8-K
Data Storage Corp (DTST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 1, 2021
DATA STORAGE CORPORATION
(Exact name of registrant as specified in its charter)
(Former Name of Registrant)
| Nevada | 00135384 | 98-0530147 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification Number) |
48 South Service Road
Melville, New York 11747
(Address of principal executive offices) (zip code)
212-564-4922
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 1, 2021, Data Storage Corporation, a Nevada corporation (the “Company”), issued the attached press release that included financial information for its year ended December 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 and in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 and in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K shall not be incorporated by reference into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit<br><br>Number | Description |
| --- | --- |
| 99.1 | Press Release issued by Data Storage Corporation, dated<br> April 1, 2021. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DATA STORAGE CORPORATION | ||
|---|---|---|
| Date: April 1, 2021 | By: | /s/ Charles M. Piluso |
| Charles M. Piluso | ||
| Chief Executive Officer |
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Data Storage Corporation Announces Year End Results 2020; Annual Revenue of $9.3 Million Represents Ten Percent Year over YearIncrease
MELVILLE,N.Y., April 1, 2021 (GLOBE NEWSWIRE) — Data Storage Corporation (OTC: DTST) (“DSC” and the “Company”), a provider of diverse business continuity, disaster recovery protection, and cloud infrastructure solutions and services, today provided a business update and announced its 2020 financial results.
Chuck Piluso, CEO of Data Storage Corporation, commented, “We continue to achieve meaningful financial performance and profitability despite the impact of COVID-19 on the global markets, as evidenced by a 10% increase in revenue to $9.3 million for the year ending December 31, 2020 as compared to the year ended December 31, 2019. Importantly, we had strong revenue growth in each of our key products: Nexxis VoIP Services increased by 44%; Infrastructure & Disaster Recovery/Cloud Services increased by 6.8%; Equipment and Software increased by 16%; and Managed Services increased by 4%. We achieved profitability while investing resources and capital in Nexxis, adding leadership for channel management, rounding out our product suite, as well as investing our income into further advancements in our infrastructure and operations to support our long-term growth initiatives. At the same time, we continue to carefully manage our expenses. Overall, we have built a scalable business model focused on high-margin recurring revenues.”
“Heading into 2021, we believe we have set the stage for continued growth. Due to the COVID-19 outbreak and the critical need for safe remote collaboration, we expanded our offering of cybersecurity solutions for remote tele-computing with our new product, ezSecurity™. We also launched a new remote collaboration program for small and medium-sized businesses. As part of this new program, we are offering free migration services from Microsoft Exchange to Microsoft 365, along with support for comprehensive voice communications (Hosted VoIP, IP Phones, Cloud PBX) and video conferencing. In addition, we expanded capacity through our new Dallas data center location to accommodate increased demand for our portfolio of ezServices, including ezBackup, ezRecovery and ezAvailability, adding to our existing network of data centers and fiber backbone.”
“At the same time, we expanded our North American footprint, including new markets in Canada, where we added two new Tier 3 enterprise-level data centers. We also recently announced a joint venture with Able-One Systems Inc, an IBM market leader, to provide our portfolio of enterprise-level IBM cloud infrastructure services to customers in Canada. We look forward to working closely with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superior IBM infrastructure and Disaster Recovery services.”
“In addition to our organic growth, we are also exploring potential opportunities to acquire cash flow positive businesses with complementary products and services. Most recently, we entered into a definitive Agreement with Flagship Solutions, LLC to merge into our wholly owned subsidiary, Data Storage FL, LLC, at which time Flagship will become a wholly owned subsidiary of our Company. Flagship is a provider of IBM Software, Services, Equipment and cutting edge intelligent analytical and decision-making solutions, providing managed services and cloud solutions worldwide that include cloud-based server monitoring and management, 24×7 help desk support, and data center infrastructure management. We believe this transaction will be highly synergistic with our existing IBM business. This merger provides a comprehensive one-stop provider approach to cross-sell solutions across our respective enterprises and middle-market customers. Overall, we remain extremely encouraged by the outlook for the business and believe 2021 will be a transformative year for the Company.”
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FinancialResults
Net sales for the year ended December 31, 2020 were $9,320,933, an increase of $837,325 or 10%, compared to $8,483,608 for the year ended December 31, 2019. The increase was primarily attributable to an increase in our infrastructure & disaster recover/ cloud subscription services due to a higher demand for IBM Power Systems cloud hosting, increased equipment sales, as well as an increase in demand for our VoIP services related to the Nexxis division in which we have invested $488,438 which impacted our core profitability by $(133,282).
Cost of Sales for the year ended December 31, 2020 was $5,425,205, an increase of $678,904 or 14%, from $4,746,031 for the year ended December 31, 2019. The increase in cost of sales was primarily attributable to improvements and expenses associated with the data centers for infrastructure and disaster recovery cloud services, including new IBM systems, storage and network equipment for the Raleigh, NC expansion and new Dallas data center location. There were also additional costs related to the Nexxis division, and equipment purchases for sale.
Operating expenses for the year ended December 31, 2020 were $3,896,791, an increase of $365,738, or 13%, as compared to $3,531,053 for the year ended December 31, 2019. The net increase was a result of an increase in salaries, stock option compensation, software as a service, advertising and Nexxis.
Net income for the year ended December 31, 2020 was $173,359, as compared to a net income of $29,323 for the year ended December 31, 2019.
AboutData Storage Corporation
The Company delivers and supports a broad range of premium technology solutions focusing on IaaS, data storage protection and IT management. Clients look to DSC to ensure disaster recovery, business continuity, enhance security, and to meet increasing industry, state and federal regulations. The Company markets to businesses, government, education and the healthcare industry by leveraging leading technologies. Through its business units, the Company provides IaaS, SaaS, DRaaS, VoIP, IBM Power systems and storage hardware with managed IT services. For more information, please visit http://www.DataStorageCorp.com.
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SafeHarbor Provision
Thispress release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Actof 1995, as amended, that are intended to be covered by the safe harbor created thereby. Forward-looking statements generallycan be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,”“plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negativethereof or any variation thereon or similar terminology or expressions. These forward-looking statements are based upon currentestimates and assumptions and include statements regarding the Company’s future revenue, setting the stage for the Company’saccelerated growth, working with Able-One to develop new opportunities in Canada and solve technology issues for businesses seekingsuperior IBM infrastructure and disaster Recovery services, exploring potential opportunities to acquire cash flow positive businesseswith complementary products and services, completion of the pending acquisition of Flagship Solutions, LLC, the Flagship acquisitionbeing highly synergistic with the Company’s existing IBM business, and 2021 being a transformative year for the Company.Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from resultsproposed in such statements. Although the Company believes that the expectations reflected in such forward-looking statementsare reasonable, it can provide no assurance that such expectations will prove to have been correct. Important factors that couldcause actual results to differ materially from the Company’s expectations include, but are not limited to, the Company’sability to continue to generate revenue at current levels, the Company’s ability to achieve accelerated growth, the Company’sability to work with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superiorIBM infrastructure and disaster Recovery services, the Company’s ability to acquire cash flow positive businesses with complementaryproducts and services, the Company’s ability to complete the acquisition of Flagship Solutions, LLC, the Company’sability to integrate Flagship’s business with the Company’s existing IBM business, the Company’s ability tomake 2021 a transformative year for the Company and those risk factors set forth in the Company’s Annual Report on Form 10-K forthe year ended December 31, 2020 and its other filings and submissions with the SEC. Readers are cautioned not to place unduereliance on these forward-looking statements, which speak only as of the date made. Except as required by law, the Company assumesno obligation to update or revise any forward-looking statements.
**Contact:**Crescendo Communications, LLC
212-671-1020
DTST@crescendo-ir.com
***tables follow***
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| DATA STORAGE CORPORATION AND SUBSIDIARIES | |||||
|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | |||||
| AS OF DECEMBER 31, | |||||
| 2019 | |||||
| --- | --- | --- | --- | --- | --- |
| ASSETS | |||||
| Current Assets: | |||||
| Cash and cash equivalents | 893,598 | $ | 326,561 | ||
| Accounts receivable (less allowance for doubtful accounts of 30,000 in 2020 and 2019) | 554,587 | 691,436 | |||
| Prepaid expenses and other current assets | 239,472 | 80,728 | |||
| Total Current Assets | 1,687,657 | 1,098,725 | |||
| Property and Equipment: | |||||
| Property and equipment | 7,845,423 | 6,894,087 | |||
| Less—Accumulated depreciation | (5,543,822 | ) | (4,705,256 | ) | |
| Net Property and Equipment | 2,301,601 | 2,188,831 | |||
| Other Assets: | |||||
| Goodwill | 3,015,700 | 3,015,700 | |||
| Operating lease right-of-use assets | 241,911 | 324,267 | |||
| Other assets | 49,310 | 65,433 | |||
| Intangible assets, net | 455,935 | 649,934 | |||
| Total Other Assets | 3,762,856 | 4,055,334 | |||
| Total Assets | 7,752,114 | $ | 7,342,890 | ||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||
| Current Liabilities: | |||||
| Accounts payable and accrued expenses | 979,552 | $ | 906,716 | ||
| Dividend payable | 1,115,674 | 970,997 | |||
| Deferred revenue | 461,893 | 432,942 | |||
| Line of credit | 24 | 75,000 | |||
| Finance leases payable | 168,139 | - | |||
| Finance leases payable related party | 1,149,403 | 833,148 | |||
| Operating lease liabilities short term | 104,549 | 101,505 | |||
| Note payable | 374,871 | 350,000 | |||
| Total Current Liabilities | 4,354,105 | 3,670,308 | |||
| Note payable long term | 107,106 | -- | |||
| Operating lease liabilities long term | 147,525 | 231,312 | |||
| Finance leases payable, long term | 247,677 | -- | |||
| Finance leases payable related party, long term | 974,743 | 1,713,122 | |||
| Total Long Term Liabilities | 1,477,051 | 1,944,434 | |||
| Total Liabilities | 5,831,156 | 5,614,742 | |||
| Stockholders’ Equity: | |||||
| Preferred stock, Series A par value .001;<br> 10,000,000 shares authorized; 1,401,786 shares issued and outstanding in each year | 1,402 | 1,402 | |||
| Common stock, par value .001; 250,000,000 shares<br> authorized; 128,539,418 and 128,439,418 shares issued and outstanding in 2020 and 2019, respectively | 128,539 | 128,439 | |||
| Additional paid in capital | 17,620,459 | 17,456,431 | |||
| Accumulated deficit | (15,734,737 | ) | (15,790,076 | ) | |
| Total Data Storage Corp Stockholders’ Equity | 2,015,663 | 1,796,196 | |||
| Non-controlling interest in consolidated subsidiary | (94,705 | ) | (68,048 | ) | |
| Total Stockholders’ Equity | 1,920,958 | 1,728,148 | |||
| Total Liabilities and Stockholders’ Equity | 7,752,114 | $ | 7,342,890 |
All values are in US Dollars.
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| DATA STORAGE CORPORATION AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| YEARS ENDED DECEMBER 31, | ||||||
| 2020 | 2019 | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Sales | $ | 9,320,933 | $ | 8,483,608 | ||
| Cost of sales | 5,425,205 | 4,746,031 | ||||
| Gross Profit | 3,895,728 | 3,737,577 | ||||
| Selling, general and administrative | 3,896,791 | 3,531,053 | ||||
| (Loss) Income from Operations | (1,063 | ) | 206,524 | |||
| Other Income (Expense) | ||||||
| Interest income | 24 | 250 | ||||
| Interest expense | (175,602 | ) | (177,451 | ) | ||
| Gain on extinguishment of contingent liability | 350,000 | - | ||||
| Total Other Income (Expense) | 174,422 | (177,201 | ) | |||
| Income before provision for income taxes | 173,359 | 29,323 | ||||
| Provision for income taxes | -- | — | ||||
| Net Income | 173,359 | 29,323 | ||||
| Non-controlling interest in consolidated subsidiary | 26,657 | 40,537 | ||||
| Net Income attributable to Data Storage Corporation | 200,016 | 69,860 | ||||
| Preferred Stock Dividends | (144,677 | ) | (124,312 | ) | ||
| Net Income (Loss) Attributable to Common Stockholders | $ | 55,339 | $ | (54,452 | ) | |
| Earnings (Loss) per Share – Basic | $ | 0.00 | $ | 0.00 | ||
| Earnings (Loss) per Share – Diluted | $ | 0.00 | $ | 0.00 | ||
| Weighted Average Number of Shares - Basic | 128,526,267 | 128,156,678 | ||||
| Weighted Average Number of Shares - Diluted | 134,640,419 | 128,156,678 |
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| DATA STORAGE CORPORATION AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| Years Ended December 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net Income | $ | 173,359 | $ | 29,323 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 1,032,566 | 896,697 | ||||
| Stock based compensation | 158,728 | 41,340 | ||||
| Gain on extinguishment of contingent liability | (350,000 | ) | -- | |||
| Changes in Assets and Liabilities: | ||||||
| Accounts receivable | 136,849 | (160,191 | ) | |||
| Other assets | 16,126 | -- | ||||
| Prepaid expenses and other current assets | (132,132 | ) | 87,163 | |||
| Right of use asset | 82,356 | (324,267 | ) | |||
| Accounts payable and accrued expenses | 44,620 | (81,862 | ) | |||
| Deferred revenue | 28,951 | (2,464 | ) | |||
| Deferred rent | -- | (18,890 | ) | |||
| Operating lease liability | (80,743 | ) | 332,817 | |||
| Net Cash Provided by Operating Activities | 1,110,679 | 799,666 | ||||
| Cash Flows from Investing Activities: | ||||||
| Capital expenditures | (181,072 | ) | (40,355 | ) | ||
| Net Cash Used in Investing Activities | (181,072 | ) | (40,355 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Repayments of capital lease obligations | -- | -- | ||||
| Proceeds from issuance of note payable | 481,977 | - | ||||
| Repayments of finance lease obligations related party | (718,690 | ) | (741,940 | ) | ||
| Repayments of finance lease obligations | (56,281 | ) | -- | |||
| Cash received for the exercised of options | 5,400 | 5,400 | ||||
| Advance from Credit Line | -- | 75,000 | ||||
| Repayment of Credit Line | (74,976 | ) | -- | |||
| Net Cash Used in Financing Activities | (362,570 | ) | (661,540 | ) | ||
| Increase in Cash and Cash Equivalents | 567,037 | 97,771 | ||||
| Cash and Cash Equivalents, Beginning of Year | 326,561 | 228,790 | ||||
| Cash and Cash Equivalents, End of Year | $ | 893,598 | $ | 326,561 | ||
| Supplemental Disclosures: | ||||||
| Cash paid for interest | $ | 168,837 | $ | 177,451 | ||
| Cash paid for income taxes | $ | -- | $ | -- | ||
| Non-cash investing and financing activities: | ||||||
| Accrual of preferred stock dividend | $ | 144,677 | $ | 124,312 | ||
| Assets acquired by finance lease | $ | 808,261 | $ | 1,560,021 |
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