Data Storage (DTST) - 2024 Q3 - Quarterly Report

Sales Performance - Total sales for Q3 2024 were $5,808,834, a decrease of$177,791 or 3% compared to 5,986,625 in Q3 2023, primarily due to lower one-time equipment and software sales [136]. - Infrastructure & Disaster Recovery/Cloud Services increased by 706,978 or 27% to $3,329,629 in Q3 2024, while Equipment and Software sales decreased by$780,927 or 36% to $1,404,134 [137]. - For the nine months ended September 30, 2024, total sales were$18,955,074, an increase of $184,335 or 1$18,770,739 in the same period of 2023, driven by a $2,146,623 or 29$18,955,074, an increase of $184,335 or 1$18,770,739 for the same period in 2023 [146]. - Infrastructure & Disaster Recovery/Cloud Service sales increased by $2,146,623 or 29$9,448,240, while Equipment and Software sales decreased by $1,816,358 or 22$6,271,084 [146]. Cost and Expenses - Cost of sales for Q3 2024 was $3,297,164, a decrease of$359,107 or 10% compared to $3,656,271 in Q3 2023, mainly due to lower costs associated with one-time equipment and managed services [138]. - Selling, general and administrative expenses increased by$221,288 or 10% to $2,537,501 in Q3 2024, with notable increases in salaries and professional fees [139]. - Selling, general and administrative expenses rose to$8,086,857, an increase of $1,167,875 or 17$6,918,982 for the same period in 2023 [147]. Cash Flow and Investments - Cash provided by operating activities decreased to $552,590 for the nine months ended September 30, 2024, down$1,608,834 from $2,161,424 in the same period of 2023 [160]. - Net cash used in investing activities totaled$1,172,581, a decrease of $1,595,368 compared to$2,767,949 for the nine months ended September 30, 2023 [162]. - Other income increased by $104,678 to$423,646 for the nine months ended September 30, 2024, primarily due to increased interest income from marketable securities [152]. Income and EBITDA - Income before provision for income taxes decreased by $176,014 to$222,825 for the nine months ended September 30, 2024, compared to $398,839 for the same period in 2023 [153]. - Adjusted EBITDA for the three months ended September 30, 2024, was$515,462, reflecting the company's operating performance [171]. - Net income for the nine months ended September 30, 2024, was $222,825, compared to a net loss of$1,923,944 for Nexxis Inc. during the same period [173]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $1,352,492, a significant increase from an adjusted EBITDA loss of$2,056,969 in the previous year [173]. - The company reported an adjusted EBITDA of $3,092,429 for the nine months ended September 30, 2023, compared to an adjusted EBITDA of$1,351,197 for the same period in 2024 [174]. Corporate Developments - The company is expanding into Europe, focusing on the UK, with plans for three data center locations to be operational by January 2025, targeting over 50,000 businesses in the UK and EU markets [128]. - The merger of CloudFirst Technologies and Flagship Solutions LLC on January 1, 2024, aims to enhance strategic initiatives and operational efficiency [127]. - The company maintains a solid cash position and forecasts continued positive EBITDA from subsidiary operations despite unpredictable market conditions [130]. - The company has established an executive presence in London for its European expansion, appointing Colin Freeman as Managing Director [128]. - An Equity Distribution Agreement with Maxim Group LLC allows the company to offer and sell up to $10,600,000 shares of common stock, with a commission of 2.5$571,872 to $11,583,279 on September 30, 2024, from$11,011,407 at December 31, 2023 [165]. - Depreciation and amortization for the nine months ended September 30, 2024, totaled $991,773, compared to$928,180 in the same period of 2023 [174]. - Stock-based compensation for the nine months ended September 30, 2024, was $563,139, up from$338,146 in the previous year [173]. - Interest expense for the nine months ended September 30, 2024, was $31,335, while interest income was reported as a loss of$456,580 [173]. - The total net income (loss) for CloudFirst Technologies for the nine months ended September 30, 2024, was $1,980,917, compared to a net loss of$167,450 for Nexxis Inc. in the same period [174]. - The total net loss for the corporate segment for the nine months ended September 30, 2024, was $1,414,628 [174]. - Interest expense for the nine months ended September 30, 2023, was$56,985, with no interest income reported [174]. - The company experienced a significant increase in stock-based compensation from $199,623 in 2023 to$322,974 in 2024 [173].