013,662 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, 2019 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 3,849,252 $ 111,214 $ 3,960,466 Equipment and Software 1,285,297 — 1,285,297 Managed Services 322,133 — 322,133 Nexxis VoIP Services 478,635 — 478,635 Total Revenue $ 5,935,317 $ 111,214 $ 6,046,531 For the Nine Months Ended September 30, Timing of revenue recognition 2020 2019 Products transferred at a point in time $ 1,544,786 $ 1,285,297 Products and services transferred over time 5,283,081 4,761,234 Total Revenue $ 6,827,867 $ 6,046,531 |
Schedule of Earnings Per Share, Basic and Diluted | 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, 2020 and 2019: For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net Income (Loss) Available to Common Shareholders $ 9,568 (152,673 ) $ 96,677 $ (103,659 ) Weighted average number of common shares - basic 128,539,418 128,139,418 128,521,836 128,139,418 Dilutive securities Options 6,667,227 — 5,980,817 — Warrants 133,334 — 133,334 — Weighted average number of common shares - diluted 135,339,979 128,139,418 134,635,987 128,139,418 Earnings (Loss) per share, basic $ 0.00 $ 0.00 $ 0.00 $ 0.00 Earnings (Loss) per share, diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00 |
Schedule of anti-dilutive income (loss) per share | The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income (loss) per share net income (loss) per share because their effect was anti-dilutive: Three Months ended September 30, Nine Months ended September 30, 2020 2019 2020 2019 Options 1,758,597 6,015,518 2,445,007 6,015,518 Warrants — 133,334 — 133,334 1,758,597 6,148,852 2,445,007 6,148,852 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment, at cost, consist of the following: September 30, December 31, 2020 2019 Storage equipment $ 756,236 $ 756,236 Website and software 533,417 533,417 Furniture and fixtures 27,131 27,131 Leasehold improvements 20,983 16,846 Computer hardware and software 1,224,591 1,218,464 Data center equipment 5,266,790 4,341,993 7,829,148 6,894,087 Less: Accumulated depreciation (5,313,999 ) (4,705,256 ) Net property and equipment $ 2,515,149 $ 2,188,831 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and intangible assets | Goodwill and intangible assets consisted of the following: Estimated September 30, 2020 life Gross amount Accumulated Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 3,015,700 $ — $ 3,015,700 Trademarks Indefinite 294,268 — 294,268 Total intangible assets not subject to amortization 3,309,968 — 3,309,968 Intangible assets subject to amortization Customer lists 5-15 897,274 897,274 — ABC acquired contracts 5 310,000 242,833 67,167 SIAS acquired contracts 5 660,000 517,000 143,000 Non-compete agreements 4 272,147 272,147 — Total intangible assets subject to amortization 2,139,421 1,929,254 210,167 Total Goodwill and Intangible Assets $ 5,449,389 $ 1,929,254 $ 3,520,135 |
Schedule of amortization over the next two years | Scheduled amortization over the next two years as follows: Twelve months ending September 30, 2021 $ 194,000 2022 16,167 Total $ 210,167 |
Lease (Tables)
Lease (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Components of lease expense | The components of lease expense were as follows: Nine Months Ended Finance lease: Amortization of assets, included in depreciation and amortization expense $ 608,743 Interest on lease liabilities, included in interest expense 124,300 Operating lease: Amortization of assets, included in total operating expense 57,709 Interest on lease liabilities, included in total operating expense 16,106 Total net lease cost $ 806,858 |
Supplemental balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease ROU asset $ 263,034 Current operating lease liabilities 103,780 Noncurrent operating lease liabilities 168,390 Total operating lease liabilities $ 272,170 September 30, 2020 Finance leases: Property and equipment, at cost $ 4,366,665 Accumulated amortization (3,172,342 ) Property and equipment, net 1,194,323 Current obligations of finance leases $ 1,139,828 Finance leases, net of current obligations, 1,509,614 Total finance lease liabilities $ 2,649,441 |
Supplemental cash flow and other information related to leases | Supplemental cash flow and other information related to leases was as follows: Nine Months Ended Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 75,852 Financing cash flows related to finance leases $ 829,391 Weighted average remaining lease term (in years): Operating leases 1.72 Finance leases 2.33 Weighted average discount rate: Operating leases 7 % Finance leases 6 % |
Long-term obligations under the operating and Finance leases | Long-term obligations under the operating and finance leases at September 30, 2020 mature as follows: For the Twelve Months Ended September 30, Operating Leases Finance Leases 2021 $ 103,780 348,440 2022 106,901 1,241,361 2023 90,696 849,426 2024 - 441,725 Total lease payments 301,377 2,880,952 Less: Amounts representing interest (29,207 ) (231,509 ) Total lease obligations 272,170 2,649,443 Less: Current (103,780 ) (1,139,828 ) $ 168,390 1,509,615 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule of Maturities of Long-term Debt | As of September 30, 2020, remaining scheduled principal payments due on notes payable are as follows: Twelve months ended September 30, 2021 $ 294,541 2022 187,436 $ 481,977 |
Stockholders' (Deficit) (Tables
Stockholders' (Deficit) (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Schedule of option activity and related information | A summary of the Company’s option activity and related information follows: Number of Range of Weighted Options Outstanding at December 31, 2019 8,425,824 $ 0.05 – 0.65 $ 0.17 Options Granted 350,000 0.13 0.13 Exercised (100,000 ) 0.05 0.05 Expire/Cancelled (250,000 ) 0.36 0.36 Options Outstanding at September 30, 2020 8,425,824 $ 0.05 – 0.65 $ 0.13 Options Exercisable at September 30, 2020 4,869,403 $ 0.05 – 0.65 $ 0.19 |
Schedule of fair value of options by using Black-Scholes model | The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the nine months ended September 30, 2020 are set forth in the table below. 2020 Weighted average fair value of options granted $0.13 Risk-free interest rate 0.66% - 0.83% Volatility 221% - 223% Expected life (years) 10 Dividend yield 0.00% |
Basis of Presentation, Organi_2
Basis of Presentation, Organization and Other Matters (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Net loss attributable to common shareholders | $ 9,568 | $ (152,673) | $ 96,677 | $ (103,659) | ||
Cash and cash equivalents | 604,763 | $ 283,682 | 604,763 | 283,682 | $ 326,561 | $ 228,790 |
Working capital deficiency | $ (2,553,236) | (2,553,236) | ||||
Net Cash Provided by Operating Activities | $ 696,087 | $ 634,428 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 2,723,532 | $ 2,013,662 | $ 6,827,867 | $ 6,046,531 |
Products Transferred at a Point in Time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 936,344 | 410,238 | 1,544,786 | 1,285,297 |
Products and Services Transferred Over Time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,787,188 | 1,603,424 | 5,283,081 | 4,761,234 |
Infrastructure & Disaster Recovery/Cloud Service [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,437,398 | 1,336,348 | 4,240,796 | 3,960,466 |
Equipment and Software [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 936,344 | 350,339 | 1,544,786 | 1,285,297 |
Managed Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 169,565 | 195,847 | 557,515 | 322,133 |
Nexxis Voip Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 180,225 | 131,129 | 484,770 | 478,635 |
UNITED STATES | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 2,702,981 | 1,950,461 | 6,720,284 | 5,935,317 |
UNITED STATES | Infrastructure & Disaster Recovery/Cloud Service [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,416,847 | 1,273,147 | 4,133,213 | 3,849,252 |
UNITED STATES | Equipment and Software [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 936,344 | 350,339 | 1,544,786 | 1,285,297 |
UNITED STATES | Managed Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 169,565 | 195,847 | 557,515 | 322,133 |
UNITED STATES | Nexxis Voip Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 180,225 | 131,128 | 484,770 | 478,635 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 20,551 | 63,201 | 107,583 | 111,214 |
International | Infrastructure & Disaster Recovery/Cloud Service [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 20,551 | 63,201 | 107,583 | 111,214 |
International | Equipment and Software [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | ||||
International | Managed Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | ||||
International | Nexxis Voip Services [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||||
Net Income (Loss) Available to Common Shareholders | $ 9,568 | $ (152,673) | $ 96,677 | $ (103,659) |
Weighted average number of common shares - basic | 128,539,418 | 128,139,418 | 128,521,836 | 128,139,418 |
Dilutive securities | ||||
Options | 6,667,227 | 5,980,817 | ||
Warrants | 133,334 | 133,334 | ||
Weighted average number of common shares - diluted | 135,339,979 | 128,139,418 | 134,635,987 | 128,139,418 |
Earnings (Loss) per share, basic | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings (Loss) per share, diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Potentially dilutive securities | $ 1,758,597 | $ 6,148,852 | $ 2,445,007 | $ 6,148,852 |
Option [Member] | ||||
Potentially dilutive securities | 1,758,597 | 6,015,518 | 2,445,007 | 6,015,518 |
Warrant [Member] | ||||
Potentially dilutive securities | $ 133,334 | $ 133,334 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts receivables due | 30 days | ||
Advertising costs | $ 234,565 | $ 188,249 | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Concentration risk | 65.00% | 38.00% | |
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | |||
Concentration risk | 10.00% | 31.00% | |
Property And Equipment [Member] | Minimum [Member] | |||
Useful lives | P5Y | ||
Property And Equipment [Member] | Maximum [Member] | |||
Useful lives | P7Y |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 7,829,148 | $ 6,894,087 |
Less: Accumulated depreciation | (5,313,999) | (4,705,256) |
Net property and equipment | 2,515,149 | 2,188,831 |
Storage Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 756,236 | 756,236 |
Website And Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 533,417 | 533,417 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 27,131 | 27,131 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 20,983 | 16,846 |
Computer Hardware and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 1,224,591 | 1,218,464 |
Data Center Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 5,266,790 | $ 4,341,993 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 608,743 | $ 530,927 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Intangible assets not subject to amortization | |
Total intangible assets not subject to amortization, Gross amount | $ 3,015,700 |
Total intangible assets not subject to amortization, Accumulated Amortization | 294,268 |
Total intangible assets not subject to amortization, Net | 3,309,968 |
Intangible assets subject to amortization | |
Total Intangible Assets, Gross amount | 2,139,421 |
Total Intangible Assets, Accumulated Amortization | 1,929,254 |
Total Intangible Assets, Net amount | 210,167 |
Total Goodwill and Intangible Assets, Gross amount | 5,449,389 |
Total Goodwill and Intangible Assets, Accumulated Amortization | 1,929,254 |
Total Goodwill and Intangible Assets, Net | 3,520,135 |
Goodwill [Member] | |
Intangible assets not subject to amortization | |
Total intangible assets not subject to amortization, Gross amount | 3,015,700 |
Total intangible assets not subject to amortization, Accumulated Amortization | 294,268 |
Total intangible assets not subject to amortization, Net | $ 3,309,968 |
Intangible assets subject to amortization | |
Estimated life in years | Indefinite |
Trademark [Member] | |
Intangible assets not subject to amortization | |
Total intangible assets not subject to amortization, Gross amount | |
Total intangible assets not subject to amortization, Accumulated Amortization | |
Total intangible assets not subject to amortization, Net | |
Intangible assets subject to amortization | |
Estimated life in years | Indefinite |
Customer Lists [Member] | |
Intangible assets subject to amortization | |
Total Intangible Assets, Gross amount | $ 897,274 |
Total Intangible Assets, Accumulated Amortization | 897,274 |
Total Intangible Assets, Net amount | |
Customer Lists [Member] | Minimum [Member] | |
Intangible assets subject to amortization | |
Intangible assets subject to amortization, Estimated life in years | 5 years |
Customer Lists [Member] | Maximum [Member] | |
Intangible assets subject to amortization | |
Intangible assets subject to amortization, Estimated life in years | 15 years |
ABC Acquired Contracts [Member] | |
Intangible assets subject to amortization | |
Total Intangible Assets, Gross amount | $ 310,000 |
Total Intangible Assets, Accumulated Amortization | 242,833 |
Total Intangible Assets, Net amount | $ 67,167 |
Intangible assets subject to amortization, Estimated life in years | 5 years |
SIAS Acquired Contracts [Member] | |
Intangible assets subject to amortization | |
Total Intangible Assets, Gross amount | $ 660,000 |
Total Intangible Assets, Accumulated Amortization | 517,000 |
Total Intangible Assets, Net amount | $ 143,000 |
Intangible assets subject to amortization, Estimated life in years | 5 years |
Non-compete Agreements [Member] | |
Intangible assets subject to amortization | |
Total Intangible Assets, Gross amount | $ 272,147 |
Total Intangible Assets, Accumulated Amortization | 272,147 |
Total Intangible Assets, Net amount | |
Intangible assets subject to amortization, Estimated life in years | 4 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) | Sep. 30, 2020USD ($) |
Scheduled amortization over next five years | |
2021 | $ 194,000 |
2022 | 16,167 |
Total | $ 210,167 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 145,500 | $ 148,000 |
Lease (Details)
Lease (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Finance lease: | |
Amortization of assets, included in depreciation and amortization expense | $ 608,743 |
Interest on lease liabilities, included in interest expense | 124,300 |
Operating lease: | |
Amortization of assets, included in total operating expense | 57,709 |
Interest on lease liabilities, included in total operating expense | 16,106 |
Total net lease cost | $ 806,858 |
Lease (Details 1)
Lease (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Operating Leases | ||
Operating lease ROU asset | $ 263,034 | $ 324,267 |
Current operating lease liabilities | 103,780 | 101,505 |
Noncurrent operating lease liabilities | 168,390 | $ 231,312 |
Total operating lease liabilities | 272,170 | |
Finance leases: | ||
Property and equipment, at cost | 4,366,665 | |
Accumulated amortization | (3,172,342) | |
Property and equipment, net | 1,194,323 | |
Current obligations of finance leases | 1,139,828 | |
Finance leases, net of current obligations | 1,509,615 | |
Total finance lease liabilities | $ 2,649,443 |
Lease (Details 2)
Lease (Details 2) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Leases [Abstract] | |
Operating cash flows related to operating leases | $ 75,852 |
Financing cash flows related to finance leases | $ 829,391 |
Weighted average remaining lease term operating leases (in years) | 1 year 8 months 19 days |
Weighted average remaining lease term finance leases (in years) | 2 years 3 months 29 days |
Weighted average discount rate operating leases | 7.00% |
Weighted average discount rate finance leases | 6.00% |
Lease (Details 3)
Lease (Details 3) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Summary of minimum obligations under operating lease agreements | ||
2021 | $ 103,780 | |
2022 | 106,901 | |
2023 | 90,696 | |
2024 | ||
Total lease payments | 301,377 | |
Less: Amounts representing interest | (29,207) | |
Total operating lease liabilities | 272,170 | |
Less: Current operating lease liabilities | (103,780) | $ (101,505) |
Noncurrent operating lease liabilities | 168,390 | $ 231,312 |
Summary of obligations under Finance leases | ||
2021 | 348,440 | |
2022 | 1,241,361 | |
2023 | 849,426 | |
2024 | 441,725 | |
Total lease payments | 2,880,952 | |
Less: Amounts representing interest | (231,509) | |
Total finance lease liabilities | 2,649,443 | |
Less: Current Finance lease liabilities | (1,139,828) | |
Noncurrent Finance lease liabilities | $ 1,509,615 |
Lease (Details Narrative)
Lease (Details Narrative) - USD ($) | Jun. 01, 2020 | Apr. 02, 2019 | Jan. 02, 2019 | Apr. 02, 2018 | Jul. 31, 2020 | Jun. 29, 2020 | Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Apr. 01, 2018 |
Operating Leased Assets [Line Items] | ||||||||||
Operating leases, rent expense, net | $ 127,268 | $ 191,377 | ||||||||
Discount rate | 7.00% | |||||||||
Melville [Member] | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | Jul. 31, 2023 | |||||||||
Operating leases, rent expense | $ 86,268 | |||||||||
Lease Term | 5 years 3 months | |||||||||
Melville [Member] | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Operating leases, rent expense | $ 897 | |||||||||
Annual base rent | $ 10,764 | |||||||||
Warwick, RI [Member] | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | Jan. 31, 2020 | |||||||||
Operating leases, rent expense | $ 2,598 | |||||||||
Annual base rent | $ 31,176 | |||||||||
Systems Trading | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | Dec. 31, 2023 | Apr. 16, 2022 | Jan. 1, 2023 | |||||||
Operating leases, rent expense | $ 10,534 | |||||||||
Lease Term | 5 years | 3 years | 4 years | |||||||
Interest rate | 6.75% | 5.00% | 6.00% | |||||||
Fiance leases contingent monthly rental payments | $ 29,592 | $ 23,475 | ||||||||
Systems Trading | Second Lease | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | Mar. 1, 2022 | |||||||||
Interest rate | 7.00% | |||||||||
Fiance leases contingent monthly rental payments | $ 461 | |||||||||
Systems Trading | First Lease | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | Mar. 1, 2022 | |||||||||
Interest rate | 6.70% | |||||||||
Fiance leases contingent monthly rental payments | $ 1,328 | |||||||||
Arrow Capital Solutions | Lease | ||||||||||
Operating Leased Assets [Line Items] | ||||||||||
Lease expiration date | May 31, 2023 | Jun. 29, 2023 | ||||||||
Operating leases, rent expense | $ 5,008 | $ 4,524 | $ 5,050 | |||||||
Lease Term | 3 years | 3 years | 3 years | |||||||
Interest rate | 7.00% | 7.00% | 7.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Interest rate on debt under revolving credit facility excluding prime rate | 0.50% | |
Total debt amount available under revolving credit facility | $ 100,000 | |
Revolving Credit Facility | $ 24 | $ 75,000 |
Long Term Debt (Details)
Long Term Debt (Details) | Sep. 30, 2020USD ($) |
Long-term Debt, Unclassified [Abstract] | |
2021 | $ 294,541 |
2022 | 187,436 |
Long-term debt, payments due | $ 481,977 |
Long Term Debt (Details Narrati
Long Term Debt (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Note Payable description | In connection with the 2012 asset acquisition of Message Logic, LLC the Company had a use of the Message Logic software subject to a UCC filing on the software in the amount of $350,000. On September 5, 2014 the Company entered into an agreement whereby the Company paid all arrears interest over 7 months at $3,910 per month. In addition, the Company agreed to make monthly interest payments at $1,553 per month. The company assumed this liability as part of the option to pay and lift the UCC and own the software lien free. | ||||
Gain on contingent liability | $ 350,000 | ||||
Signature Bank | |||||
Interest rate | 1.00% | ||||
Proceeds from loan | $ 481,977 |
Stockholders' (Deficit) (Detail
Stockholders' (Deficit) (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Summary of option/warrant activity | |
Exercised | shares | (100,000) |
Employee Stock Option [Member] | |
Summary of option/warrant activity | |
Outstanding, beginning | shares | 8,425,824 |
Granted | shares | 350,000 |
Exercised | shares | (100,000) |
Expired/Cancelled | shares | (250,000) |
Outstanding, ending | shares | 8,425,824 |
Exercisable, ending | shares | 4,869,403 |
Range of option/warrant price per share, Granted | $ 0.13 |
Option Exercised | 0.05 |
Range of option/warrant price per share, Expire/Cancelled | 0.36 |
Weighted Average Exercise Price Outstanding, beginning | 0.17 |
Weighted Average Exercise Price, Granted | 0.13 |
Weighted Average Exercise Price, Exercised | 0.05 |
Weighted Average Exercise Price, Expire/Cancelled | 0.36 |
Weighted Average Exercise Price Outstanding, ending | 0.13 |
Exercisable, ending | 0.19 |
Employee Stock Option [Member] | Minimum [Member] | |
Summary of option/warrant activity | |
Range of option/warrant price per share, outstanding, beginning | $ 0.05 |
Range of option/warrant price per share, outstanding, ending | shares | 0.05 |
Range of option/warrant price per share, Exercisable ending | $ 0.05 |
Employee Stock Option [Member] | Maximum [Member] | |
Summary of option/warrant activity | |
Range of option/warrant price per share, outstanding, beginning | $ 0.65 |
Range of option/warrant price per share, outstanding, ending | shares | 0.65 |
Range of option/warrant price per share, Exercisable ending | $ 0.65 |
Stockholders' (Deficit) (Deta_2
Stockholders' (Deficit) (Details 1) | 9 Months Ended |
Sep. 30, 2020$ / shares | |
Weighted average fair value of options granted | $ 0.13 |
Expected life (years) | 10 years |
Dividend yield | 0.00% |
Minimum [Member] | |
Risk-free interest rate | 0.66% |
Volatility | 221.00% |
Maximum [Member] | |
Risk-free interest rate | 0.83% |
Volatility | 223.00% |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Equity [Abstract] | |||
Capital stock authorized | 260,000,000 | ||
Common stock, authorized | 250,000,000 | 250,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Preferred stock, authorized | 10,000,000 | 10,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Number of option exercised | 100,000 | ||
Proceeds from exercise of Option | $ 5,400 | ||
Share-based compensation expense | 116,559 | ||
Unrecognized compensation expense | $ 306,282 | ||
Weighted average period expected to recognized compensation expense (in years) | 2 years 2 months 30 days | ||
Series A Preferred Stock Dividend Rate | 10.00% | ||
Accrued dividends | $ 1,076,874 | $ 970,997 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
NexxisCapital | ||
Proceeds from related party | $ 0 | $ 0 |