Revenue and Financial Performance - In 2024, the Company reported total revenue of $25.4 million, with over 80% derived from recurring sources such as cloud-based hosting and disaster recovery solutions[36]. - Revenue for the year ended December 31, 2024, increased by approximately 2% to $25,371,303 compared to $24,959,576 for the year ended December 31, 2023[166]. - The Company derived approximately 51% of revenue from infrastructure & disaster recovery/cloud services, 31% from equipment and software sales, 12% from managed services, and 5% from Nexxis VoIP services for the year ended December 31, 2024[166]. - The Company reported net income attributable to common shareholders of $523,214 for the year ended December 31, 2024, compared to $381,575 for 2023, indicating a year-over-year increase of approximately 37%[52]. - Adjusted EBITDA for the year ended December 31, 2024, was $2,365,238, compared to $1,639,388 for 2023, reflecting an increase in operational performance[191]. - Cash provided by operating activities for the year ended December 31, 2024, was $1,740,089, a decrease from $3,873,047 in 2023, primarily due to an increase in accounts receivable of $1,010,880[185]. - The company's working capital increased to $11,869,914 on December 31, 2024, up by $858,507 from $11,011,407 at the end of 2023[182]. Customer Base and Retention - The Company has a contract renewal rate exceeding 90%, positioning it to maintain and expand its customer base[36]. - The Company ended the year with a $21.5 million Annual Recurring Revenue (ARR) run rate[36]. - The Company has historically maintained over 90% annual subscription renewal rates, reflecting strong customer retention[164]. - For the year ended December 31, 2024, two customers each accounted for 12% of the Company's revenue, while in 2023, two customers accounted for 12% and 10% respectively, highlighting dependency on a limited customer base[69]. - The Company’s client base exceeds 425 organizations across diverse sectors, indicating broad market demand for its services[164]. Operational and Strategic Developments - The integration of Flagship Solutions into CloudFirst was completed in January 2024, enhancing operational synergies and cross-selling opportunities[23]. - The Company is focused on expanding its cloud footprint and cross-selling its full suite of solutions to meet evolving client needs[34]. - The Company plans to continue acquiring complementary solutions and services, which may divert management's attention and increase operating costs[58]. - The Company anticipates ongoing international expansion, which will require substantial investment in marketing and localized services[106]. Risks and Challenges - The competitive landscape for cloud solutions is intense, with significant competition from established players like IBM, Microsoft, Google, and AWS, which may impact the Company's market position[70]. - The Company is exposed to risks related to cybersecurity, as breaches could disrupt its data protection services and harm its reputation[76]. - The Company faces challenges in retaining existing customers, and a significant decrease in retention rates could necessitate higher marketing expenses to maintain revenue[89]. - The Company must maintain effective advertising and marketing strategies to attract new customers, as failure to do so could lead to increased expenses and reduced operating results[55]. - The Company is subject to evolving privacy regulations, and any failure to comply could result in legal actions and loss of customer trust[97]. - The Company faces risks associated with international operations, including economic and political instability, currency fluctuations, and differing legal environments[107]. - The Company is exposed to risks from fluctuations in foreign currency exchange rates, which could adversely affect reported earnings[109]. Financial Position and Capital Management - As of December 31, 2024, the Company had cash of $1,070,097 and marketable securities totaling $11,261,006, with working capital amounting to $11,869,914[52]. - The Company does not expect to declare any cash dividends in the foreseeable future, meaning shareholders may need to rely on share price appreciation for returns[138]. - The Company may face challenges in raising additional capital due to market conditions and the potential dilution from outstanding securities[136]. - The Company has received a Notification Letter from Nasdaq confirming compliance with audit committee requirements, thus maintaining its listing on The Nasdaq Capital Market[134]. Compliance and Regulatory Matters - The Company must comply with HIPAA and HITECH regulations, which include privacy standards that protect individual health information[99]. - The Company may face penalties for non-compliance with federal and state standards regarding patient privacy, which could adversely affect its business[100]. - The Company maintains a cyber risk management program that includes annual risk assessments to identify and mitigate cybersecurity threats[142]. Market and Economic Conditions - The Company's revenue is heavily concentrated in the U.S., making it vulnerable to fluctuations in demand within this market[91]. - The Company's operations could be negatively impacted by changes in trade policies and economic conditions, affecting its financial results[119].
Data Storage (DTST) - 2024 Q4 - Annual Report