Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 11, 2021 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-35384 | |
Entity Registrant Name | DATA STORAGE CORPORATION | |
Entity Central Index Key | 0001419951 | |
Entity Tax Identification Number | 98-0530147 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 48 South Service Road | |
Entity Address, City or Town | Melville | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 11747 | |
City Area Code | (212) | |
Local Phone Number | 564-4922 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,692,742 | |
Common Stock, par value $0.001 per share | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | DTST | |
Security Exchange Name | NASDAQ | |
Warrants to purchase shares of Common Stock, par value $0.001 per share | ||
Title of 12(b) Security | Warrants to purchase shares of Common Stock, par value $0.001 per share | |
Trading Symbol | DTSTW | |
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and cash equivalents | $ 12,889,032 | $ 893,598 |
Accounts receivable (less allowance for doubtful accounts of $19,896 and $30,000 in 2021 and 2020, respectively) | 1,837,053 | 554,587 |
Prepaid expenses and other current assets | 521,958 | 239,472 |
Total Current Assets | 15,248,043 | 1,687,657 |
Property and Equipment: | ||
Property and equipment | 6,443,075 | 7,845,423 |
Less—Accumulated depreciation | (4,406,987) | (5,543,822) |
Net Property and Equipment | 2,036,088 | 2,301,601 |
Other Assets: | ||
Goodwill | 6,610,021 | 3,015,700 |
Operating lease right-of-use assets | 469,643 | 241,911 |
Other assets | 72,153 | 49,310 |
Intangible assets, net | 2,355,463 | 455,935 |
Total Other Assets | 9,507,280 | 3,762,856 |
Total Assets | 26,791,411 | 7,752,114 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,287,525 | 979,552 |
Dividend payable | 1,115,674 | |
Deferred revenue | 379,526 | 461,893 |
Line of credit | 50,000 | 24 |
Finance leases payable | 177,175 | 168,139 |
Finance leases payable related party | 805,890 | 1,149,403 |
Operating lease liabilities short term | 204,598 | 104,549 |
Note payable | 374,871 | |
Total Current Liabilities | 2,904,714 | 4,354,105 |
Note payable long term | 107,106 | |
Deferred tax liability long term | 429,619 | |
Operating lease liabilities long term | 274,702 | 147,525 |
Finance leases payable, long term | 126,645 | 247,677 |
Finance leases payable related party, long term | 482,069 | 974,743 |
Total Long Term Liabilities | 1,313,035 | 1,477,051 |
Total Liabilities | 4,217,749 | 5,831,156 |
Stockholders' Equity: | ||
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 0 and 1,401,786 shares issued and outstanding in 2021 and 2020, respectively | 1,402 | |
Common stock, par value $.001; 250,000,000 shares authorized; 6,692,742 and 3,213,486 shares issued and outstanding in 2021 and 2020, respectively | 6,693 | 3,213 |
Additional paid in capital | 38,189,610 | 17,745,785 |
Accumulated deficit | (15,521,578) | (15,734,737) |
Total Data Storage Corp Stockholders' Equity | 22,674,725 | 2,015,663 |
Non-controlling interest in consolidated subsidiary | (101,063) | (94,705) |
Total Stockholder's Equity | 22,573,662 | 1,920,958 |
Total Liabilities and Stockholders' Equity | $ 26,791,411 | $ 7,752,114 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts related to accounts receivable | $ 19,896 | $ 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 | 0 | 1,401,786 |
Preferred stock, outstanding | 0 | 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 | 6,692,742 | 3,213,486 |
Common stock, outstanding | 6,692,742 | 3,213,486 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Sales | $ 3,860,258 | $ 2,723,532 | $ 9,963,198 | $ 6,827,867 |
Cost of sales | 2,167,622 | 1,621,008 | 5,609,845 | 3,977,546 |
Gross Profit | 1,692,636 | 1,102,524 | 4,353,353 | 2,850,321 |
Selling, general and administrative | 2,024,304 | 1,017,863 | 4,745,022 | 2,882,755 |
Income (loss) from Operations | (331,668) | 84,661 | (391,669) | (32,434) |
Other Income (Expense) | ||||
Interest expense, net | (15,726) | (42,726) | (97,392) | (132,845) |
Gain on contingent liability | 350,000 | |||
Loss on disposal of equipment | (29,732) | |||
Gain on forgiveness of debt | 481,977 | 789,277 | ||
Total Other Income (Expense) | 466,251 | (42,726) | 662,153 | 217,155 |
Income before provision for income taxes | 134,583 | 41,935 | 270,484 | 184,721 |
Provision for income taxes | ||||
Net Income | 134,583 | 41,935 | 270,484 | 184,721 |
Non-controlling interest in consolidated subsidiary | 1,047 | 4,283 | 6,358 | 17,833 |
Net Income attributable to Data Storage Corp | 135,630 | 46,218 | 276,842 | 202,554 |
Preferred Stock Dividends | (36,650) | (63,683) | (105,877) | |
Net Income Attributable to Common Stockholders | $ 135,630 | $ 9,568 | $ 213,159 | $ 96,677 |
Earning per Share – Basic | $ 0.02 | $ 0 | $ 0.05 | $ 0.03 |
Earning per Share – Diluted | $ 0.02 | $ 0 | $ 0.05 | $ 0.03 |
Weighted Average Number of Shares – Basic | 6,350,826 | 3,213,485 | 4,530,188 | 3,212,821 |
Weighted Average Number of Shares – Diluted | 6,482,577 | 3,383,499 | 4,720,546 | 3,365,675 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,402 | $ 3,211 | $ 17,581,659 | $ (15,790,076) | $ (68,048) | $ 1,728,148 |
Beginning balance, shares at Dec. 31, 2019 | 1,401,786 | 3,210,986 | ||||
Stock-based compensation | 116,557 | 116,557 | ||||
Stock options exercise | $ 2 | 5,398 | 5,400 | |||
Stock Options Exercise, shares | 2,500 | |||||
Net Income (Loss) | 202,554 | (17,833) | 184,721 | |||
Preferred stock dividends | (105,877) | (105,877) | ||||
Ending balance, value at Sep. 30, 2020 | $ 1,402 | $ 3,213 | 17,703,614 | (15,693,399) | (85,881) | 1,928,949 |
Ending balance, shares at Sep. 30, 2020 | 1,401,786 | 3,213,486 | ||||
Beginning balance, value at Jun. 30, 2020 | $ 1,402 | $ 3,213 | 17,661,443 | (15,702,967) | (81,598) | 1,881,493 |
Beginning balance, shares at Jun. 30, 2020 | 1,401,786 | 3,213,486 | ||||
Stock-based compensation | 42,171 | 42,171 | ||||
Net Income (Loss) | 46,218 | (4,283) | 41,935 | |||
Preferred stock dividends | (36,650) | (36,650) | ||||
Ending balance, value at Sep. 30, 2020 | $ 1,402 | $ 3,213 | 17,703,614 | (15,693,399) | (85,881) | 1,928,949 |
Ending balance, shares at Sep. 30, 2020 | 1,401,786 | 3,213,486 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 1,402 | $ 3,213 | 17,745,785 | (15,734,737) | (94,705) | 1,920,958 |
Beginning balance, shares at Dec. 31, 2020 | 1,401,786 | 3,213,486 | ||||
Conversion of preferred series to common stock | $ (1,402) | $ 44 | 1,358 | |||
Conversion of preferred series to stock, shares | (1,401,786) | 43,806 | ||||
Proceeds from issuance of common stock and warrants | $ 2,975 | 16,941,405 | 16,944,380 | |||
Proceeds from issuance of common stock and warrants, shares | 2,975,000 | |||||
Stock-based compensation | 120,252 | 120,252 | ||||
Stock options exercise | $ 5 | (5) | ||||
Stock Options Exercise, shares | 5,060 | 5,060 | ||||
Stock Warrants Exercise | $ 456 | 3,380,815 | $ 3,381,271 | |||
Stock Warrants Exercise, shares | 455,390 | |||||
Net Income (Loss) | 276,842 | (6,358) | 270,484 | |||
Preferred stock dividends | (63,683) | (63,683) | ||||
Ending balance, value at Sep. 30, 2021 | $ 6,693 | 38,189,610 | (15,521,578) | (101,063) | 22,573,662 | |
Ending balance, shares at Sep. 30, 2021 | 6,692,742 | |||||
Beginning balance, value at Jun. 30, 2021 | $ 4,862 | 27,276,653 | (15,657,208) | (100,016) | 11,524,291 | |
Beginning balance, shares at Jun. 30, 2021 | 4,862,352 | |||||
Conversion of preferred series to stock, shares | 1,375,000 | |||||
Proceeds from issuance of common stock and warrants | $ 1,375 | 7,488,110 | 7,489,485 | |||
Stock-based compensation | 44,032 | 44,032 | ||||
Stock Warrants Exercise | $ 456 | 3,380,815 | 3,381,271 | |||
Stock Warrants Exercise, shares | 455,390 | |||||
Net Income (Loss) | 135,630 | (1,047) | 134,583 | |||
Ending balance, value at Sep. 30, 2021 | $ 6,693 | $ 38,189,610 | $ (15,521,578) | $ (101,063) | $ 22,573,662 | |
Ending balance, shares at Sep. 30, 2021 | 6,692,742 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 270,484 | $ 184,721 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 947,669 | 754,243 |
Stock based compensation | 120,252 | 116,557 |
Gain on forgiveness of debt | (789,277) | |
Gain on contingent liability | (350,000) | |
Loss on disposal of equipment | 29,732 | |
Changes in Assets and Liabilities: | ||
Accounts receivable | 106,797 | (241,675) |
Other assets | (344) | 16,125 |
Prepaid expenses and other current assets | (154,912) | (98,874) |
Right of use asset | (227,732) | 61,233 |
Accounts payable and accrued expenses | (206,385) | 252,717 |
Deferred revenue | (151,103) | 61,687 |
Deferred tax liability | (19,362) | |
Operating lease liability | 227,226 | (60,647) |
Net Cash Provided by Operating Activities | 153,045 | 696,087 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (418,422) | (164,796) |
Cash acquired in business acquisition | 212,068 | |
Cash consideration for business acquisition | (6,149,343) | |
Net Cash Used in Investing Activities | (6,355,697) | (164,796) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of note payable | 481,977 | |
Proceeds from line of credit | 50,000 | |
Repayments of finance lease obligations related party | (886,189) | (641,170) |
Repayments of finance lease obligations | (111,995) | (24,320) |
Proceeds from issuance of common stock and warrants | 16,944,380 | |
Cash received for the exercise of warrants | 3,381,271 | |
Cash received for the exercised of options | 5,400 | |
Repayments of dividend payable | (1,179,357) | |
Repayment of line of credit | (24) | (74,976) |
Net Cash Provided by (Used) in Financing Activities | 18,198,086 | (253,089) |
Increase in Cash and Cash Equivalents | 11,995,434 | 278,202 |
Cash and Cash Equivalents, Beginning of Period | 893,598 | 326,561 |
Cash and Cash Equivalents, End of Period | 12,889,032 | 604,763 |
Supplemental Disclosures: | ||
Cash paid for interest | 92,779 | 124,297 |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Accrual of preferred stock dividend | 63,683 | 105,877 |
Assets acquired by finance lease | $ 50,000 | $ 808,261 |
Basis of Presentation, Organiza
Basis of Presentation, Organization and Other Matters | 9 Months Ended |
Sep. 30, 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), Cyber Security and Voice and Data solutions. Headquartered in Melville, NY, DSC offers solutions and services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government industries. DSC derives its revenues from subscription services and solutions, managed services, software and maintenance, equipment and onboarding provisioning. DSC maintains infrastructure and storage equipment in several technical centers in New York, Massachusetts, Texas, Florida and North Carolina. On May 31, 2021, the Company completed a merger (the “Merger”) under an Agreement and Plan of Merger (the “Merger Agreement”) with Flagship Solutions, LLC (“Flagship”) (a Florida limited liability company) and the Company’s wholly-owned subsidiary, Data Storage FL, LLC, a Florida limited liability company, a Florida limited liability company. Flagship is a provider of IBM solutions, managed services and cloud solutions. The Company expects that Flagship’s business will be synergistic with the Company’s existing IBM business and anticipates meaningful operation efficiency through the integration of the two organizations. The Company also believes the Merger will provide the combined entities a comprehensive one-stop provider to cross-sell solutions across each organization’s respective enterprise, as well as middle-market customers. Key offerings for the combined companies are expected to include a wide array of multicloud information technology solutions in highly secure, reliable enterprise level cloud services for companies using IBM Power systems, Microsoft Windows and Linux, including: Infrastructure as a Service (IaaS), Disaster Recovery of digital information (DRaaS), Cyber Security as a Service (CSaaS), and Data Analytics as a Service. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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, (iii) Flagship Solutions, LLC, a Florida limited liability company, 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 September 30, 2021 and its results of operations and cash flows for the three and nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 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. In July 2021, the FASB issued ASU No. 2021-05, Lessors—Certain Leases with Variable Lease Payments (Topic 842), Which requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate (hereafter referred to as “variable payments”) as an operating lease on the commencement date of the lease if specified criteria are met. ASU 2021-05 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. 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 September 30, 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 maintains allowances for doubtful accounts on factors surrounding the credit risk of specific customers, historical trends, and other information. As of September 30, 2021, DSC had three customers with an accounts receivable balance representing 47 65 For the nine months ended September 30, 2021, the Company had one customer that accounted for 14 10 Accounts Receivable/Allowance for Credit Losses The Company sells its services to customers on an open credit basis. Accounts receivables are uncollateralized, non-interest-bearing customer obligations. Accounts receivables are typically due within 30 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 7 29,732 Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At September 30, 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 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 Infrastructure as a Service (IaaS) provides clients the ability to migrate compute and store on DSC enterprise level technical assets in Tier 3 data centers. DSC provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, flash storage, disaster recovery and cyber security while eliminating client capital expenditures. Clients can subscribe to disaster recovery solutions without subscribing to IaaS. Product offerings provided directly from DSC are High Availability, Data Vaulting and DRaaS type solutions, including standby servers which allows clients to centralize and streamline their mission critical digital information and technical environment. Client’s data is vaulted, maintenance of retention schedules for corporate governances and regulations to meet their back to work objective in a disaster. 2) Managed Services These services are performed at the inception of a contract. The Company provides professional assistance to its clients during the implementation processes. On-boarding and set-up services ensure that the solution or software is installed properly and function as designed to provide clients with the best solutions. In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing. The Company also derives both one time and subscription-based revenue, from providing support, management and renewal of software, hardware, third party maintenance contracts and third-party cloud services to clients. The managed services include help desk, remote access, operating system and software patch management, annual recovery tests and manufacturer support for equipment and on-gong monitoring of client system performance. 3) Equipment and Software 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, infrastructure and hybrid cloud solutions provided to clients. 4) Nexxis VoIP and Direct Internet Access The company offers VoIP, Internet access and data transport services to help keep businesses fully connected to the Internet from any location. The company provides, among other things, highly reliable Hosted VoIP solutions with equipment options for IP phones and internet speeds of up to 10Gb delivered over fiber optics. Disaggregation of revenue In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition. Schedule of revenue is disaggregated by major product For the Three Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,799,488 $ 27,567 $ 1,827,055 Equipment and Software 316,107 — 316,107 Managed Services 1,472,261 — 1,472,261 Nexxis VoIP Services 210,445 — 210,445 Other 34,390 — 34,390 Total Revenue $ 3,832,691 $ 27,567 $ 3,860,258 For the Three Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 169,565 — 169,565 Nexxis VoIP Services 180,225 — 180,225 Total Revenue $ 2,702,981 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 754,438 $ 936,344 Products and services transferred over time 3,105,820 1,787,188 Total Revenue $ 3,860,258 $ 2,723,532 For the Nine Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 5,115,212 $ 97,354 $ 5,212,566 Equipment and Software 1,541,441 — 1,541,441 Managed Services 2,508,515 — 2,508,515 Nexxis VoIP Services 588,889 — 588,889 Other 111,787 — 111,787 Total Revenue $ 9,865,844 $ 97,354 $ 9,963,198 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 2,230,873 $ 1,544,786 Products and services transferred over time 7,732,325 5,283,081 Total Revenue $ 9,963,198 $ 6,827,867 Contract receivables are recorded at the invoiced amount and are uncollateralized, non-interest-bearing client obligations. Provisions for estimated uncollectible accounts receivable are made for individual accounts based upon specific facts and circumstances including criteria such as their age, amount, and client standing. Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract. Transaction price allocated to the remaining performance obligations The Company has the following performance obligations: 1) Data Vaulting 2) High Availability (“HA”) : A managed subscription-based service which offers cost-effective mirroring software replication technology and provides one (1) hour or less recovery time. 3) Infrastructure as a Service (“IaaS”) : subscription-based service offers “capacity on-demand” for IBM Power and Intel server systems. 4) Internet : subscription-based service offers continuous internet connection along with FailSAFE providing disaster recovery. 5) Support and Maintenance : subscription-based service offers support for servers, firewalls, desktops or software and ad hoc support and help desk. 6) Implementation / Set-Up Fees : on boarding and set-up IaaS and DRaaS and Cyber Security. 7) Equipment sales : sale of servers and data storage equipment to the client. 9) License : granting SSL certificates and other licenses. 10) VoIP services (VoIP) and Direct Internet Access: subscription-based business Hosted VoIP, SIP Trunk and Toll Free solutions. 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. E quipment 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. Warranties The Company offers guaranteed service levels 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 $ 409,468 234,565 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. Net Income (Loss) Per Common Share In accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The following table sets forth the information needed to compute basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020: Schedule of Earning per share basic and dilute For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Net Income Available to Common Shareholders $ 135,630 $ 9,568 $ 213,159 $ 96,677 Weighted average number of common shares – basic 6,350,826 3,213,485 4,530,188 3,212,821 Dilutive securities Options 128,418 166,681 187,025 149,520 Warrants 3,333 3,333 3,333 3,333 Weighted average number of common shares – diluted 6,482,577 3,383,499 4,720,546 3,365,675 Earnings per share, basic $ 0.02 $ 0.00 $ 0.05 $ 0.03 Earnings per share, diluted $ 0.02 $ 0.00 $ 0.05 $ 0.03 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: Schedule of anti-dilutive income (loss) per share Three Months ended September 30, Nine Months ended September 30, 2021 2020 2021 2020 Options 96,248 43,965 37,641 61,125 Warrants 2,415,860 — 2,415,860 — 2,512,108 43,965 2,453,501 61,125 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment Property and equipment, at cost, consist of the following: Schedule of property and equipment September 30, December 31, 2021 2020 Storage equipment $ 476,887 $ 756,236 Website and software — 533,417 Furniture and fixtures 18,160 17,441 Leasehold improvements 20,983 20,983 Computer hardware and software 314,721 1,236,329 Data center equipment 5,612,324 5,281,017 6,443,075 7,845,423 Less: Accumulated depreciation (4,406,987 ) (5,543,822 ) Net property and equipment $ 2,036,088 $ 2,301,601 Depreciation expense for the nine months ended September 30, 2021 and 2020 was $ 709,195 608,743 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 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: Schedule of goodwill and intangible assets September 30, 2021 Estimated life Accumulated in years Gross amount Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 6,610,021 $ — $ 6,610,021 Trademarks Indefinite 529,268 — 529,268 Total intangible assets not subject to amortization 7,139,289 — 7,139,289 Intangible assets subject to amortization Customer lists 7 2,614,099 833,147 1,780,952 ABC acquired contracts 5 310,000 304,835 5,165 SIAS acquired contracts 5 660,000 649,000 11,000 Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 3,924 29,078 Total intangible assets subject to amortization 3,889,248 2,063,053 1,826,195 Total Goodwill and Intangible Assets $ 11,028,537 $ 2,063,053 $ 8,965,484 Scheduled amortization over the next three years are as follows: Schedule of amortization over the next two years Twelve months ending September 30, 2022 $ 292,754 2023 276,587 2024 273,439 2025 267,143 Thereafter 716,272 Total $ 1,826,195 Amortization expense for the nine months ended September 30, 2021 and 2020 were $ 238,474 145,500 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | 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 commenced 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 $ 10,764 897 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 July 31, 2023 The lease for office space in Warwick, RI, called for monthly payments of $ 2,324 2,460 January 31, 2019 January 31, 2021 31,176 2,598 On July 31, 2021, the Company signed a 3 August 1, 2021 328,026 The Company leases technical space in New York, Massachusetts, North Carolina and Florida. These leases are month to month and the monthly rent is approximately $ 39,000 In 2020, the Company entered into a new technical space lease agreement in Dallas, TX. The lease term is 13 1,403 July 31, 2023 Finance Lease Obligations On June 1, 2020, the Company entered into a lease agreement with a finance company to lease equipment. The lease obligation is payable in monthly installments of $ 5,008 7 3 June 1, 2023 On June 29, 2020, the Company entered into a lease agreement with a finance company to lease equipment. The lease obligation is payable in monthly installments of $ 5,050 7 3 June 29, 2023 On July 31, 2020, the Company entered into a lease agreement with a finance company to lease equipment under a finance lease. The lease obligation is payable in monthly installments of $ 4,524 7 July 31, 2023 Subsequent to September 30, 2021, the Company entered into a lease agreement with a finance company to lease equipment under a finance lease. The lease commenced in the fourth quarter of 2021 whereas the Company is obligated to pay monthly installments of $ 19,751 8 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 5 4 April 16, 2022 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 6.75 5 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 March 1, 2022 7 461 March 1, 2022 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 6 3 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 March 31, 2024 8 The Company determines if an arrangement contains a lease at inception. Right of Use “ROU” assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. A discount rate of 7 The components of lease expense were as follows: Components of lease expense Nine Months Ended Finance leases: Amortization of assets, included in depreciation and amortization expense $ 998,185 Interest on lease liabilities, included in interest expense 134,188 Operating lease: Amortization of assets, included in total operating expense 94,158 Interest on lease liabilities, included in total operating expense 13,624 Total net lease cost $ 1,240,155 Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease right-of-use asset $ 469,643 Current operating lease liabilities $ 204,598 Noncurrent operating lease liabilities 274,702 Total operating lease liabilities $ 479,300 September 30, 2021 Finance leases: Property and equipment, at cost $ 4,366,665 Accumulated amortization (2,538,765 ) Property and equipment, net $ 1,827,900 Current obligations of finance leases $ 983,065 Finance leases, net of current obligations 608,714 Total finance lease liabilities $ 1,591,779 Supplemental cash flow and other information related to leases was as follows: Supplemental balance sheet information related to leases Nine Months Ended September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 227,226 Financing cash flows related to finance leases $ 998,183 Weighted average remaining lease term (in years): Operating leases 2.38 Finance leases 1.72 Weighted average discount rate: Operating leases 5 % Finance leases 7 % Long-term obligations under the operating and finance leases at September 30, 2021 mature as follows: Long-term obligations under the operating and Finance leases For the Twelve Months Ended September 30, Operating Leases Finance Leases 2022 $ 222,011 1,037,916 2023 195,594 553,478 2024 90,979 103,226 Total lease payments 508,584 1,694,620 Less: Amounts representing interest (29,284 ) (102,841 ) Total lease obligations 479,300 1,591,779 Less: Current (204,598 ) (983,065 ) $ 274,702 $ 608,714 As of September 30, 2021, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the nine months ended September 30, 2021 and 2020 was $ 130,020 127,268 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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 0.5 0 24 On March 24, 2017, Flagship entered into a revolving demand note with a bank for an amount not to exceed $750,000. The line of credit may be cancelled by either party at any time for any reason by written notice to the other and is collateralized by all of Flagship’s assets and the personal guarantee of two members of the Company. The stated interest rate is adjustable with interest equal to the Prime Rate plus four percent per annum. Repayment terms consist of interest only due monthly with all principal and remaining interest due on demand. The line of credit balance outstanding as of September 30, 2021 was $ 50,000 |
Note payable
Note payable | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Note payable | Note 7 – Note payable On April 30, 2020, the Company was granted a loan from a banking institution, in the principal amount of $ 481,977 April 30, 2022 1.00 On June 1, 2021 the Company assumed the PPP loan of Flagship Solutions, LLC in the amount of $ 307,300 |
Stockholders_ (Deficit)
Stockholders’ (Deficit) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Stockholders’ (Deficit) | Note 8 - Stockholders’ (Deficit) Capital Stock The Company has 260,000,000 250,000,000 .001 10,000,000 .001 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. 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 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 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 0.001 7.425 The public offering price was $ 6.75 1,600,000 240,000 10.8 Pursuant to the Underwriting Agreement, the Company issued warrants to purchase up to a total of 80,000 7.425 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. 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 July 21, 2021, the Company entered into a securities purchase agreement with certain accredited institutional investors resulting in the raise of $ 8,305,000 1,375,000 0.001 1,031,250 6.15 Maxim Group LLC acted as the sole placement agent for the Company in connection with the Offering. Pursuant to that certain Placement Agency Agreement, dated as of July 19, 2021, between the Company and the Placement Agent (the “Placement Agency Agreement”), the Placement Agent will be entitled to a cash fee of 6.5% of the gross proceeds of the Offering and the reimbursement for certain out-of-pocket expenses up to $ 50,000 The Company received net proceeds of $ 7,518,766 During the nine months ended September 30, 2021, employees exercised 6,592 5,060 During the nine months ended September 30, 2021, warrant holders exercised 455,390 3,381,271 Common Stock Options A summary of the Company’s option activity and related information follows: Schedule of option activity and related information Number of Range of Weighted Weighted Options Outstanding at December 31, 2020 207,747 $ 2.00 15.76 $ 5.20 2.00 Options Granted 39,357 5.41 5.80 5.53 10.00 Exercised (6,592 ) 2.00 2.00 — Expired/Cancelled (15,846 ) 3.00 14.00 5.89 — Options Outstanding at September 30, 2021 224,666 $ 2.00 16.00 $ 5.53 5.51 Options Exercisable at September 30, 2021 141,105 $ 2.00 16.00 $ 5.53 6.26 Share-based compensation expense for options totaling $ 120,252 116,557 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 the Company over a period equal to the expected life of the awards. As of September 30, 2021, there was $ 354,344 2.3 The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the nine months ended September 30, 2021 are set forth in the table below. Schedule of weighted average fair value of options granted 2021 Weighted average fair value of options granted $ 5.35 Risk-free interest rate 1.31 1.62 Volatility 217 219 Expected life (years) 10 Dividend yield 0.00 Common Stock Warrant A summary of the Company’s warrant activity and related information follows: Schedule of warrant activity and related information Number of Range of Weighted Weighted Warrant Outstanding at December 31, 2020 3,333 $ 0.40 $ 0.40 3.5 Warrant Granted 2,871,250 7.43 6.67 6.97 5.00 Exercised (455,390 ) 7.43 7.43 — Expired/Cancelled — — — — Warrant Outstanding at September 30, 2021 2,419,193 $ 7.43 0.40 $ 6.87 4.92 Warrant Exercisable at September 30, 2021 2,419,193 $ 7.43 0.40 $ 6.87 4.92 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 1,401,786 43,806 1,179,357 0 |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 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 | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 - Related Party Transactions Finance Lease Obligations – Related Party During the nine months ended September 30, 2021 the Company entered into one related party finance lease obligations. See Note 5 for details. Nexxis Capital LLC Charles M. Piluso (Chairman and CEO) and Harold Schwartz (President) collectively own 100% of Nexxis Capital LLC (“Nexxis Capital”). Nexxis Capital was formed to purchase equipment and provide leases to Nexxis Inc.’s customers. The Company received funds of $ 10,935 31,251 |
Merger
Merger | 9 Months Ended |
Sep. 30, 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”). The Company acquired Flagship on May 31, 2021, and became its wholly-owned subsidiary. 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, was converted into the right to receive an aggregate amount equal to up to $ 10,500,000 5,550,000 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 net working capital at Closing is more or is less than the target working capital amount specified in the Merger Agreement. Concurrently with the Closing, Flagship and Mark Wyllie, Flagship’s Chief Executive Officer, entered into an Employment Agreement, which was 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 $ 170,000 400,000 Following the closing of the transaction, Flagship’s financial statements as of the Closing were consolidated with the Consolidated Financial Statements of the Company. These amounts are provisional and may be adjusted during the measurement period. The following sets forth the components of the purchase price: Schedule of Purchase price Purchase price: Cash paid to seller $ 6,149,343 Total purchase price 6,149,343 Assets acquired: Cash 212,068 Accounts Receivable 1,389,263 Prepaid Expenses 127,574 Fixed Assets 4,986 Website and Digital Assets 33,002 Security Deposits 22,500 Total assets acquired 1,789,393 Liabilities assumed: Accounts payable and accrued expenses 514,354 Deferred Revenue 68,736 PPP Loan Payable 307,300 Deferred Tax Liability 448,305 Total liabilities assumed 1,338,695 Net assets acquired 450,698 Excess purchase price $ 5,698,645 Due to the limited amount of time since the acquisition date, the assets and liabilities of Flagship were recorded based primarily on their acquisition date carrying values. Management believes the estimated fair value of these accounts on the acquisition date approximates their carrying value as reflected in the table above due to the short-term nature of these instruments. The remaining assets and liabilities primarily consisted of goodwill and customer relationships. We will adjust the remaining assets and liabilities to fair value as valuations are completed and we obtain information necessary to complete the analyses, but no later than one year from the acquisition data. For purposes of the preliminary allocation of the purchase price, the excess purchase price has been recorded as goodwill. The following presents the unaudited pro-forma combined results of operations of the Company with Flagship Solutions as if the entities were combined on January 1, 2020. Schedule of unaudited pro-forma Three Months Ended September 30, 2020 Revenues $ 3,526,834 Net loss attributable to common shareholders $ (197,055 ) Net loss per share $ (0.04 ) Weighted average number of shares outstanding 4,530,188 Nine Months Ended September 30, 2020 Revenues $ 12,895,505 Net loss attributable to common shareholders $ (178,429 ) Net loss per share $ (0.06 ) Weighted average number of shares outstanding 3,212,821 Nine Months Ended September 30, 2021 Revenues $ 18,138,730 Net income attributable to common shareholders $ 1,338,334 Net income per share $ 0.30 Weighted average number of shares outstanding 4,530,188 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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, (iii) Flagship Solutions, LLC, a Florida limited liability company, |
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 September 30, 2021 and its results of operations and cash flows for the three and nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 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. In July 2021, the FASB issued ASU No. 2021-05, Lessors—Certain Leases with Variable Lease Payments (Topic 842), Which requires a lessor to classify a lease with variable lease payments that do not depend on an index or rate (hereafter referred to as “variable payments”) as an operating lease on the commencement date of the lease if specified criteria are met. ASU 2021-05 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. |
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 September 30, 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 maintains allowances for doubtful accounts on factors surrounding the credit risk of specific customers, historical trends, and other information. As of September 30, 2021, DSC had three customers with an accounts receivable balance representing 47 65 For the nine months ended September 30, 2021, the Company had one customer that accounted for 14 10 |
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 receivables are uncollateralized, non-interest-bearing customer obligations. Accounts receivables are typically due within 30 |
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 7 29,732 |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. At September 30, 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 |
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 Infrastructure as a Service (IaaS) provides clients the ability to migrate compute and store on DSC enterprise level technical assets in Tier 3 data centers. DSC provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, flash storage, disaster recovery and cyber security while eliminating client capital expenditures. Clients can subscribe to disaster recovery solutions without subscribing to IaaS. Product offerings provided directly from DSC are High Availability, Data Vaulting and DRaaS type solutions, including standby servers which allows clients to centralize and streamline their mission critical digital information and technical environment. Client’s data is vaulted, maintenance of retention schedules for corporate governances and regulations to meet their back to work objective in a disaster. 2) Managed Services These services are performed at the inception of a contract. The Company provides professional assistance to its clients during the implementation processes. On-boarding and set-up services ensure that the solution or software is installed properly and function as designed to provide clients with the best solutions. In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing. The Company also derives both one time and subscription-based revenue, from providing support, management and renewal of software, hardware, third party maintenance contracts and third-party cloud services to clients. The managed services include help desk, remote access, operating system and software patch management, annual recovery tests and manufacturer support for equipment and on-gong monitoring of client system performance. 3) Equipment and Software 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, infrastructure and hybrid cloud solutions provided to clients. 4) Nexxis VoIP and Direct Internet Access The company offers VoIP, Internet access and data transport services to help keep businesses fully connected to the Internet from any location. The company provides, among other things, highly reliable Hosted VoIP solutions with equipment options for IP phones and internet speeds of up to 10Gb delivered over fiber optics. Disaggregation of revenue In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition. Schedule of revenue is disaggregated by major product For the Three Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,799,488 $ 27,567 $ 1,827,055 Equipment and Software 316,107 — 316,107 Managed Services 1,472,261 — 1,472,261 Nexxis VoIP Services 210,445 — 210,445 Other 34,390 — 34,390 Total Revenue $ 3,832,691 $ 27,567 $ 3,860,258 For the Three Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 169,565 — 169,565 Nexxis VoIP Services 180,225 — 180,225 Total Revenue $ 2,702,981 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 754,438 $ 936,344 Products and services transferred over time 3,105,820 1,787,188 Total Revenue $ 3,860,258 $ 2,723,532 For the Nine Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 5,115,212 $ 97,354 $ 5,212,566 Equipment and Software 1,541,441 — 1,541,441 Managed Services 2,508,515 — 2,508,515 Nexxis VoIP Services 588,889 — 588,889 Other 111,787 — 111,787 Total Revenue $ 9,865,844 $ 97,354 $ 9,963,198 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 2,230,873 $ 1,544,786 Products and services transferred over time 7,732,325 5,283,081 Total Revenue $ 9,963,198 $ 6,827,867 Contract receivables are recorded at the invoiced amount and are uncollateralized, non-interest-bearing client obligations. Provisions for estimated uncollectible accounts receivable are made for individual accounts based upon specific facts and circumstances including criteria such as their age, amount, and client standing. Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract. Transaction price allocated to the remaining performance obligations The Company has the following performance obligations: 1) Data Vaulting 2) High Availability (“HA”) : A managed subscription-based service which offers cost-effective mirroring software replication technology and provides one (1) hour or less recovery time. 3) Infrastructure as a Service (“IaaS”) : subscription-based service offers “capacity on-demand” for IBM Power and Intel server systems. 4) Internet : subscription-based service offers continuous internet connection along with FailSAFE providing disaster recovery. 5) Support and Maintenance : subscription-based service offers support for servers, firewalls, desktops or software and ad hoc support and help desk. 6) Implementation / Set-Up Fees : on boarding and set-up IaaS and DRaaS and Cyber Security. 7) Equipment sales : sale of servers and data storage equipment to the client. 9) License : granting SSL certificates and other licenses. 10) VoIP services (VoIP) and Direct Internet Access: subscription-based business Hosted VoIP, SIP Trunk and Toll Free solutions. |
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 | E quipment 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. |
Warranties | Warranties The Company offers guaranteed service levels 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 $ 409,468 234,565 |
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. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share In accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The following table sets forth the information needed to compute basic and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020: Schedule of Earning per share basic and dilute For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Net Income Available to Common Shareholders $ 135,630 $ 9,568 $ 213,159 $ 96,677 Weighted average number of common shares – basic 6,350,826 3,213,485 4,530,188 3,212,821 Dilutive securities Options 128,418 166,681 187,025 149,520 Warrants 3,333 3,333 3,333 3,333 Weighted average number of common shares – diluted 6,482,577 3,383,499 4,720,546 3,365,675 Earnings per share, basic $ 0.02 $ 0.00 $ 0.05 $ 0.03 Earnings per share, diluted $ 0.02 $ 0.00 $ 0.05 $ 0.03 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: Schedule of anti-dilutive income (loss) per share Three Months ended September 30, Nine Months ended September 30, 2021 2020 2021 2020 Options 96,248 43,965 37,641 61,125 Warrants 2,415,860 — 2,415,860 — 2,512,108 43,965 2,453,501 61,125 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of revenue is disaggregated by major product | Schedule of revenue is disaggregated by major product For the Three Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,799,488 $ 27,567 $ 1,827,055 Equipment and Software 316,107 — 316,107 Managed Services 1,472,261 — 1,472,261 Nexxis VoIP Services 210,445 — 210,445 Other 34,390 — 34,390 Total Revenue $ 3,832,691 $ 27,567 $ 3,860,258 For the Three Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 1,416,847 $ 20,551 $ 1,437,398 Equipment and Software 936,344 — 936,344 Managed Services 169,565 — 169,565 Nexxis VoIP Services 180,225 — 180,225 Total Revenue $ 2,702,981 $ 20,551 $ 2,723,532 For the Three Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 754,438 $ 936,344 Products and services transferred over time 3,105,820 1,787,188 Total Revenue $ 3,860,258 $ 2,723,532 For the Nine Months Ended September 30, 2021 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 5,115,212 $ 97,354 $ 5,212,566 Equipment and Software 1,541,441 — 1,541,441 Managed Services 2,508,515 — 2,508,515 Nexxis VoIP Services 588,889 — 588,889 Other 111,787 — 111,787 Total Revenue $ 9,865,844 $ 97,354 $ 9,963,198 For the Nine Months Ended September 30, 2020 United States International Total Infrastructure & Disaster Recovery/Cloud Service $ 4,133,213 $ 107,583 $ 4,240,796 Equipment and Software 1,544,786 — 1,544,786 Managed Services 557,515 — 557,515 Nexxis VoIP Services 484,770 — 484,770 Total Revenue $ 6,720,284 $ 107,583 $ 6,827,867 For the Nine Months Ended September 30, Timing of revenue recognition 2021 2020 Products transferred at a point in time $ 2,230,873 $ 1,544,786 Products and services transferred over time 7,732,325 5,283,081 Total Revenue $ 9,963,198 $ 6,827,867 |
Schedule of Earning per share basic and dilute | Schedule of Earning per share basic and dilute For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Net Income Available to Common Shareholders $ 135,630 $ 9,568 $ 213,159 $ 96,677 Weighted average number of common shares – basic 6,350,826 3,213,485 4,530,188 3,212,821 Dilutive securities Options 128,418 166,681 187,025 149,520 Warrants 3,333 3,333 3,333 3,333 Weighted average number of common shares – diluted 6,482,577 3,383,499 4,720,546 3,365,675 Earnings per share, basic $ 0.02 $ 0.00 $ 0.05 $ 0.03 Earnings per share, diluted $ 0.02 $ 0.00 $ 0.05 $ 0.03 |
Schedule of anti-dilutive income (loss) per share | Schedule of anti-dilutive income (loss) per share Three Months ended September 30, Nine Months ended September 30, 2021 2020 2021 2020 Options 96,248 43,965 37,641 61,125 Warrants 2,415,860 — 2,415,860 — 2,512,108 43,965 2,453,501 61,125 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment September 30, December 31, 2021 2020 Storage equipment $ 476,887 $ 756,236 Website and software — 533,417 Furniture and fixtures 18,160 17,441 Leasehold improvements 20,983 20,983 Computer hardware and software 314,721 1,236,329 Data center equipment 5,612,324 5,281,017 6,443,075 7,845,423 Less: Accumulated depreciation (4,406,987 ) (5,543,822 ) Net property and equipment $ 2,036,088 $ 2,301,601 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and intangible assets | Schedule of goodwill and intangible assets September 30, 2021 Estimated life Accumulated in years Gross amount Amortization Net Intangible assets not subject to amortization Goodwill Indefinite $ 6,610,021 $ — $ 6,610,021 Trademarks Indefinite 529,268 — 529,268 Total intangible assets not subject to amortization 7,139,289 — 7,139,289 Intangible assets subject to amortization Customer lists 7 2,614,099 833,147 1,780,952 ABC acquired contracts 5 310,000 304,835 5,165 SIAS acquired contracts 5 660,000 649,000 11,000 Non-compete agreements 4 272,147 272,147 — Website and Digital Assets 3 33,002 3,924 29,078 Total intangible assets subject to amortization 3,889,248 2,063,053 1,826,195 Total Goodwill and Intangible Assets $ 11,028,537 $ 2,063,053 $ 8,965,484 |
Schedule of amortization over the next two years | Schedule of amortization over the next two years Twelve months ending September 30, 2022 $ 292,754 2023 276,587 2024 273,439 2025 267,143 Thereafter 716,272 Total $ 1,826,195 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Components of lease expense | Components of lease expense Nine Months Ended Finance leases: Amortization of assets, included in depreciation and amortization expense $ 998,185 Interest on lease liabilities, included in interest expense 134,188 Operating lease: Amortization of assets, included in total operating expense 94,158 Interest on lease liabilities, included in total operating expense 13,624 Total net lease cost $ 1,240,155 Supplemental balance sheet information related to leases was as follows Operating Leases Operating lease right-of-use asset $ 469,643 Current operating lease liabilities $ 204,598 Noncurrent operating lease liabilities 274,702 Total operating lease liabilities $ 479,300 |
Supplemental balance sheet information related to leases | Supplemental balance sheet information related to leases Nine Months Ended September 30, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 227,226 Financing cash flows related to finance leases $ 998,183 Weighted average remaining lease term (in years): Operating leases 2.38 Finance leases 1.72 Weighted average discount rate: Operating leases 5 % Finance leases 7 % |
Long-term obligations under the operating and Finance leases | Long-term obligations under the operating and Finance leases For the Twelve Months Ended September 30, Operating Leases Finance Leases 2022 $ 222,011 1,037,916 2023 195,594 553,478 2024 90,979 103,226 Total lease payments 508,584 1,694,620 Less: Amounts representing interest (29,284 ) (102,841 ) Total lease obligations 479,300 1,591,779 Less: Current (204,598 ) (983,065 ) $ 274,702 $ 608,714 |
Stockholders_ (Deficit) (Tables
Stockholders’ (Deficit) (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Schedule of option activity and related information | Schedule of option activity and related information Number of Range of Weighted Weighted Options Outstanding at December 31, 2020 207,747 $ 2.00 15.76 $ 5.20 2.00 Options Granted 39,357 5.41 5.80 5.53 10.00 Exercised (6,592 ) 2.00 2.00 — Expired/Cancelled (15,846 ) 3.00 14.00 5.89 — Options Outstanding at September 30, 2021 224,666 $ 2.00 16.00 $ 5.53 5.51 Options Exercisable at September 30, 2021 141,105 $ 2.00 16.00 $ 5.53 6.26 |
Schedule of weighted average fair value of options granted | Schedule of weighted average fair value of options granted 2021 Weighted average fair value of options granted $ 5.35 Risk-free interest rate 1.31 1.62 Volatility 217 219 Expected life (years) 10 Dividend yield 0.00 |
Schedule of warrant activity and related information | Schedule of warrant activity and related information Number of Range of Weighted Weighted Warrant Outstanding at December 31, 2020 3,333 $ 0.40 $ 0.40 3.5 Warrant Granted 2,871,250 7.43 6.67 6.97 5.00 Exercised (455,390 ) 7.43 7.43 — Expired/Cancelled — — — — Warrant Outstanding at September 30, 2021 2,419,193 $ 7.43 0.40 $ 6.87 4.92 Warrant Exercisable at September 30, 2021 2,419,193 $ 7.43 0.40 $ 6.87 4.92 |
Merger (Tables)
Merger (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Purchase price | Schedule of Purchase price Purchase price: Cash paid to seller $ 6,149,343 Total purchase price 6,149,343 Assets acquired: Cash 212,068 Accounts Receivable 1,389,263 Prepaid Expenses 127,574 Fixed Assets 4,986 Website and Digital Assets 33,002 Security Deposits 22,500 Total assets acquired 1,789,393 Liabilities assumed: Accounts payable and accrued expenses 514,354 Deferred Revenue 68,736 PPP Loan Payable 307,300 Deferred Tax Liability 448,305 Total liabilities assumed 1,338,695 Net assets acquired 450,698 Excess purchase price $ 5,698,645 |
Schedule of unaudited pro-forma | Schedule of unaudited pro-forma Three Months Ended September 30, 2020 Revenues $ 3,526,834 Net loss attributable to common shareholders $ (197,055 ) Net loss per share $ (0.04 ) Weighted average number of shares outstanding 4,530,188 Nine Months Ended September 30, 2020 Revenues $ 12,895,505 Net loss attributable to common shareholders $ (178,429 ) Net loss per share $ (0.06 ) Weighted average number of shares outstanding 3,212,821 Nine Months Ended September 30, 2021 Revenues $ 18,138,730 Net income attributable to common shareholders $ 1,338,334 Net income per share $ 0.30 Weighted average number of shares outstanding 4,530,188 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Product Information [Line Items] | ||||
Total Revenue | $ 3,860,258 | $ 2,723,532 | $ 9,963,198 | $ 6,827,867 |
Transferred at Point in Time [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 754,438 | 936,344 | 2,230,873 | 1,544,786 |
Transferred over Time [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 3,105,820 | 1,787,188 | 7,732,325 | 5,283,081 |
Service [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 1,827,055 | 1,437,398 | 5,212,566 | 4,240,796 |
Equipment and Software [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 316,107 | 936,344 | 1,541,441 | 1,544,786 |
Managed Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 1,472,261 | 169,565 | 2,508,515 | 557,515 |
Nexxis Voip Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 210,445 | 180,225 | 588,889 | 484,770 |
Other [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 34,390 | 111,787 | ||
UNITED STATES | ||||
Product Information [Line Items] | ||||
Total Revenue | 3,832,691 | 2,702,981 | 9,865,844 | 6,720,284 |
UNITED STATES | Service [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 1,799,488 | 1,416,847 | 5,115,212 | 4,133,213 |
UNITED STATES | Equipment and Software [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 316,107 | 936,344 | 1,541,441 | 1,544,786 |
UNITED STATES | Managed Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 1,472,261 | 169,565 | 2,508,515 | 557,515 |
UNITED STATES | Nexxis Voip Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 210,445 | 180,225 | 588,889 | 484,770 |
UNITED STATES | Other [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 34,390 | 111,787 | ||
International [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 27,567 | 20,551 | 97,354 | 107,583 |
International [Member] | Service [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | 27,567 | 20,551 | 97,354 | 107,583 |
International [Member] | Equipment and Software [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | ||||
International [Member] | Managed Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | ||||
International [Member] | Nexxis Voip Services [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue | ||||
International [Member] | Other [Member] | ||||
Product Information [Line Items] | ||||
Total Revenue |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accounting Policies [Abstract] | ||||
Net Income Available to Common Shareholders | $ 135,630 | $ 9,568 | $ 213,159 | $ 96,677 |
Weighted average number of common shares – basic | 6,350,826 | 3,213,485 | 4,530,188 | 3,212,821 |
Dilutive securities | ||||
Options | 128,418 | 166,681 | 187,025 | 149,520 |
Warrants | 3,333 | 3,333 | 3,333 | 3,333 |
Weighted average number of common shares – diluted | 6,482,577 | 3,383,499 | 4,720,546 | 3,365,675 |
Earnings per share, basic | $ 0.02 | $ 0 | $ 0.05 | $ 0.03 |
Earnings per share, diluted | $ 0.02 | $ 0 | $ 0.05 | $ 0.03 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 2,512,108 | 43,965 | 2,453,501 | 61,125 |
Employee Stock Option 1 [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 96,248 | 43,965 | 37,641 | 61,125 |
Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities | 2,415,860 | 0 | 2,415,860 | 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product Information [Line Items] | ||||||
Accounts receivables due | 30 days | |||||
Gain (Loss) on Disposition of Property Plant Equipment | $ 29,732 | |||||
Uncertain tax positions | $ 0 | $ 0 | ||||
Advertising Expense | $ 409,468 | $ 234,565 | ||||
Property, Plant and Equipment [Member] | Minimum [Member] | ||||||
Product Information [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||
Property, Plant and Equipment [Member] | Maximum [Member] | ||||||
Product Information [Line Items] | ||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration Risk, Percentage | 47.00% | 65.00% | ||||
Customer Concentration Risk [Member] | One Customer [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration Risk, Percentage | 14.00% | 10.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 6,443,075 | $ 7,845,423 |
Less: Accumulated depreciation | (4,406,987) | (5,543,822) |
Net property and equipment | 2,036,088 | 2,301,601 |
Technology Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 476,887 | 756,236 |
Website And Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 533,417 | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 18,160 | 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 | 314,721 | 1,236,329 |
Data Center Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 5,612,324 | $ 5,281,017 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 709,195 | $ 608,743 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets not subject to amortization, Gross amount | $ 7,139,289 |
Total intangible assets not subject to amortization, Accumulated Amortization | |
Total intangible assets not subject to amortization, Net | 7,139,289 |
Total Intangible Assets, Gross amount | 3,889,248 |
Total Intangible Assets, Accumulated Amortization | 2,063,053 |
Total Intangible Assets, Net amount | 1,826,195 |
Total Goodwill and Intangible Assets, Gross amount | 11,028,537 |
Total Goodwill and Intangible Assets, Accumulated Amortization | 2,063,053 |
Total Goodwill and Intangible Assets, Net | $ 8,965,484 |
Goodwill [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life in years | Indefinite |
Total intangible assets not subject to amortization, Gross amount | $ 6,610,021 |
Total intangible assets not subject to amortization, Accumulated Amortization | |
Total intangible assets not subject to amortization, Net | $ 6,610,021 |
Other Intangible Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated life in years | Indefinite |
Total intangible assets not subject to amortization, Gross amount | $ 529,268 |
Total intangible assets not subject to amortization, Accumulated Amortization | |
Total intangible assets not subject to amortization, Net | $ 529,268 |
Customer Lists [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets subject to amortization, Estimated life in years | 7 years |
Total Intangible Assets, Gross amount | $ 2,614,099 |
Total Intangible Assets, Accumulated Amortization | 833,147 |
Total Intangible Assets, Net amount | $ 1,780,952 |
ABC Acquired Contracts [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets subject to amortization, Estimated life in years | 5 years |
Total Intangible Assets, Gross amount | $ 310,000 |
Total Intangible Assets, Accumulated Amortization | 304,835 |
Total Intangible Assets, Net amount | $ 5,165 |
SIAS Acquired Contracts [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets subject to amortization, Estimated life in years | 5 years |
Total Intangible Assets, Gross amount | $ 660,000 |
Total Intangible Assets, Accumulated Amortization | 649,000 |
Total Intangible Assets, Net amount | $ 11,000 |
Noncompete Agreements [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets subject to amortization, Estimated life in years | 4 years |
Total Intangible Assets, Gross amount | $ 272,147 |
Total Intangible Assets, Accumulated Amortization | 272,147 |
Total Intangible Assets, Net amount | |
Website And Digital Assets [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets subject to amortization, Estimated life in years | 3 years |
Total Intangible Assets, Gross amount | $ 33,002 |
Total Intangible Assets, Accumulated Amortization | 3,924 |
Total Intangible Assets, Net amount | $ 29,078 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) | Sep. 30, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 292,754 |
2023 | 276,587 |
2024 | 273,439 |
2025 | 267,143 |
Thereafter | 716,272 |
Total | $ 1,826,195 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 238,474 | $ 145,500 |
Lease (Details)
Lease (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Jul. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Amortization of assets, included in depreciation and amortization expense | $ 998,185 | ||
Interest on lease liabilities, included in interest expense | 134,188 | ||
Amortization of assets, included in total operating expense | 94,158 | ||
Interest on lease liabilities, included in total operating expense | 13,624 | ||
Total net lease cost | $ 328,026 | 1,240,155 | |
Operating lease ROU asset | 469,643 | $ 241,911 | |
Current operating lease liabilities | 204,598 | 104,549 | |
Noncurrent operating lease liabilities | 274,702 | $ 147,525 | |
Total operating lease liabilities | 479,300 | ||
Property and equipment, at cost | 4,366,665 | ||
Accumulated amortization | (2,538,765) | ||
Property and equipment, net | 1,827,900 | ||
Current obligations of finance leases | 983,065 | ||
Finance leases, net of current obligations | 608,714 | ||
Total finance lease liabilities | $ 1,591,779 |
Lease (Details 1)
Lease (Details 1) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Leases [Abstract] | |
Operating cash flows related to operating leases | $ 227,226 |
Financing cash flows related to finance leases | $ 998,183 |
Weighted average remaining lease term operating leases (in years) | 2 years 4 months 17 days |
Weighted average remaining lease term finance leases (in years) | 1 year 8 months 19 days |
Weighted average discount rate operating leases | 5.00% |
Weighted average discount rate finance leases | 7.00% |
Lease (Details 2)
Lease (Details 2) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Operating Leases 2022 | $ 222,011 | |
Finance Leases 2022 | 1,037,916 | |
Operating Leases 2023 | 195,594 | |
Finance Leases 2023 | 553,478 | |
Operating Leases 2024 | 90,979 | |
Finance Leases 2024 | 103,226 | |
Operating Leases Total lease payments | 508,584 | |
Finance Leases Total lease payments | 1,694,620 | |
Operating Leases Less: Amounts representing interest | (29,284) | |
Finance Leases Less: Amounts representing interest | (102,841) | |
Operating Leases Total operating lease liabilities | 479,300 | |
Finance Leases Total finance lease liabilities | 1,591,779 | |
Operating Leases Less: Current operating lease liabilities | (204,598) | $ (104,549) |
Finance Leases Less: Current Finance lease liabilities | (983,065) | |
Operating Leases Noncurrent operating lease liabilities | 274,702 | $ 147,525 |
Finance Leases Noncurrent Finance lease liabilities | $ 608,714 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | Oct. 01, 2021 | Mar. 04, 2021 | Apr. 01, 2019 | Jan. 01, 2019 | Apr. 01, 2018 | Jul. 31, 2021 | Sep. 30, 2020 | Jul. 31, 2020 | Jun. 29, 2020 | Jan. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Feb. 01, 2017 | Jun. 02, 2020 |
Lessee, Lease, Description [Line Items] | |||||||||||||||
Annual rent | $ 10,764 | ||||||||||||||
Fiance leases contingent monthly rental payments | 897 | ||||||||||||||
Lease expiration date | Aug. 1, 2021 | Jul. 31, 2023 | Jul. 31, 2023 | ||||||||||||
Annual base rent | $ 1,403 | ||||||||||||||
Lease term | 3 years | 13 months | |||||||||||||
Lease amount | $ 328,026 | $ 1,240,155 | |||||||||||||
Interest rate | 800.00% | ||||||||||||||
Discount rate | 7.00% | ||||||||||||||
Operating leases, rent expense, net | $ 130,020 | $ 127,268 | |||||||||||||
Systems Trading [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Fiance leases contingent monthly rental payments | $ 1,567 | $ 29,592 | $ 23,475 | $ 10,534 | |||||||||||
Lease expiration date | Mar. 31, 2024 | Dec. 31, 2023 | Apr. 16, 2022 | Jan. 1, 2023 | |||||||||||
Interest rate | 8.00% | 6.75% | 5.00% | 6.00% | |||||||||||
Lease Term | 5 years | 4 years | 3 years | ||||||||||||
Melville [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Operating Leases, Rent Expense | $ 86,268 | ||||||||||||||
Lease expiration date | Jul. 31, 2023 | ||||||||||||||
Warwick, RI [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Operating Leases, Rent Expense | $ 2,598 | ||||||||||||||
Lease expiration date | Jan. 31, 2021 | ||||||||||||||
Annual base rent | $ 31,176 | ||||||||||||||
Warwick, RI [Member] | Minimum [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Operating Leases, Rent Expense | $ 2,324 | ||||||||||||||
Lease expiration date | Jan. 31, 2019 | ||||||||||||||
Warwick, RI [Member] | Maximum [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Operating Leases, Rent Expense | $ 2,460 | ||||||||||||||
Massachusetts And North Carolina Florida And Texas [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Operating Leases, Rent Expense | $ 39,000 | ||||||||||||||
Arrow Capital Solutions [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Fiance leases contingent monthly rental payments | $ 19,751 | $ 5,008 | $ 4,524 | $ 5,050 | |||||||||||
Lease expiration date | Jun. 1, 2023 | Jun. 29, 2023 | |||||||||||||
Interest rate | 7.00% | 700.00% | 7.00% | ||||||||||||
Lease Term | 3 years | 3 years | |||||||||||||
First Lease [Member] | Systems Trading [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Fiance leases contingent monthly rental payments | $ 1,328 | ||||||||||||||
Lease expiration date | Mar. 1, 2022 | ||||||||||||||
Interest rate | 7.00% | ||||||||||||||
Second Lease [Member] | Systems Trading [Member] | |||||||||||||||
Lessee, Lease, Description [Line Items] | |||||||||||||||
Fiance leases contingent monthly rental payments | $ 461 | ||||||||||||||
Lease expiration date | Mar. 1, 2022 | ||||||||||||||
Interest rate | 6.70% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Line of Credit Facility [Line Items] | ||
Revolving Credit Facility | $ 50,000 | $ 24 |
Line of credit | 50,000 | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Total debt amount available under revolving credit facility | $ 100,000 | |
Interest rate on debt under revolving credit facility excluding prime rate | 0.50% | |
Revolving Credit Facility | $ 0 | $ 24 |
Note payable (Details Narrative
Note payable (Details Narrative) - USD ($) | Jun. 01, 2021 | Apr. 30, 2020 |
Flagship Solutions L L C [Member] | ||
Debt Instrument [Line Items] | ||
PPP loan amount | $ 307,300 | |
Paycheck Protection Program [Member] | ||
Debt Instrument [Line Items] | ||
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 | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercised | (5,060) | |
Share-based Payment Arrangement, Option [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding, beginning | 207,747 | |
Weighted Average Exercise Price Outstanding, beginning | $ 5.20 | |
Weighted Average Contractual Life | 5 years 6 months 3 days | 2 years |
Granted | 39,357 | |
Weighted Average Exercise Price, Granted | $ 5.53 | |
Weighted Average Contractual Life | 10 years | |
Exercised | (6,592) | |
Range of option/warrant price per share, Granted | $ 2 | |
Weighted Average Exercise Price, Exercised | $ 2 | |
Expired/Cancelled | (15,846) | |
Weighted Average Exercise Price, Expire/Cancelled | $ 5.89 | |
Outstanding, ending | 224,666 | |
Weighted Average Exercise Price Outstanding, ending | $ 5.53 | |
Exercisable, ending | 141,105 | |
Exercisable, ending | $ 5.53 | |
Weighted Average Contractual Life, Exercisable | 6 years 3 months 3 days | |
Share-based Payment Arrangement, Option [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation shares authorized under stock option plan exercises price | 2.00 | |
Range of option/warrant price per share, Granted | $ 5.41 | |
Range of option/warrant price per share, Expire/Cancelled | 3.00 | |
Range of option per share outstanding ending balance | 2.00 | |
Range of option/warrant price per share, Exercisable ending | $ 2 | |
Share-based Payment Arrangement, Option [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share based compensation shares authorized under stock option plan exercises price | 15.76 | |
Range of option/warrant price per share, Granted | $ 5.80 | |
Range of option/warrant price per share, Expire/Cancelled | 14.00 | |
Range of option per share outstanding ending balance | 16.00 | |
Range of option/warrant price per share, Exercisable ending | $ 16 |
Stockholders' (Deficit) (Deta_2
Stockholders' (Deficit) (Details 1) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Weighted average fair value of options granted | $ 5.35 |
Expected life (years) | 10 years |
Dividend yield | 0.00% |
Minimum [Member] | |
Risk-free interest rate | 1.31% |
Volatility | 217.00% |
Maximum [Member] | |
Risk-free interest rate | 1.62% |
Volatility | 219.00% |
Stockholders' (Deficit) (Deta_3
Stockholders' (Deficit) (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercised | (5,060) | |
Warrant [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Outstanding, beginning | 3,333 | |
Range of option/warrant price per share, outstanding, beginning | $ 0.40 | |
Weighted Average Exercise Price Outstanding, beginning | $ 0.40 | |
Weighted Average Contractual Life | 3 years 6 months | |
Granted | 2,871,250 | |
Weighted Average Exercise Price, Granted | $ 6.97 | |
Weighted Average Contractual Life, Exercisable | 5 years | |
Exercised | (455,390) | |
Weighted Average Exercise Price, Granted | $ 7.43 | |
Granted | ||
Weighted Average Exercise Price, Granted | ||
Outstanding, ending | 2,419,193 | 3,333 |
Weighted Average Exercise Price Outstanding, ending | $ 6.87 | $ 0.40 |
Weighted Average Contractual Life, Exercisable | 4 years 11 months 1 day | |
Exercisable, ending | 2,419,193 | |
Exercisable, ending | $ 6.87 | |
Warrant [Member] | Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Range of option/warrant price per share, Granted | $ 7.43 | |
Range of option per share outstanding ending balance | 7.43 | |
Range of option/warrant price per share, Exercisable ending | $ 7.43 | |
Warrant [Member] | Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Range of option/warrant price per share, Granted | $ 6.67 | |
Range of option per share outstanding ending balance | 0.40 | |
Range of option/warrant price per share, Exercisable ending | $ 0.40 |
Stockholders_ (Deficit) (Detail
Stockholders’ (Deficit) (Details Narrative) - USD ($) | May 15, 2021 | May 13, 2021 | May 06, 2021 | Jul. 21, 2021 | Jul. 19, 2021 | May 18, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Class of Stock [Line Items] | |||||||||
Capital stock authorized | 260,000,000 | ||||||||
Common stock, authorized | 250,000,000 | 250,000,000 | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock, authorized | 10,000,000 | 10,000,000 | |||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||||||
Sale of common stock units | $ 1,162,790 | $ 16,944,380 | |||||||
Aggregate of shares | 1,600,000 | 1,375,000 | |||||||
Exercise price | $ 7.425 | $ 6.15 | |||||||
Offering price | $ 6.75 | ||||||||
Underwriters agreed to purchase | $ 1,600,000 | $ 1,031,250 | |||||||
Purchase additional shares | 240,000 | ||||||||
Gross proceeds | $ 10,800,000 | $ 8,305,000 | $ 50,000 | ||||||
Representative, warrants to purchase | 80,000 | ||||||||
Warrants are exercisable price | $ 7.425 | ||||||||
Net proceeds | $ 7,518,766 | ||||||||
Stock option exercise | 6,592 | 455,390 | |||||||
Stock option exercise | 5,060 | ||||||||
Proceeds from common stock shares received | $ 3,381,271 | ||||||||
Share-based compensation expense for options | $ 120,252 | $ 116,557 | |||||||
Total unrecognized compensation expense | $ 354,344 | ||||||||
Weighted average period expected to recognized compensation expense (in years) | 2 years 3 months 18 days | ||||||||
Series A Preferred Stock Dividend Rate | 10.00% | ||||||||
Conversion of Stock, Shares Converted | 1,401,786 | ||||||||
Accured unpaid dividends | $ 1,179,357 | ||||||||
Accrued dividends | $ 0 | ||||||||
Series A Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion of Stock, Shares Converted | 43,806 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transactions [Abstract] | ||
Proceeds from related party debt | $ 10,935 | $ 31,251 |
Merger (Details)
Merger (Details) - Flagship Solutions [Member] | Sep. 30, 2021USD ($) |
Purchase price: | |
Cash paid to seller | $ 6,149,343 |
Total purchase price | 6,149,343 |
Assets acquired: | |
Cash | 212,068 |
Accounts Receivable | 1,389,263 |
Prepaid Expenses | 127,574 |
Fixed Assets | 4,986 |
Website and Digital Assets | 33,002 |
Security Deposits | 22,500 |
Total assets acquired | 1,789,393 |
Liabilities assumed: | |
Accounts payable and accrued expenses | 514,354 |
Deferred Revenue | 68,736 |
PPP Loan Payable | 307,300 |
Deferred Tax Liability | 448,305 |
Total liabilities assumed | 1,338,695 |
Net assets acquired | 450,698 |
Excess purchase price | $ 5,698,645 |
Merger (Details 1)
Merger (Details 1) - Flagship Solutions [Member] - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Business Acquisition [Line Items] | |||
Revenues | $ 3,526,834 | $ 18,138,730 | $ 12,895,505 |
Net income attributable to common shareholders | $ (197,055) | $ 1,338,334 | $ (178,429) |
Net income per share | $ (0.04) | $ 0.30 | $ (0.06) |
Weighted average number of shares outstanding | 4,530,188 | 4,530,188 | 3,212,821 |
Merger (Details Narrative)
Merger (Details Narrative) - USD ($) | Feb. 04, 2021 | Sep. 30, 2021 |
Business Combination and Asset Acquisition [Abstract] | ||
Received aggregate amount | $ 10,500,000 | |
Cash payable | 5,550,000 | |
Net working capital adjustment | $ 4,950,000 | |
Annual base salary | $ 170,000 | |
Life insurance benefits | $ 400,000 |