Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.24.3
Segment Information
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Information

Note 11 – Segment Information

 

The Company operates in two reportable segments: CloudFirst 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 the Company’s 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 September 30, 2024
 
    CloudFirst Technologies   Nexxis Inc.   Corporate   Total
                 
Accounts receivable   $ 1,931,076     $ 42,077     $ —     $ 1,973,153  
Prepaid expenses and other current assets     633,231       22,947       104,386       760,564  
Net property and equipment     3,053,222       2,269       4,212       3,059,703  
Intangible assets, net     1,493,792       —       —       1,493,792  
Goodwill     4,238,671       —       —       4,238,671  
Operating lease right-of-use assets     599,625       —       —       599,625  
All other assets     —       —       12,093,086       12,093,086  
Total assets   $ 11,949,617     $ 67,293     $ 12,201,684     $ 24,218,594  
                                 
Accounts payable and accrued expenses   $ 2,051,086     $ 72,901     $ 505,427     $ 2,629,414  
Deferred revenue     160,237       —       —       160,237  
Finance leases payable     79,652       —       —       79,652  
Finance leases payable related party     74,077       —       —       74,077  
Operating lease liabilities     644,442       —       —       644,442  
Total liabilities   $ 3,009,494     $ 72,901     $ 505,427     $ 3,587,822  

 

                                 
    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 September 30, 2024

 

                                 
    CloudFirst
Technologies		   Nexxis Inc.   Corporate   Total
Sales   $ 5,483,537     $ 325,298     $ —     $ 5,808,835  
Cost of sales     3,116,332       180,832       —       3,297,164  
Gross Profit     2,367,205       144,466       —       2,511,671  
                                 
Selling, general and administrative     1,196,547       149,055       834,635       2,180,237  
Depreciation and amortization     356,855       214       195       357,264  
Total operating expenses     1,553,402       149,269       834,830       2,537,501  
                                 
Income (Loss) from Operations     813,803       (4,803 )     (834,830 )     (25,830 )
                                 
Interest income     —       —       160,770       160,770  
Interest expense     (9,815 )     —       —       (9,815 )
Loss on disposal of equipment     (1,599 )     —       —       (1,599 )
Total Other Income (Expense)     (11,414 )     —       160,770       149,356  
Income (Loss) before provision for income taxes   $ 802,389     $ (4,803 )   $ (674,060 )   $ 123,526  

 

                                 
For the Three Months Ended September 30, 2023
                 
    CloudFirst Technologies   Nexxis Inc.   Corporate   Total
Sales   $ 5,716,060     $ 270,565     $ —     $ 5,986,625  
Cost of sales     3,492,250       164,021       —       3,656,271  
Gross Profit     2,223,810       106,544       —       2,330,354  
                                 
Selling, general and administrative     1,196,582       174,527       606,584       1,977,693  
Depreciation and amortization     338,131       213       176       338,520  
Total operating expenses     1,534,713       174,740       606,760       2,316,213  
                                 
Income (Loss) from Operations     689,097       (68,196 )     (606,760 )     14,141  
                                 
Interest income     —       —       156,666       156,666  
Interest expense     (13,069 )     —       —       (13,069 )
Total Other Income (Expense)     (13,069 )     —       156,666       143,597  
                                 
Income (Loss) before provision for income taxes   $ 676,028     $ (68,196 )   $ (450,094 )   $ 157,738  

 

For the Nine Months Ended September 30, 2024

 

                                 
    CloudFirst
Technologies		   Nexxis Inc.   Corporate   Total
Sales   $ 18,055,940     $ 899,134     $ —     $ 18,955,074  
Cost of sales     10,564,352       504,686       —       11,069,038  
Gross Profit     7,491,588       394,448       —       7,886,036  
                                 
Selling, general and administrative     4,229,162       485,978       2,379,944       7,095,084  
Depreciation and amortization     990,557       636       580       991,773  
Total operating expenses     5,219,719       486,614       2,380,524       8,086,857  
                                 
Income (Loss) from Operations     2,271,869       (92,166 )     (2,380,524 )     (200,821 )
                                 
Interest income     —       —       456,580       456,580  
Interest expense     (31,335 )     —       —       (31,335 )
Loss on disposal of equipment     (1,599 )     —       —       (1,599 )
Total Other Income (Expense)     (32,934 )     —       456,580       423,646  
                                 
Income (Loss) before provision for income taxes   $ 2,238,935     $ (92,166 )   $ (1,923,944 )   $ 222,825  

 

                                 
    For the nine months ended September 30, 2023
 
    CloudFirst Technologies    Nexxis Inc.    Corporate   Total
Sales   $ 17,970,297     $ 800,442     $ —     $ 18,770,739  
Cost of sales     11,273,091       498,795       —       11,771,886  
Gross profit     6,697,206       301,647       —       6,998,853  
      —                          
Selling, general and administrative     3,732,073       468,605       1,790,124       5,990,802  
Depreciation and amortization     927,231       492       457       928,180  
Total operating expenses     4,659,304       469,097       1,790,581       6,918,982  
                                 
Income (loss) from operations     2,037,902       (167,450 )     (1,790,581 )     79,871  
                                 
Interest income     —       —       375,953       375,953  
Interest expense     (56,985 )     —       —       (56,985 )
Total Other Income (Expense)     (56,985 )     —       375,953       318,968  
                                 
Income (loss) before provision for income taxes   $ 1,980,917     $ (167,450 )   $ (1,414,628 )   $ 398,839