Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.24.2.u1
Segment Information
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Segment Information

Note 12 – Segment Information

 

The Company operates in two reportable segments: Cloud First and Nexxis. Its segments were determined based on the Company’s internal organizational structure, the manner in which its operations are managed, and the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate performance, which is generally the segment’s assets, liabilities, and operating income or losses. The Flagship acquisition in June of 2021 has benefited DSC with a client base, experienced sales and marketing talent, and a strong experienced technical team. Based on over two years of information and our experience with Flagship the Company decided, based on the services and product set, as well as the talented team at Flagship, to bring together both CloudFirst and Flagship. This unification on January 1, 2024 has strengthened the Company’s overall technical teams and provided for cross selling opportunities while reducing overall expenses.

 

   
Operations of:   Products and services provided:
     
CloudFirst Technologies Corporation   CloudFirst provides services from CloudFirst technological assets deployed in seven Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts.
Nexxis Inc.   Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment.

 

The following tables present certain financial information related to the Company’s reportable segments and Corporate:

 

                               
    As of June 30, 2024
 
    CloudFirst Technologies   Nexxis Inc.   Corporate   Total
                 
Accounts receivable   $ 1,854,471     $ 50,288     $ —     $ 1,904,759  
Prepaid expenses and other current assets     614,989       25,037       119,953       759,979  
Net property and equipment     3,133,601       2,484       2,257       3,138,342  
Intangible assets, net     1,560,577       —       —       1,560,577  
Goodwill     4,238,671       —       —       4,238,671  
Operating lease right-of-use assets     632,733       —       —       632,733  
All other assets     —       —       12,103,835       12,103,835  
Total assets   $ 12,035,042     $ 77,809     $ 12,226,045     $ 24,338,896  
                                 
Accounts payable and accrued expenses   $ 2,411,858     $ 68,905     $ 443,809     $ 2,924,572  
Deferred revenue     208,944       —       —       208,944  
Finance leases payable     147,769       —       —       147,769  
Finance leases payable related party     113,467       —       —       113,467  
Operating lease liabilities     640,165       —       —       640,165  
Total liabilities   $ 3,522,203     $ 68,905     $ 443,809     $ 4,034,917  

  

                                 
    As of December 31, 2023
 
    CloudFirst Technologies   Nexxis Inc.   Corporate   Total
                 
Accounts receivable   $ 1,229,820     $ 30,152     $ —     $ 1,259,972  
Prepaid expenses and other current assets     419,254       18,157       75,764       513,175  
Net property and equipment     2,727,225       2,905       2,644       2,732,774  
Intangible assets, net     1,698,084       —       —       1,698,084  
Goodwill     4,238,671       —       —       4,238,671  
Operating lease right-of-use assets     62,981       —       —       62,981  
All other assets     —       —       12,795,362       12,795,362  
Total assets   $ 10,376,035     $ 51,214     $ 12,873,770     $ 23,301,019  
                                 
Accounts payable and accrued expenses   $ 2,020,963     $ 65,161     $ 522,814     $ 2,608,938  
Deferred revenue     336,201       —       —       336,201  
Finance leases payable     281,241       —       —       281,241  
Finance leases payable related party     256,241       —       —       256,241  
Operating lease liabilities     63,983       —       —       63,983  
Total liabilities   $ 2,958,629     $ 65,161     $ 522,814     $ 3,546,604  

 

For the Three Months Ended June 30, 2024

 

                                 
    CloudFirst
Technologies		   Nexxis Inc.   Corporate   Total
Sales   $ 4,617,445     $ 293,047     $ —     $ 4,910,492  
Cost of sales     2,345,385       157,214       —       2,502,599  
Gross Profit     2,272,060       135,833       —       2,407,893  
                                 
Selling, general and administrative     1,400,718       160,044       896,606       2,457,368  
Depreciation and amortization     338,908       211       192       339,311  
Total operating expenses     1,739,626       160,255       896,798       2,796,679  
                                 
Income (Loss) from Operations     532,434       (24,422 )     (896,798 )     (388,786 )
                                 
Interest expense, net     —       —       152,441       152,441  
Other expense     (10,260 )     —       —       (10,260 )
Total Other Income (Expense)     (10,260 )     —       152,441       142,181  
Income (Loss) before provision for income taxes   $ 522,174     $  (24,422 )   $  (744,357 )   $  (246,605 )

 

                                 
For the Three Months Ended June 30, 2023
                 
    CloudFirst Technologies   Nexxis Inc.   Corporate   Total
Sales   $ 5,639,310     $ 265,081     $ —     $ 5,904,391  
Cost of sales     3,168,984       156,653       —       3,325,637  
Gross Profit     2,470,326       108,428       —       2,578,754  
                                 
Selling, general and administrative     1,388,712       169,328       613,020       2,171,060  
Depreciation and amortization     300,575       208       167       300,950  
Total operating expenses     1,689,287       169,536       613,187       2,472,010  
                                 
Income (Loss) from Operations     781,039       (61,108 )     (613,187 )     106,744  
                                 
Interest expense, net     (16,570 )     —       115,864       99,294  
Other expense     —       —       —       —  
Total Other Income (Expense)     (16,570 )     —       115,864       99,294  
                                 
Income (Loss) before provision for income taxes   $ 764,469     $  (61,108 )   $  (497,323 )   $  206,038  

 

For the Six Months Ended June 30, 2024

 

                                 
    CloudFirst
Technologies		   Nexxis Inc.   Corporate   Total
Sales   $ 12,572,403     $ 573,836     $ —     $ 13,146,239  
Cost of sales     7,448,020       323,854       —       7,771,874  
Gross Profit     5,124,383       249,982       —       5,374,365  
                                 
Selling, general and administrative     3,021,616       336,923       1,545,310       4,903,849  
Depreciation and amortization     644,701       422       385       645,508  
Total operating expenses     3,666,317       337,345       1,545,695       5,549,357  
                                 
Income (Loss) from Operations     1,458,066       (87,363 )     (1,545,695 )     (174,992 )
                                 
Interest expense, net     —       —       295,810       295,810  
Other expense     (21,520 )     —       —       (21,520 )
Total Other Income (Expense)     —       —       —       —  
                                 
Income (Loss) before provision for income taxes   $ 1,436,546     $  (87,363 )   $  (1,249,885 )   $  99,298  

 

                                 
    For the six months ended June 30, 2023
 
    CloudFirst Technologies    Nexxis Inc.    Corporate   Total
Sales   $ 12,254,237     $ 529,877     $ —     $ 12,784,114  
Cost of sales     7,780,841       334,774       —       8,115,615  
Gross profit     4,473,396       195,103       —       4,668,499  
                                 
Selling, general and administrative     2,535,491       294,078       1,183,540       4,013,109  
Depreciation and amortization     589,100       279       281       589,660  
Total operating expenses     3,124,591       294,357       1,183,821       4,602,769  
                                 
Income (loss) from operations     1,348,805       (99,254 )     (1,183,821 )     65,730  
                                 
Interest income     —       —       —       —  
Interest expense     (43,916 )     —       219,287       175,371  
Total Other Income (Expense)     43,916 )     —       219,287       175,371  
                                 
Income (loss) before provision for income taxes   $ 1,304,889     $ (99,254 )   $ (964,534 )   $ 241,101