Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 17, 2021 | |
Document And Entity Information | ||
Entity Registrant Name | Data Storage Corp | |
Entity Central Index Key | 0001419951 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
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 | 3,215,063 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 634,312 | $ 893,598 |
Accounts receivable (less allowance for credit losses of $30,000 in 2021 and 2020) | 724,683 | 554,587 |
Prepaid expenses and other current assets | 529,490 | 239,472 |
Total Current Assets | 1,888,485 | 1,687,657 |
Property and Equipment: | ||
Property and equipment | 8,152,661 | 7,845,423 |
Less-Accumulated depreciation | (5,762,511) | (5,543,822) |
Net Property and Equipment | 2,390,150 | 2,301,601 |
Other Assets: | ||
Goodwill | 3,015,700 | 3,015,700 |
Operating lease right-of-use assets | 220,419 | 241,911 |
Other assets | 49,654 | 49,310 |
Intangible assets, net | 407,435 | 455,935 |
Total Other Assets | 3,693,208 | 3,762,856 |
Total Assets | 7,971,843 | 7,752,114 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,538,231 | 979,552 |
Dividend payable | 1,154,556 | 1,115,674 |
Deferred revenue | 402,404 | 461,893 |
Line of Credit | 24 | 24 |
Finance lease payable | 171,099 | 168,139 |
Finance leases payable related party | 1,102,488 | 1,149,403 |
Operating lease liabilities short term | 105,319 | 104,549 |
Note payable | 455,200 | 374,871 |
Total Current Liabilities | 4,929,321 | 4,354,105 |
Note payable long term | 26,777 | 107,106 |
Operating lease liabilities long term | 125,391 | 147,525 |
Finance leases payable, long term | 208,035 | 247,677 |
Finance leases payable related party, long term | 757,733 | 974,743 |
Total Long-Term Liabilities | 1,117,936 | 1,477,051 |
Total Liabilities | 6,047,257 | 5,831,156 |
Stockholders' Equity | ||
Preferred stock, Series A par value $0.001; 10,000,000 shares authorized; 1,401,786 shares issued and outstanding in each year | 1,402 | 1,402 |
Common stock, par value $0.001; 250,000,000 shares authorized; 3,215,063 shares issued and outstanding in 2021 and 2020 | 3,213 | 3,213 |
Additional paid in capital | 17,787,956 | 17,745,785 |
Accumulated deficit | (15,771,521) | (15,734,737) |
Total Data Storage Corp Stockholders' Equity | 2,021,050 | 2,015,663 |
Non-controlling interest in consolidated subsidiary | (96,464) | (94,705) |
Total Stockholder's Equity | 1,924,586 | 1,920,958 |
Total Liabilities and Stockholders' Equity | $ 7,971,843 | $ 7,752,114 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
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 | 3,215,063 | 3,215,063 |
Common stock, outstanding | 3,215,063 | 3,215,063 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Sales | $ 2,574,691 | $ 2,098,710 |
Cost of Sales | 1,420,899 | 1,216,117 |
Gross Profit | 1,153,792 | 882,593 |
Selling, General and Administrative | 1,118,407 | 876,626 |
Income from Operations | 35,385 | 5,967 |
Other Income (Expense) | ||
Interest income | 2 | 20 |
Interest expense | (35,047) | (46,460) |
Total Other Income (Expense) | (35,045) | (46,440) |
Income (Loss) before provision for income taxes | 340 | (40,473) |
Provision for Income Taxes | 0 | 0 |
Net Income (Loss) | 340 | (40,473) |
Non-controlling interest in consoldiated subsidiary | 1,759 | 6,063 |
Net Income (Loss) attributable to Data Storage Corp | 2,099 | (34,410) |
Preferred Stock Dividend | (38,883) | (34,186) |
Net Loss attributable to Common Stockholders | $ (36,784) | $ (68,596) |
Earning (Loss) per Share - Basic | $ (0.01) | $ (0.02) |
Earning (Loss) per Share - Diluted | $ (0.01) | $ (0.02) |
Weighted Average Number of Shares - Basic | 3,213,485 | 3,212,152 |
Weighted Average Number of Shares - Diluted | 3,213,485 | 3,212,152 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock | Common Stock | [1] | Additional Paid-In Capital | [1] | Accumulated Deficit | Noncontrolling Interest | Total |
Balance at beginning at Dec. 31, 2019 | $ 1,402 | $ 3,211 | $ 17,581,659 | $ (15,790,076) | $ (68,048) | $ 1,728,148 | ||
Balance at beginning (in shares) at Dec. 31, 2019 | 1,401,786 | 3,210,985 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based Compensation | 33,048 | 33,048 | ||||||
Stock Options Exercise | $ 3 | 5,397 | ||||||
Stock Options Exercise (in shares) | 2,500 | |||||||
Net Loss | (34,410) | (6,063) | (40,473) | |||||
Preferred stock | (34,186) | (34,186) | ||||||
Balance at end at Mar. 31, 2020 | $ 1,401,786 | $ 3,214 | 17,620,104 | (15,858,672) | (74,111) | 1,691,937 | ||
Balance at end (in shares) at Mar. 31, 2020 | 1,401,786 | 3,213,485 | ||||||
Balance at beginning at Dec. 31, 2020 | $ 1,402 | $ 3,213 | 17,745,785 | (15,734,737) | (94,705) | 1,920,958 | ||
Balance at beginning (in shares) at Dec. 31, 2020 | 1,401,786 | 3,213,485 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based Compensation | 42,171 | 42,171 | ||||||
Stock Options Exercise | 5,400 | |||||||
Net Loss | 2,099 | (1,759) | 340 | |||||
Preferred stock | (38,883) | (17,278) | ||||||
Balance at end at Mar. 31, 2021 | $ 1,402 | $ 3,213 | $ 17,787,956 | $ (15,771,521) | $ (96,464) | $ 1,924,586 | ||
Balance at end (in shares) at Mar. 31, 2021 | 1,401,786 | 3,213,485 | ||||||
[1] | Amounts have been retroactively restated for all periods to reflect the one-for-forty reverse split of common stock on May 14, 2021 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flows from Operating Activities: | ||
Net Income (Loss) | $ 340 | $ (40,473) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 267,189 | 241,658 |
Stock-based compensation | 42,171 | 33,048 |
Changes in Assets and Liabilities: | ||
Accounts receivable | (170,096) | (145,521) |
Other assets | (345) | 0 |
Prepaid expenses and other current assets | (290,018) | (29,657) |
Right of use asset | 21,492 | 20,067 |
Accounts payable and accrued expenses | 558,679 | 123,890 |
Deferred revenue | (59,489) | 113,901 |
Operating lease liability | (21,364) | (19,193) |
Net Cash Provided by Operating Activities | 348,559 | 297,720 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (257,238) | (56,812) |
Net Cash Used in Investing Activities | (257,238) | (56,812) |
Cash Flows from Financing Activities: | ||
Repayments of capital lease obligations | 0 | (169,711) |
Repayments of finance lease obligations related party | (313,925) | 0 |
Repayments of finance lease obligations | (36,682) | 0 |
Cash received for the exercised of options | 0 | 5,400 |
Repayment of Credit Line | 0 | (74,976) |
Net Cash Used in Financing Activities | (350,607) | (239,287) |
Net change in Cash and Cash Equivalents | (259,286) | 1,621 |
Cash and Cash Equivalents, Beginning of Period | 893,598 | 326,561 |
Cash and Cash Equivalents, End of Period | 634,312 | 328,182 |
Supplemental Disclosures: | ||
Cash paid for interest | 31,971 | 177,451 |
Cash paid for income taxes | 0 | 0 |
Non-cash investing and financing activities: | ||
Accrual of preferred stock dividend | 38,883 | 34,186 |
Assets acquired by finance lease | $ 50,000 | $ 336,165 |
Basis of Presentation, Organiza
Basis of Presentation, Organization and Other Matters | 3 Months Ended |
Mar. 31, 2021 | |
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, 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, Massachusetts, Texas and North Carolina. Going Concern Analysis As reflected in the Condensed Consolidated Financial statements, the Company had a net loss attributable to common shareholders of $(36,784) and $(68,596) for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, DSC had cash and cash equivalents of $634,312 and a working capital deficiency of $3,040,836. As a result, these conditions initially raised substantial doubt regarding our ability to continue as a going concern. During the three months ended March 31, 2021, the Company provided cash from operations of $348,559 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 foregoing and current favorable trends of improving cash flow, and after further analysis, the Company concluded that the initial conditions which raised substantial doubt regarding the ability to continue as a going concern has been alleviated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
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 subsidiaries, Data Storage Corporation, a Delaware corporation, and Data Storage FL, LLC, a Florida limited liability company and (iii) its majority-owned subsidiary, Nexxis Inc, a Nevada corporation. All significant inter-company transactions and balances have been eliminated in consolidation. Basis of Presentation The Condensed Consolidated Financial Statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed. As such, the information included in these financial statements should be read in conjunction with the audited financial statements as of and for the years ended December 31, 2020 and 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), as filed on March 31, 2021. In the opinion of the Company’s management, these condensed consolidated financial statements include all adjustments, which are of only a normal and recurring nature, necessary for a fair presentation of the statement of financial position of the Company as of March 31, 2021 and its results of operations and cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2021. 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. Recently Issued and Newly Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU-2016-13”). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company expects that there would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of this ASU. On November 15, 2019, the FASB issued ASU 2019-10, which (1) provides a framework to stagger effective dates for future major accounting standards and (2) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification ● Derivatives and Hedging (ASC 8152) – January 1, 2021 ● Leases (ASC 842) – January 1, 2021 ● Financial Instruments — Credit Losses (ASC 326) – January 1, 2023 ● Intangibles — Goodwill and Other (ASC 350) – January 1, 2023 The Company expects that there would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of these ASU’s. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable, line of credit, notes payable and lease commitments. Management believes the estimated fair value of these accounts at March 31, 2021 approximate their carrying value as reflected in the balance sheet 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 and Cash Equivalents The Company considers all highly liquid investments with an original maturity or remaining maturity at the time of purchase, of three months or less to be cash equivalents. 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. For the three months ended March 31, 2021, DSC had two customers with an accounts receivable balance representing 58% of total accounts receivable. For the three months ended March 31, 2020, DSC had two customers with an accounts receivable balance representing 30% of total accounts receivable. For the three months ended March 31, 2021 the Company had two customers that accounted for 36% of revenue. For the three months ended March 31, 2020 the Company had one customer that accounted for 14% of revenue. Accounts Receivable/Allowance for Credit Losses 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 credit losses reflects the estimated accounts receivable that will not be collected due to credit losses. 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 are recorded at cost and depreciated over their estimated useful lives or the term of the lease using the straight-line method for financial statement purposes. Estimated useful lives in years for depreciation are 5 to 7 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. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of equity financings, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financings be abandoned, the deferred offering costs are expensed immediately as a charge to other income (expense) in the consolidated statement of operations. For the three months ended March 31, 2021, the Company recorded deferred offering costs of $273,423, which are included in prepaid expenses. 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 March 31, 2021 and December 31, 2020, 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, 2020 and 2019, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company’s 2019, 2018 and 2017 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. Goodwill and Other Intangibles In accordance with GAAP, the Company tests goodwill and other intangible assets for impairment on at least an annual basis. Impairment exists if the carrying value of a reporting unit exceeds its estimated fair value. To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using a market participant approach that directly impact the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management. 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 capital expenditures. 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 revenue 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 March 31, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,629,773 $ 30,575 $ 1,660,348 Equipment and Software 464,883 — 464,883 Managed Services 226,767 — 226,767 Nexxis VoIP Services 195,326 — 195,326 Other 27,367 — 27,367 Total Revenue $ 2,544,116 $ 30,575 $ 2,574,691 For the Three Months Ended March 31, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,359,921 $ 33,799 $ 1,393,720 Equipment and Software 328,733 — 328,733 Managed Services 220,475 — 220,475 Nexxis VoIP Services 153,197 — 153,197 Other 2,585 — 2,585 Total Revenue $ 2,064,911 $ 33,799 $ 2,098,710 For the Three Months Ended March 31, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 687,576 $ 328,733 Products and services transferred over time 1,887,115 1,769,977 Total Revenue $ 2,574,691 $ 2,098,710 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 is 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 is 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 recognizes 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 in the previous month. 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 contracts have multiple performance obligations, 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, the Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated 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 $95,776 and $65,380 for advertising costs for the three months ended March 31, 2021 and 2020, 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 period is 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 assessment. Estimated volatility is a measure of the amount by which DSC’s stock price is expected to fluctuate each year during the expected life of the award. 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 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: March 31, 2021 2020 Options 207,650 208,146 Warrants 3,333 3,333 210,983 211,479 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment Property and equipment, at cost, consist of the following: March 31, December 31, 2021 2020 Storage equipment $ 756,236 $ 756,236 Website and software 533,417 533,417 Furniture and fixtures 27,131 17,441 Leasehold improvements 20,983 20,983 Computer hardware and software 1,228,520 1,236,329 Data center equipment 5,586,374 5,281,017 8,152,661 7,845,423 Less: Accumulated depreciation (5,762,511 ) (5,543,822 ) Net property and equipment $ 2,390,150 $ 2,301,601 Depreciation expense for the three months ended March 31, 2021 and 2020 was $218,689 and $193,158, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 4 - Goodwill and Intangible Assets Goodwill and intangible assets consisted of the following: March 31, 2021 Estimated life Accumulated in years Gross amount 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 5 310,000 273,833 36,167 SIAS acquired contracts 5 660,000 583,000 77,000 Non-compete agreements 4 272,147 272,147 — Total intangible assets subject to amortization 2,139,421 2,026,254 113,167 Total Goodwill and Intangible Assets $ 5,449,389 $ 2,026,254 $ 3,423,135 Scheduled amortization over the next year is as follows: Twelve months ending March 31, 2022 $ 113,167 Amortization expense for the three months ended March 31, 2021 and 2020 were $48,500 and $48,500 respectively. |
Lease
Lease | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Lease | Note 5 –Leases Operating Leases The Company currently has two leases for office space located in Melville, NY. The first lease for office space in Melville, NY, was assumed as part of the Company’s acquisition of ABC in 2016 and called for monthly payments of $8,382 and expiring August 31, 2019. Upon termination of the lease in August 2019, the Company entered into a new lease for a technology lab in a smaller space commencing on September 1, 2019. The term of this lease is for three years and eleven 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. A second lease for office space in Melville, NY, was entered into on November 20, 2017, which commenced on April 2, 2018. The term of this lease is five years and three months at $86,268 per year with an escalation of 3% per year and expires on July 31, 2023. The lease for office space in Warwick, RI, called for monthly payments of $2,324 beginning February 1, 2015 which escalated to $2,460 on February 1, 2017. This lease commenced on February 1, 2015 and expired on January 31, 2019. The Company extended this lease until January 31, 2020. This lease was further extended until January 31, 2021. The annual base rent was $31,176 payable in equal monthly installments of $2,598. The Company satisfied the terms of the lease and no longer occupies this premise. The Company leases rack space in New York, Massachusetts and North Carolina. These leases are month to month and the monthly rent is approximately $25,000. In 2020, the Company entered into a new rack space lease agreement in Dallas, TX. The lease term is 13 months and requires monthly payments of $1,905. 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 equipment 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, Harold 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 installments of $1,328 and expires on March 1, 2022. It carries an interest rate of 7%. The second lease calls for monthly installments 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 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. On March 4, 2021, the Company entered into a new lease agreement with Systems Trading effective April 1, 2021. This lease obligation is payable to Systems Trading with monthly installments of $1,567 and expires on March 31, 2024. The lease carries an interest rate of 8%. The Company determines if an arrangement contains a lease at inception. Right of Use “ROU” assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient 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. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. A discount rate of 7% was used in preparation of the ROU asset and operating liabilities. The components of lease expense were as follows: Three Months Ended Finance leases: Amortization of assets, included in depreciation and amortization expense $ 350,607 Interest on lease liabilities, included in interest expense 26,941 Operating lease: Amortization of assets, included in total operating expense 25,652 Interest on lease liabilities, included in total operating expense 4,287 Total net lease cost $ 407,487 Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease ROU asset $ 220,419 Current operating lease liabilities 105,319 Noncurrent operating lease liabilities 125,391 Total operating lease liabilities $ 230,710 March 31, 2021 Finance leases: Property and equipment, at cost $ 4,416,665 Accumulated amortization (2,305,689 ) Property and equipment, net 2,110,976 Current obligations of finance leases $ 1,273,587 Finance leases, net of current obligations 965,768 Total finance lease liabilities $ 2,239,355 Supplemental cash flow and other information related to leases was as follows: Three Months Ended March 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 21,364 Financing cash flows related to finance leases $ 350,607 Weighted average remaining lease term (in years): Operating leases 1.47 Finance leases 2.07 Weighted average discount rate: Operating leases 7 % Finance leases 6 % Long-term obligations under the operating and finance leases at March 31, 2021 mature as follows: For the Twelve Months Ended March 31, Operating Leases Finance Leases 2022 $ 105,319 $ 1,260,160 2023 108,534 773,155 2024 37,120 377,276 Total lease payments 250,973 2,410,591 Less: Amounts representing interest (20,263 ) (171,236 ) Total lease obligations 230,710 2,239,355 Less: Current (105,319 ) (1,273,587 ) $ 125,391 $ 965,768 As of March 31, 2021, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the three months ended March 31, 2021 and 2020 was $20,263 and $24,905, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 - Commitments and Contingencies COVID-19 The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption. The extent to which COVID-19 will adversely impact the Company’s business, financial condition and results of operations is dependent upon numerous factors, many of which are highly uncertain, rapidly changing and uncontrollable. These factors include, but are not limited to: (i) the duration and scope of the pandemic; (ii) governmental, business and individual actions that have been and continue to be taken in response to the pandemic, including travel restrictions, quarantines, social distancing, work-from-home and shelter-in-place orders and shut-downs; (iii) the impact on U.S. and global economies and the timing and rate of economic recovery; (iv) potential adverse effects on the financial markets and access to capital; (v) potential goodwill or other impairment charges; (vi) increased cybersecurity risks as a result of pervasive remote working conditions; and (vii) the Company’s ability to effectively carry out its operations due to any adverse impacts on the health and safety of its employees and their families. 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, as a result of the pandemic, all employees, including the Company’s specialized technical staff, are working remotely or in a virtual environment. DSC always maintains the ability for team members to work virtually and the Company will continue to stay virtual, until the State and or the Federal government indicate the environment is safe to return to work. The significant increase in remote working, particularly for an extended period of time, could exacerbate certain risks to the Company’s business, including an increased risk of cybersecurity events and improper dissemination of personal or confidential information, though the Company does not believe these circumstances have, or will, materially adversely impact its internal controls or financial reporting systems. If the COVID-19 pandemic should worsen, the Company may experience disruptions to our business including, but not limited to: equipment, its workforce, or to its business relationships with other third parties. The extent to which COVID-19 impacts the Company’s operations or those of its 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 COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Any such disruptions or losses we incur could have a material adverse effect on the Company’s 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 March 31, 2021 and December 31, 2020 the balance was $24 and $24 respectively. |
Long Term Debt
Long Term Debt | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Long Term Debt | Note 7 – Long Term Debt 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 used 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. The Company has applied for the loan forgiveness. As of March 31, 2021, if not forgiven, remaining scheduled principal payments due on notes payable are as follows: For the twelve months ending March 31, 2022 $ 455,200 2023 26,777 $ 481,977 |
Stockholders' (Deficit)
Stockholders' (Deficit) | 3 Months Ended |
Mar. 31, 2021 | |
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. On March 8, 2021 the Company’s shareholders approved an amendment to the Company’s articles of incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, at a ratio to be determined at the discretion of the Board of Directors within a range of one (1) share of common stock for every two (2) to sixty (60) shares of common stock, such amendment to be effected only in the event the Board of Directors still deems it advisable. See Note 12 – Subsequent Events. On May 6, 2021 the Company filed with the Securities and Exchange Commission Amendment No. 4 to Form S-1 - Registration Statement Under the Securities Act of 1993 to offer 1,162,790 Units (Each Unit Consisting of One Share of Common Stock and One Warrant to Purchase One Share of Common Stock). During the three months ended March 31, 2021, the Company received cash of $5,400 from the exercise of 2,500 options. Common Stock Options A summary of the Company’s option activity and related information follows: Number of Range of Weighted Weighted Options Outstanding at December 31, 2020 207,650 $ 2.0-15.6 $ 5.2 6.6 Options Granted — — — Exercised — — — Expired/Cancelled — — — Options Outstanding at March 31, 2021 207,650 $ 2.0-15.6 $ 5.2 6.38 Options Exercisable at March 31, 2021 139,541 $ 2.0-15.6 $ 6.4 5.50 Share-based compensation expense for options totaling $42,171 and $33,048 was recognized in our results for the three months ended March 31, 2021 and 2020, respectively. The valuation methodology used to determine the fair value of the options issued during the year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including 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 March 31, 2021, there was $221,939 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 1.5 years. Preferred Stock Dividends Each share of Series A Preferred Stock, in preference to the holders of all common stock, 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 Company. Accrued dividends at March 31, 2021 were $1,154,556. |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2021 | |
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 | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 - Related Party Transactions Finance Lease Obligations – Related Party During the three months ended March 31, 2021 the Company entered into one related party finance lease obligations. See Note 5 for details. Nexxis Capital LLC Charles Piluso (Chairman and CEO) and Harold Schwartz (President) collectively own 100% of Nexxis Capital LLC (“Nexxis Capital”). Nexxis Capital was formed to purchase equipment and provide leases to Nexxis Inc.’s customers. The Company received funds of $3,968 and $0 during the three months ended March 31, 2021 and 2020 respectively. |
Merger
Merger | 3 Months Ended |
Mar. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Merger | Note 11 - Merger Flagship Solutions, LLC On February 4, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Data Storage FL, LLC, a Florida limited liability company and the Company’s wholly-owned subsidiary (the “Merger Sub”), Flagship Solutions, LLC (“Flagship”), a Florida limited liability company, and the owners (collectively, the “Equityholders”) of all of the issued and outstanding limited liability company membership interests in Flagship (collectively, the “Equity Interests”), pursuant to which, upon the Closing (as defined below), the Company will acquire Flagship through the merger of Merger Sub with and into Flagship (the “Merger”), with Flagship being the surviving company in the Merger and becoming as a result its wholly-owned subsidiary. The closing of the Merger (the “Closing”) is expected to take place on or before May 31, 2021 (the “Outside Closing Date”). Pursuant to the Merger, all of the Equity Interests that are issued and outstanding immediately prior to the effectiveness of the filing of the Articles of Merger by Flagship and Merger Sub with the Secretary of State of the State of Florida, will be converted into the right to receive an aggregate amount equal to up to $10,500,000, consisting of $5,550,000, payable in cash, subject to reduction by the amount of any excluded liabilities assumed by the Company at Closing and subject to adjustment as set forth below in connection with a net working capital adjustment, and up to $4,950,000, payable in shares of the Company’s common stock, subject to reduction by the amount by which the valuation of Flagship (the “Flagship Valuation”), as calculated based on Flagship’s unaudited pro forma 2018 financial statements and audited 2019 and 2020 financial statements (the “2020 Audit”), is less than $10,500,000. In the event that the Flagship Valuation, as calculated based on the 2020 Audit, is less than $10,500,000, then, within fifteen (15) days after completion of the audit of Flagship’s financial statements for its 2019, 2020 and 2021 fiscal years (the “2021 Audit”), the Company has agreed to pay the Equityholders, in shares of the Company’s common stock, the amount by which the Flagship Valuation, as calculated based on the 2021 Audit, exceeds the sum of $5,550,000 and the value of the shares merger consideration paid by us to the Equityholders at Closing, subject to a cap of $4,950,000. In addition, the cash merger consideration paid by the Company to the Equityholders at Closing shall be adjusted, on a dollar-for-dollar basis, by the amount by which Flagship’s estimated net working capital at Closing is more or is less than the target working capital amount specified in the Merger Agreement. The parties have agreed to indemnify each other for any losses that may be incurred by them as a result of their breach of any of their representations, warranties and covenants contained in the Merger Agreement. The Company’s indemnification obligations are capped at 20% of the aggregate merger consideration paid to the Equityholders for any breach of our representations and warranties contained in the Merger Agreement, other than the representations and warranties set forth under Section 4.1 (Existence; Good Standing; Authority; Enforceability), Section 4.2 (No Conflict) and Section 4.4 (Brokers) (herein, “Fundamental Representations”). The Company’s indemnification obligations in respect of any breach by the Company of the Fundamental Representations or in the event of our willful or intentional breach of the Merger Agreement (or acts of fraud), are not capped. Concurrently with the Closing, Flagship and Mark Wyllie, Flagship’s Chief Executive Officer, will enter into an Employment Agreement (the “Wyllie Employment Agreement”), which will become effective upon consummation of the Closing, pursuant to which Mr. Wyllie will continue to serve as Chief Executive Officer of Flagship following the Closing on the terms and conditions set forth therein. Flagship’s obligations under the Wyllie Employment Agreement will also be guaranteed by the Company. The Wyllie Employment Agreement provides for: (i) an annual base salary of $170,000, (ii) management bonuses comprised of twenty-five percent (25%) of Flagship’s net income available in free cash flow as determined in accordance with GAAP for each calendar quarter during the term, (iii) an agreement to issue him stock options of the Company, subject to approval by the Board, commensurate with his position and performance and reflective of the executive compensation plans that the Company has in place with its other subsidiaries of similar size to Flagship, (iv) life insurance benefits in the amount of $400,000, and (v) four weeks paid vacation. In the event Mr. Wyllie’s employment is terminated by him for good reason (as defined in the Wyllie Employment Agreement) or by Flagship without cause, he will be entitled to receive his annual base salary through the expiration of the initial three-year employment term and an amount equal to his last annual bonus paid, payable quarterly. Pursuant to the Wyllie Employment Agreement, we have agreed to elect Mr. Wyllie to the Board and the board of directors of Flagship to serve so long as he continues to be employed by the Company. The employment agreement contains customary non-competition provisions that apply during its term and for a period of two years after the term expires. In addition, pursuant to the Wyllie Employment Agreement, Mr. Wyllie will be appointed to serve as a member of the Company’s Board of Directors and the board of directors of Flagship to serve so long as he continues to be employed by us. The Merger Agreement further provides that it may be terminated by Flagship and the Equityholders (a “Flagship Termination”) in the event the Company has not consummated an underwritten public offering of its securities or listed its shares of common stock on national securities exchange such as the Nasdaq, by the Outside Closing Date, as long as such failure was not due to the breach of, or non-compliance with, the Merger Agreement by the Company or any of the Equityholders. In the event of a Flagship Termination, the Company will be required to pay Flagship and the Equityholders an amount equal to two (2) times their reasonable, documented, out-of-pocket attorneys’ and accountants’ transaction fees and expenses incurred prior to such Flagship Termination in connection with the Merger, up to a maximum aggregate amount of $100,000. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 -Subsequent Events On May 13, 2021, the Company’s registration statement on Form S-1 (File No. 333-23506) was declared effective (the “S-1 Registration Statement”). On May 13, 2021, the Company filed a registration statement on Form S-1 (File No. 333-256111) with the “Securities and Exchange Commission pursuant to Rule 462(b) of the Securities Act of 1933, as amended to register additional securities which was immediately declared effective. On May 14, 2021, the Company effected a 1-for-40 reverse stock split. As a result, all share information in the accompanying condensed financial statements has been adjusted as if the reverse stock split happened on the earliest date presented. On May 13, 2021, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC, as representative of the several underwriters named therein (the “Representative”), for an underwritten public offering (the “Offering”) of an aggregate of 1,600,000 units (the “Units), each consisting of one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), together with one warrant to purchase one share of Common Stock (each a “Warrant” and collectively, the “Warrants”) at an exercise price equal to $7.425 per share of Common Stock. The public offering price was $6.75 per Unit and the underwriters agreed to purchase 1,600,000 Units at an 7.5% discount to the public offering price. The Company granted the Representative a 45-day option to purchase an additional 240,000 shares of Common Stock and/or an additional 240,000 Warrants, in any combination thereof, to cover over-allotments, if any. On May 15, 2021, the Representative partially exercised the over-allotment option to purchase an additional 240,000 Warrants to purchase 240,000 shares of Common Stock. The gross proceeds from the Offering are estimated to be $10.8 million, or approximately $12.4 million if the Representative exercises in full its over-allotment option, before deducting underwriting discounts and commissions and other Offering expenses. Pursuant to the Underwriting Agreement, the Company agreed to issue to the Representative, as a portion of the underwriting compensation payable to the Representative, warrants to purchase up to a total of 80,000 shares of Common Stock (the “Representative’s Warrants”). The Representative’s Warrants are exercisable at $7.425 per share, are initially exercisable 180 days from the commencement of sales of the securities issued in connection with the Offering, or November 14, 2021, and have a term of five years from their initial issuance date, or May 18, 2026. Pursuant to FINRA rules, the Representative’s Warrants are subject to a lock-up agreement pursuant to which the Representative will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period of 180 days from the beginning on the date of commencement of sales of the securities issued in connection with this offering. The Underwriting Agreement contains customary representations, warranties, and covenants by the Company and customary conditions to closing, obligations of the parties and termination provisions. Additionally, under the terms of the Underwriting Agreement, the Company has agreed to indemnify the underwriters for losses, expenses and damages arising out of or in connection with the Offering, including for liabilities under the Securities Act, or contribute to payments the underwriters may be required to make with respect to these liabilities. Pursuant to the Underwriting Agreement, subject to certain exceptions, each director and executive officer of the Company and certain of its stockholders have agreed to a 180-day “lock-up” from the date of the closing of the Offering of shares of Common Stock that they beneficially own, and the Company agreed to a 120-day lock-up, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of Common Stock or securities convertible into Common Stock, without first obtaining the consent of the Representative. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
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 subsidiaries, Data Storage Corporation, a Delaware corporation, and Data Storage FL, LLC, a Florida limited liability company and (iii) its majority-owned subsidiary, Nexxis Inc, a Nevada corporation. All significant inter-company transactions and balances have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The Condensed Consolidated Financial Statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Certain information and note disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed. As such, the information included in these financial statements should be read in conjunction with the audited financial statements as of and for the years ended December 31, 2020 and 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”), as filed on March 31, 2021. In the opinion of the Company’s management, these condensed consolidated financial statements include all adjustments, which are of only a normal and recurring nature, necessary for a fair presentation of the statement of financial position of the Company as of March 31, 2021 and its results of operations and cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2021. |
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. |
Recently Issued and Newly Adopted Accounting Pronouncements | Recently Issued and Newly Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU-2016-13”). ASU 2016-13 affects loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. ASU 2016-13 is effective for the fiscal year beginning after December 15, 2022, including interim periods within that fiscal year. The Company expects that there would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of this ASU. On November 15, 2019, the FASB issued ASU 2019-10, which (1) provides a framework to stagger effective dates for future major accounting standards and (2) amends the effective dates for certain major new accounting standards to give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new standards on the following topics in the FASB Accounting Standards Codification ● Derivatives and Hedging (ASC 8152) – January 1, 2021 ● Leases (ASC 842) – January 1, 2021 ● Financial Instruments — Credit Losses (ASC 326) – January 1, 2023 ● Intangibles — Goodwill and Other (ASC 350) – January 1, 2023 The Company expects that there would be no material impact on the Company’s condensed consolidated financial statements upon the adoption of these ASU’s. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. |
Estimated Fair Value of Financial Instruments | Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable, line of credit, notes payable and lease commitments. Management believes the estimated fair value of these accounts at March 31, 2021 approximate their carrying value as reflected in the balance sheet 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 and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity or remaining maturity at the time of purchase, of three months or less to be cash equivalents. |
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. For the three months ended March 31, 2021, DSC had two customers with an accounts receivable balance representing 58% of total accounts receivable. For the three months ended March 31, 2020, DSC had two customers with an accounts receivable balance representing 30% of total accounts receivable. For the three months ended March 31, 2021 the Company had one customer that accounted for 36% of revenue. For the three months ended March 31, 2020 the Company had one customer that accounted for 14% of revenue. |
Accounts Receivable/Allowance for Credit Losses | Accounts Receivable/Allowance for Credit Losses 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 credit losses reflects the estimated accounts receivable that will not be collected due to credit losses. 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 are recorded at cost and depreciated over their estimated useful lives or the term of the lease using the straight-line method for financial statement purposes. Estimated useful lives in years for depreciation are 5 to 7 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. |
Deferred Offering Costs | Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of equity financings, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the planned equity financings be abandoned, the deferred offering costs are expensed immediately as a charge to other income (expense) in the consolidated statement of operations. For the three months ended March 31, 2021, the Company recorded deferred offering costs of $273,423, which are included in prepaid expenses. |
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 March 31, 2021 and December 31, 2020, 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, 2020 and 2019, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company’s 2019, 2018 and 2017 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. |
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. Impairment exists if the carrying value of a reporting unit exceeds its estimated fair value. To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using a market participant approach that directly impact the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management. |
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 capital expenditures. 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 revenue 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 March 31, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,629,773 $ 30,575 $ 1,660,348 Equipment and Software 464,883 — 464,883 Managed Services 226,767 — 226,767 Nexxis VoIP Services 195,326 — 195,326 Other 27,367 — 27,367 Total Revenue $ 2,544,116 $ 30,575 $ 2,574,691 For the Three Months Ended March 31, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,359,921 $ 33,799 $ 1,393,720 Equipment and Software 328,733 — 328,733 Managed Services 220,475 — 220,475 Nexxis VoIP Services 153,197 — 153,197 Other 2,585 — 2,585 Total Revenue $ 2,064,911 $ 33,799 $ 2,098,710 For the Three Months Ended March 31, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 687,576 $ 328,733 Products and services transferred over time 1,887,115 1,769,977 Total Revenue $ 2,574,691 $ 2,098,710 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 | 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 is recognized on a straight-line basis over the contract term. |
Initial Set-Up Fees | Initial Set-Up Fees The Company accounts for set-up fees as separate performance obligation. Set-up services are performed one time and accordingly the revenue is recognized at the point in time that the service is performed, and the Company is entitled to the payment. |
Equipment sales | 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 | 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 recognizes 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 in the previous month. |
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 contracts have multiple performance obligations, 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, the Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated 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 $95,776 and $65,380 for advertising costs for the three months ended March 31, 2021 and 2020, 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 period is 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 assessment. Estimated volatility is a measure of the amount by which DSC’s stock price is expected to fluctuate each year during the expected life of the award. 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 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: March 31, 2021 2020 Options 207,650 208,146 Warrants 3,333 3,333 210,983 211,479 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,629,773 $ 30,575 $ 1,660,348 Equipment and Software 464,883 — 464,883 Managed Services 226,767 — 226,767 Nexxis VoIP Services 195,326 — 195,326 Other 27,367 — 27,367 Total Revenue $ 2,544,116 $ 30,575 $ 2,574,691 For the Three Months Ended March 31, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,359,921 $ 33,799 $ 1,393,720 Equipment and Software 328,733 — 328,733 Managed Services 220,475 — 220,475 Nexxis VoIP Services 153,197 — 153,197 Other 2,585 — 2,585 Total Revenue $ 2,064,911 $ 33,799 $ 2,098,710 For the Three Months Ended March 31, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 687,576 $ 328,733 Products and services transferred over time 1,887,115 1,769,977 Total Revenue $ 2,574,691 $ 2,098,710 |
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: March 31, 2021 2020 Options 207,650 208,146 Warrants 3,333 3,333 210,983 211,479 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment, at cost, consist of the following: March 31, December 31, 2021 2020 Storage equipment $ 756,236 $ 756,236 Website and software 533,417 533,417 Furniture and fixtures 27,131 17,441 Leasehold improvements 20,983 20,983 Computer hardware and software 1,228,520 1,236,329 Data center equipment 5,586,374 5,281,017 8,152,661 7,845,423 Less: Accumulated depreciation (5,762,511 ) (5,543,822 ) Net property and equipment $ 2,390,150 $ 2,301,601 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and intangible assets | Goodwill and intangible assets consisted of the following: March 31, 2021 Estimated life Accumulated in years Gross amount 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 5 310,000 273,833 36,167 SIAS acquired contracts 5 660,000 583,000 77,000 Non-compete agreements 4 272,147 272,147 — Total intangible assets subject to amortization 2,139,421 2,026,254 113,167 Total Goodwill and Intangible Assets $ 5,449,389 $ 2,026,254 $ 3,423,135 |
Schedule of amortization over the next two years | Scheduled amortization over the next year is as follows: Twelve months ending March 31, 2022 $ 113,167 |
Lease (Tables)
Lease (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Components of lease expense | The components of lease expense were as follows: Three Months Ended Finance leases: Amortization of assets, included in depreciation and amortization expense $ 350,607 Interest on lease liabilities, included in interest expense 26,941 Operating lease: Amortization of assets, included in total operating expense 25,652 Interest on lease liabilities, included in total operating expense 4,287 Total net lease cost $ 407,487 |
Supplemental balance sheet information related to leases | Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease ROU asset $ 220,419 Current operating lease liabilities 105,319 Noncurrent operating lease liabilities 125,391 Total operating lease liabilities $ 230,71 0 March 31, 2021 Finance leases: Property and equipment, at cost $ 4,416,665 Accumulated amortization (2,305,689 ) Property and equipment, net 2,110,976 Current obligations of finance leases $ 1,273,587 Finance leases, net of current obligations, 965,768 Total finance lease liabilities $ 2,239,355 |
Supplemental cash flow and other information related to leases | Supplemental cash flow and other information related to leases was as follows: Three Months Ended March 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 21,364 Financing cash flows related to finance leases $ 350,607 Weighted average remaining lease term (in years): Operating leases 1.47 Finance leases 2.07 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 March 31, 2021 mature as follows: For the Twelve Months Ended March 31, Operating Leases Finance Leases 2022 $ 105,319 $ 1,260,160 2023 108,534 773,155 2024 37,120 377,276 Total lease payments 250,973 2,410,591 Less: Amounts representing interest (20,263 ) (171,236 ) Total lease obligations 230,710 2,239,355 Less: Current (105,319 ) (1,273,587 ) $ 125,391 $ 965,768 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Long-term Debt, Unclassified [Abstract] | |
Scheduled of principal payments due on notes payable | As of March 31, 2021, if not forgiven, remaining scheduled principal payments due on notes payable are as follows: For the twelve months ending March 31, 2022 $ 455,200 2023 26,777 $ 481,977 |
Stockholders' (Deficit) (Tables
Stockholders' (Deficit) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 Weighted Options Outstanding at December 31, 2020 207,650 $ 2.0-15.6 $ 5.2 6.6 Options Granted — — — Exercised — — — Expired/Cancelled — — — Options Outstanding at March 31, 2021 207,650 $ 2.0-15.6 $ 5.2 6.38 Options Exercisable at March 31, 2021 139,541 $ 2.0-15.6 $ 6.4 5.50 |
Basis of Presentation, Organi_2
Basis of Presentation, Organization and Other Matters (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss attributable to common shareholders | $ (36,784) | $ (68,596) | ||
Cash and cash equivalents | 634,312 | 328,182 | $ 893,598 | $ 326,561 |
Working capital deficiency | (3,040,836) | |||
Net Cash Provided by Operating Activities | $ 348,559 | $ 297,720 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 2,574,691 | $ 2,098,710 |
Products Transferred at a Point in Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 687,576 | 328,733 |
Products and Services Transferred Over Time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,887,115 | 1,769,977 |
Infrastructure & Disaster Recovery/Cloud Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,660,348 | 1,393,720 |
Equipment and Software [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 464,883 | 328,733 |
Managed Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 226,767 | 220,475 |
Nexxis Voip Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 195,326 | 153,197 |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 27,367 | 2,585 |
UNITED STATES | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 2,544,116 | 2,064,911 |
UNITED STATES | Infrastructure & Disaster Recovery/Cloud Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,629,773 | 1,359,921 |
UNITED STATES | Equipment and Software [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 464,883 | 328,733 |
UNITED STATES | Managed Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 226,767 | 220,475 |
UNITED STATES | Nexxis Voip Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 195,326 | 153,197 |
UNITED STATES | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 27,367 | 2,585 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 30,575 | 33,799 |
International | Infrastructure & Disaster Recovery/Cloud Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 30,575 | 33,799 |
International | Equipment and Software [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
International | Managed Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
International | Nexxis Voip Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
International | Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 2) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Potentially dilutive securities | 210,983 | 211,479 |
Option [Member] | ||
Potentially dilutive securities | 207,650 | 208,146 |
Warrant [Member] | ||
Potentially dilutive securities | 3,333 | 3,333 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Accounts receivables due | 30 days | ||
Uncertain tax positions | $ 0 | $ 0 | |
Advertising costs | 95,776 | $ 65,380 | |
Deferred Offering Costs | $ 273,423 | ||
Property And Equipment [Member] | Minimum [Member] | |||
Useful lives | P5Y | ||
Property And Equipment [Member] | Maximum [Member] | |||
Useful lives | P7Y | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Concentration risk | 58.00% | 30.00% | |
Customer Concentration Risk [Member] | One Customer [Member] | |||
Concentration risk | 36.00% | 14.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 8,152,661 | $ 7,845,423 |
Less: Accumulated depreciation | (5,762,511) | (5,543,822) |
Net property and equipment | 2,390,150 | 2,301,601 |
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 | 17,441 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 20,983 | 20,983 |
Computer Hardware and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 1,228,520 | 1,236,329 |
Data Center Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 5,586,374 | $ 5,281,017 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 218,689 | $ 193,158 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Intangible assets not subject to amortization | |
Total intangible assets not subject to amortization, Gross amount | $ 3,309,968 |
Total intangible assets not subject to amortization, Accumulated Amortization | 0 |
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 | 2,026,254 |
Total Intangible Assets, Net amount | 113,167 |
Total Goodwill and Intangible Assets, Gross amount | 5,449,389 |
Total Goodwill and Intangible Assets, Accumulated Amortization | 2,026,254 |
Total Goodwill and Intangible Assets, Net | 3,423,135 |
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 | 0 |
Total intangible assets not subject to amortization, Net | $ 3,015,700 |
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 | $ 294,268 |
Total intangible assets not subject to amortization, Accumulated Amortization | 0 |
Total intangible assets not subject to amortization, Net | $ 294,268 |
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 | $ 0 |
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 | 273,833 |
Total Intangible Assets, Net amount | $ 36,167 |
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 | 583,000 |
Total Intangible Assets, Net amount | $ 77,000 |
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 | $ 0 |
Intangible assets subject to amortization, Estimated life in years | 4 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) | Mar. 31, 2021USD ($) |
Scheduled amortization over next five years | |
2022 | $ 113,167 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 48,500 | $ 48,500 |
Lease (Details)
Lease (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Finance lease: | |
Amortization of assets, included in depreciation and amortization expense | $ 350,607 |
Interest on lease liabilities, included in interest expense | 26,941 |
Operating lease: | |
Amortization of assets, included in total operating expense | 25,652 |
Interest on lease liabilities, included in total operating expense | 4,287 |
Total net lease cost | $ 407,487 |
Lease (Details 1)
Lease (Details 1) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Operating Leases | ||
Operating lease ROU asset | $ 220,419 | $ 241,911 |
Current operating lease liabilities | 105,319 | 104,549 |
Noncurrent operating lease liabilities | 125,391 | $ 147,525 |
Total operating lease liabilities | 230,710 | |
Finance leases: | ||
Property and equipment, at cost | 4,416,665 | |
Accumulated amortization | (2,305,689) | |
Property and equipment, net | 2,110,976 | |
Current obligations of finance leases | 1,273,587 | |
Finance leases, net of current obligations | 965,768 | |
Total finance lease liabilities | $ 2,239,355 |
Lease (Details 2)
Lease (Details 2) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows related to operating leases | $ 21,364 |
Financing cash flows related to finance leases | $ 350,607 |
Weighted average remaining lease term operating leases (in years) | 1 year 5 months 20 days |
Weighted average remaining lease term finance leases (in years) | 2 years 26 days |
Weighted average discount rate operating leases | 7.00% |
Weighted average discount rate finance leases | 6.00% |
Lease (Details 3)
Lease (Details 3) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Summary of minimum obligations under operating lease agreements | ||
2022 | $ 105,319 | |
2023 | 108,534 | |
2024 | 37,120 | |
Total lease payments | 250,973 | |
Less: Amounts representing interest | (20,263) | |
Total operating lease liabilities | 230,710 | |
Less: Current operating lease liabilities | (105,319) | $ (104,549) |
Noncurrent operating lease liabilities | 125,391 | $ 147,525 |
Summary of obligations under Finance leases | ||
2022 | 1,260,160 | |
2023 | 773,155 | |
2024 | 377,276 | |
Total lease payments | 2,410,591 | |
Less: Amounts representing interest | (171,236) | |
Total finance lease liabilities | 2,239,355 | |
Less: Current Finance lease liabilities | (1,273,587) | |
Noncurrent Finance lease liabilities | $ 965,768 |
Lease (Details Narrative)
Lease (Details Narrative) - USD ($) | Mar. 04, 2021 | Apr. 01, 2019 | Jan. 01, 2019 | Apr. 01, 2018 | Jul. 31, 2020 | Jun. 30, 2020 | Jun. 29, 2020 | Mar. 31, 2020 | Jan. 31, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Feb. 01, 2017 | Jun. 02, 2020 |
Operating Leased Assets [Line Items] | |||||||||||||
Operating leases, rent expense, net | $ 20,263 | $ 24,905 | |||||||||||
Discount rate | 7.00% | ||||||||||||
Melville [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Aug. 31, 2019 | ||||||||||||
Operating leases, rent expense | $ 8,382 | ||||||||||||
Melville [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating leases, rent expense | $ 897 | ||||||||||||
Lease Term | 3 years 11 months | ||||||||||||
Annual base rent | $ 10,764 | ||||||||||||
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 | ||||||||||||
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 | ||||||||||||
Warwick, RI [Member] | Minimum [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Jan. 31, 2019 | ||||||||||||
Operating leases, rent expense | $ 2,324 | ||||||||||||
Warwick, RI [Member] | Maximum [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating leases, rent expense | $ 2,460 | ||||||||||||
Massachusetts and North Carolina [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating leases, rent expense | $ 25,000 | ||||||||||||
Dallas [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Operating leases, rent expense | $ 1,905 | ||||||||||||
Lease Term | 13 months | 13 months | |||||||||||
Arrow Capital Solutions [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Jun. 1, 2023 | Jun. 29, 2023 | |||||||||||
Lease Term | 3 months | 3 months | 3 months | ||||||||||
Interest rate | 7.00% | 7.00% | 7.00% | ||||||||||
Fiance leases contingent monthly rental payments | $ 4,524 | $ 5,008 | $ 5,050 | ||||||||||
Systems Trading | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Mar. 31, 2024 | Dec. 31, 2023 | Apr. 16, 2022 | Jan. 1, 2023 | |||||||||
Lease Term | 5 years | 4 years | 3 years | ||||||||||
Interest rate | 80.00% | 6.75% | 5.00% | 6.00% | |||||||||
Fiance leases contingent monthly rental payments | $ 1,567 | $ 29,592 | $ 23,475 | $ 10,534 | |||||||||
Systems Trading | First Lease | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Mar. 1, 2022 | ||||||||||||
Interest rate | 7.00% | ||||||||||||
Fiance leases contingent monthly rental payments | $ 1,328 | ||||||||||||
Systems Trading | Second Lease | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Lease expiration date | Mar. 1, 2022 | ||||||||||||
Interest rate | 6.70% | ||||||||||||
Fiance leases contingent monthly rental payments | $ 461 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
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 | $ 24 |
Long Term Debt (Details)
Long Term Debt (Details) | Mar. 31, 2021USD ($) |
Year ending December 31, | |
2022 | $ 455,200 |
2023 | 26,777 |
Long term debt | $ 481,977 |
Long Term Debt (Details Narrati
Long Term Debt (Details Narrative) - Paycheck Protection Program [Member] | 1 Months Ended |
Apr. 30, 2020USD ($) | |
Proceeds from loans | $ 481,977 |
Debt instrument, maturity date | Apr. 30, 2022 |
Debt instrument, interest rate | 1.00% |
Stockholders' (Deficit) (Detail
Stockholders' (Deficit) (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Summary of option/warrant activity | ||
Exercised | (2,500) | |
Employee Stock Option [Member] | ||
Summary of option/warrant activity | ||
Outstanding, beginning | 207,650 | |
Granted | ||
Exercised | ||
Expired/Cancelled | ||
Outstanding, ending | 207,650 | 207,650 |
Exercisable, ending | 139,541 | |
Weighted Average Exercise Price Outstanding, beginning | $ 5.2 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Expire/Cancelled | ||
Weighted Average Exercise Price Outstanding, ending | 5.2 | $ 5.2 |
Exercisable, ending | $ 6.4 | |
Weighted Average Contractual Life | 6 years 9 months 18 days | 6 years 7 months 6 days |
Weighted Average Contractual Life, Exercisable | 5 years 6 months | |
Employee Stock Option [Member] | Minimum [Member] | ||
Summary of option/warrant activity | ||
Range of option/warrant price per share, outstanding, beginning | $ 2 | |
Range of option/warrant price per share, outstanding, ending | 2 | |
Range of option/warrant price per share, Exercisable ending | $ 2 | |
Employee Stock Option [Member] | Maximum [Member] | ||
Summary of option/warrant activity | ||
Range of option/warrant price per share, outstanding, beginning | $ 15.6 | |
Range of option/warrant price per share, outstanding, ending | 15.6 | |
Range of option/warrant price per share, Exercisable ending | $ 15.6 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
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 | |
Share-based compensation expense for options | $ 42,171 | $ 33,048 | |
Total unrecognized compensation expense | $ 221,939 | ||
Weighted average period expected to recognized compensation expense (in years) | 3 months | ||
Series A Preferred Stock Dividend Rate | 10.00% | ||
Accrued dividends | $ 154,556 | $ 154,556 | |
Stock option exercise | 2,500 | ||
Proceed from stock option exercise | $ 5,400 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions [Abstract] | ||
Proceeds from related party debt | $ 3,968 | $ 0 |
Merger (Details Narrative)
Merger (Details Narrative) - FlagshipSolutions | 1 Months Ended |
Feb. 04, 2021USD ($) | |
Subsequent event, description | Pursuant to the Merger, all of the Equity Interests that are issued and outstanding immediately prior to the effectiveness of the filing of the Articles of Merger by Flagship and Merger Sub with the Secretary of State of the State of Florida, will be converted into the right to receive an aggregate amount equal to up to $10,500,000, consisting of $5,550,000, payable in cash, subject to reduction by the amount of any excluded liabilities assumed by us at Closing and subject to adjustment as set forth below in connection with a net working capital adjustment, and up to $4,950,000, payable in shares of our common stock, subject to reduction by the amount by which the valuation of Flagship (the “Flagship Valuation”), as calculated based on Flagship’s unaudited pro forma 2018 financial statements and audited 2019 and 2020 financial statements (the “2020 Audit”), is less than $10,500,000. In the event that the Flagship Valuation, as calculated based on the 2020 Audit, is less than $10,500,000, then, within fifteen (15) days after completion of the audit of Flagship’s financial statements for its 2019, 2020 and 2021 fiscal years (the “2021 Audit”), we have agreed to pay the Equityholders the amount by which the Flagship Valuation, as calculated based on the 2021 Audit, exceeds the sum of $5,550,000 and the value of the merger consideration paid in shares of our common stock by us to the Equityholders at Closing. |
Transaction fees and expenses | $ 100,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) | May 15, 2021 | May 14, 2021 | May 13, 2021 |
Reverse stock split | 1-for-40 reverse stock split | ||
Underwriting Agreement [Member] | Maxim Group [Member] | |||
Number of common stock issued | 1,600,000 | ||
Share Price | $ 0.001 | ||
Warrants exercise price | 7.425 | ||
Proceeds from offering | $ 10,800,000 | ||
Offering price | $ 6.75 | ||
Public offering description | Company granted the Representative a 45-day option to purchase an additional 240,000 shares of Common Stock and/or an additional 240,000 Warrants, in any combination thereof, to cover over-allotments, if any. On May 15, 2021, the Representative partially exercised the over-allotment option to purchase an additional 240,000 Warrants to purchase 240,000 shares of Common Stock. The gross proceeds from the Offering are estimated to be $10.8 million, or approximately $12.4 million if the Representative exercises in full its over-allotment option, before deducting underwriting discounts and commissions and other Offering expenses. |