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): August
14, 2024
DATA
STORAGE CORPORATION
(Exact name of registrant as specified in its charter)
(Former Name of Registrant)
| Nevada | 001-35384 | 98-0530147 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
225 Broadhollow Road, Suite 307
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-4I under the Exchange Act (17 CFR 240.13I(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | DTST | The Nasdaq Capital Market |
| Warrants to purchase shares of Common Stock, par value $0.001 per share | DTSTW | The Nasdaq Capital Market |
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 FinancialCondition.
On August 14, 2024, Data Storage Corporation, a Delaware corporation (the “Company”), issued a press release that included financial information for the fiscal quarter ended June 30, 2024. A copy of the press release is attached 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
The following exhibits are furnished with this Current Report on Form 8-K:
| Exhibit Number | Exhibit Description |
|---|---|
| 99.1 | Press Release, issued by Data Storage Corporation on August 14, 2024 |
| 104 | Cover<br> Page Interactive Data File (the cover page XBRL tags are embedded within in the inline XBRL document) |
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.
| Dated: August 14, 2024 | DATA STORAGE CORPORATION | |
|---|---|---|
| By: | /s/ Charles M. Piluso | |
| Name: | Charles M. Piluso | |
| Title: | Chief Executive Officer |
EXHIBIT 99.1
Data Storage Corporation Reports 2024 Second QuarterFinancial Results and Provides Business Update
Gross Profit Margin Increased Over 500 Basis Pointsto 49.0% for the Second Quarter of 2024
Achieved Profitability for the Six Months EndedJune 30, 2024
MELVILLE, N.Y., August 14, 2024 (GLOBE NEWSWIRE) — Data Storage Corporation (Nasdaq: DTST) (“DSC” and the “Company”), a provider of diverse business continuity solutions for disaster-recovery, cloud infrastructure, cyber-security, and IT services, today provided a business update and reported financial results for the three and six months ended June 30, 2024.
“We experienced strong growth for the first half of 2024,” commented Chuck Piluso, CEO of Data Storage Corporation. “Specifically, we achieved $13.1 million in sales for the six months ended June 30, 2024, and attained profitability. For the second quarter of 2024, we generated $4.9 million in revenue. While this represents a decline from the previous year’s second quarter, it is important to note that the reduction is attributable to the large one-time equipment sales recorded during the second quarter of 2023. Importantly, our gross profit margin increased over 500 basis points to 49.0% during the second quarter of 2024, up from 43.7% in the same period last year. The increased margin is a testament to our disciplined execution and strategic efforts to optimize profitability while building a sustainable revenue base.”
“We believe these positive results are a direct result of our growth efforts including the Flagship and CloudFirst consolidation, moving into our new headquarters location, expanding into the United Kingdom, and deploying technical assets at a new data center in Chicago, all of which were completed to support our anticipated growth moving forward. In fact, we are already witnessing the positive effects of the consolidation demonstrated by the expanded contracts secured during the quarter resulting in six-figure and seven-figure contracts with prominent clients.”
“To support the traction and growth, we recently expanded into the United Kingdom with the opening of our London office. This strategic move represents a significant milestone in our plan to serve a global clientele and strengthen our presence in key international markets. In addition, we are witnessing an increased demand for our solutions, and as a result we deployed assets to our seventh data center in Chicago. Chicago was strategically selected as it is expected to allow us to capitalize on the growing demand within the region as well as diversify our geographic footprint within the United States.”
“Overall, we are executing on a strategic growth plan which we believe will enable us to accelerate our growth and penetration within the market. At the same time, we have carefully managed our expenses and maintained a solid balance sheet with approximately $12 million in cash and marketable securities as of June 30, 2024. We are pleased with the important progress made during the quarter and look forward to providing additional updates as developments unfold,” concluded Mr. Piluso.
Conference Call
The Company plans to host a conference call at 11:00 am ET today, to discuss the Company’s financial results for the second quarter of 2024 which ended June 30, 2024, as well as corporate progress and other developments.
The conference call will be available via telephone by dialing toll-free 877-451-6152 for U.S. callers or for international callers +1-201-389-0879. A webcast of the call may be accessed at https://viavid.webcasts.com/starthere.jsp?ei=1677739&tp_key=572353fe45, or on the Company’s News & Events section of the website, www.dtst.com/news-events.
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A webcast replay of the call will be available on the Company’s website (www.dtst.com/news-events) through August 14, 2025. A telephone replay of the call will be available approximately three hours following the call, through August 21, 2024, and can be accessed by dialing 844-512-2921 for U.S. callers or + 1-412-317-6671 for international callers and entering conference ID: 13747395.
About Data Storage Corporation
Data Storage Corporation (Nasdaq: DTST) is a leading provider of fully managed cloud hosting, disaster recovery, cybersecurity, IT automation, and voice & data solutions. With strategic technical investments in multiple regions, DTST serves a diverse clientele, including Fortune 500 companies, in sectors such as government, education, and healthcare. Focused on the fast-growing, multi-billion-dollar business continuity market, DTST is recognized as a stable and emerging growth leader in cloud infrastructure, support and the migration of data to the cloud. Our regional data centers across North America enable us to deliver sustainable services through recurring subscription agreements.
Additional information about the Company is available at: www.dtst.com and on X @DataStorageCorp.
Safe Harbor Provision
This press release contains “forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harborcreated thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievementsto differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statementspreceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,”“intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditionalverbs such as “will,” “should,” “would,” “may” and “could” are generally forward-lookingin nature and not historical facts, although not all forward-looking statements include the foregoing. The forward looking statementsin this press release include statements regarding the positive results being a direct result of the Company’s growth efforts includingthe Flagship and CloudFirst consolidation, moving into its new headquarters location, expanding into the United Kingdom, and deployingtechnical assets at a new data center in Chicago, the Company’s anticipated growth moving forward, plans to serve a global clienteleand strengthen the Company’s presence in key international markets, opening a data center in Chicago allowing the Company to capitalizeon the growing demand within the region as well as diversify its geographic footprint within the United States and the strategic growthplan enabling the Company to accelerate its growth and penetration within the market. . Although the Company believes that theexpectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will proveto have been correct. These forward-looking statements are based on management’s expectations and assumptions as of the date ofthis press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actualresults to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements.Important factors that could cause actual results to differ materially from current expectations include the Company’s ability tocontinue its growth efforts and serve a global clientele and strengthen the Company’s presence in key international markets, theability to capitalize on the growing demand in the Chicago region and its ability to execute and advance its growth strategies. Theserisks should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form8-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it was initiallymade. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements, whether as a resultof new information, future events, changed circumstances or otherwise.
**Contact:**Crescendo Communications, LLC
212-671-1020
DTST@crescendo-ir.com
[Tables to Follow]
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| DATA STORAGE CORPORATION AND SUBSIDIARIES | |||||
|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
| December 31,<br> 2023 | |||||
| --- | --- | --- | --- | --- | --- |
| ASSETS | |||||
| Current Assets: | |||||
| Cash and cash equivalents | 779,986 | $ | 1,428,730 | ||
| Accounts receivable (less provision for credit losses of 22,596 and 7,915 in 2024 and 2023, respectively) | 1,904,759 | 1,259,972 | |||
| Marketable securities | 11,214,006 | 11,318,196 | |||
| Prepaid expenses and other current assets | 759,979 | 513,175 | |||
| Total Current Assets | 14,658,730 | 14,520,073 | |||
| Property and Equipment: | |||||
| Property and equipment | 8,740,796 | 7,838,225 | |||
| Less—Accumulated depreciation | (5,602,454 | ) | (5,105,451 | ) | |
| Net Property and Equipment | 3,138,342 | 2,732,774 | |||
| Other Assets: | |||||
| Goodwill | 4,238,671 | 4,238,671 | |||
| Operating lease right-of-use assets | 632,733 | 62,981 | |||
| Other assets | 109,843 | 48,436 | |||
| Intangible assets, net | 1,560,577 | 1,698,084 | |||
| Total Other Assets | 6,541,824 | 6,048,172 | |||
| Total Assets | 24,338,896 | $ | 23,301,019 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current Liabilities: | |||||
| Accounts payable and accrued expenses | 2,924,572 | $ | 2,608,938 | ||
| Deferred revenue | 208,944 | 336,201 | |||
| Finance leases payable | 147,769 | 263,600 | |||
| Finance leases payable related party | 113,467 | 235,944 | |||
| Operating lease liabilities short term | 65,983 | 63,983 | |||
| Total Current Liabilities | 3,460,735 | 3,508,666 | |||
| Operating lease liabilities | 574,182 | — | |||
| Finance leases payable | — | 17,641 | |||
| Finance leases payable related party | — | 20,297 | |||
| Total Long-Term Liabilities | 574,182 | 37,938 | |||
| Total Liabilities | 4,034,917 | 3,546,604 | |||
| Commitments and contingencies (Note 7) | |||||
| Stockholders’ Equity: | |||||
| Preferred stock, Series A par value 0.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | — | — | |||
| Common stock, par value 0.001; 250,000,000 shares authorized; 6,995,822 and 6,880,460 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively | 6,995 | 6,881 | |||
| Additional paid in capital | 39,940,436 | 39,490,285 | |||
| Accumulated deficit | (19,392,941 | ) | (19,505,803 | ) | |
| Total Data Storage Corporation Stockholders’ Equity | 20,554,490 | 19,991,363 | |||
| Non-controlling interest in consolidated subsidiary | (250,511 | ) | (236,948 | ) | |
| Total Stockholder’s Equity | 20,303,979 | 19,754,415 | |||
| Total Liabilities and Stockholders’ Equity | 24,338,896 | $ | 23,301,019 |
All values are in US Dollars.
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| DATA STORAGE CORPORATION AND SUBSIDIARIES |
|---|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Sales | $ | 4,910,492 | $ | 5,904,391 | $ | 13,146,239 | $ | 12,784,114 | ||||
| Cost of sales | 2,502,599 | 3,325,637 | 7,771,874 | 8,115,615 | ||||||||
| Gross Profit | 2,407,893 | 2,578,754 | 5,374,365 | 4,668,499 | ||||||||
| Selling, general and administrative | 2,796,679 | 2,472,010 | 5,549,356 | 4,602,769 | ||||||||
| Income (Loss) from Operations | (388,786 | ) | 106,744 | (174,991 | ) | 65,730 | ||||||
| Other Income (Expense) | ||||||||||||
| Interest income | 152,441 | 120,058 | 295,810 | 223,482 | ||||||||
| Interest expense | (10,260 | ) | (20,764 | ) | (21,520 | ) | (48,111 | ) | ||||
| Total Other Income (Expense) | 142,181 | 99,294 | 274,290 | 175,371 | ||||||||
| (Loss) Income before provision for income taxes | (246,605 | ) | 206,038 | 99,299 | 241,101 | |||||||
| Benefit from income taxes | — | — | — | — | ||||||||
| Net (Loss) Income | (246,605 | ) | 206,038 | 99,299 | 241,101 | |||||||
| Income in Non-controlling interest of consolidated subsidiary | 2,365 | 20,785 | 13,563 | 36,388 | ||||||||
| Net (Loss) Income attributable to Common Stockholders | $ | (244,240 | ) | $ | 226,823 | $ | 112,862 | $ | 277,489 | |||
| Net (Loss) Income per Share – Basic | $ | (0.04 | ) | $ | 0.03 | $ | 0.02 | $ | 0.04 | |||
| Net (Loss) Income per Share – Diluted | $ | (0.04 | ) | $ | 0.03 | $ | 0.02 | $ | 0.04 | |||
| Weighted Average Number of Shares - Basic | 6,973,068 | 6,834,627 | 6,902,138 | 6,828,446 | ||||||||
| Weighted Average Number of Shares - Diluted | 6,973,068 | 7,022,275 | 7,499,839 | 7,016,094 |
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| DATA STORAGE CORPORATION AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (Unaudited) | ||||||
| Six Months Ended June 30, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| 2024 | 2023 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net Income | $ | 99,299 | $ | 241,101 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 634,509 | 589,660 | ||||
| Stock based compensation | 379,172 | 209,183 | ||||
| Provision for credit losses | 21,816 | — | ||||
| Changes in Assets and Liabilities: | ||||||
| Accounts receivable | (666,603 | ) | 1,281,234 | |||
| Other assets | (61,407 | ) | — | |||
| Prepaid expenses and other current assets | (246,804 | ) | (151,720 | ) | ||
| Right of use asset | 78,206 | 102,026 | ||||
| Accounts payable and accrued expenses | 315,636 | (1,119,100 | ) | |||
| Deferred revenue | (127,257 | ) | 33,006 | |||
| Operating lease liability | (71,776 | ) | (105,576 | ) | ||
| Net Cash Provided by Operating Activities | 354,791 | 1,079,814 | ||||
| Cash Flows from Investing Activities: | ||||||
| Capital expenditures | (902,571 | ) | (1,165,724 | ) | ||
| Purchase of marketable securities | (295,810 | ) | (219,286 | ) | ||
| Sale of marketable securities | 400,000 | — | ||||
| Net Cash Used in Investing Activities | (798,381 | ) | (1,385,010 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Repayments of finance lease obligations related party | (142,774 | ) | (308,005 | ) | ||
| Repayments of finance lease obligations | (133,473 | ) | (236,482 | ) | ||
| Proceeds from exercise of stock options | 71,093 | — | ||||
| Net Cash Used in Financing Activities | (205,154 | ) | (544,487 | ) | ||
| Decrease in Cash and Cash Equivalents | (648,744 | ) | (849,683 | ) | ||
| Cash and Cash Equivalents, Beginning of Period | 1,428,730 | 2,286,722 | ||||
| Cash and Cash Equivalents, End of Period | $ | 779,986 | $ | 1,437,039 | ||
| Supplemental Disclosures: | ||||||
| Cash paid for interest | $ | 14,303 | $ | 41,062 | ||
| Cash paid for income taxes | $ | — | $ | — | ||
| Non-cash investing and financing activities: | ||||||
| Assets acquired by operating lease | $ | 647,958 | $ | — |
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