What changed in Data Storage Corp's 2024 10-K compared to 2023?

Across the narrative sections we track, Data Storage Corp (DTSTW) added 242 paragraphs, removed 188, and edited 120 between the 2023 and 2024 10-K filings. The biggest movers are Item 1A. Risk Factors (+93/−75), Item 7. Management's Discussion & Analysis (+74/−67), Item 1. Business (+56/−26).

Did Data Storage Corp add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 93 new/edited paragraphs and 75 removed paragraphs versus the 2023 10-K.

What changed in Data Storage Corp's MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 74 new/edited paragraphs and 67 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did Data Storage Corp update its Cybersecurity disclosure (Item 1C) in 2024?

Item 1C Cybersecurity has 9 paragraph-level changes between the 2023 and 2024 filings.

Where does this DTSTW 10-K diff come from?

The source filings are Data Storage Corp's official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Data Storage Corp's 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of Data Storage Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+242 added−188 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-28)

Top changes in Data Storage Corp's 2024 10-K

242 paragraphs added · 188 removed · 120 edited across 6 sections

Item 1A. Risk Factors+93 / −75 · 59 edited
Item 7. Management's Discussion & Analysis+74 / −67 · 42 edited
Item 1. Business+56 / −26 · 6 edited
Item 1C. Cybersecurity+9 / −6 · 6 edited
Item 2. Properties+4 / −8 · 3 edited

Item 1. Business

Business — how the company describes what it does

6 edited+50 added−20 removed5 unchanged

2023 filing

2024 filing

Biggest changeCompliance with these regulations is critical, as failure to do so could result in legal action, loss of customer trust, and negative impacts on the Company’s reputation and operations. 9 Key Regulatory Frameworks: ● General Compliance: The Company is committed to adhering to industry standards and the various privacy policies and obligations it holds towards third parties.

Biggest changeThese laws regulate the Company’s handling of personal and customer data, reflecting the growing importance of privacy in the digital age. Compliance with these regulations is critical, as failure to do so could result in legal action, loss of customer trust, and negative impacts on the Company’s reputation and operations.

The regulatory environment for Data Storage Corporation is marked by rapid changes and requires continuous vigilance to ensure compliance. As privacy regulations evolve, the Company may need to adjust its services and practices to remain compliant, thereby safeguarding its reputation and facilitating the development of new and innovative services that respect customer privacy.

The regulatory environment for DSC is marked by rapid changes and requires continuous vigilance to ensure compliance. As privacy regulations evolve, the Company may need to adjust its services and practices to remain compliant, thereby safeguarding its reputation and facilitating the development of new and innovative services that respect customer privacy.

Human Capital Resources Summary Data Storage Corporation attributes its success to the skill and dedication of its workforce, consisting of 51 full-time and one part-time employees as of March 27, 2024. The team is diverse, with roles across executive management, administration, finance, sales, marketing, and a robust technical team, complemented by independent contractors for service support and installations as needed.

Human Capital Resources DSC attributes its success to the skill and dedication of its workforce, consisting of fifty-three full-time and two part-time employees as of March 15, 2025. The team is diverse, with roles across executive management, administration, finance, sales, marketing, and a robust technical team, complemented by independent contractors for service support and installations as needed.

Data Storage Corporation Nevada, initially known as Euro Trend Inc., was founded on October 20, 2008, marking its start with a share exchange transaction. The Company underwent a name change to its current identity post-acquisition.

Corporate Information Data Storage Corporation, a Delaware corporation founded in 2001, became a subsidiary of the Company, a Nevada corporation (DSC), in 2008. DSC was initially incorporated as Euro Trend Inc. on March 27, 2007, and consummated a share exchange transaction in October 2008. The Company underwent a name change to its current identity post-acquisition.

Key aspects of our human capital management include: ● Employee Composition: The workforce includes six in executive management, six in administration and finance, nine in sales, four in marketing, and twenty-seven in technical roles. ● Compensation Strategy: Compensation programs are performance-aligned to incentivize both short-term and long-term achievements, aiming to attract, retain, and motivate talent. ● Health and Safety: Employee health and safety are paramount, underscoring the Company’s commitment to its staff and operational philosophy. 10 Corporate Information Office Location: The Company is based at 48 South Service Road, Suite 203, Melville, NY 11747.

The Company has no collective bargaining agreements in place and maintains a positive relationship with its employees. 8 Key aspects of the Company’s human capital management include: ● Employee Composition: The workforce includes eight in executive management, five in administration and finance, eleven in sales, three in marketing, and twenty-eight in technical roles . ● Compensation Strategy: Compensation programs are performance-aligned to incentivize both short-term and long-term achievements, aiming to attract, retain, and motivate talent. ● Health and Safety: Employee health and safety are paramount, underscoring the Company’s commitment to its staff and operational philosophy.

These developments highlight Data Storage Corporation’s strategic efforts to strengthen its market position, expand its service offerings, and navigate through competitive and financial challenges successfully. Government Regulation Summary Data Storage Corporation operates within a complex and evolving regulatory landscape, governed by a multitude of federal, state, local, and international privacy laws.

By emphasizing its CloudFirst differentiators and executing on cross-sell opportunities, DSC aims to strengthen its market position as a trusted partner for cloud infrastructure and business continuity worldwide. Government Regulation DSC operates within a complex and evolving regulatory landscape, governed by a multitude of federal, state, local, and international privacy laws.

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ITEM 1. BUSINESS Company Overview Data Storage Corporation (“DSC,” “Data Storage” or the “Company”), based in Melville, New York, leverages its expertise through its three subsidiaries: CloudFirst Technologies Corporation (formerly DSC), Flagship Solutions, LLC, and Nexxis Inc.

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ITEM 1. BUSINESS Corporate Overview The Company is a leading provider of enterprise cloud and business continuity solutions, specializing in fully managed cloud hosting, disaster recovery, cybersecurity, and IT automation services. DSC leverages its expertise through its subsidiaries: CloudFirst Technologies Corporation (“CloudFirst Technologies”), CloudFirst Europe Ltd. (“CloudFirst Europe” and, together with CloudFirst Technologies, “CloudFirst”) , and Nexxis Inc. (“Nexxis”).

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Catering to diverse sectors such as healthcare, banking, manufacturing, and government, DSC delivers a suite of IT services, including disaster recovery, cloud infrastructure, cybersecurity, managed services and dedicated internet access and UCaaS / Voice over Internet Protocol (VoIP) services. The Company’s approach involves long-term subscription models, robust business development, and expansive distribution networks.

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Through its CloudFirst platform – built on IBM Power Systems infrastructure – DSC delivers high-performance cloud solutions tailored for IBM i and AIX workloads.

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In 2023, following a capital infusion and its Nasdaq listing in May 2021, DSC embarked on a growth trajectory, enhancing its distribution, marketing capabilities, and technological infrastructure. This strategic expansion is aimed at reinforcing the Company’s position in the evolving IT landscape, where there’s a marked shift towards multi-cloud technologies and cybersecurity solutions.

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This niche focus on IBM Power environments distinguishes CloudFirst in the market: none of the major public cloud providers (AWS, Microsoft Azure, or Google Cloud) natively support IBM i/AIX workload, giving DSC a distinct competitive edge in serving clients with these mission-critical systems.

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Market Opportunity and Strategic Focus Recognizing the urgent need for reliable and efficient IT solutions, DSC is tapping into the growing demand for managed cloud and cybersecurity services. With CloudFirst Technologies positioned in a $36 billion annual recurring revenue market in the U.S. and Canada, the Company is at the forefront of addressing critical IT challenges with limited competition.

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DSC’s offerings are designed to support a spectrum of needs from cloud-based IBM Power System deployments for critical workloads to comprehensive disaster recovery and cybersecurity protections.

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DSC’s client base exceeds 425 organizations across diverse sectors – including government, healthcare, education, manufacturing, and Fortune 500 enterprises – reflecting broad market demand for its multi-cloud hosting and business continuity solutions.

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The focus is on hybrid cloud deployments, ensuring data and workloads remain secure against various threats. 6 Operational Footprint DSC operates from key locations in New York, Florida, and Texas, with technology centers and labs designed to meet sophisticated client requirements.

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The Company boasts a network of six geographically diverse data centers across the U.S. and Canada, ensuring resilient and scalable IT solutions. Solutions and Services The Company’s core offerings include disaster recovery and business continuity, managed cloud services, and a comprehensive suite of cybersecurity solutions.

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Notably, the integration of Flagship Solutions, LLC (“Flagship”) (which became a subsidiary of DSC in 2021) into CloudFirst was completed in January 2024, unlocking operational synergies and enabling cross-selling of the full CloudFirst suite to Flagship’s established customer base. This integration, combined with enhanced distribution and marketing capabilities post-2021 Nasdaq uplisting, has bolstered DSC’s growth trajectory and technical expertise.

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From initial cloud migration to ongoing management, DSC ensures seamless operation of client applications and workloads in a multi-cloud environment. The Company’s success is underscored by a client subscription renewal rate. Growth and Innovation Driven by a commitment to innovation and client satisfaction, DSC continues to refine its service offerings and expand its market reach.

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Solutions and Services DSC provides a comprehensive portfolio of solutions to ensure clients’ critical IT systems remain operational, secure, and resilient: • Cloud Infrastructure Services (IaaS) – CloudFirst offers fully managed cloud hosting for IBM Power systems (IBM i and AIX) as well as x86 environments.

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The Company’s strategic growth is supported by a team of solution architects and business development professionals dedicated to solving complex business challenges and fostering long-term client relationships. Through a blend of organic growth strategies and targeted expansion efforts, DSC is poised to capitalize on the opportunities presented by the dynamic IT landscape.

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Clients can migrate on-premises IBM workloads to DSC’s owned and operated cloud and run them on enterprise-grade IBM Power infrastructure, with interoperability to public clouds like AWS, Azure, and Google for hybrid deployments.

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Growth Strategies and Core Services Growth Strategies Data Storage Corporation aims to enhance revenue streams and market presence by: ● Broadening distribution channels and bolstering digital and direct marketing efforts. ● Leveraging social and digital platforms for lead generation. ● Pursuing synergistic acquisitions to expand distribution, innovate technology trends, augment the technical team, and achieve economies of scale to improve gross profit margins. ● Fostering a diverse network of distribution partners, including IBM Business Partners, Software Vendors, IT Resellers, Managed Service Providers, and other cloud infrastructure providers, to create collaborative solutions and marketing initiatives. ● Targeting global expansion to tap into the increasing demand for multi-cloud solutions worldwide. 7 Core Services Data Storage Corporation provides a comprehensive suite of multi-cloud IT solutions, ensuring high security and enterprise-level services for clients using IBM Power Systems, Microsoft Windows, and Linux.

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DSC’s cloud solutions include comprehensive migration services to ensure seamless transfer of data and applications from legacy systems to the cloud with minimal downtime. • Disaster Recovery & Business Continuity – DSC delivers robust disaster-recovery-as-a-service and business continuity solutions to protect organizations from downtime and data loss.

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Key service areas include: ● Cyber Security Solutions: ezSecurity™, offering comprehensive security solutions for endpoint security, system assessments, risk analysis, and IBM system protection, including Ransomware defense. ● Data Protection and Recovery Solutions: ezVault™ for offsite data protection, ezRecovery™ for fast data recovery, ezAvailability™ for real-time data replication with minimal recovery objectives, and ezMirror™ for data mirroring at the storage level. ● Cloud Hosted Production Systems: ezHost™ delivers managed cloud services, providing scalable resources for smooth operation of client workloads with predictable costs. ● Voice & Data Solutions: Nexxis specializes in VoIP, Internet Access, and Data Transport solutions, including dedicated internet services, SD-WAN options, and a cloud-based PBX solution integrated with Microsoft Teams for business continuity.

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CloudFirst’s recovery services provide off-site data replication, rapid failover for IBM i/AIX and Windows/Linux systems, and cloud-based backup to meet stringent recovery time objectives.

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These strategies and services position Data Storage Corporation for sustained growth by meeting the evolving needs of its clients and capitalizing on market opportunities. Corporate History Summary Data Storage Corporation, a Delaware corporation, founded in 2001, became a subsidiary of Data Storage Corporation, a Nevada Corporation (“Data Storage Corporation Nevada”), in 2008.

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These services ensure that clients can quickly restore critical applications in the event of cyberattacks, hardware failures, or natural disasters, thereby minimizing operational disruption. • Cybersecurity Solutions – Through its security suite, DSC offers comprehensive cybersecurity and compliance services. This includes endpoint protection, network security, data encryption, ransomware defense, vulnerability assessments, and IBM i security monitoring.

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Key Milestones: ● June 2010: Acquired SafeData, LLC, expanding its disaster recovery and data protection services. ● October 2012: Acquired Message Logic LLC, enhancing its data management and analytics capabilities. ● November 2012: Partnered with ABC Services, Inc. to launch Secure Infrastructure & Services LLC (SIAS), offering for the first time IBM Power multi-tenant cloud infrastructure services. ● October 2016: Completed the acquisition of the remaining shares of ABC Services, Inc., fully integrating the SIAS offerings. ● June 1, 2021: Merged with Flagship Solutions, LLC, an IBM Gold Business Partner, further expanding its service offerings and solidifying its market leadership in business continuity, disaster recovery, and IBM Power cloud infrastructure solutions.

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By integrating cybersecurity into its cloud and DR offerings, DSC provides a layered defense to safeguard client data and systems across on-premise and cloud environments. • Managed IT Services and Support – DSC augments its core cloud offerings with managed services such as systems monitoring, IT automation, and voice & data communications solutions.

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These strategic acquisitions and partnerships have established Data Storage Corporation as a key player in cloud infrastructure and disaster recovery sectors, offering a comprehensive suite of solutions to meet the evolving needs of its clients. 8 Competitive Landscape and Corporate Developments Summary Competitive Landscape Data Storage Corporation operates in a competitive market dominated by giants like Amazon Web Services (AWS), Google, and Microsoft, which control approximately 51% of the X86 cloud infrastructure and disaster recovery platforms.

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For example, through its Nexxis subsidiary, DSC provides Voice over Internet Protocol (“VoIP”)/Unified Communications and dedicated internet connectivity as part of its one-stop solution set. These ancillary services enable clients to rely on a single provider for a broad range of IT infrastructure needs.

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Despite the fierce competition, the Company finds a niche market within the IBM Power community, where an estimated 15% have transitioned to cloud solutions, offering significant growth opportunities. The Company’s cybersecurity solutions, while facing numerous competitors, are distinctively tailored for existing clients and distribution networks.

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This integrated solutions portfolio positions DSC as a single-source provider for cloud infrastructure, disaster recovery, cybersecurity, and connectivity. From initial cloud migration through ongoing management and support, the Company ensures clients’ workloads run securely and efficiently in a multi-cloud environment.

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Key competitive factors include pricing, product features, performance, quality, reliability, software partnerships, marketing and distribution capabilities, and the Company’s reputation. Data Storage Corporation focuses on expanding its market reach globally, especially within the disaster recovery and cloud infrastructure sectors, primarily catering to the IBM end user community.

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DSC’s value proposition is underscored by its high service reliability (Tier III data centers with 99.999% uptime SLAs) and a consultative approach by in-house solution architects to meet each client’s unique requirements.

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For the fiscal year ended December 31, 2023, approximately 22% of our revenue was derived from two customers. Corporate Developments ● Flagship Solutions, LLC Merger: On June 1, 2021, the Company finalized the merger with Flagship Solutions, LLC, enhancing its offerings in IBM equipment, managed services, and cloud solutions.

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Competitive Positioning and CloudFirst Strategy CloudFirst occupies a distinct competitive niche as a premier cloud solution for IBM Power Systems, an area with high barriers to entry and limited competition. Because IBM i and AIX workloads cannot be easily re-platformed to standard x86 cloud environments, hyperscale cloud providers (Amazon, Microsoft, Google) generally do not compete in this segment.

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This strategic move bolsters the Company’s position in server monitoring, management, and data center infrastructure management. ● Leadership Changes: Post-merger, Mark Wyllie was appointed as CEO of Flagship Solutions, LLC, with an agreement guaranteeing his obligations by Data Storage Corporation. Thomas Kempster succeeded Mark Wyllie as President of Flagship Solutions Group following Mark Wyllie’s resignation on October 28, 2022.

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DSC has capitalized on this gap by building a cloud platform specialized for IBM Power – complete with the necessary hardware, OS expertise, and tools to support mission-critical IBM environments. This focus, combined with DSC’s deep IBM technical know-how, allows the Company to address complex legacy modernization and disaster recovery needs that others cannot readily fulfill.

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These laws regulate the Company’s handling of personal and customer data, reflecting the growing importance of privacy in the digital age.

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At the same time, CloudFirst is designed for interoperability with mainstream clouds: the platform integrates via high-bandwidth, low-latency connections to AWS, Azure, Google, and IBM Cloud, enabling clients to run IBM i/AIX systems in parallel with their other cloud-native workloads.

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The Company has no collective bargaining agreements in place and maintains a positive relationship with its employees.

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This multi-cloud capability gives enterprises the “best of both worlds” – they can maintain essential IBM systems, whereby protecting their applications designed for the IBM operating platform on CloudFirst, while interfacing seamlessly with applications hosted on public clouds. 6 Security and compliance are core to CloudFirst’s value proposition.

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DSC’s data centers meet Tier III standards and SOC 2 Type II compliance, offering the highest levels of reliability and data protection. CloudFirst’s infrastructure and processes are aligned with stringent regulatory requirements in the United States, Canada, and the United Kingdom, which is crucial for clients in regulated industries (financial services, government, healthcare, etc.).

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Additionally, DSC’s cloud services adhere to data sovereignty laws by enabling clients to keep data within country borders (e.g., Canadian data in Canada, UK data in UK data centers). By prioritizing security certifications and regional compliance, CloudFirst provides enterprise customers with confidence that their critical systems are hosted in an environment that meets national security standards and privacy laws.

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This commitment to security, combined with 24x7 managed support, has solidified DSC’s reputation as a trusted partner for business continuity. Industry recognition of this niche leadership is evident – DSC is viewed as an emerging growth leader in cloud infrastructure and the migration of data to the cloud for IBM Power workloads.

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Global Footprint and Infrastructure DSC has established a global cloud infrastructure footprint to serve its clients’ multi-national needs.

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The Company operates and leverages a network of Tier III data center facilities across North America and Europe, including five in the United States, which includes one new data center facility in Chicago, two in Canada, and three in the United Kingdom (Scotland and England).

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This expansive footprint was built through strategic investments and partnerships: historically, DSC operated out of seven primary data centers across the U.S. and Canada, and in 2024 it expanded into Europe by partnering with leading regional data center providers (e.g., Brightsolid in Scotland and Pulsant in England).

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By early 2025, CloudFirst’s platform spanned three countries and served over 400 clients globally. Having infrastructure in multiple geographies allows DSC to deliver cloud infrastructure and recovery services from a single source across continents, a capability few competitors offer.

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Clients with international operations can rely on CloudFirst to host and protect data in-region for performance and compliance, while managing everything through one provider.

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For example, a U.S.-based enterprise with subsidiaries in Canada and the UK can run IBM i production in DSC’s U.S. cloud, have disaster recovery in Canada, and extend certain workloads or backups to the UK – all under CloudFirst’s management.

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This one-stop, multi-country service model is highly differentiated in the mid-market enterprise segment, where companies often struggle to find integrated solutions for IBM Power workloads across regions. DSC’s data centers are inter-connected and built with full redundancy (power, cooling, network) and round-the-clock operations support, ensuring consistent service levels worldwide.

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The geographic diversity of these sites also adds resiliency (e.g., data can be replicated to a different country for added protection). Management believes this global infrastructure approach for cross-border cloud services provides DSC with a competitive advantage in winning customers seeking a single vendor for all their cloud hosting and business continuity needs.

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Growth Strategy and Cross-Selling Opportunities DSC’s growth strategy is centered on expanding its cloud footprint and cross-selling its full suite of solutions to meet the evolving needs of its clients. A key pillar of this strategy is capitalizing on cross-sell opportunities that arise from the Company’s multi-country presence and broadened solution set.

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As the Company enters new regions like Europe, DSC can target existing North American clients who have overseas operations, offering to migrate or protect those international workloads via CloudFirst’s new UK facilities.

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Similarly, partnerships with local providers (such as Pulsant in the UK) open access to new customer bases that DSC can serve with its IBM expertise – including European organizations and U.S. multinationals operating abroad. Management has structured these partnerships to maximize customer engagement across different industry verticals and regions, thereby creating access to a much broader addressable market.

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Early success of this approach is evidenced by growing demand in the UK/EU for IBM cloud services, which CloudFirst is now positioned to fulfill as one of the few specialized providers in that area. In North America, DSC continues to deepen penetration in high-value verticals such as finance, healthcare, and insurance that require the reliable continuity solutions DSC provides.

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The Company’s unified sales team now markets an expanded portfolio – for instance, a disaster recovery customer can be upsold to production hosting on CloudFirst, cybersecurity services, and even voice/data connectivity, all through one relationship.

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Internally, the consolidation of Flagship into the CloudFirst brand has enhanced this cross-selling: Flagship’s legacy customers (who may have originally engaged for IBM hardware or software solutions) are being introduced to DSC’s cloud and DR services, driving incremental recurring revenue.

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To support these efforts, DSC is investing in its distribution channels, including IBM Business Partners, Managed Service Provider’s (MSPs), and resellers, to refer and resell CloudFirst services globally. The Company is also pursuing selective acquisitions and alliances to broaden its technical capabilities and customer reach.

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In 2024, DSC reported $25.4 million in total revenue, with greater than 80% stemming from recurring sources, including cloud-based hosting and disaster recovery solutions, infrastructure-as-a-service hosting, managed services, cyber security and maintenance subscriptions. This base of annual recurring revenue reflects the effectiveness of the Company’s subscription-focused model.

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The remaining contract value for cloud services totals approximately $39.2 million, providing revenue visibility and supporting future growth expectations. The Company ended the year with a $21.5 million Annual Recurring Revenue (ARR) run rate. With a contract renewal rate exceeding 90%, DSC is positioned to maintain and expand its customer base.

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DSC operates with no debt and continues to improve operating margins as it scales its cloud solutions and service offerings. Looking forward, the Company is advancing its strategy, expanding its company owned and managed IBM Power platform into new markets, including a recent entry into Europe.

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Management believes that there is a global migration of IBM power systems and disaster recovery to cloud based solutions.

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DSC is uniquely positioned to capitalize on these trends, driving sustained revenue growth and long-term shareholder value. 7 Overall, DSC’s integrated approach – a unique IBM-focused cloud platform, compliance-driven global data center presence, and a broad suite of continuity and security solutions – positions the Company as a comprehensive one-stop provider for enterprises undergoing digital transformation and cloud migration.

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Key Regulatory Frameworks: ● General Compliance: The Company is committed to adhering to industry standards and the various privacy policies and obligations it holds towards third parties.

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On May 31, 2021, the Company completed a merger of Flagship, a Florida limited liability company, and the Company’s wholly-owned subsidiary, Data Storage FL, LLC, a Florida limited liability company. Flagship is a provider of Hybrid Cloud solutions, managed services and cloud solutions.

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On January 1, 2024, Flagship Solutions, LLC was consolidated into the Company’s wholly-owned subsidiary, CloudFirst Technologies Corporation, a Delaware corporation incorporated in 2001.

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On January 27, 2022, we formed Information Technology Acquisition Corporation a special purpose acquisition company for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.

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On August 12, 2024, the Company formed UK Cloud Host Technologies Ltd., a company formed under the laws of the United Kingdom, for the purpose of establishing an executive presence in London, United Kingdom and managing the business and affairs of the Company within Europe.

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On December 27, 2024, the name of the entity was changed to CloudFirst Europe Ltd . Facilities The Company’s corporate headquarters are located at 225 Broadhollow Road, Suite 307, Melville, New York 11747, which are leased pursuant to a lease agreement, dated January 17, 2024. The lease commenced on April 1, 2024, and has a term of sixty-seven months.

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The monthly rent is $11,931 and the lease expires on October 30, 2029. The Company believes that these headquarters are adequate for its current operations and needs.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+34 added−16 removed149 unchanged

2023 filing

2024 filing

Biggest changeThe Company does not expect to declare any common stock cash dividends in the foreseeable future. The Company does not anticipate declaring any cash dividends to holders of Data Storage common stock in the foreseeable future.

Biggest changeThe Company does not anticipate declaring any cash dividends to holders of its common stock in the foreseeable future. Consequently, common stockholders may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

The Company’s solutions are used by customers in the health care industry, and it must comply with numerous federal and state laws related to patient privacy in connection with providing its solutions to these customers.

Errors, failures, bugs in or unavailability of the Company’s solutions released by it could result in negative publicity, damage to its brand, returns, loss of or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others.

To execute the Company’s growth plan, it must attract and retain highly qualified personnel. Competition for these employees is intense, and the Company may not be successful in attracting and retaining qualified personnel. The Company, from time to time in the past, experienced, and it expects to continue to experience, difficulty in hiring and retaining highly-skilled employees with appropriate qualifications.

To execute the Company’s growth plan, it must attract and retain highly qualified personnel. Competition for these employees is intense, and the Company may not be successful in attracting and retaining qualified personnel. The Company, from time to time in the past, experienced, and expects to continue to experience, difficulty in hiring and retaining highly-skilled employees with appropriate qualifications.

The Company’s new solutions or solution enhancements could fail to attain sufficient market acceptance or harm its business for many reasons, including: ● delays in releasing its new solutions or enhancements to the market; ● failure to accurately predict market demand or customer demands; ● inability to protect against new types of attacks or techniques used by hackers; ● difficulties with software development, design, or marketing that could delay or prevent its development, introduction, or implementation of new solutions and enhancements; ● defects, errors or failures in its design or performance; ● negative publicity about its performance or effectiveness; ● introduction or anticipated introduction of competing solutions by its competitors; ● poor business conditions for its customers, causing them to delay information technology purchases; ● the perceived value of its solutions or enhancements relative to their cost; and ● easing of regulatory requirements around security or storage. 15 In addition, new technologies have the risk of defects that may not be discovered until after the product launches, resulting in adverse publicity, loss of revenue or harm to the Company’s business and reputation.

The Company’s new solutions or solution enhancements could fail to attain sufficient market acceptance or harm its business for many reasons, including: ● delays in releasing its new solutions or enhancements to the market; ● failure to accurately predict market demand or customer demands; ● inability to protect against new types of attacks or techniques used by hackers; ● difficulties with software development, design, or marketing that could delay or prevent its development, introduction, or implementation of new solutions and enhancements; ● defects, errors or failures in its design or performance; ● negative publicity about its performance or effectiveness; ● introduction or anticipated introduction of competing solutions by its competitors; ● poor business conditions for its customers, causing them to delay information technology purchases; ● the perceived value of its solutions or enhancements relative to their cost; and ● easing of regulatory requirements around security or storage. 13 In addition, new technologies have the risk of defects that may not be discovered until after the product launches, resulting in adverse publicity, loss of revenue or harm to the Company’s business and reputation.

Business associate agreements typically include: ● a description of the Company’s permitted uses of individually identifiable health information; ● a covenant not to disclose that information except as permitted under the agreement and to make the Company’s subcontractors, if any, subject to the same restrictions; ● assurances that appropriate administrative, physical, and technical safeguards are in place to prevent misuse of that information; ● an obligation to report to the Company’s customers any use or disclosure of that information other than as provided for in the agreement; 20 ● a prohibition against the Company’s use or disclosure of that information if a similar use or disclosure by its customers would violate the HIPAA standards; ● the ability of the Company’s customers to terminate their subscription to its solution if the Company breaches a material term of the business associate agreement and are unable to cure the breach; ● the requirement to return or destroy all individually identifiable health information at the end of the customer’s subscription; and ● access by the Department of Health and Human Services to the Company’s internal practices, books, and records to validate that we are safeguarding individually identifiable health information.

Business associate agreements typically include: ● a description of the Company’s permitted uses of individually identifiable health information; ● a covenant not to disclose that information except as permitted under the agreement and to make the Company’s subcontractors, if any, subject to the same restrictions; ● assurances that appropriate administrative, physical, and technical safeguards are in place to prevent misuse of that information; ● an obligation to report to the Company’s customers any use or disclosure of that information other than as provided for in the agreement; ● a prohibition against the Company’s use or disclosure of that information if a similar use or disclosure by its customers would violate the HIPAA standards; 18 ● the ability of the Company’s customers to terminate their subscription to its solution if the Company breaches a material term of the business associate agreement and are unable to cure the breach; ● the requirement to return or destroy all individually identifiable health information at the end of the customer’s subscription; and ● access by the Department of Health and Human Services to the Company’s internal practices, books, and records to validate that we are safeguarding individually identifiable health information.

These actions, if required, may be costly or unavailable on terms acceptable to the Company, or at all. 23 Furthermore, the Company has licensed proprietary technologies from third parties that it uses in its technologies and business, and it cannot be certain that the owners’ rights in their technologies will not be challenged, invalidated, or circumvented.

These actions, if required, may be costly or unavailable on terms acceptable to the Company, or at all. Furthermore, the Company has licensed proprietary technologies from third parties that it uses in its technologies and business, and it cannot be certain that the owners’ rights in their technologies will not be challenged, invalidated, or circumvented.

In order to grow, the Company must continue to reach the many businesses in need of our unique services, many of whom may have not previously used infrastructure as a service and cloud disaster recovery backup solutions. The Company uses and periodically adjusts a diverse mix of advertising and marketing programs to promote its solutions.

In order to grow, the Company must continue to reach the many businesses in need of its unique services, many of whom may have not previously used infrastructure as a service and cloud disaster recovery backup solutions. The Company uses and periodically adjusts a diverse mix of advertising and marketing programs to promote its solutions.

Any errors or defects in third-party software could result in errors or a failure of its solutions, which could harm its business. If the Company is unable to protect its domain names, its reputation, brand, customer base, and revenue, as well as its business and operating results, could be adversely affected.

As a result, the Company has incurred and expects to continue to incur additional expenses related to its continued growth. The Company also anticipates that its efforts to expand internationally will entail the marketing and advertising of its services and brand and the development of localized websites.

As a result, the Company has incurred and expects to continue to incur additional expenses related to its continued growth. The Company also anticipates that its ongoing efforts to continue to expand internationally will entail the marketing and advertising of its services and brand and the development of localized websites.

Moreover, if its third-party data center providers or its third-party colocation providers are unable to keep up with the Company’s growing needs for capacity, this could have an adverse effect on the Company’s business.

Moreover, if its third-party data center providers or its third-party colocation providers are unable to keep up with the Company’s growing capacity needs, this could have an adverse effect on the Company’s business.

The market price for the Company’s common stock may be influenced by many factors, including the following: 24 ● investor reaction to the Company’s business strategy; ● the success of competitive products or technologies; ● regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to the Company’s products; ● variations in the Company’s financial results or those of companies that are perceived to be similar to the Company; ● the Company’s ability or inability to raise additional capital and the terms on which it raises it; ● declines in the market prices of stocks generally; ● the Company’s public disclosure of the terms of any financing which it consummates in the future; ● an announcement that the Company has effected a reverse split of the Company’s common stock and treasury stock; ● the Company’s failure to be profitable; ● the Company’s failure to raise working capital; ● any acquisitions we may consummate, including, but not limited to, the Merger; ● announcements by the Company or its competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments; ● cancellation of key contracts; ● the Company’s failure to meet financial forecasts it publicly discloses; ● trading volume of the Company’s common stock; ● sales of the Company’s common stock by it or its stockholders; ● general economic, industry and market conditions; and ● other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic, and natural disasters such as hurricanes, floods, fires, earthquakes, tornadoes or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt the Company’s operations, disrupt the operations of its suppliers or result in political or economic instability.

The market price for the Company’s common stock may be influenced by many factors, including the following: ● investor reaction to the Company’s business strategy; ● the success of competitive products or technologies; ● regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to the Company’s products; ● variations in the Company’s financial results or those of companies that are perceived to be similar to the Company; 23 ● the Company’s ability or inability to raise additional capital and the terms on which it raises it; ● declines in the market prices of stocks generally; ● the Company’s public disclosure of the terms of any financing which it consummates in the future; ● an announcement that the Company has effected a reverse split of the Company’s common stock and treasury stock; ● the Company’s failure to be profitable; ● the Company’s failure to raise working capital; ● any acquisitions we may consummate; ● announcements by the Company or its competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments; ● cancellation of key contracts; ● the Company’s failure to meet financial forecasts it publicly discloses; ● trading volume of the Company’s common stock; ● sales of the Company’s common stock by it or its stockholders; ● general economic, industry and market conditions; and ● other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic, and natural disasters such as hurricanes, floods, fires, earthquakes, tornadoes or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt the Company’s operations, disrupt the operations of its suppliers or result in political or economic instability.

These provisions include: limitations on the ability to engage in any “combination” with an “interested stockholder” (each, as defined in the Nevada Revised Statutes (“NRS”)) for two years from the date the person first becomes an “interested stockholder”; being subject to Sections 78.378 to 78.3793 of the NRS and allowing an “acquiring person” to obtain voting rights in “control shares” without shareholder approval; the ability of the Board to issue shares of currently undesignated and unissued preferred stock without prior stockholder approval; limitations on the ability of stockholders to call special meetings; and the ability of the Board to amend its amended Bylaws without stockholder approval.

If Nasdaq delists our securities from trading on its exchange at some future date, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity with respect to our securities; ● a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock; ● a limited amount of news and analyst coverage for our company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.

If Nasdaq delists the Company’s securities from trading on its exchange at some future date, the Company could face significant material adverse consequences, including: ● a limited availability of market quotations for its securities; ● reduced liquidity with respect to its securities; ● a determination that the Company’s common stock is a “penny stock” which will require brokers trading in the Company’s common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the Company’s common stock; ● a limited amount of news and analyst coverage for the Company; and ● a decreased ability to issue additional securities or obtain additional financing in the future.

Additionally, because the Company recognizes revenue from customers over the terms of their subscriptions, a large portion of its revenue for each quarter reflects deferred revenue from subscriptions entered into during previous quarters, and downturns or upturns in subscription sales or renewals may not be reflected in the Company’s operating results until later periods.

Additionally, because the Company recognizes revenue from customers over the terms of their subscriptions, a sizeable portion of its revenue for each quarter reflects deferred revenue from subscriptions entered into during previous quarters, and downturns or upturns in subscription sales or renewals may not be reflected in the Company’s operating results until later periods.

Complaints or negative publicity about the Company’s solutions or billing practices could adversely impact its ability to attract and retain customers and its business, financial condition, and operating results. 19 The Company is subject to governmental regulation and other legal obligations related to privacy, and any actual or perceived failure to comply with such obligations would harm its business.

Complaints or negative publicity about the Company’s solutions or billing practices could adversely impact its ability to attract and retain customers and its business, financial condition, and operating results. 17 The Company is subject to governmental regulation and other legal obligations related to privacy, and any actual or perceived failure to comply with such obligations would harm its business.

If the Company is unable to maintain effective advertising programs, its ability to attract new customers could be adversely affected, its advertising and marketing expenses could increase substantially, and its operating results may suffer. 11 A portion of the Company’s potential customers locate its website through search engines, such as Google, Bing, and Yahoo!.

If the Company is unable to maintain effective advertising programs, its ability to attract new customers could be adversely affected, its advertising and marketing expenses could increase substantially, and its operating results may suffer. 9 A portion of the Company’s potential customers locate its website through search engines, such as Google, Bing, and Yahoo!.

The integration of an acquired company may cost more than the Company anticipates, and it is possible that the Company will incur significant additional unforeseen costs in connection with such integration, which may negatively impact its earnings. 12 In addition, the Company may only be able to conduct limited due diligence on an acquired company’s operations.

The integration of an acquired company may cost more than the Company anticipates, and it is possible that the Company will incur significant additional unforeseen costs in connection with such integration, which may negatively impact its earnings. 10 In addition, the Company may only be able to conduct limited due diligence on an acquired company’s operations.

Consequently, a decrease of interest in and demand for the Company’s solutions in the U.S. could have a disproportionately greater impact on it than if its geographic mix of revenue was less concentrated. 18 The Company primarily depends upon third-party distribution companies to generate new customers.

Consequently, a decrease of interest in and demand for the Company’s solutions in the U.S. could have a disproportionately greater impact on it than if its geographic mix of revenue was less concentrated. 16 The Company primarily depends upon third-party distribution companies to generate new customers.

Problems with the reliability or security of the Company’s systems could harm its reputation, and the cost of remedying these problems could negatively affect the Company’s business, financial condition, and operating results. 16 Security vulnerabilities, data protection breaches and cyberattacks could disrupt the Company’s data protection platform and solutions, and any such disruption could increase its expenses, damage its reputation, harm its business, and adversely affect its stock price.

Problems with the reliability or security of the Company’s systems could harm its reputation, and the cost of remedying these problems could negatively affect the Company’s business, financial condition, and operating results. 14 Security vulnerabilities, data protection breaches and cyberattacks could disrupt the Company’s data protection platform and solutions, and any such disruption could increase its expenses, damage its reputation, harm its business, and adversely affect its stock price.

In addition, while the Company both operates and maintains elements of network infrastructure, some elements of this complex system are operated by third parties that the Company does not control and that would require significant time to replace. The Company expects this dependence on third parties to increase.

In addition, while the Company both operates and maintains elements of network infrastructure, some elements of this complex system are operated by third parties that the Company does not control and that would require considerable time to replace. The Company expects this dependence on third parties to increase.

Any internet outages or delays could adversely affect the Company’s ability to provide services to its customers. 17 Currently, internet access is provided by telecommunications companies and internet access service providers that have significant and increasing market power in the broadband and internet access marketplace.

Any internet outages or delays could adversely affect the Company’s ability to provide services to its customers. 15 Currently, internet access is provided by telecommunications companies and internet access service providers that have significant and increasing market power in the broadband and internet access marketplace.

If the Company’s approximate 94% retention rate significantly decreases, it may need to increase the rate at which it adds new customers in order to maintain and grow its revenue, which may require it to incur significantly higher advertising and marketing expenses than it currently anticipates, or its revenue may decline.

If the Company’s retention rate significantly decreases, it may need to increase the rate at which it adds new customers in order to maintain and grow its revenue, which may require it to incur significantly higher advertising and marketing expenses than it currently anticipates, or its revenue may decline.

Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation.

Section 404 requires an annual management assessment of the effectiveness of the Company’s internal control over financial reporting. The rules governing the standards that must be met for management to assess the Company’s internal control over financial reporting are complex and require significant documentation, testing, and possible remediation.

The Company may fail to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial statements or cause it to fail to meet its periodic reporting obligations. As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.

The Company may fail to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial statements or cause it to fail to meet its periodic reporting obligations. As a public company, The Company is required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.

Upon exercise of the Company’s outstanding options or warrants, it will be obligated to issue a substantial number of additional shares of common stock which will dilute its present shareholders .

Upon exercising the Company’s outstanding options or warrants, it will be obligated to issue a substantial number of additional shares of common stock which will dilute its present shareholders .

Data Storage Corporation is subject to anti-takeover provisions under Nevada law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for the Company’s securities.

DSC is subject to anti-takeover provisions under Nevada law, which could delay or prevent a change of control. Together, these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for the Company’s securities.

As a result, some of these competitors may be able to: ● develop superior products or services, gain greater market acceptance, and expand their service offerings more efficiently or more rapidly; ● adapt to new or emerging technologies and changes in customer requirements more quickly; ● bundle their offerings, including hosting services with other services they provide at reduced prices; ● streamline their operational structure, obtain better pricing, or secure more favorable contractual terms, allowing them to deliver services and products at a lower cost; ● take advantage of acquisition, joint ventures, and other opportunities more readily; ● adopt more aggressive pricing policies and devote greater resources to the promotion, marketing, and sales of their services, which could cause us to have to lower prices for certain services to remain competitive in the market; and ● devote greater resources to the research and development of their products and services.

If the Company fails to achieve the necessary level of efficiency in its organization as it grows, its business, financial condition, and operating results could be harmed. 21 The Company has office locations in New York, Florida, and Texas, and data centers in New York, Massachusetts, North Carolina, Texas, and Canada.

If the Company fails to achieve the necessary level of efficiency in its organization as it grows, its business, financial condition, and operating results could be harmed. 19 The Company has office locations in New York, Florida, Texas and the United Kingdom, and data centers in New York, Massachusetts, North Carolina, Texas, Canada and the United Kingdom.

While the Company has no reason to believe its shares would be the target of a short squeeze, there can be no assurance that it won’t be in the future, and you may lose a significant portion or all of your investment if you purchase the Company’s shares at a rate that is significantly disconnected from its underlying value.

While the Company has no reason to believe its shares would be the target of a short squeeze, there can be no assurance that it won’t be in the future, and investors may lose a significant portion or all of their investment if they purchase the Company’s shares at a rate that is significantly disconnected from its underlying value.

This could also cause the market price of the Company’s common stock shares to drop significantly, even if its business is performing well. Provisions of Nevada law could delay or prevent an acquisition of Data Storage, even if the acquisition would be beneficial to its stockholders and could make it more difficult for stockholders to change Data Storage’s management.

This could also cause the market price of the Company’s common stock shares to drop significantly, even if its business is performing well. Provisions of Nevada law could delay or prevent an acquisition of DSC, even if the acquisition would be beneficial to its stockholders and could make it more difficult for stockholders to change DSC’s management.

Risks Related to Data Storage’s Business The Company has not generated a significant amount of net income and it may not be able to sustain profitability in the future.

Risks Related to the Company’s Business The Company has not generated a significant amount of net income and it may not be able to sustain profitability in the future.

While these data centers are of the highest level, Tier 3, there can be no assurance that they will not experience disruptions that will adversely impact the Company’s ability to service its customers. The Company’s data center leases expire at various times between 2023 and 2024 with rights of extension.

While these data centers are of the highest level, Tier 3, there can be no assurance that they will not experience disruptions that will adversely impact the Company’s ability to service its customers. The Company’s data center agreements expire at various times between 2027 and 2029 with rights of extension.

The Company is obligated to issue additional shares of its common stock in connection with any exercise or conversion, as applicable, of its outstanding options, warrants, and shares of its convertible preferred stock. As of December 31, 2023, there were options and warrants outstanding convertible into an aggregate of 3,011,207 shares of common stock.

The Company is obligated to issue additional shares of its common stock in connection with any exercise or conversion, as applicable, of its outstanding options, warrants, and shares of its convertible preferred stock. As of December 31, 2024, there were options and warrants outstanding convertible into an aggregate of 3,174,162 shares of common stock.

If Nasdaq should determine at any time that we fail to meet Nasdaq requirements, we may be subject to a delisting action by Nasdaq. On January 18, 2024, Nasdaq notified the Company that due to the passing of Mr.

If Nasdaq should determine at any time that the Company failed to meet Nasdaq requirements, it may be subject to a delisting action by Nasdaq. 24 On January 18, 2024, Nasdaq notified the Company that due to the passing of Mr.

In addition, the Company may need to obtain future licenses from third parties to use intellectual property associated with the development of its solutions, which might not be available to the Company on acceptable terms, or at all.

The Company relies on software licensed from third parties to develop and offer its solutions. In addition, the Company may need to obtain future licenses from third parties to use intellectual property associated with the development of its solutions, which might not be available to the Company on acceptable terms, or at all.

We cannot be assured that we will continue to comply with the rules, regulations or requirements governing the listing of our common stock on Nasdaq Capital Market or that our securities will continue to be listed on Nasdaq Capital Market in the future.

The Company cannot be assured that it will continue to comply with the rules, regulations or requirements governing the listing of its common stock on The Nasdaq Capital Market or that its securities will continue to be listed on Nasdaq Capital Market in the future.

The Company may also enter into relationships with other businesses to expand its portfolio of solutions or its ability to provide its solutions in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing, or investments in other companies.

The Company expects to continue to acquire complementary solutions, services, technologies, or businesses in the future. The Company may also enter into relationships with other businesses to expand its portfolio of solutions or its ability to provide its solutions in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing, or investments in other companies.

We cannot be assured that we will be able to maintain our listing on the Nasdaq Capital Market. Our securities are listed on The Nasdaq Capital Market, a national securities exchange.

The Company cannot be assured that it will be able to maintain its listing on the Nasdaq Capital Market. The Company’s securities are listed on The Nasdaq Capital Market, a national securities exchange.

Hoffman, the Company no longer complies with Nasdaq’s audit committee requirements as set forth in Rule 5605(c)(2)(A) of the Nasdaq listing standards.

Hoffman, a member of the Company’s Board of Directors and member of the Audit Committee, the Company was no longer compliant with Nasdaq’s audit committee requirements as set forth in Rule 5605(c)(2)(A) of the Nasdaq listing standards.

Certain of the Company’s competitors offer, or may in the future offer, lower-priced or free solutions that compete with its solutions. 14 Additionally, consolidation activity through strategic mergers, acquisitions and joint ventures may result in new competitors that can offer a broader range of products and services, may have a greater scale or a lower cost structure.

Additionally, consolidation activity through strategic mergers, acquisitions and joint ventures may result in new competitors that can offer a broader range of products and services that, may have a greater scale or a lower cost structure.

If there are significantly more shares of common stock offered for sale than buyers are willing to purchase, then the market price of the Company’s common stock may decline to a market price at which buyers are willing to purchase the offered common stock and sellers remain willing to sell its common stock.

The Company’s failure to implement and maintain effective internal control over financial reporting could result in errors in its consolidated financial statements that could result in a restatement of its financial statements and could cause it to fail to meet its reporting obligations, any of which could diminish investor confidence in the Company and cause a decline in the price of its common stock.

The Company’s failure to implement and maintain effective internal controls over financial reporting could result in errors in its consolidated financial statements that could result in a restatement of its financial statements and could cause it to fail to meet its reporting obligations, any of which could diminish investor confidence in the Company and cause a decline in the price of its common stock. 11 The Company is controlled by three principal stockholders who serve as its executive officers and directors.

The Company’s revenue from new foreign markets may not exceed the costs of establishing, marketing, and maintaining its international solutions, and therefore may not be profitable on a sustained basis, if at all. The Company’s intended international expansion will subject it to risks typically encountered when operating internationally .

There can be no guarantee that the Company’s stock price will remain at current prices or that future sales of its common stock will not be at prices lower than those sold to investors. 25 Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

If the Company is unable to attract new customers to its infrastructure and disaster recovery/cloud subscription services on a cost-effective basis, its revenue and operating results would be adversely affected.

There can be no assurance that the Company will continue to generate income in the future or that the income will be significant. If the Company is unable to attract new customers to its infrastructure and disaster recovery/cloud subscription services on a cost-effective basis, its revenue and operating results would be adversely affected.

In addition to the general risks described above associated with intellectual property and other proprietary rights, the Company is subject to the additional risk that the seller of such technologies may not have appropriately created, maintained, or enforced their rights in such technology. 22 The Company relies on third-party software to develop and provide its solutions, including server software and licenses from third parties to use patented intellectual property.

The Company competes with cloud backup and infrastructure providers and providers of traditional hardware-based systems and IBM Power Systems. Its current and potential competitors vary by size, service offerings, and geographic region. These competitors may elect to partner with each other or with focused companies to grow their businesses.

Its current and potential competitors vary by size, service offerings, and geographic region. These competitors may elect to partner with each other or with focused companies to grow their businesses.

Piluso, Schwartz and Kempster control approximately 37% of the Company’s outstanding common stock, giving them the ability to control a significant portion of the votes for the Company’s directors and all other matters requiring the approval of its stockholders, including the election of all its directors and the approval of a reverse stock split. 13 Risks Related to the Company’s Industry The market for cloud solutions is highly competitive, and if the Company does not compete effectively, its operating results will be harmed.

Piluso, Schwartz and Kempster control approximately 36% of the Company’s outstanding common stock, giving them the ability to control a significant portion of the votes for the Company’s directors and all other matters requiring the approval of its stockholders, including the election of all its directors and the approval of a reverse stock split.

Consequently, common stockholders may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment. 26 Because the Company may issue preferred stock without the approval of its shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire the Company and could depress its stock price.

Because the Company may issue preferred stock without the approval of its shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire the Company and could depress its stock price.

In addition, demand for the Company’s cloud solutions is sensitive to price. Many factors, including the Company’s customer acquisition, advertising and technology costs, and its current and future competitors’ pricing and marketing strategies, can significantly affect its pricing strategies.

Many factors, including the Company’s customer acquisition, advertising and technology costs, and its current and future competitors’ pricing and marketing strategies, can significantly affect its pricing strategies. Certain of the Company’s competitors offer, or may in the future offer, lower-priced or free solutions that compete with its solutions.

The market for the Company’s services is highly competitive, quickly evolving and subject to rapid changes in technology. The Company expects to continue to face intense competition from its existing competitors as well as additional competition from new market entrants in the future as the market for its services continues to grow.

The Company expects to continue to face intense competition from its existing competitors as well as additional competition from new market entrants in the future as the market for its services continues to grow. The Company competes with cloud backup and infrastructure providers and providers of traditional hardware-based systems and IBM Power Systems.

The investment and additional resources required to establish operations and manage growth in other countries may not produce desired levels of revenue or profitability. The Company’s software contains encryption technologies, certain types of which are subject to U.S. and foreign export control regulations and, in some foreign countries, restrictions on importation and/or use.

If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition. 21 The Company’s software contains encryption technologies, certain types of which are subject to U.S. and foreign export control regulations and, in some foreign countries, restrictions on importation and/or use.

If the Company fails to attract new personnel, or fails to retain and motivate its current personnel, its business and growth prospects could be severely harmed. Risks Related to Intellectual Property Assertions by a third party that the Company’s solutions infringe its intellectual property, whether correct, could subject the Company to costly and time-consuming litigation or expensive licenses.

Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets. Risks Related to Intellectual Property Assertions by a third party that the Company’s solutions infringe its intellectual property, whether or not correct, could subject the Company to costly and time-consuming litigation or expensive licenses.

As reflected in the consolidated financial statements, the Company had net income attributable to common shareholders of $381,575 for the year ended December 31, 2023 and a net loss attributable to common shareholders of $4,356,802 for the year ended December 31, 2022.

As reflected in the consolidated financial statements, the Company had net income attributable to common shareholders of $523,214 and $381,575 for the years ended December 31, 2024, and 2023, respectively As of December 31, 2024, the Company had cash of $1,070,097, marketable securities of $11,261,006, and working capital of $11,869,914.

By way of example, on September 1, 2023, the reported low sale price of the Company’s common stock was $3.21, and the reported high sales price was $3.75.

By way of example, on March 28, 2024, the reported low sale price of the Company’s common stock was $5.52, and the reported high sales price was $7.02. For comparison purposes, on May 29, 2024, the last closing price of the Company’s common stock was $7.81 while the last closing price on September 6, 2024, was $3.32.

In November of 2022, management and its advisors began evaluating and documenting the design and operating effectiveness of our internal control over financial reporting, and their work is ongoing. The Company can give no assurance that additional material weaknesses will not be identified in the future.

The Company can give no assurance that additional material weaknesses will not be identified in the future.

ITEM 1A. RISK FACTORS Investing in the Company’s common stock involves a high degree of risk. You should carefully consider the following risks together with the other information in this Annual Report.

ITEM 1A. RISK FACTORS Investing in the Company’s common stock involves a high degree of risk. Investors should carefully consider the risks described below before deciding whether to invest in our securities. If any of the following risks actually occur, our business, financial condition or results of operations could be adversely affected.

The Company is controlled by three principal stockholders who serve as its executive officers and directors. As of March 27, 2024, through their aggregate voting power, Messrs.

As of March 27, 2025, through their aggregate voting power, Messrs.

Removed

As of December 31, 2023, the Company had cash of $1,428,730, marketable securities of $11,318,196, and working capital of $11,011,407. There can be no assurance that the Company will continue to generate income in the future.

Added

In such case, the trading price of our Common Stock could decline and you could lose all or part of your investment. Our actual results could differ materially from those anticipated in the forward-looking statements made throughout this Annual Report as result of different factors, including the risks we face described below.

Removed

Having completed the merger with Flagship, the Company expects to continue to acquire complementary solutions, services, technologies, or businesses in the future.

Added

To date, a substantial portion of the Company’s revenues have come from a limited number of customers, making it dependent on those few customers. Though the Company continues to expand its customer base, the Company remains dependent on a limited number of customers for a substantial portion of its revenues.

Removed

We may not realize the anticipated benefits of the merger with Flagship or successfully integrate our businesses On May 31, 2021, the Company completed the Merger.

Added

For the year ended December 31, 2024, the Company had two customers that each, individually, accounted for 12% of revenue. For the year ended December 31, 2023, the Company had two customers that accounted for 12% and 10% of revenue.

Removed

The Company expects that Flagship’s business will be synergistic with its existing IBM business and anticipates meaningful operation efficiency and that the Merger will provide a comprehensive one-stop provider to cross-sell solutions across each organization’s respective enterprise, as well as middle-market customers.

Added

The loss of, or a significant reduction of business from, any of the Company’s primary customers could have a material adverse effect on its business, financial condition, and results of operations unless it is able to replace such customers with other primary customers.

Removed

Key offerings for the combined companies are expected to include a wide array of multi-cloud 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 as a Service (DRaaS), and Cyber Security as a Service (CSaaS).

Added

Risks Related to the Company’s Industry The market for cloud solutions is highly competitive, and if the Company does not compete effectively, its operating results will be harmed. The market for the Company’s services is highly competitive, quickly evolving and subject to rapid changes in technology.

Removed

Since having completed the merger, however, the Company still faces risks and unknowns associated with the Merger. Ultimately, the Company may not realize the anticipated benefits of the merger with Flagship and integrating and operating Data Storage’s and Flagship’s business may be more difficult, time-consuming, or costly than expected.

Added

The Company’s international expansion will subject it to risks typically encountered when operating internationally including economic and political instability, fluctuations in currency exchange rates, differing legal and regulatory environments, challenges in managing a geographically dispersed workforce, and cultural differences.

Removed

Additionally, integrating and operating the Flagship business could result in higher capital expenditures than anticipated, which could result in the Company’s need to raise additional capital for its operations.

Added

International operations are subject to numerous political and economic factors, including changes in foreign national priorities, foreign government budgets, global economic conditions, and fluctuations in foreign currency exchange rates, the possibility of trade sanctions and other government actions, regulatory requirements, significant competition, taxation, and other risks associated with doing business outside the United States. Competition for international sales is intense.

Removed

The Company previously identified material weaknesses in its internal control over financial reporting, concluding that its disclosure controls were not effective, based on material weaknesses which ultimately contributed to the Company not designing and maintaining formal controls to analyze, account for, and disclose complex transactions, including the accounting for certain consideration received from a vendor.

Added

As a result of the Company’s international expansion into Europe, it will be exposed to risks inherent in foreign operations.

Removed

These material weaknesses resulted in the restatement of the Company’s previously filed quarterly condensed consolidated financial information for the period ended June 30, 2022, related to accrued expenses, cost of goods sold, gross profit, loss from operations, net loss, earnings per share and the related disclosures. As of March 31, 2023, the material weaknesses has been remediated.

Added

These risks, which can vary substantially by market, include: 1. higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets; 2. political instability, corruption, and social and ethnic unrest; 3. changes in economic conditions (including wage and commodity inflation, consumer spending and unemployment levels); 4. the regulatory environment; 5. compliance with tax, trade, environmental and other foreign laws and regulations, including legal limitations on ownership in some foreign countries and inadequate or inconsistent enforcement of regulations; 6. actions by local regulatory bodies, including setting rates and tariffs that may be earned by or charged to our businesses; 7. adverse rulings by foreign courts or tribunals; challenges obtaining, maintaining and complying with permits or approvals; difficulty enforcing contractual and property rights; and differing legal standards; 8. cultural differences; 9. consumer preferences ; 10. changes in the laws and policies that govern foreign investment in countries where our business is operated; 20 11. crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; 12. deterioration of political relations with the United States; and 13.

Removed

In response to such material weaknesses, management has expended and will continue to expand a substantial amount of effort and resources for the remediation of material weaknesses in internal control over financial reporting.

Added

Government appropriations of assets. In addition, the Company may experience gains and losses resulting from fluctuations in foreign currency exchange rates. To date, the majority of the Company’s revenues and costs are denominated in U.S. dollars; however, the majority of revenues and costs in its international operations [are/will be] denominated in foreign currencies.

Removed

The Company intends to expand internationally which subjects it to new risks that it has not generally faced in the United States.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+3 added−0 removed9 unchanged

2023 filing

2024 filing

Biggest changeThe Company acknowledges that the risk of cyber incidents is prevalent in the current threat landscape and that a future cyber incident may occur in the normal course of its business. To date, the Company has not experienced a cybersecurity incident.

Biggest changeThe Company faces risks from cybersecurity threats that could adversely affect its business, financial condition, results of operations, cash flows, or reputation. The Company acknowledges that the risk of cyber incidents is prevalent in the current threat landscape and that a future cyber incident may occur in the normal course of its business.

The Cyber Security & Risk Committee of the Board of Directors consists of Matthew Grover and Uwayne A. Mitchell. The Company’s ISMS Steering Committee also oversees risks from cybersecurity threats. The Company also contracts with a third-party consultant to ensure the ISMS and information security controls comply with applicable standards and requirements.

The Cyber Security & Risk Committee of the Board of Directors consists of Matthew Grover and Uwayne A. Mitchell. The Company’s ISMS Steering Committee also oversees risks from cybersecurity threats. In addition, the Company also contracts with a third-party consultant to ensure the ISMS and information security controls comply with applicable standards and requirements.

Further, there is increasing regulation regarding responses to cybersecurity incidents, including reporting to regulators, investors, and additional stakeholders, which could subject us to additional liability and reputational harm. See Item 1A. “Risk Factors” for more information on cybersecurity risks.

Further, there is increasing regulation regarding responses to cybersecurity incidents, including reporting to regulators, investors, and additional stakeholders, which could subject the Company to additional liability and reputational harm. See Item 1A. “Risk Factors” for more information on cybersecurity risks.

Together, these documents form the foundation of our ISMS and ensure organizational assets and processes for information security are managed, governed, and are operating effectively.

Together, these documents form the foundation of the Company’s ISMS and ensure organizational assets and processes for information security are managed, governed, and are operating effectively.

As part of its review of the adequacy of our system of internal controls over financial reporting and disclosure controls and procedures, the Cyber Security & Risk Committee of the Board of Directors, comprised of independent directors, is specifically responsible for reviewing the adequacy of our computerized information system controls and security related thereof, the Company’s cybersecurity threat landscape, risks and the Company’s management and mitigation of cybersecurity risks and potential breach incidents. 27 The Company faces risks from cybersecurity threats that could adversely affect its business, financial condition, results of operations, cash flows, or reputation.

As part of its review of the adequacy of the Company’s system of internal controls over financial reporting and disclosure controls and procedures, the Cyber Security & Risk Committee of the Board of Directors, comprised of independent directors, is specifically responsible for reviewing the adequacy of the Company’s computerized information system controls and security related thereof, the Company’s cybersecurity threat landscape, risks and the Company’s management and mitigation of cybersecurity risks and potential breach incidents.

The ISMS Steering Committee is specifically responsible for reviewing the adequacy of the Company’s information security controls.

The ISMS Steering Committee includes members with technical and strategic expertise in cybersecurity risk assessment, data protection, and ISO/IEC 27001 implementation, providing the Company with robust oversight capabilities. 27 The ISMS Steering Committee is specifically responsible for reviewing the adequacy of the Company’s information security controls.

Added

The Company’s management team possesses extensive experience in selecting, deploying, and overseeing cybersecurity technologies, initiatives, and processes, and relies on threat intelligence and other information obtained from governmental, public, and private sources to guide its approach. Matthew Grover brings over 15 years of experience in enterprise IT governance and has held senior leadership positions overseeing global information security operations.

Added

Uwayne A. Mitchell holds certifications such as CISSP and CISM and has a background in regulatory compliance and incident response within highly regulated industries.

Added

To date, the Company has not experienced a cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−5 removed0 unchanged

2023 filing

2024 filing

Biggest changeA 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 per year with an escalation of 3% per year with an ending date of July 31, 2023.

Biggest changeOn September 3, 2024, the Company amended this agreement and is on an eight month lease agreement with payments of a $1,056 per month. On January 17, 2024, the Company entered into a lease agreement for office space in Melville, NY. The lease commenced on April 1, 2024, and has a term of sixty-seven months.

The monthly rent is approximately $4,820. On January 1, 2022, the Company entered into a lease agreement for office space with WeWork in Austin, TX. The lease term is six months and requires monthly payments of $1,470 and expired on June 30, 2022.

The commencement date of the lease was August 2, 2021. The monthly rent is approximately $4,965. The lease has since expired. On January 1, 2022, the Company entered into a lease agreement for office space with WeWork in Austin, TX.

The lease was subsequently renewed for a one-year period commencing on August 1, 2023. The monthly rent is approximately $8,334. On July 31, 2021, the Company signed a three-year lease for approximately 2,880 square feet of office space at 980 North Federal Highway, Suite 302, Boca Raton, Florida. The commencement date of the lease is August 1, 2021.

ITEM 2. PROPERTIES The Company currently maintains two leases for office space located in Melville, NY, and one lease for office space in Austin, TX. On July 31, 2021, the Company signed a three-year lease for approximately 2,880 square feet of office space at 980 North Federal Highway, Boca Raton, FL.

Removed

ITEM 2. PROPERTIES The Company currently has three leases for office space, with two offices located in Melville, NY, and one office in Boca Raton, FL. The Company’s principal offices are located at 48 South Service Road, Suite 203, Melville, NY 11747. We also maintain offices located at 980 North Federal Highway, Suite 302, Boca Raton, FL 33432.

Added

The lease requires monthly payments of $11,931 and expires on October 30, 2029.

Removed

The Company’s data centers are in New York, Massachusetts, North Carolina, and Texas. The Company believes that its current offices and facilities are adequate for the near future. In August 2019, we entered into a new lease for a technology lab located in Melville, NY commencing on September 1, 2019.

Removed

The term of this lease is for three years and 11 months and runs co-terminus with the Company’s existing lease in the same building. The base annual rent is $11,856 payable in equal monthly installments of $988. The lease was subsequently renewed for a one-year period commencing on August 1, 2023. The monthly rent is approximately $1,010.

Removed

Subsequent to June 30, 2022, the Company is on a $3,073 month-to-month lease with WeWork in Austin, TX. The Company leases technical space in New York, Massachusetts, and North Carolina. These leases are month to month and the monthly rent is approximately $40,442. In 2020, the Company entered into a new technical space lease agreement in Dallas, TX.

Removed

The lease term is 13 months and requires monthly payments of $1,403 and expired on July 31, 2023. The Company is now on a month to month basis with monthly payments of $4,729.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−2 removed3 unchanged

2023 filing

2024 filing

Biggest changeHolders of the Company’s Common Stock As of March 27, 2024, we had 35 shareholders of record of the Company’s common stock, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).

Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock trades on The Nasdaq Capital Market under the symbol “DTST.” Holders of the Company’s Common Stock As of March 27, 2025, we had 31 shareholders of record of the Company’s common stock, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).

The declaration or payment of dividends, if any, in the future, will be at the discretion of Data Storage’s Board of Directors and will depend on the then- current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board.

The declaration or payment of dividends, if any, in the future, will be at the discretion of DSC’s Board of Directors and will depend on the then- current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board.

Recent Sales of Unregistered Securities The Company did not sell any equity securities during the fiscal year ended December 31, 2023 that were not registered under the Securities Act, other than as previously disclosed in its filings with the Securities and Exchange Commission (the “SEC”).

Recent Sales of Unregistered Securities The Company did not sell any equity securities during the three months ended, or the fiscal year ended, December 31, 2024, that were not registered under the Securities Act, other than as previously disclosed in its filings with the Securities and Exchange Commission (the “SEC”).

No Preferred shares are outstanding, and no dividends have been paid to date since retiring in May 2021 one shareholder.

No shares of Series A Preferred Stock are outstanding, and no dividends have been paid to date since May 2021 when all of the then outstanding shares of Series A Preferred Stock were converted into shares of the Company’s common stock.

Removed

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock trades on The Nasdaq Capital Market under the symbol “DTST”.

Added

Issuer Purchases of Equity Securities There were no issuer purchases of equity securities during the year ended, December 31, 2024.

Removed

Issuer Purchases of Equity Securities There were no issuer purchases of equity securities during the year ended December 31, 2023. Equity Compensation Plan Information See Part II-Item 12 under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters-Equity Compensation Plan Information” of this Annual Report on Form 10-K for equity compensation plan information. ITEM 6.

Added

Securities Authorized for Issuance Under Equity Compensation Plans The following table contains information about the Company’s equity compensation plans as of December 31, 2024: 29 Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options and warrants Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 2010 Plan 129,152 $ 3.41 — 2021 Plan 466,195 $ 2.25 479,653 Equity compensation plans not approved by stockholders N/A N/A N/A Total 595,347 $ 2.48 479,65 3 ITEM 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

42 edited+32 added−25 removed16 unchanged

2023 filing

2024 filing

Biggest changeDuring the year ended December 31, 2023, Data Storage’s cash decreased $857,992 to $1,428,730 from $2,286,722 on December 31, 2022.For the year ended December 31, 2023, net cash of $3,873,047 was provided by Data Storage’s operating activities resulting primarily from changes in net working capital requirements.

Biggest changeCash Flows for the year ended December 31, 2024, as compared to December 31, 2023 The following table summarizes the Company’s cash flows: Year Ended December 31, 2024 2023 Cash provided by operating activities $ 1,740,089 $ 3,873,047 Cash used in investing activities (1,743,174 ) (3,852,245 ) Cash used in financing activities (352,957 ) (878,794 ) Effect of exchange rate changes on cash (2,591 ) Decrease in cash (358,633 ) (857,992 ) Cash, beginning of period 1,428,730 2,286,722 Cash, end of period $ 1,070,097 $ 1,428,730 33 Operating activities For the year ended December 31, 2024, cash provided by operating activities was $1,740,089, compared to $3,873,047 for the year ended December 31, 2023.

To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using a market participant approach that directly impacts 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.

To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using a market participant approach that directly impacts the testing results. 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.

The Company is a partner of IBM and the various software, infrastructure and hybrid cloud solutions provided to clients. 4) Nexxis Voice over Internet and Direct Internet Access The Company provides VoIP, Internet access and data transport services to ensure businesses are fully connected to the internet from any location, remote and on premise.

The Company is a partner of IBM and the various software, infrastructure and hybrid cloud solutions are provided to clients. 4) Nexxis Voice over Internet and Direct Internet Access The Company provides VoIP, Internet access and data transport services to ensure businesses are fully connected to the internet from any location, remote and on premise.

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) Cloud Infrastructure and Disaster Recovery Revenue Cloud Infrastructure provides clients the ability to migrate their on-premise computing and digital storage to CloudFirst’s enterprise-level technical compute and digital storage assets located in Tier 3 data centers.

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) Cloud Infrastructure and Disaster Recovery Revenue Cloud Infrastructure provides clients with the ability to migrate their on-premise computing and digital storage to CloudFirst’s enterprise-level technical compute and digital storage assets located in Tier 3 data centers.

An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated un-discounted future cash flows. Stock-Based Compensation The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees.

An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated un-discounted future cash flows. 37 Stock-Based Compensation The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion of our plan of operation and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this Annual Report on Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion of our plan of operation and results of operations should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

In 2024, the Company intends to continue to work to increase its presence in the IBM “Power I” infrastructure cloud and business continuity marketplace in the niche of IBM “Power” and in the disaster recovery global marketplace utilizing its technical expertise, data centers utilization, assets deployed in the data centers, 24 x 365 monitoring and software.

In 2025, the Company intends to continue to work to increase its presence in the IBM “Power I” infrastructure cloud and business continuity marketplace in the niche of IBM “Power” and in the disaster recovery global marketplace utilizing its technical expertise, data centers utilization, assets deployed in the data centers, 24 x 365 monitoring and software.

Management believes the estimated fair value of these accounts on December 31, 2023, approximate their carrying value as reflected in the balance sheet due to the short-term nature.

Management believes the estimated fair value of these accounts on December 31, 2024, approximate their carrying value as reflected in the balance sheet due to the short-term nature.

Additionally, our measure of Adjusted EBITDA may differ from other companies’ measure of Adjusted EBITDA. When evaluating our performance, Adjusted EBITDA should be considered with other financial performance measures, including various cash flow metrics, net income and other GAAP results.

Additionally, the Company’s measure of Adjusted EBITDA may differ from other companies’ measure of Adjusted EBITDA. When evaluating the Company’s performance, Adjusted EBITDA should be considered with other financial performance measures, including various cash flow metrics, net income and other GAAP results.

Substantially all of the Company’s sales were to customers in the United States, with less than 2% of its sales to international customers.

Substantially all of the Company’s sales were to customers in the United States, with 2% of its sales to international customers.

Actual results could differ from these estimates. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

Actual results could differ from these estimates. The Company believes that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

The Company derives its sales from four types of services that we provide: infrastructure & disaster recovery/cloud services which is the largest source of our sales, followed by managed services, equipment and software sales, and Nexxis, VoIP and internet access services. The cloud infrastructure & disaster recovery/cloud services are subscription-based.

The Company derives its sales from four types of services that it provides: infrastructure & disaster recovery/cloud services which is the largest source of its sales, followed by managed services, equipment and software sales, and Nexxis VoIP and internet access services. The cloud infrastructure & disaster recovery/cloud services are subscription-based.

We also provide equipment and software and actively participate in collaboration with IBM to provide innovative business solutions to clients. The professional services are providing the client cloud infrastructure and or Disaster Recovery implementation services as well as time and materials billing.

The Company also provides equipment and software and actively participates in collaboration with IBM to provide innovative business solutions to clients. The professional services are providing the client cloud infrastructure and or disaster recovery implementation services as well as time and materials billing.

There are accounting policies, each of which requires significant judgments and estimates on the part of management, that we believe are significant to the presentation of our consolidated financial statements. The most significant accounting estimates are set forth below. 34 Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and lease commitments.

There are accounting policies, each of which requires significant judgments and estimates on the part of management, that the Company believes are significant to the presentation of its consolidated financial statements. The most significant accounting estimates are set forth below. Estimated Fair Value of Financial Instruments The Company’s financial instruments include cash, accounts receivable, accounts payable and lease commitments.

Product offerings provided directly from DSC are High Availability, Data Vaulting and retention solutions, including standby servers which allows clients to centralize and streamline their mission-critical digital information and technical environment while ensuring business continuity if they experience a cyber-attack or natural disaster.

Clients can subscribe to an array of disaster recovery solutions without subscribing to cloud infrastructure. Product offerings provided directly from DSC are High Availability, Data Vaulting and retention solutions, including standby servers which allows clients to centralize and streamline their mission-critical digital information and technical environment while ensuring business continuity if they experience a cyber-attack or natural disaster.

We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income (loss). We define Adjusted EBITDA as net income adjusted for interest and financing fees, depreciation, amortization, stock-based compensation, and other non-cash income and expenses.

The Company views Adjusted EBITDA as an operating performance measure and, as such, the Company believes that the GAAP financial measure most directly comparable to it is net income (loss). The Company defines Adjusted EBITDA as net income adjusted for interest and financing fees, depreciation, amortization, stock-based compensation, sales tax settlement, and other non-cash income and expenses.

The Company tests goodwill for impairment on an annual basis on December 31, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company has four reporting units. The Company uses an income-based approach to determine the fair value of the reporting units.

Goodwill and Other Intangibles The Company assesses goodwill for impairment on an annual basis on December 31, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company has four reporting units.

Data Storage Corporation owns the assets and provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, x86/intel, flash digital storage, while providing disaster recovery and cyber security while eliminating client capital expenditures.

DSC owns the assets and provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, x86/intel, flash digital storage, while providing disaster recovery and cyber security while eliminating client capital expenditures. The client pays a monthly fee and can increase capacity as required.

During the year ended December 31, 2023, the Company derived approximately 24% of our revenue from equipment and software sales, 39% of our revenue from infrastructure & disaster recovery/cloud services, 32% of our revenue from managed services, 4% of our revenue from Nexxis VoIP services.

During the year ended December 31, 2024, the Company derived approximately 31% of revenue from equipment and software sales, 51% of revenue from infrastructure & disaster recovery/cloud services, 12% of revenue from managed services, 5% of revenue from Nexxis VoIP services.

The Company has long-term contracts to supply its subscription-based solutions that are invoiced to clients monthly. The Company believes its total contract value of its subscription contracts with clients based on the actual contracts that it has to date, exceeds $10 million. Further, the Company continues to see an uptick in client interest distribution channel expansion and in sales proposals.

RESULTS OF OPERATIONS Year ended December 31, 2023, as compared to December 31, 2022 Revenue Sales for the year ended December 31, 2023, increased by approximately 5% to $24,959,576 as compared to sales for the year ended December 31, 2022, of $23,870,837.

RESULTS OF OPERATIONS Year ended December 31, 2024, as compared to December 31, 2023 Revenue Revenue for the year ended December 31, 2024, increased by approximately 2% to $25,371,303 as compared to sales for the year ended December 31, 2023, of $24,959,576.

Additions, betterments and replacements are capitalized, while expenditures for repairs and maintenance are charged to operations when incurred. As units of property are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income.

As units of property are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income.

Goodwill and Other Intangibles 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.

The Company performs a qualitative analysis of goodwill and other intangible assets for impairment indicators on at least an annual basis. If this assessment shows impairment indicators the Company will perform an impairment test to determine if the carrying value of a reporting unit exceeds its estimated fair value.

Services are provided 24x7x365 to our clients. 6) Implementation / Set-Up Fees : Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security. 7) Equipment sales : Sale of servers and data storage equipment to the client. 9) License : Granting SSL certificates and licenses. 36 Impairment of Long-Lived Assets 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.

Services are provided 24x7x365 to the Company’s clients. 6) Implementation / Set-Up Fees : Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security. 7) Equipment sales : Sale of servers and data storage equipment to the client. 9) License : Granting SSL certificates and licenses.

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. 35 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.

We believe that Adjusted EBITDA provides us an important measure of operating performance because it allows management, investors, debt holders and others to evaluate and compare ongoing operating results from period to period by removing the impact of our asset base, any asset disposals or impairments, stock-based compensation and other non-cash income and expense items associated with our reliance on issuing equity-linked debt securities to fund our working capital. 33 Our use of Adjusted EBITDA has limitations as an analytical tool, and this measure should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP, as the excluded items may have significant effects on our operating results and financial condition.

The Company believes that Adjusted EBITDA provides an important measure of operating performance because it allows management, investors, debt holders and others to evaluate and compare ongoing operating results from period to period by removing the impact of the Company’s asset base, any asset disposals or impairments, stock-based compensation and other non-cash income and expense items associated with its reliance on issuing equity-linked debt securities to fund its working capital.

Net income before provision for income taxes for the year ended December 31, 2023, was $299,316, as compared to a loss before provision for income taxes of $4,408,863 for the year ended December 31, 2022, primarily attributable to the items discussed above. 32 LIQUIDITY AND CAPITAL RESOURCES The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.

LIQUIDITY AND CAPITAL RESOURCES The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.

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.

In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing supplementing the client’s staff. 36 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.

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 supplementing the client’s staff.

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.

The Company performed the qualitative assessment as permitted by ASC 350-20 and determined for three of its reporting units that the fair value of its reporting units was more likely than not greater than their carrying value, including Goodwill at December 31, 2023.

For the year ended December 31, 2023, the Company was required to complete its annual impairment tests of goodwill since the Company combined two reporting units. The Company performed the quantitative assessment and determined that the fair value of the reporting units was more likely than not greater than their carrying value, including goodwill at December 31, 2023.

This approach uses a discounted cash flow methodology and the ability of our reporting units to generate cash flows as measures of fair value of our reporting units. For the year ended December 31, 2023, and 2022, the Company completed its annual impairment tests of goodwill.

The Company uses an income-based approach to determine the fair value of the reporting units. This approach uses a discounted cash flow methodology and the ability of the Company’s reporting units to generate cash flows as measures of fair value of its reporting units.

There were no goodwill impairment charges during the year ended December 31, 2023. Selling, general and administrative expenses . For the year ended December 31, 2023, selling, general and administrative expenses were $9,744,736, a decrease of $92,572, or 1%, as compared to $9,837,308 for the year ended December 31, 2022. The decrease is reflected in the chart below.

For the year ended December 31, 2024, selling, general and administrative expenses were $11,023,476, an increase of $1,278,740, or 13%, as compared to $9,744,736 for the year ended December 31, 2023. The increase is reflected in the chart below.

During the year ended December 31, 2022, we derived approximately 26% of our revenue from equipment and software sales, 34% of our revenue from infrastructure & disaster recovery/cloud services, 35% of our revenue from managed services, and 3% of our revenue from Nexxis VoIP services.

During the year ended December 31, 2023, the Company derived approximately 41% of our revenue from equipment and software sales, 40% of its revenue from infrastructure & disaster recovery/cloud services, 13% of revenue from managed services, and 4% of revenue from Nexxis VoIP services. 31 The following chart details the changes in the Company’s sales for the years ended December 31, 2024, and 2023, respectively.

Based on the completion of the annual impairment test on December 31, 2022, the Company recorded an impairment charge of $2,322,000 for goodwill for the year ended December 31, 2022 .

Based on the completion of the annual impairment test on December 31, 2023, the Company did not record an impairment charge.

These risks and other factors include, among others, those listed under “Forward-Looking Statements” and “Risk Factors” and those included elsewhere in this report. 29 COMPANY OVERVIEW SUMMARY Data Storage Corporation, based in Melville, New York, is a leading provider of data management and cloud solutions across multiple industries including healthcare, finance, manufacturing, and government.

These risks and other factors include, among others, those listed under “Forward-Looking Statements” and “Risk Factors” and those included elsewhere in this report. 30 COMPANY OVERVIEW SUMMARY DSC is a leading provider of enterprise cloud and business continuity solutions, specializing in fully managed cloud hosting, disaster recovery, cybersecurity, and IT automation services.

In the future, we may disclose different non-GAAP financial measures in order to help our investors and others more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.

In the future, the Company may disclose different non-GAAP financial measures in order to help its investors and others more meaningfully evaluate and compare the Company’s future results of operations to its previously reported results of operations. 34 The following table shows the Company’s reconciliation of net income (loss) to adjusted EBITDA for the years ended December 31, 2024, and 2023: For the year ended December 31, 2024 CloudFirst Technologies CloudFirst Europe Ltd.

Non-GAAP Financial Measures Adjusted EBITDA To supplement our consolidated financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we consider and are including herein Adjusted EBITDA, a Non-GAAP financial measure.

Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.” Non-GAAP Financial Measures Adjusted EBITDA To supplement the Company’s consolidated financial statements presented in accordance with GAAP and to provide investors with additional information regarding the Company’s financial results, the Company considers and is including herein Adjusted EBITDA, a Non-GAAP financial measure.

For the year ended December 31, 2023, cost of sales was $15,383,251, a decrease of $404,293, or 3%, compared to $15,787,544 for the year ended December 31, 2022.

For the year ended December 31, 2024, cost of sales was $14,267,936, a decrease of $1,115,315, or 7%, compared to $15,383,251 for the year ended December 31, 2023. The decrease of $1,115,315 was mostly related to the decrease in one-time equipment and managed services related cost of sales. Selling, general and administrative expenses .

Net cash of $3,852,245 was used in investing activities for the year ended December 31, 2023, primarily related to the purchase of short-term investments and capital expenditures. Net cash of $878,794 was used in financing activities for the year ended December 31, 2023, primarily related to payments in connection with finance lease obligations and payments for deferred offering costs.

Financing activities During the year ended December 31, 2024, net cash used in financing activities totaled $352,957, compared to $878,794 during the year ended December 31, 2023. The decrease of $525,837 was primarily due to lower repayments of finance lease obligations.

Corporate Total Net income $ 933,789 $ (4,916,934 ) $ (292,731 ) $ (132,987 ) $ (4,408,863 ) Non-GAAP adjustments: Flagship acquisition costs 770 770 Depreciation and amortization 943,224 282,687 1,225,911 Interest and letter of credit fees 138,365 319 (8,598 ) 130,086 Impairment of goodwill 2,322,000 2,322,000 Stock-based compensation 101,522 513,320 7,204 112,433 734,479 Adjusted EBITDA $ 2,116,900 $ (1,798,608 ) $ (285,527 ) $ (28,382 ) $ 4,383 CRITICAL ACCOUNTING 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.

Corporate Total Net income (loss) $ 2,625,879 $ — $ (229,377 ) $ (2,097,186 ) $ 299,316 Non-GAAP adjustments: Depreciation and amortization 1,300,237 — 705 652 1,301,594 Interest income — — — (542,229 ) (542,229 ) Interest expense 74,502 — — — 74,502 Stock-based compensation 162,004 — 17,603 326,598 506,205 Adjusted EBITDA $ 4,162,622 $ — $ (211,069 ) $ (2,312,165 ) $ 1,639,38 8 CRITICAL ACCOUNTING 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.

For the Year Ended December 31, 2023 2022 $ Change % Change Cloud Infrastructure & Disaster Recovery $ 9,695,833 $ 8,300,378 $ 1,395,455 17 % Equipment and Software 6,056,723 6,194,634 (137,911 ) (2 )% Managed Services 8,040,384 8,445,455 (405,071 ) (5 )% Nexxis VoIP Services 1,012,193 799,675 212,518 27 % Other 154,443 130,695 23,748 18 % Total Sales $ 24,959,576 $ 23,870,837 $ 1,088,739 5 % Expenses Cost of sales.

For the Year Ended December 31, 2024 2023 $ Change % Change Cloud Infrastructure & Disaster Recovery $ 12,898,192 $ 10,154,930 $ 2,743,262 27 % Equipment and Software 7,962,998 10,344,976 (2,381,978 ) (23 )% Managed Services 3,155,359 3,293,034 (137,675 ) (4 )% Nexxis VoIP Services 1,146,174 1,012,193 133,981 13 % Other 208,580 154,443 54,137 35 % Total Revenue $ 25,371,303 $ 24,959,576 $ 411,727 2 % Expenses Cost of sales.

SaaS decreased due to the completion of certain consulting engagements related to one of our customer relationship management platforms. Advertising Expenses. Advertising Expenses decreased due to non-renewal of a marketing program at Flagship. Commissions Expense. Commissions expense increased due to an increase in sales at CloudFirst and Nexxis. Travel and Entertainment.

Professional Fees. Professional fees increased primarily due to business development consulting fees, an increase in legal and accounting fees related to the filing of certain registration statements, and an increase in recruiting fees. Software as a Service Expense (SaaS). SaaS increased due to new projects for improvement initiatives for one of the Company’s customer relationship management systems. Advertising Expenses.

Removed

Through its subsidiaries, CloudFirst Technologies, Flagship Solutions LLC, and Nexxis, Inc., the Company offers a comprehensive suite of services designed to enhance operational resilience and data integrity for its clients.

Added

DSC leverages its expertise through its three subsidiaries: CloudFirst Technologies, CloudFirst Europe and Nexxis.

Removed

Strategic Growth and Infrastructure: In response to a capital raise and Nasdaq uplisting in 2021, the Company expanded its distribution networks and bolstered its team, focusing on enhancing its sales, marketing, and technological capabilities. Data Storage Corporation operates six geographically diverse data centers across the U.S. and Canada, supporting its commitment to providing secure and reliable subscription-based services.

Added

Through its CloudFirst platform – built on IBM Power Systems infrastructure – DSC delivers high-performance cloud solutions tailored for IBM i and AIX workloads This niche focus on IBM Power environments distinguishes CloudFirst in the market: none of the major public cloud providers (AWS, Microsoft Azure, or Google Cloud) natively support IBM i/AIX workload, giving DSC a distinct competitive edge in serving clients with these mission-critical systems.

Removed

Core Services: ● Business Continuity Solutions: Offers rapid recovery from system outages and disasters, ensuring minimal operational disruption. ● Managed Cloud Infrastructure Services: Facilitates cloud migration and provides ongoing support for software applications and technical workloads in a multi-cloud environment. ● Cyber Security: Delivers comprehensive security consultation, data protection, disaster recovery, and remote monitoring services, either integrated into cloud solutions or as standalone offerings.

Added

The Company leverages long-term subscription contracts for its cloud and disaster-recovery services, yielding a highly recurring revenue base and strong customer retention (historically over 90% annual subscription renewal rates) DSC’s client base exceeds 425 organizations across diverse sectors – including government, healthcare, education, manufacturing, and Fortune 500 enterprises – reflecting broad market demand for its multi-cloud hosting and business continuity solutions.

Removed

Client Engagement and Revenue Generation: The Company engages with clients through direct business development efforts and a broad distribution network, offering solutions that lower barriers to entry for disaster recovery and cloud infrastructure services.

Added

In recent years, DSC has undertaken strategic expansions (organically and via acquisitions) to reinforce its position as an emerging growth leader in the multi-billion-dollar cloud hosting and business continuity market. Notably, the integration of Flagship (acquired 2021) into CloudFirst was completed in January 2024, unlocking operational synergies and enabling cross-selling of the full CloudFirst suite to Flagship’s established customer base.

Removed

While subscription-based services constitute a significant portion of its revenue, Data Storage Corporation also generates income from the sale of equipment and software, emphasizing cybersecurity, data storage, and IBM Power systems solutions.

Added

This integration, combined with enhanced distribution and marketing capabilities post-2021 Nasdaq uplisting, has bolstered DSC’s growth trajectory and technical expertise.

Removed

This overview highlights Data Storage Corporation’s strategic approach to leveraging technology and expertise to meet the complex needs of its diverse client base, ensuring business continuity and security in an increasingly digital world.

Added

Recent Developments On July 18, 2024, the Company entered into an Equity Distribution Agreement (the “Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which it may offer and sell, from time to time, through Maxim, as sales agent or principal, shares of the Company’s common stock.

Removed

Key Merger Highlights: ● Synergistic Integration: The merger with Flagship is expected to create a unified platform that leverages both entities’ strengths in IBM solutions, managed services, and cloud-based security, promising enhanced operational efficiency. ● Expanded Offerings: The combined expertise of Data Storage Corporation and Flagship Solutions is set to offer a comprehensive range of multi-cloud IT solutions, including Infrastructure as a Service (IaaS), Disaster Recovery as a Service (DRaaS), and Cyber Security as a Service (CSaaS), targeting both enterprise and mid-market customers. ● Strategic Growth: Post-merger, the focus remains on harnessing this strategic integration to extend the range of high-security, reliable cloud services for IBM Power systems, Microsoft Windows, and Linux platforms.

Added

Subject to the terms and conditions of the Agreement, Maxim will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Capital Market to sell shares from time to time based upon the Company’s instructions, including any price, time or size limits specified by us.

Removed

The Company is committed to continuing its growth through further synergistic acquisitions. As of January 1, 2024 CloudFirst Technologies and Flagship Solutions LLC have merged. 30 Operational Footprint: Data Storage Corporation operates from offices in New York, Florida and Texas, equipped with technology centers designed to meet client requirements effectively.

Added

Under the Agreement, Maxim may sell shares by any method deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, or any other method permitted by law, including in privately negotiated transactions.

Removed

The Company also employs remote staff to complement its office teams and manages a robust infrastructure across six geographically diverse data centers in the United States and Canada, supporting its comprehensive subscription-based solutions.

Added

Maxim’s obligations to sell shares under the Agreement are subject to satisfaction of certain conditions, including customary closing conditions for transactions of this nature. The Company will pay Maxim a commission of 2.5% of the aggregate gross proceeds from each sale of shares and have agreed to provide Maxim with customary indemnification and contribution rights.

Removed

This merger represents a pivotal step in Data Storage Corporation’s strategy to expand its service offerings and enhance its competitive edge in the rapidly evolving cloud services and IT solutions market.

Added

The Company also agreed to reimburse Maxim for certain specified expenses of up to $50,000.

Removed

The following chart details the changes in the Company’s sales for the years ended December 31, 2023 and 2022, respectively.

Added

Sales of shares of common stock under the Agreement will be made pursuant to the Company’s registration statement on Form S-3 (File No. 333-280881) (the “Registration Statement”) and a related prospectus supplement (the “ATM Prospectus”), both of which were filed with the SEC on July 18, 2024.

Removed

The decrease of $404,293 was mostly related to new, negotiated pricing at Flagship, offset by an increase in cost of sales at CloudFirst and Nexxis due to the increase in revenue. 31 Impairment of goodwill. During the year ended December 31, 2022, the Company recorded a goodwill impairment charge of $2,322,000 regarding its Flagship segment .

Added

The ATM Prospectus relates to the offering of up to $10,600,000 shares of the Company’s common stock. The issuance and sale, if any, of common stock under the Agreement is subject to the Company maintaining an effective registration statement. The Registration Statement was declared effective on July 26, 2024.

Removed

Selling, general and administrative expenses For the Year Ended December 31, 2023 2022 $ Change % Change Salaries $ 5,036,038 $ 5,199,513 $ (163,475 ) (3 )% Professional Fees 1,143,700 927,441 216,259 23 % Software as a Service Expense 182,765 230,725 (47,960 ) (21 )% Advertising Expenses 815,674 966,248 (150,574 ) (16 )% Commissions Expense 1,420,492 1,301,949 118,543 9 % Amortization and Depreciation Expense 293,166 294,477 (1,311 ) 0 % Travel and Entertainment Expense 202,051 280,763 (78,712 ) (28 )% Rent and Occupancy Expense 225,466 219,545 5,921 3 % Insurance Expense 119,472 111,294 8,178 7 % All Other Expenses 305,912 305,353 559 0 % Total Expenses $ 9,744,736 $ 9,837,308 $ (92,572 ) (1 )% Salaries.

Added

Selling, general and administrative expenses For the Year Ended December 31, 2024 2023 $ Change % Change Salaries and Director Fees $ 4,790,489 $ 4,529,833 $ 260,656 6 % Stock Based Compensation 794,687 506,205 288,482 57 % Professional Fees 1,591,181 1,143,700 447,481 39 % Software as a Service Expense 235,379 182,765 52,614 29 % Advertising Expenses 749,257 815,674 (66,417 ) (8 )% Commissions Expense 1,323,818 1,420,492 (96,674 ) (7 )% Amortization and Depreciation Expense 285,381 293,166 (7,785 ) (3 )% Travel and Entertainment Expense 404,811 202,051 202,760 100 % Rent and Occupancy Expense 242,747 225,466 17,281 8 % Insurance Expense 128,746 119,472 9,274 8 % All Other Expenses 476,980 305,912 171,068 56 % Total Expenses $ 11,023,476 $ 9,744,736 $ 1,278,740 13 % Salaries and Director Fees.

Removed

Salaries decreased as a result of a reduction in stock-based compensation at Flagship , offset by an increase in employee benefits due to the addition of a new employee benefit program in 2023. Professional Fees. Professional fees increased primarily due to an increase in legal fees relating to employment matters and other corporate projects. Software as a Service Expense (SaaS).

Added

Salaries and director fees increased as a result of an increase in headcount, an increase in the number of Board Members and an increase due to annual employee performance reviews. Stock Based Compensation. Stock Based Compensation increased primarily due to an increase in the number of RSU’s granted and higher fair value per share for both RSU’s and stock options.

Removed

Travel and Entertainment expense decreased due to less travel by executives and reduced corporate events. Rent and Occupancy. Rent and Occupancy increased primarily due to contractual increases in rent for office space. All Other Expenses. Increased primarily due to an increase in bad debt expense offset by a reduction in all other expenses. Other Income (Expense).

Added

Advertising expense decreased due to the Company’s strategy to offset stadium expense by re-selling the suite for certain events. 32 Commissions Expense. Commissions expense decreased due to lower one-time equipment sales. Travel and Entertainment. Travel and entertainment expenses increased due to international expansion efforts in addition to travel related to domestic customer expansion efforts. All Other Expenses.

Removed

Other income (expense) for the year ended December 31, 2023, increased $800,576 to $467,727 from $(332,848) for the year ended December 31, 2022. The increase in other income (expense) is primarily attributable to net interest income for the year ended December 31, 2023 from marketable securities and a decrease in impairment of deferred offering costs.

Added

All other expenses increased primarily due to the Company receiving communications from the New York State Department of Taxation and Finance regarding sales and use tax matters. On July 31, 2024, the Company received additional correspondence and entered into discussions with the agency concerning an audit of its sales and use tax filings.

Removed

This was primarily offset by cash received in connection with the exercise of stock options. The Company’s working capital was $11,011,407 on December 31, 2023, increasing by $156,000 from $10,855,407 at December 31, 2022. The increase is primarily attributable to a decrease in cash, accounts receivable, prepaids and other current assets, accounts payable and leases payable related party.

Added

On February 4, 2025, the Company received a Statement of Proposed Audit Change from the Department, proposing a total liability of $219,352. The proposed liability related to the audit period from December 1, 2018 through May 31, 2023, and included $142,021 in tax and $77,331 in interest, with no penalties assessed.

Removed

This was offset by an increase in short-term investments and deferred revenue. Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”.

Added

As of September 30, 2024, the Company recorded an initial accrual of $89,000 based on the information available at the time. Upon receipt of the proposed assessment and completion of its evaluation, the Company recorded the remaining liability of $53,021 in other expenses and $77,331 in interest expense as of December 31, 2024, bringing the total accrual to $219,352.

Removed

The following table shows our reconciliation of net income (loss) to adjusted EBITDA for the years ended December 31, 2023, and 2022, respectively: For the year ended December 31, 2023 CloudFirst Technologies Flagship Solutions LLC Nexxis Inc.

Added

The Company subsequently paid the full amount to the New York State Department of Taxation and Finance in February 2025. Income before provision for income taxes. Income before provision for income taxes for the years ended December 31, 2024, and 2023 was $552,103, and $299,316 respectively, primarily attributable to the items discussed above.

… 19 more changes not shown on this page.

Top changes in Data Storage Corp's 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 1C. Cybersecurity

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other DTSTW 10-K year-over-year comparisons