Attached files
file | filename |
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EX-31.1 - CERTIFICATIONS PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - Data Storage Corp | f10k2009ex31i_datastorage.htm |
EX-32.1 - CERTIFICATIONS PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - Data Storage Corp | f10k2009ex32i_datastorage.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2009
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ___________ to ___________
Commission
File No. 333-148167
DATA
STORAGE CORPORATION
(Exact
name of registrant as specified in its charter)
NEVADA
|
98-0530147
|
401
Franklin Avenue
Garden
City, N.Y 11530
|
|
(212)
564-4922
Securities
registered under Section 12(b) of the Exchange Act:
|
|
Title
of each class registered:
|
Name
of each exchange on which registered:
|
None
|
OTC.BB
|
Securities
registered under Section 12(g) of the Exchange Act:
|
|
Common
Stock, par value $.001
(Title
of class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 the Securities Act.
Yes o
No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes o No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No o
Indicate
by check mark whether the registrant is a shell company as defined in Rule 12b-2
of the Exchange Act.
Yes oNo x
Check if
there is no disclosure of delinquent filers in response to Item 405 of S-K
(§229.405 of this chapter) not contained in this form, and no
disclosure will be contained, to the best of the registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated
filer o Accelerated
filer o
Non-accelerated
filer o Smaller
reporting
company x
(Do not
check if a smaller reporting company)
Revenues
for year ended December 31, 2009: $585,285
Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of December 31, 2009, was $6,832,699
Number of
shares of the registrant’s common stock outstanding as of April 15, 2010 was:
13,665,399
Transitional
Small Business Disclosure Format:
Yes o No o
Table
of Contents
SECURITIES
AND EXCHANGE COMMISSION
|
1 | |||
Wshington,
D.C. 20549
|
1 | |||
FORM
10-K
|
1 | |||
PART
I
|
7 | |||
ITEM
1 DESCRIPTION OF BUSINESS
|
7 | |||
Corporate
History
|
7 | |||
Overview
of Data Storage Corporation & our industry
|
7 | |||
Description
of Data Storage’s Business by Division:
|
9 | |||
DSC
Services
|
11 | |||
Overview:
|
11 | |||
Our
Strategy:
|
11 | |||
What
We Do:
|
11 | |||
Features
and Benefits:
|
11 | |||
Equipment
Maintenance Services
|
11 | |||
Overview:
|
11 | |||
What
We Do:
|
11 | |||
Infrastructure
Services
|
12 | |||
Overview:
|
12 | |||
Our
Strategy:
|
12 | |||
What
We Do:
|
12 | |||
Benefits
of Using DSC:
|
12 | |||
Industry
Certifications and Affiliations:
|
12 | |||
Data
Center Services:
|
13 | |||
Overview:
|
13 | |||
Our
Strategy:
|
13 | |||
What
We Do:
|
13 | |||
Benefits
of Using DSC:
|
13 | |||
Security
|
13 | |||
Overview:
|
13 | |||
Our
Strategy:
|
13 | |||
What
We Do:
|
13 | |||
Benefits
of Using DSC:
|
13 | |||
Wireless
Services
|
14 | |||
Overview:
|
14 | |||
Our
Strategy:
|
14 | |||
What
We Do:
|
14 | |||
Vendors:
|
14 | |||
Benefits
of Using DSC:
|
14 | |||
Professional
Services
|
14 | |||
Overview:
|
14 | |||
Our
Strategy:
|
14 | |||
What
We Do:
|
14 |
Benefits
of Using DSC:
|
15 | |||
Managed
Services
|
15 | |||
Overview:
|
15 | |||
Our
Strategy:
|
15 | |||
What
We Do:
|
15 | |||
Each
program is based upon the following:
|
16 | |||
Benefits
of Using DSC:
|
16 | |||
Competition
|
16 | |||
Principal
competitors by service sector are:
|
16 | |||
Typical
Client Target
|
18 | |||
Reasons
to Select Our Services
|
18 | |||
Market
Size and Opportunity
|
18 | |||
Healthcare
DPS Product Offering
|
19 | |||
About
the Healthcare Unit
|
19 | |||
Marketplace
Differentiators
|
19 | |||
Competitive
Matrix
|
21 | |||
Safe
Data
|
22 | |||
Pending
the acquisition of Safe data, we have filed this term
sheet.
|
22 | |||
ITEM
1A RISK FACTORS
|
22 | |||
ITEM
1B. UNRESOLVED STAFF COMMENTS
|
22 | |||
ITEM
2. DESCRIPTION OF PROPERTY
|
22 | |||
ITEM
3. LEGAL PROCEEDINGS
|
22 | |||
ITEM
4. (REMOVED AND RESERVED)
|
22 | |||
PART
II
|
23 | |||
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
|
23 | |||
No
Public Market for Common Stock
|
23 | |||
Holders
of Our Common Stock
|
23 | |||
Stock
Option Grants
|
23 | |||
Registration
Rights
|
23 | |||
ITEM
6. SELECTED FINANCIAL DATA
|
23 | |||
ITEM
7.MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
|
23 | |||
Company
Overview
|
23 | |||
Results
of Operation
|
24 | |||
Critical
Accounting Policies
|
24 | |||
Off
Balance Sheet Transactions
|
25 | |||
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
26 | |||
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
26 | |||
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
39 | |||
ITEM
9A. CONTROLS AND PROCEDURES
|
39 | |||
PART
III
|
41 | |||
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
|
41 | |||
ITEM
11. EXECUTIVE COMPENSATION
|
44 | |||
SUMMARY
COMPENSATION TABLE
|
44 | |||
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
|
46 |
|
||||
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
46 | |||
PART
IV
|
48 | |||
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|
48 | |||
SIGNATURES
|
49 | |||
DATA
STORAGE CORPORATION
|
49 |
PART
I
ITEM
1. DESCRIPTION OF BUSINESS
Overview
Corporate
History
Euro
Trend Inc. was incorporated on March 27, 2007 under the laws of the State of
Nevada. On October 20, 2008 we completed a Share Exchange Agreement whereby we
acquired all of the outstanding capital stock and ownership interests of Data
Storage Corporation. In exchange we issued 13,357,143 shares of our common stock
to the Data Storage Shareholders. This transaction was accounted for as a
reverse merger for accounting purposes. Accordingly, Data Storage Corporation,
the accounting acquirer, is regarded as the predecessor entity.
Overview
of Data Storage Corporation & our industry
Data
Storage Corporation (“Data Storage” or “DSC”). Data Storage provides technical
professional services focused on managing customized, powerful, premium
solutions for data protection, data management cloud computing including:
Storage Infrastructure Design and Management, Business Continuity Planning and
Disaster Recovery, Virtualization, Data Archiving, Disk and Transaction
Mirroring, and Internet Services..

Delivering
and supporting through its divisions and Joint Venture, professional services
providing a broad range of premium solutions in electronic data storage and
protection. Clients look to DSC to ensure disaster recovery and
business continuity, strengthen security, and to meet increasing industry
compliance, State and Federal regulations. The company markets to business,
government, education, and the healthcare industry by leveraging leading
technologies such as Virtualization, Cloud Computing, and Electronic Medical
Records (EMR). The company provides hardware, Software-as-a-Service,
managed IT services, installation, and maintenance. To protect and
leverage customer investments, DSC provides a range of top-quality professional
services and proactive customer support, directly, as well as through authorized
partner organizations.

Data
Storage derives revenues from the sale and subscription of solutions that
provide businesses, education, government and healthcare protection of critical
electronic data. In 2009 revenues consisted primarily of offsite data backup,
de-duplication, Continuous data protection, private cloud Disaster Recovery
solutions, Electronic Medical Records, protecting information for our clients.
We have operations in our datacenter in Westbury, New York and a disaster
recovery facility which is located over 1,000 miles away from the primary data
center. We deliver our services over a highly intelligent, reliable, redundant
and secure fiber optic network, with separate and diverse routes to the
Internet. The network and geographical diversity is important to clients seeking
storage hosting and Disaster Recovery solutions, ensuring protection of data in
the case of a network interruption.
NAME
(Location)
|
TYPE
OF BREACH
|
#
OF RECORDS
|
|||
Harvard
Law School
|
Lost
backup tapes
|
21,000 | |||
University
of Utah
|
Stolen
backup tapes
|
1,300,000 | |||
University
of Miami
|
Stolen
backup tapes
|
2,100,000 | |||
University
of Michigan
|
Stolen
backup tapes
|
8,585 | |||
Johns
Hopkins University
|
Lost
backup tapes
|
52,000 | |||
NY
Social Security Admin
|
Lost
Data Disk
|
969 | |||
Bristol-Myers
Squibb
|
Lost
backup tapes
|
42,000 | |||
Lost
backup tapes
|
Lost
backup tapes
|
80,000 |
Data
Storage is in the position today to leverage our infrastructure and leadership
team to grow revenue to significant levels by acquisitions of synergetic data
protection and cloud storage businesses that provide data backup services,
disaster recovery and business continuity solutions, store data for future
access for e-discovery, e – title and electronic medical information.
DSC believes opportunities exist to acquire synergistic service providers to
enhance our products and services portfolio, expand our management and increase
our cash flow.


Our aim
is to reduce costs through economies of scale while increasing local market
share and consolidating efforts during the current economic environment. Over
4,000 service providers exist today, providing DSC with ample acquisition
targets. Initial acquisitions will be derived from companies that offer similar
services to Data Storage as greater economies of scale can be realized using
this strategy improving net income. These acquisitions will become partners of
DSC and continue to offer solutions under the DSC brand.
We
believe that the opportunity exists today to roll up customer bases as well as
acquire companies. This strategy will enable Data Storage to create a national
presence as the premiere brand.. The roll up of these technical consulting
companies and system integrators will also form a powerful distribution channel
for both our current and future product service offerings. Acquisition activity
including organic growth is forecasted at $6 Million for 2010 and $11 Million
for 2011. These revenue outlooks form the base line revenue for each consecutive
year since revenue is monthly recurring and normally under agreements that range
from 12 months to 36 months.
Worldwide
Storage-as-a-Service Demand

The
marketplace providing professional services that specializing in Disaster
Recovery and Business Continuity are segmented into systems integrators that
have added data protection services as an additional product line adding to
their bundle of services and products, focused on smaller clients. A few very
large professional services providers such as IBM and SunGard focus on the
enterprise level organizations greater than 1,500 employees, therefore leaving
small and medium size organizations under-served for top level professional
services for Disaster Recovery solutions under DSC’s professional services
umbrella.
According
to IDC in its recent research study entitled “Storage-as-a-Service: Commercial
Opportunities,” demand for online storage services is very strong in small,
mid-size, and large firms that are facing budgetary and IT staffing pressures.
The study states that these firms are evaluating online storage services and
storage capacity for backup/disaster recovery, long term record retention,
business continuity and availability. DSC aims to meet this demand by
recommending, implementing, and providing solutions in these areas. In its
Worldwide Storage-as-a-Service Market Size and 2008-2012 Forecast, IDC predicts
that customers will continue to invest strongly in various forms of online
storage services, forecasting this market to pass the $3 billion mark by 2012,
with a CAGR greater than 29% from 2007 to 2012.
On
our Healthcare unit trends in the industry are as follows:
Healthcare DPS, a division of Data Storage, provides data protection technology
and services for hospitals, nursing and residential care facilities, physician’s
offices, home healthcare service companies, dental offices, alternative
healthcare offices, outpatient care centers, ambulatory healthcare service
companies, and medical and diagnostic laboratories in the New York metropolitan
area. Healthcare DPS assists Healthcare Providers in complying with HIPAA and
other federal and local regulations on data protection. With zero tolerance for
downtime, larger healthcare organizations require extremely reliable
mission-critical data protection services. A host of state and industry
regulators are now urging, and in some cases requiring, the development of
business continuity and disaster recovery plans to ensure the backup, protection
and recovery of data on a long-term basis. Internet Services over Ethernet is
rapidly becoming the technology of choice to address these critical data center
needs, because of its ability to provide transparent connectivity over the wide
area. Data Storage offers an array of services in order to satisfy all of the
aforementioned requirements.
As
outlined in the 2008 HIMSS/HIMSS Analytics Ambulatory Healthcare I.T. Survey,
there is no clear leader in the Electronic Medical Records
market. According to BCC Research, software applications (EHR) is the
dominating segment of the U.S. healthcare technology market, generating an
estimated $3.4 billion, increasing to $7.2 billion in 2014; a CAGR of 16.4%. A
June 2008 survey published in the New England Journal of Medicine revealed only
four percent of U.S. physicians providing direct patient care have a full EHR
system, and only 13 percent have a basic system. Through the 2009 Economic
Stimulus Package, the CMS will subsidize the cost of EHR systems by paying
physicians $44,000 to $64,000 over five years, beginning in 2011, for deployment
and ‘meaningful use’ of certified EHRs. According to a Congressional Budget
Office review, the incentive is expected to increase physicians’ use of EHR to
90 percent in the next decade. Marketing EHR solutions and related
services under its Healthcare
DPS brand, DSC is well positioned to take advantage of increased state
and federal regulations and incentives designed to transform healthcare from
today's largely paper‐based disparate
system to one that is electronic and interconnected.
On our
E-commerce unit, the company provides low cost online data backup brand DataStor
Live. DataStor Live is powered by cloud computing based
platforms and provide service to home users, small-office and home-office
workers. IDC projects the market for this type of service to grow to $715
million by 2011, up from $235 million in 2007. DataStor Live offers a
similar service to EMC’s Mozy which was acquired in September 2007 from Berkley
Data Systems in a $76M deal.
We have
created significant momentum since the acquisition share exchange with Data
Storage Corporation.
Description
of Data Storage’s Business by Division:

Data
Storage Corporation delivers and supports through its various divisions a broad
range of premium solutions focusing in electronic data storage and
protection. Clients look to DSC to ensure disaster recovery and
business continuity, strengthen security, and to meet increasing industry, State
and Federal regulations. The company markets to business, government, education,
and the healthcare industry by leveraging leading technologies such as
Virtualization, Cloud Computing, and Electronic Medical Records
(EMR). The company provides hardware, Software-as-a-Service, managed
IT services, installation, and maintenance. To protect and leverage
customer investments, DSC provides a range of top-quality professional services
and proactive customer support, directly, as well as through authorized partner
organizations.
DSC
Services
We offer
the following services to our clients.
Overview:
Data
Storage Corporation provides data protection and information management
solutions using our secure, encrypted, disk-based backup, storage and archiving
systems. We specialize in protecting, managing, backing up and
restoring valuable corporate information by automatically getting data stored,
safely and securely, off-site. Our solutions help clients
reduce the risks and cost associated with data protection, information recovery,
disaster planning and regulatory compliance. Our company protects and
ensures that information assets are secure and restorable on
demand.
Our
Strategy:
Specializing
in Off-site Backup and Archiving, DSC can support your environment with
protection for all your data across the network as well as keeping it secured
safely off-site in two geographically diverse datacenters. Our
enterprise backup solution is integrated and built with all the latest feature
sets an organization could ask for. This provides your organization
with the best tools and features for disaster recovery and business
continuity.
What
We Do:
We
provide online backup services that transfer your information over the Internet
or on a dedicated private circuit to our secure company owned off-site storage
location. Our online backup service provides the most advanced data protection
solution for small and medium businesses. Our service turns an ordinary server
into a powerful and fully automated network backup device.
Features
and Benefits:
·
|
Simple
to grow – Simple to manage
|
·
|
Reduces
operational overhead while freeing up staff to focus on higher priority
tasks.
|
·
|
Agent-less
– No agents to install on any machine (Some limitations apply to MS
Exchange, GroupWise, Lotus Notes and MS
SharePoint).
|
·
|
Backed
up data can be archived for long term
storage.
|
·
|
Always
secure with 256-bit AES encryption.
|
·
|
Centralized
management interface, email or SNMP alerts, extensive logging and
reporting for audits and
verification.
|
·
|
Tape-less
– Disk to Disk – No more manual handling of
tapes.
|
·
|
Continuous
Data Protection for email and data
files.
|
·
|
Customizable
retention policies and software
parameters.
|
Equipment
Maintenance Services
Overview:
The
service employs a HotSpares strategy which essentially means we have live
running servers and arrays in facilities:
·
|
Guaranteed
working spare when going on calls (No
DOA)
|
·
|
Test
all components from the field from our
suppliers
|
·
|
Provides
continuing education and troubleshooting in the
field
|
Mean time
to repair (Call Closure) is less than three (3) hours according to nationwide
statistics. We will provide you with engineering services nationwide
for installation, De-Installation and Re-Location Services as well as a
multitude of professional services, local to your site (available from 35
offices, covering most major cities in USA).
What
We Do:
We
support the following platforms:
·
|
IBM
Systems and Storage
|
o
|
RS/6000’s
including legacy products
|
o
|
pSeries
|
o
|
ISeries
|
o
|
zSeries
(Direct)
|
o
|
zSeries,
Blades and Netfinity Series
|
o
|
Tape
Libraries, SSA & FastT Storage
|
o
|
AIX
Operating System Software Telephone support is available. Extended AIX and
OS/400 support is available through a
partner.
|
·
|
SUN
Microsystems Servers and Storage
|
o
|
ALL
SPARC and legacy products
|
o
|
ALL
SUN Ultra products and Enterprise Servers including the
10K
|
o
|
ALL
StorEdge Products, including many StorageTek
Products
|
o
|
Solaris
Operating System Software Telephone support is
available. Authorized software support and patch downloads are
available direct through SUN. Ask us to assist in determining the
need.
|
·
|
Hewlett-Packard
Servers and Storage
|
o
|
All
Digital Equipment Corporation (DEC) legacy products (VAX &
Alpha)
|
o
|
All
Compaq products (Proliants, Blades and
StorageWorks)
|
o
|
All
HP 9000 Servers and 3000 Servers
|
o
|
All
Integrity Servers and Storage
Products
|
o
|
OpenVMS
and HP-UX Operating System Software Telephone support is available. MPE
Software Support is available as
well.
|
·
|
Dell
PowerEdge Servers and PowerVault
Storage
|
o
|
All
Dell Poweredge Products both in and out of
warranty
|
o
|
All
Dell PowerVault Servers including many NetApp and EMC
Products
|
o
|
All
Dell PowerConnect Switches
|
·
|
EMC
Clariion Storage Arrays
|
o
|
All
Clariion Products
|
o
|
Brocade
& McData Swtiches
|
o
|
Tier
2 Support Available
|
Infrastructure
Services
Overview:
Whether
you need to upgrade your existing infrastructure, or are adding a new location,
our team of skilled expert’s works with you to evaluate the capabilities of your
existing infrastructure and makes recommendations for supporting new
applications and services to accommodate your future growth. We then design,
install and implement a solution handmade for your business.
Our
Strategy:
Specializing
in Low Voltage systems, DSC supports your ongoing need for new technology,
transforming your communications system from just cables and connectors to an
integrated solution for voice, data, audio and visual communications. Our
services include Structure Cabling and Voice-Data-Fiber-CATVCCTV-Access
Control.
What
We Do:
From
premise cabling systems to data centers, overhead paging to concert sound
systems, CATV systems to security, our extensive engineering and technical
background enables us to provide and unsurpassed level of service.
Benefits
of Using DSC:
Our
commitment to our clients' best interest, and our vendor neutral approach,
assure unbiased consultation and full access to world-class technologies. Our
highly trained technicians are constantly updated on the latest technology,
products and installation practices. Each installation is tested and certified;
every detail is documented and labeled according to TIA/EIA 606 standards. Final
test results and as-built CAD floor plans are submitted upon project
completion.
Industry
Certifications and Affiliations:
· BICSI
· ANSI
· EIA/TIA
606 Standards
· National
Electric Code
· Panduit
(PCI)
· Belden
· Leviton
|
· HubbelGeneral
· Berk-Tek
· Systimax
· Corning
· Commscope
· B-Line
· Amp/Tyco
|
Union and Non Union Labor
· CWA
(NY, NJ)
· IBEW
(NJ)
|
Data
Center Services:
Overview:
Data
Storage Corporation is pleased to bring the finest data center specialists to
perform your latest upgrade or build your new installation. Our outstanding
cabling services, plug & play, rack and stack, inter-rack cabling and
network patching are just part of our thorough approach to assure your critical
success.
Our
Strategy:
The
essential elements for a well executed data center include:
PDU,
CRAC, UPS and Generator Hot/Cold Aisle, High/Low Density Structured Cabling
Requirements, "Streets and Avenues" Raised Floor Requirements (Above or Below)
Cabinet/Hardware Planning “Room-Ready" Criteria and Implementation.
What We Do:
Data
Storage Corporation will carefully follow a systematic process for
building/upgrading your data center to achieve your desires. For best results,
let us do it all:
Data
Center and Technology Room Design Structured Cabling Design and Analysis Site
Selection Analysis and Base Building Design Strategic Planning Point Of
Distribution (POD) Installations IT and Construction Project
Management.
Benefits
of Using DSC:
·
|
Consistent
end-to-end project management.
|
·
|
Complete
follow through in bid process, from drawings and specifications to
negotiations and recommendations.
|
·
|
Continual
review of master schedule to assure
adherence.
|
·
|
Vendor-nuetral
purchasing of only the best
materials.
|
·
|
Strict
problem/prevention/resolution procedures keep the project on
target.
|
Security
Overview:
There are
literally thousands of ways a factory, storefront or other building can have its
security and safety compromised. For many business owners and operations
executives, security isn't about the problems you see. It's about the problems
you don't see. How do you find the right measure of protection? Whether you've
had a security failure or are simply concerned about preventing one, DSC can
provide the latest technology and attentive service to meet your
need.
Our
Strategy:
A great
system is just the beginning of a comprehensive security solution. Careful
pre-planning and proper installation are key to getting the best possible
results. Data Storage Corporation's team of experienced professionals ensures
that every aspect of security protection you need is never overlooked, and that
your top-quality components perform to the highest industry standards. Our
ever-present support is just a phone call away to assure your continuous peace
of mind.
What
We Do:
·
|
Burglar
and Fire Alarm Systems
|
·
|
Video
Surveillance
|
·
|
Electronic
Access Control
|
·
|
Monitoring
Services. (Including Web-Hosted)
|
Benefits
of Using DSC:
·
|
Expert
professional design and
installation.
|
·
|
Custom
evaluation to define your exact
requirements.
|
·
|
Protection
available for any size facility.
|
·
|
We
are licensed and fully comply with state/local codes and insurance
requirements.
|
·
|
Security
review before installation to confirm your level of
protection.
|
Wireless
Services
Overview:
Wireless
solutions play an important role in the achievements and advancements made by
systems users every day. More and more, previously difficult or unworkable
situations are accomplished elegantly by properly deployed wireless technology.
Expansion and upgrade possibilities for your existing wireless applications are
greater than ever. Is a wireless solution really right for you? How do you
arrive at the best solution for your growing needs? You can turn to Data Storage
Corporation for the most complete answers.
Our
Strategy:
You need
a versatile supplier to assure that the correct strategy, from the many
available, is applied to your situation. Some of the most important tasks
supported by wireless each require specialized expertise. These include indoor
wireless LAN (Wi-Fi), outdoor licensed and unlicensed wireless links, wireless
sports and entertainment, video surveillance, voice over wireless LAN, and
cellular reinforcement for office buildings, campuses, indoor or outdoor arenas,
etc.
What
We Do:
·
|
Point
to Point / Point to multipoint Microwave design and
deployment
|
·
|
802.11X
Site Surveys (Indoor/Outdoor)
|
·
|
Predictive
analysis
|
·
|
Cellular
reinforcement (Providing additional cellular coverage to weak
areas)
|
Vendors:
· Cisco
Networks
· Trapeze
Networks
· Meru
Networks
· Firetide
|
· Bridgewave
· Cerragon
· Andrew
DaS
· Mobile
Access
|
Benefits
of Using DSC:
·
|
The
same level of expertise is assured throughout our nationwide service
area.
|
·
|
Our
vendor-neutral approach frees us to meet your highest
expectations.
|
·
|
Serving
every location from small office to large hotel, office building,
convention center or stadium.
|
·
|
Our
application integration process assures that your system functions will
work together smoothly.
|
·
|
Our
broad understanding enables your system to perform efficiently and
economically.
|
Professional
Services
Overview:
You need
to get the most out of every dollar you spend. That's why Data Storage
Corporation's Technology Division offers you a proven, comprehensive selection
of professional services designed to help you fully leverage the value of your
investment in Information Systems Performance Management.
Our
Strategy:
DSC
Professional Services include the three most critical areas of service
-deployment, performance and best practices. Specific services are available for
end to end IT and infrastructure assessments to design build engagements. Our
products, and all services, can be easily customized to fit your IT and business
needs. Our consultants are experts in many technology disciplines and will
provide you with a wealth of knowledge, tools, skills and expertise. This means
that your staff can work with the confidence of knowing that their needs are
paramount.
What
We Do:
DSC
Professional Services for planning, design, deployment, performance and best
practices can help you speed time to value and increase ROJ for your DSC
investment:
·
|
Staffing
|
·
|
Gap
Analysis
|
·
|
Systems
Integration and Design
|
·
|
Technology
Assessments
|
·
|
Telecommunications
Audits
|
·
|
Managed
Services
|
·
|
Corporation
Relocations
|
·
|
Technology
Deployment
|
·
|
Network,
Systems and broadband engineering
consulting
|
·
|
Server
farm virtualization analysis, design and
implementation
|
Benefits
of Using DSC:
·
|
Develop
a robust road map via DSC’s audit services to increase efficiencies and
develop pragmatic action plans to meet any business
goal.
|
·
|
Accelerate
deployment through proven procedures and deep technology
expertise.
|
·
|
Maximize
performance with proactive audit and analysis, backed by fast problem
response.
|
·
|
Leverage
best practices that include DSC’s proprietary processes and intellectual
capital gathered from numerous successful
engagements.
|
·
|
Speed
time to value with DSC’s tools, procedures and
assistance.
|
·
|
Minimize
risk by adopting a proactive service management
approach.
|
Managed
Services
Overview:
Plagued
by system downtime, viruses, spyware, losses of productivity, and every other
excuse for why the computer system you rely upon to run your business is not
working consistently and as expected? These distractions are unnecessary and
very expensive.
Our
Strategy:
Proactive, Flexible,
Affordable, Managed…
Data
Storage Corporation understands this. We also know that businesses are
constantly challenged by the task of managing the demands of growing their
business while coping with continuous technology challenges. Our focus is to
keep your systems operational and available so that you can focus your efforts
on the demands of growing your business, managing costs and increasing revenues.
We want to help you realize the productivity gains and ROI you have been
expecting from your computer systems. Managed Services from Data Storage
Corporation consists of various service level offerings that provide affordable
proactive IT management and support to growing businesses. Utilizing our unique
framework referred by us as DSC-MS for providing managed IT services, Data
Storage Corporation provides a range of proactive services to keep your computer
systems up and running and your people and business productive. It's not just
about monitoring, that just lets you know something is wrong. It's not just
about remote access to your systems to troubleshoot issues.
What
We Do:
By
utilizing technology, daily, weekly and monthly IT tasks can be automated and
scheduled to ensure all tasks are completed and reported consistently without
fail. As the tasks run, valuable data is gathered to spot trends and patterns
which can be used to plan system changes or enhancements. This reduces or
eliminates any impact on the business. Proactive managed services eliminate the
scenario of calling and waiting for the "computer guy". Potential issues and
problems are prevented. Systems and people remain productive and working. In the
case where problems do occur, response times can often be within minutes.
Consistency is the cornerstone of DSC-MS consistency creates reliability and
renders no surprise expenditures or billings. How many times have you received a
bill that you couldn't understand or begin to determine if it was
justified?
Each
program is based upon the following:
·
|
Site
Assessment and Inventory
|
·
|
Proactive
Service
|
·
|
Management
and Status Reporting
|
·
|
Best
Practice Driven
|
·
|
Automated
and Reliable
|
Benefits
of Using DSC:
Our goal
is to serve as your technology partner with a focus on providing solutions. By
using a consultative approach to evaluate your business and technology needs, we
can advise on the best solutions for your current and future needs.
·
|
Reliability
|
·
|
Security
|
·
|
Consistency
|
·
|
Productivity
Gains
|
·
|
Cost
Management and Control
|
·
|
Performance
|
·
|
Managed
Expansion and Growth
|
Data
Storage Corporation provides you with a single source of professional expertise
and resources you need to streamline system management and support functions at
an affordable price. Data Storage Corporation uses advanced
processes, tools and methodologies, to deliver superior services that match your
needs.
Competition
Principal
competitors by service sector are:
Data
Protection
Commvault- a software
company focused primarily on data management. Uses singular architecture based
on Common Technology Engine to deliver data movement and expansion to changing
business requirements. Commvault offers a team of engineers and consultants for
customizing solutions for customers in six continents.
Symantec – parent
company of Norton is an industry leader in electronic messaging security,
offering solutions for instant messaging, anti-spam, anti-virus, legal and
content compliance, legal discovery and message archiving.
CA (Computer
Associates) - offers data protection with a multi-layered solution that
combines data backup, security, replication and failover.
Data
De-Duplication
Diligent – is an
innovator in enterprise-class disk-based data protection solutions. Recently
acquired by IBM, it is the inventor of ProtecTIER, de-duplication platform
capable of inline de-duplication, eliminating redundant data and amount of
physical storage required.
NetApp – is a creator
of storage and data management solutions for maximizing cost efficiency,
offering single platform for a range of networked environments. Infrastructure
solutions include archive and compliance, business continuity, disk to disk
backup, storage consolidation and testing & development.
Overland Storage–
this company offers a complete set of data protection appliances for small and
midrange customers, to reduce backup window and simplify data retention.
Emphasis is on improving data recovery speed and cost effective methods of
disaster recovery.
Quantum – global
specialist in backup and recovery as well as archiving of data. It was the first
to market variable length de-duplication, virtual tape library for open systems
and unified disk to disk backup systems.
Virtual Tape
Library
Data Domain - is aimed at
reducing or eliminating tape infrastructure with disk and network based data
protection. Services include file storage, backup, disaster recovery, long term
retention of enterprise data and litigation support as well as regulatory
compliance assistance.
Falconstor –
implements solutions using Continuous Data Protector, virtual tape library and
network storage server. It offers a complete line of energy conscious
solutions for various industries using their IPstor storage virtualization
platform.
Sepaton
– is a provider of VTL solutions for data protection, offering
products and services to assist in a wide range of data protection issues such
as backup performance, regulatory/corporate compliance, disaster recovery and
containment of IT costs.
Off-Site Data
Vaulting
There are
many companies providing data vaulting services, from companies purchasing
wholesale without a data center or equipment and these that have invested in
equipment and software licensees. A smaller segment of companies have developed
software that provide for data vaulting some of which only license their
software and others that compete with their licensees.
Evault – offers
online backup and recovery solutions allowing automatic storage of critical data
and off-site vaults. It offers a broad range of services including archiving,
email compliance, eDiscovery, business continuity planning and disaster recovery
testing.
Sungard – is a leader
in software and processing technology for the financial services, higher
education and public sector industries. It is a major provider in information
availability solutions, managed IT as well as services for applications and data
center outsourcing.
Live Vault / Iron Mountain
- offers online backup and recovery solutions allowing automatic storage
of critical data and off-site vaults. It offers a broad range of services
including archiving, email compliance, eDiscovery.
Storage
Drives
IBM – (International
Business Machines Corporation) specializes in computer and technology consulting
as well as manufacturing and selling computer hardware and software.
Infrastructure services include hosting, from mainframe to
nanotechnology.
Typical
Client Target
Physician
· <
30 Doctor Practice
· Electronic
Medical Records
· Server
· PC’s
· Scanner
· Managed
IT Services
· Paper
Chart Scanning
· Compliance
Documentation
· VOIP
Phone Systems
|
Hospital
· Roadmap
to HER
· Charge
Capture
· e-discovery
· Off-site
Data Vaulting
· Storage
· Telecommunications
|
Reasons
to Select Our Services
Government
Incentives
·
|
$19
billion in Stimulus Package
Distributions
|
o
|
$44,000
to $64,000 per provider to implement or upgrade
EH
|
o
|
Penalties
for non-use by 2015 (2012 for e-RX)
|
Tax
Deductions
·
|
Section
179 allows full depreciation of hardware and software until
12/31/2009
|
Subsidies
·
|
Relaxed
Stark (Anti-Kickback) Law permits hospitals to subsidize systems for
physicians
|
·
|
Regional
Health Information Organizations offer financial assistance for
implementing EHR
|
Market
Size and Opportunity
The U.S.
market for healthcare IT expected to be worth $4.0 billion in 2009
§
|
Increasing
to $9.0 billion in 2014
|
§
|
CAGR
of 17.5%
|
Software
applications (EHR) segment dominates the market
§
|
Generates
an estimated $3.4 billion in 2009
|
§
|
Expected
to increase to $7.2 billion in 2014
|
§
|
CAGR
of 16.4%
|
§
|
66%
of physicians do not have EHR
|
Dedicated
hardware is the second largest segment
§
|
Worth
$636.8 million in 2009
|
§
|
Increasing
to $1.8 billion in 2014
|
§
|
CAGR
of 22.9%
|
No clear
market leader
Sources:
1.
|
2008
HIMSS/HIMSSA Analytics Healthcare IT
Survey
|
2.
|
BCC
Research (2009) – Healthcare Information Technology Wellesly – BCC
Research
|
Healthcare
DPS Product Offering

About
the Healthcare Unit
Mission
· To
provide reliable care quality enhancing solutions
· To
empower providers to improve profitability
· To
protect & insure the privacy & security of electronic protected
health information
|
Company
Overview
· Division
of DSC
· Health
IT solution provider
· Serving
Group Practices, Nursing Homes, Assisted Living Facilities, and Hospitals
the NY Metro area & beyond.
|
Marketplace
Differentiators
§
|
We
are a local company
|
o
|
We
service the New York Metro Area
|
o
|
We
are headquartered in Garden City (Long
Island)
|
o
|
Our
support staff is located throughout New
York
|
§
|
Our
staff is well trained and highly
skilled
|
o
|
All
employees are Certified HIPAA
Professionals
|
o
|
All
employees attend ongoing mandatory training
sessions
|
o
|
All
employees have healthcare
experience
|
§
|
We
have done the research
|
o
|
Many
products are well endorsed and/or
certified
|
§
|
CCHIT
|
|
Bronx
County, Texas Medical Institution, Suffolk Academy of Medicine, Queens
Medical Society, State & Federal Agencies and
RHIO.
|
Competitive Matrix
DSC
Backup
|
Carbonite
|
Mozy
|
||
Compression
|
Compressed,
compresses all data before sending to our data centers, and we only bill
on compressed storage.
|
Uncompressed,
Carbonite does not compress data, and bills on uncompressed
storage.
|
Uncompressed,
Mozy does not compress data, and bills on uncompressed
storage.
|
|
Data
Centers
|
Two
Data Centers, Two (2) Tier-IV SAS70 type II data centers, replicating data
over a dedicated connection. The two data centers are on
opposite coasts, ensuring that if a natural disaster disables one center,
your data is still safe.
|
One
Data Center, One Data Center, Only one data center, which does not ensure
data replication.
|
One
Data Center, replicates internally which creates restoration issues.
"Preparing" your data for recovery, can take hours to days.
|
|
Retention
Level
|
Customizable,
Unlimited, We allow unlimited revisions, data will not be deleted off of
our servers unless you specifically delete it (to save from losing data
you may need to get back later)
|
30
Day Retention Level, If a file is deleted from your local machine, it will
be purged from Carbonite's servers after 30 days. No unlimited
revision rules.
|
30
Day Retention Level, If a file is deleted from your local machine, it will
be purged from Mozy's servers after 30 days. No unlimited
revision rules.
|
|
Exchange
Backups
|
Backs
up Exchange, Uses Microsoft best practices to back up Exchange, both at
the Information Store level, and at the Mailbox and Message
level.
|
Does
not back up Exchange, No functionality or plugin to back up Microsoft
Exchange
|
Backs
up Exchange, Does not do message level
|
|
HIPAA
Compliance
|
YES,
Revision rules and retention period allow for the backups to comply with
HIPAA compliance specifications
|
NO,
Retention level does not allow for HIPAA compliance
|
NO,
Retention level does not allow for HIPAA compliance
|
Safe
Data
Pending
the acquisition of Safe data, we have filed this term sheet.
ITEM
1A. RISK FACTORS
Not
Applicable
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
Applicable.
ITEM
2. DESCRIPTION OF PROPERTY
Our
principal office is located at 401 Franklin Avenue, Garden City, NY
11530. Our telephone number is (212) 564-4922.
ITEM
3. LEGAL PROCEEDINGS
We are
currently not involved in any litigation that we believe could have a materially
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our company’s or our company’s subsidiaries’ officers
or directors in their capacities as such, in which an adverse decision could
have a material adverse effect.
ITEM
4. (REMOVED AND RESERVED)
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
No
Public Market for Common Stock
A
symbol was assigned for our securities so that our securities may be quoted for
trading on the OTCBB under symbol DTST. Minimal trading occurred through
the date of this Report. There can be no assurance that a liquid market for our
securities will ever develop. Transfer of our common stock may also be
restricted under the securities or blue sky laws of various states and foreign
jurisdictions. Consequently, investors may not be able to liquidate their
investments and should be prepared to hold the common stock for an indefinite
period of time.
Quarter
ended
|
Low
Price
|
High
Price
|
||||||
December
31, 2009
|
$
|
0.25
|
$
|
1.00
|
Holders
of Our Common Stock
As April
15, 2010, we had we had 34 record holders of our Common Stock.
Stock
Option Grants
As of
April 15, 2010 we granted options to purchase 2,929,432 shares of common
stock.
Registration
Rights
We have
not granted registration rights to the selling shareholders or to any other
persons.
ITEM
6. SELECTED FINANCIAL DATA
Not
applicable.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
Company
Overview
Data
Storage Corporation (“Data Storage” or “DSC”). Data Storage provides technology
professional services focused on managing customized, powerful, premium
solutions for data protection, data management including: Storage Infrastructure
Design and Management, Business Continuity Planning and Disaster Recovery,
Virtualization, Archiving, Disk and Transaction Mirroring, and Internet
Services..
Delivering
and supporting through its divisions and Joint Venture, professional services
providing a broad range of premium solutions in electronic data storage and
protection. Clients look to DSC to ensure disaster recovery and
business continuity, strengthen security, and to meet increasing industry, State
and Federal regulations. The company markets to business, government, education,
and the healthcare industry by leveraging leading technologies such as
Virtualization, Cloud Computing, and Electronic Medical Records
(EMR). The company provides hardware, Software-as-a-Service, managed
IT services, installation, and maintenance. To protect and leverage
customer investments, DSC provides a range of top-quality professional services
and proactive customer support, directly, as well as through authorized partner
organizations.
Data
Storage Corporation derives its revenues from the sale of solutions that provide
businesses protection of critical electronic data. Primarily, these services
consist of email storage and compliance solutions; off site data back up;
continuous data protection; data duplication; high availability replication and
virtual tape libraries for disaster recovery and business continuity. The
Company has Data Centers in Westbury, New York and maintains equipment under a
strategic alliance with Broadsmart a VOIP company in Fort Lauderdale, Florida to
provide redundant data protection.
We
service customers from our New York premises which consist of modern offices and
a technology suite adapted to meet the needs of a technology based business. Our
primary role is to provide, maintain and develop the network hub hardware and
software to meet the needs of our customers.
Data
Storage varies its use of resource, technology and work processes to meet the
changing opportunities and challenges presented by the market and the internal
customer requirements.
Results
of Operation
Year
ended December 31, 2009 as compared to December 31, 2008
Net
sales. Net sales for the year ended December 31, 2009 were $585,285,
a decrease of $44,390, or 7.1%, compared to $629,675 for the year ended December
31, 2008. The decrease in sales for is primarily attributable due to industry
wide price compression.
Cost
of sales. For the year ended December 31, 2009, cost of sales increased $113,796
to $459,803. The increase is due to the addition of managed services,
the sale of hardware on a resale basis. The Company's gross margin
decreased to 21.4 % for the year ended December 31, 2009 as compared to 45.0%
for the year ended December 31, 2008. Price compression against fixed
operating costs on the data backup business combined with the addition of
managed services and hardware resale which both carry lower gross margins
account for the decrease.
Operating
Expenses. For the year ended December 31, 2009 operating expenses
were $1,170,903, an increase of $347,428 as compared to $823,475 for the year
ended December 31, 2008. The increase in operating expenses for year ended
December 31, 2009 is a result of an increase in salaries
expense. Sales salaries increased $221,176 to $231,536 as compared to
$10,360 for the year ended December 31, 2008. Marketing and
administrative salaries increased $108,651 to $113,562 for the year ended
December 31, 2009 as Data Storage has entered into additional lines of
business. Professional fees decreased $114,967 to $185,526 for the
year ended December 31, 2009. Professional fees for the year ended
December 31, 2008 were higher as a result of the merger of Euro Trend, Inc. and
Data Storage Corporation.
Interest
Expense. Interest expense for the year ended December 31, 2009
increased $1,123 to $4,986 from $3,863 for the year ended December 31, 2008. For
the years ended December 31, 2009 and December 31, 2008, interest expense was
related to a $100,000 line of credit which was opened January 31,
2008.
Net
Income (Loss). Net loss for the year ended December 31, 2009 was
($1,045,421) an increase of $512,256 as compared to net loss of ($537,959) for
the year ended December 31, 2008. The increase in is primarily from an increase
in salary expenses for the year ended December 31, 2009
Liquidity
and Capital Resources
The
financial statements have been prepared using accounting principles generally
accepted in the United States of America 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 has been funded by
the CEO and majority shareholder combined with private placements of the company
stock. The Company has been successful in raising money as
needed. Further it is the intention of management to continue to
raise money through stock issuances and to fund the Company on an as needed
basis. In 2010 we intend to continue to work to increase our presence
in the marketplace through both organic growth and acquisition of data storage
service provider’s assets.
To the
extent we are successful in growing our business, identifying potential
acquisition targets and negotiating the terms of such acquisition, and the
purchase price includes a cash component, we plan to use our working capital and
the proceeds of any financing to finance such acquisition costs. Our opinion
concerning our liquidity is based on current information. If this information
proves to be inaccurate, or if circumstances change, we may not be able to meet
our liquidity needs.
During
the year ended December 31, 2009 the company’s cash decreased to
$28,160. The Company issued 842,185 shares of Common Stock for a
price between $0.32 and $0.35 for an aggregate purchase price of
$275,000.
The
Company's working capital was ($169,721) at December 31, 2009, decreasing
$208,530, from $38,809 at December 31, 2008.
Critical
Accounting Policies
Our
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on
the assets, liabilities, revenue and expense amounts reported. These estimates
can also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition.
We believe our use if estimates and underlying accounting assumptions
adhere to GAAP and are consistently and conservatively applied. We base our
estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results may differ
materially from these estimates under different assumptions or conditions. We
continue to monitor significant estimates made during the preparation of our
financial statements.
Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have the
most significant impact on our financial statements and require management to
use a greater degree of judgment and estimates. Actual results may differ
from those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or
estimate methodologies would cause effect on our consolidated results of
operations, financial position or liquidity for the periods presented in this
report.
Recently
Issued and Newly Adopted Accounting Pronouncements
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted
Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB
Accounting Standards Codification (the “Codification”) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. All guidance contained in the Codification carries an equal
level of authority. The Codification superseded all existing non-SEC accounting
and reporting standards. All other non-grandfathered, non-SEC accounting
literature not included in the Codification is non-authoritative. The FASB will
not issue new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in
their own right. ASUs will serve only to update the Codification, provide
background information about the guidance and provide the bases for conclusions
on the change(s) in the Codification. References made to FASB guidance
throughout this document have been updated for the Codification.
Effective
April 1, 2009, the Company adopted FASB ASC 820-10-65, Fair Value Measurements
and Disclosures – Overall – Transition and Open Effective Date Information (“ASC
820-10-65”). ASC 820-10-65 provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company’s
consolidated results of operations or financial condition.
Effective
April 1, 2009, the Company adopted FASB ASC 825-10-65, Financial Instruments –
Overall – Transition and Open Effective Date Information (“ASC 825-10-65”). ASC
825-10-65 amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements. The adoption of ASC 825-10-65 did not have a
material impact on the Company’s results of operations or financial
condition.
Effective
July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements
and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to
ASC 820-10, Fair Value Measurements and Disclosures – Overall, for
the fair value measurement of liabilities. ASU 2009-05 provides clarification
that in circumstances in which a quoted price in an active market for the
identical liability is not available, a reporting entity is required to measure
fair value using certain techniques. ASU 2009-05 also clarifies that when
estimating the fair value of a liability, a reporting entity is not required to
include a separate input or adjustment to other inputs relating to the existence
of a restriction that prevents the transfer of a liability. ASU 2009-05 also
clarifies that both a quoted price in an active market for the identical
liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the
quoted price of the asset are required are Level 1 fair value measurements.
Adoption of ASU 2009-05 did not have a material impact on the Company’s results
of operations or financial condition.
In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to FASB ASC Topic 605, Revenue
Recognition ) (“ASU 2009-13”) and ASU 2009-14, Certain
Arrangements That Include Software Elements , (amendments to FASB ASC
Topic 985, Software ) (“ASU 2009-14”). ASU 2009-13
requires entities to allocate revenue in an arrangement using estimated selling
prices of the delivered goods and services based on a selling price hierarchy.
The amendments eliminate the residual method of revenue allocation and require
revenue to be allocated using the relative selling price method. ASU 2009-14
removes tangible products from the scope of software revenue guidance and
provides guidance on determining whether software deliverables in an arrangement
that includes a tangible product are covered by the scope of the software
revenue guidance. ASU 2009-13 and ASU 2009-14 should be applied on a prospective
basis for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010, with early adoption permitted. The
Company does not expect adoption of ASU 2009-13 or ASU 2009-14 to have a
material impact on the Company’s results of operations or financial
condition.
Off
Balance Sheet Transactions
We have
no off-balance sheet arrangements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
We do not
hold any derivative instruments and do not engage in any hedging
activities.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.
Index
to the Financial Statements
|
Page
|
|||
Report
of Independent Registered Public Accounting Firm
|
10 | |||
Consolidated
Balance Sheets
|
11 | |||
Consolidated
Statements of Operations
|
12 | |||
Consolidated
Statements of Cash Flows
|
13 | |||
Consolidated
Statements of Stockholders' Equity
|
14 | |||
Notes
to Consolidated Financial Statements
|
15-21 |
December
31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$
|
28,160
|
$
|
289,061
|
||||
Accounts
receivable (less allowance for doubtful
|
||||||||
accounts
of $26,472 in 200 and $44,800 in 2008)
|
30,378
|
53,367
|
||||||
Deferred
compensation
|
101,160
|
-
|
||||||
Prepaid
expense
|
21,103
|
-
|
||||||
Total
Current Assets
|
180,801
|
342,428
|
||||||
Property
and Equipment:
|
||||||||
Property
and equipment
|
1,221,706
|
1,115,984
|
||||||
Less—Accumulated
depreciation
|
(913,383)
|
(793,110
|
)
|
|||||
Net
Property and Equipment
|
308,323
|
322,874
|
||||||
Other
Assets:
|
||||||||
Deferred
compensation
|
28,628
|
-
|
||||||
Other assets
|
11,760
|
13,469
|
||||||
Intangible
Asset – Customer list
|
135,931
|
175,528
|
||||||
Employee
loan
|
23,000
|
23,000
|
||||||
Total
Other Assets
|
199,319
|
211,997
|
||||||
Total
Assets
|
688,443
|
877,299
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
82,698
|
72,037
|
||||||
Accrued
expenses
|
21,267
|
10,063
|
||||||
Credit
line payable
|
99,970
|
99,970
|
||||||
Due
to related party
|
34,718
|
18,000
|
||||||
Due
to NovaStor, Inc.
|
-
|
58,509
|
||||||
Dividend
payable
|
75,000
|
25,000
|
||||||
Due
to officer
|
7,250
|
|||||||
Deferred
revenue
|
36,869
|
12,790
|
||||||
Total
Current Liabilities
|
350,522
|
303,619
|
||||||
Deferred
rental obligation
|
28,642
|
-
|
||||||
Due
to officer
|
379,025
|
-
|
||||||
Total
Long Term Liabilities
|
407,667
|
-
|
||||||
Total
Liabilities
|
758,189
|
303,619
|
||||||
Commitments
and contingencies
|
-
|
-
|
||||||
Stockholders’
Equity (Deficit):
|
||||||||
Preferred
Stock, $.001 par value; 1,401,786
|
1,402
|
1,402
|
||||||
issued
and outstanding in 2009 and 2008
|
||||||||
Common
stock, par value $0.001; 250,000,000 shares authorized;
|
13,670
|
12,473
|
||||||
13,315,399
and 12,473,214 shares issued and outstanding in 2009 and 2008
respectively
|
||||||||
Additional
paid in capital
|
4,808,558
|
4,352,966
|
||||||
Accumulated
deficit
|
(4,893,376)
|
(3,793,161
|
)
|
|||||
Total
Stockholders' Equity (Deficit)
|
(69,746)
|
573,680
|
||||||
Total
Liabilities and Stockholders' Equity (Deficit)
|
$
|
688,443
|
$
|
877,299
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements
|
DATA
STORAGE CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
|
||||||||
Year
Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Sales
|
$ | 585,285 | $ | 629,675 | ||||
Cost
of sales
|
459,803 | 346,007 | ||||||
Gross
Profit
|
125,482 | 283,668 | ||||||
Selling,
general and administrative
|
1,170,903 | 823,475 | ||||||
Loss
from Operations
|
(1,045,421 | ) | (539,807 | ) | ||||
Other
Income (Expense)
|
||||||||
Interest
income
|
192 | 5,711 | ||||||
Interest
expense
|
(4,986 | ) | (3,863 | ) | ||||
Total
Other (Expense)
|
(4,794 | ) | 1,848 | |||||
Loss
before provision for income taxes
|
(1,050,215 | ) | (537,959 | ) | ||||
Provision
for income taxes
|
- | - | ||||||
Net
Loss
|
(1,050,215 | ) | (537,959 | ) | ||||
Preferred
Stock Dividend
|
(50,000 | ) | (25,000 | ) | ||||
Net
Loss Available to Common Stockholders
|
$ | (1,100,215 | ) | $ | (562,959 | ) | ||
Loss
per Share – Basic and Diluted
|
$ | (.08 | ) | $ | (0.01 | ) | ||
Weighted
Average Number of Shares - Basic and Diluted
|
12,944,647 | 4,569,356 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements
|
||||||||
|
DATA
STORAGE CORPORATION AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
|
|||||||
Year
Ended December 31,
|
|||||||
2008
|
2007
|
||||||
Cash
Flows from Operating Activities:
|
|||||||
Net
loss
|
$
|
(1,050,215)
|
$
|
(537,959)
|
|||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 131,361 | 119,789 | |||||
Allowance
for doubtful accounts
|
(18,058)
|
43,800
|
|||||
Stock
based compensation
|
51,902
|
51,823
|
|||||
Changes
in Assets and Liabilities:
|
|||||||
Accounts
receivable
|
41,047
|
(62,282)
|
|||||
Employee
loan
|
-
|
(5,000)
|
|||||
Other
assets
|
1,708
|
(13,469)
|
|||||
Accounts
payable
|
10,661
|
24,229
|
|||||
Accrued
expenses
|
11,204
|
8,278
|
|||||
Prepaid
expenses
|
(21,103)
|
-
|
|||||
Deferred
revenue
|
24,079
|
12,790
|
|||||
Deferred
rent
|
28,642
|
-
|
|||||
Due
to related party
|
16,718
|
18,000
|
|||||
Net
Cash Used in Operating Activities
|
(772,054)
|
(340,001)
|
|||||
Cash
Flows from Investing Activities:
|
|||||||
Cash
paid for equipment
|
(105,722)
|
(63,868)
|
|||||
Cash
paid for customer list
|
(30,000)
|
(117,019)
|
|||||
Net
Cash Used in Investing Activities
|
(135,722)
|
(180,887)
|
|||||
Cash
Flows from Financing Activities:
|
|||||||
Advances
from credit line
|
-
|
99,970
|
|||||
Advances
from officer
|
371,775
|
7,250
|
|||||
Cash
paid in connection with reverse merger
|
-
|
(635,074)
|
|||||
Options
exercised
|
100
|
-
|
|||||
Proceeds
from the issuance of common stock
|
275,000
|
1,300,000
|
|||||
Net
Cash Provided by Financing Activities
|
646,875
|
772,146
|
|||||
Increase
in Cash and Cash Equivalents
|
(260,901)
|
251,258
|
|||||
Cash
and Cash Equivalents, Beginning of Year
|
289,061
|
37,803
|
|||||
Cash
and Cash Equivalents, End of Year
|
$
|
28,160
|
$
|
289,061
|
|||
Supplemental
Disclosure of Cash Flow Information:
|
|||||||
Cash
paid for interest
|
$
|
4,986
|
$
|
3,863
|
|||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
|||
Noncash
Investing and Financing Activities:
|
|||||||
Accrual
of Preferred Stock Dividend
|
$
|
50,000
|
$
|
25,000
|
|||
Due
to Novastor, Inc. for purchase of customer list
|
$
|
-
|
$
|
58,509
|
|||
Conversion
of officer debt for common stock
|
$
|
-
|
$
|
1,836,097
|
DATA
STORAGE CORPORATION AND SUBSIDIARY
|
||||||||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||
Additional
|
||||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
Paid-in
|
Accumulated
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance
January 1, 2008
|
-
|
-
|
28,359
|
28
|
1,813,966
|
(3,230,202)
|
(1,416,208)
|
|||||||||||||||||||||
Preferred
stock issued
|
||||||||||||||||||||||||||||
in
private placement
|
51,465
|
51
|
-
|
-
|
499,949
|
-
|
500,000
|
|||||||||||||||||||||
Common
stock issued
|
||||||||||||||||||||||||||||
in
private placement
|
-
|
-
|
92,878
|
93
|
799,907
|
-
|
800,000
|
|||||||||||||||||||||
Officer
Debt Conversion
|
-
|
-
|
317,690
|
318
|
1,835,779
|
-
|
1,836,097
|
|||||||||||||||||||||
Effect
of reverse merger
|
||||||||||||||||||||||||||||
and
recapitalization
|
1,350,321
|
1,351
|
12,034,287
|
12,034
|
(648,458)
|
-
|
(635,073)
|
|||||||||||||||||||||
Stock
based compensation
|
-
|
-
|
-
|
-
|
51,823
|
-
|
51,823
|
|||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(537,959)
|
(537,959)
|
|||||||||||||||||||||
Preferred
Stock Dividend
|
-
|
-
|
-
|
-
|
-
|
(25,000)
|
(25,000)
|
|||||||||||||||||||||
Balance
December 31, 2008
|
1,401,786
|
1,402
|
12,473,214
|
12,473
|
4,352,966
|
(3,793,161)
|
573,680
|
|||||||||||||||||||||
Common
stock issued
|
||||||||||||||||||||||||||||
in
private placement
|
-
|
-
|
842,185
|
842
|
274,158
|
-
|
275,000
|
|||||||||||||||||||||
Stock
based compensation
|
-
|
-
|
-
|
350
|
181,339
|
-
|
181,339
|
|||||||||||||||||||||
Stock
options exercised
|
5
|
95
|
100
|
|||||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(1,050,215)
|
(1,050,215)
|
|||||||||||||||||||||
Preferred
Stock Dividend
|
-
|
-
|
-
|
-
|
-
|
(50,000)
|
(50,000)
|
|||||||||||||||||||||
Balance
December 31, 2009
|
1,401,786
|
1,402
|
13,315,399
|
13,670
|
4,808,558
|
(4,893,376)
|
(70,096)
|
DATA
STORAGE CORPORATION AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
Note 1
Basis of presentation, organization and other matters
On
October 20, 2008, Euro Trend Inc. ("Euro Trend") acquired all of the outstanding
capital stock of Data Storage Corporation (“Data Storage”). Data Storage became
a wholly owned subsidiary of Euro Trend. On January 6, 2009 Euro Trend, Inc.
filed with the state of Nevada changing its name to Data Storage Corporation.
The business of Data Storage was the only business of Euro Trend after the
acquisition.
Data
Storage Corporation was incorporated in Delaware on August 29, 2001. Data
Storage Corporation is a provider of data backup services. The Company
specializes in secure disk-to-disk data backup and restoration solutions for
disaster recovery, business continuity, and regulatory compliance.
Data
Storage Corporation derives its revenues from the sale of solutions that provide
businesses protection of critical electronic data. Primarily, these services
consist of email storage and compliance solutions; off site data back up;
continuous data protection; data duplication; high availability replication,
virtual tape libraries for disaster recovery and business continuity and
equipment sales. The Company has Data Centers in Westbury, New York and
maintains equipment under a strategic alliance with Broadsmart a
Voip company in Fort Lauderdale, Florida to provide redundant data
protection.
Liquidity
The
financial statements have been prepared using accounting principles generally
accepted in the United States of America applicable for a going concern, which
assumes that the Company will realize its assets and discharge its liabilities
in the ordinary course of business. For the year ended December 31, 2009, the
Company has generated revenues of $585,285 but has incurred a net loss of
$1,050,215. Its ability to continue as a going concern is dependent upon
achieving sales growth, reduction of operation expenses and ability of the
Company to obtain the necessary financing to meet its obligations and pay its
liabilities arising from normal business operations when they come due, and upon
profitable operations. The Company has been funded by the CEO and
majority shareholder since inception. It is the intention of Charles
Piluso to continue to fund the Company on an as needed basis.
Stock
Based Compensation
The
Company follows the requirements of FASB ASC 718-10-10, Share Based Payments
with regard to stock-based compensation issued to employees. The Company
has various employment agreements and consulting arrangements that call for
stock to be awarded to the employees and consultants at various times as
compensation and periodic bonuses. The expense for this stock based compensation
is equal to the fair value of the stock that was determined by using the most
recent private placement price on the day the stock was awarded multiplied by
the number of shares awarded.
Recently
Issued and Newly Adopted Accounting Pronouncements
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted
Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB
Accounting Standards Codification (the “Codification”) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. All guidance contained in the Codification carries an equal
level of authority. The Codification superseded all existing non-SEC accounting
and reporting standards. All other non-grandfathered, non-SEC accounting
literature not included in the Codification is non-authoritative. The FASB will
not issue new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in
their own right. ASUs will serve only to update the Codification, provide
background information about the guidance and provide the bases for conclusions
on the change(s) in the Codification. References made to FASB guidance
throughout this document have been updated for the Codification.
Effective
April 1, 2009, the Company adopted FASB ASC 820-10-65, Fair Value Measurements
and Disclosures – Overall – Transition and Open Effective Date Information (“ASC
820-10-65”). ASC 820-10-65 provides additional guidance for estimating fair
value in accordance with ASC 820-10 when the volume and level of activity for an
asset or liability have significantly decreased. ASC 820-10-65 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. The adoption of ASC 820-10-65 did not have an impact on the Company’s
consolidated results of operations or financial condition.
Effective
April 1, 2009, the Company adopted FASB ASC 825-10-65, Financial Instruments –
Overall – Transition and Open Effective Date Information (“ASC 825-10-65”). ASC
825-10-65 amends ASC 825-10 to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements and also amends ASC 270-10 to require those disclosures in all
interim financial statements. The adoption of ASC 825-10-65 did not have a
material impact on the Company’s results of operations or financial
condition.
Effective
April 1, 2009, the Company adopted FASB ASC 855-10, Subsequent Events – Overall
(“ASC 855-10”). ASC 855-10 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events
and the basis for that date – that is, whether that date represents the date the
financial statements were issued or were available to be issued. This disclosure
should alert all users of financial statements that an entity has not evaluated
subsequent events after that date in the set of financial statements being
presented. Adoption of ASC 855-10 did not have a material impact on the
Company’s results of operations or financial condition.
Effective
July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements
and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to
ASC 820-10, Fair Value Measurements and Disclosures – Overall, for
the fair value measurement of liabilities. ASU 2009-05 provides clarification
that in circumstances in which a quoted price in an active market for the
identical liability is not available, a reporting entity is required to measure
fair value using certain techniques. ASU 2009-05 also clarifies that when
estimating the fair value of a liability, a reporting entity is not required to
include a separate input or adjustment to other inputs relating to the existence
of a restriction that prevents the transfer of a liability. ASU 2009-05 also
clarifies that both a quoted price in an active market for the identical
liability at the measurement date and the quoted price for the identical
liability when traded as an asset in an active market when no adjustments to the
quoted price of the asset are required are Level 1 fair value measurements.
Adoption of ASU 2009-05 did not have a material impact on the Company’s results
of operations or financial condition.
In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to FASB ASC Topic 605, Revenue
Recognition ) (“ASU 2009-13”) and ASU 2009-14, Certain
Arrangements That Include Software Elements, (amendments to FASB ASC Topic
985, Software ) (“ASU 2009-14”). ASU 2009-13 requires
entities to allocate revenue in an arrangement using estimated selling prices of
the delivered goods and services based on a selling price hierarchy. The
amendments eliminate the residual method of revenue allocation and require
revenue to be allocated using the relative selling price method. ASU 2009-14
removes tangible products from the scope of software revenue guidance and
provides guidance on determining whether software deliverables in an arrangement
that includes a tangible product are covered by the scope of the software
revenue guidance. ASU 2009-13 and ASU 2009-14 should be applied on a prospective
basis for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010, with early adoption permitted. The
Company does not expect adoption of ASU 2009-13 or ASU 2009-14 to have a
material impact on the Company’s results of operations or financial
condition.
Note
2 Summary of Significant Accounting Policies
Cash,
cash equivalents and short-term investments
The
Company considers all highly liquid investments with an original maturity or
remaining maturity at the time of purchase, of three months or less to be cash
equivalents.
Concentration
of credit risk and other risks and uncertainties
Financial
instruments and assets subjecting the Company to concentration of credit risk
consist primarily of cash and cash equivalents, short-term investments and trade
accounts receivable. The Company's cash and cash equivalents are maintained at
major U.S. financial institutions. Deposits in these institutions may exceed the
amount of insurance provided on such deposits.
The
Company's customers are primarily concentrated in the United States. The Company
performs ongoing credit evaluations and establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of customers, historical
trends and other information.
The
Company provides credit in the normal course of business. The Company
performs ongoing credit evaluations of its customers and maintains allowances
for doubtful accounts on factors surrounding the credit risk of specific
customers, historical trends, and other information.
For the
years ended December 31, 2009 and 2008 the company had two customers that
represented approximately 21% and 22% of sales, respectively.
Accounts
Receivable/Allowance for Doubtful Accounts
The
Company sells its services to customers on an open credit basis. Accounts
receivable are uncollateralized, non-interest-bearing customer
obligations. Accounts receivables are due within 30 days. The
allowance for doubtful accounts reflects the estimated accounts receivable that
will not be collected due to credit losses and allowances. Provisions for
estimated uncollectible accounts receivable are made for individual accounts
based upon specific facts and circumstances including criteria such as their
age, amount, and customer standing. Provisions are also made for other accounts
receivable not specifically reviewed based upon historical
experience.
Property
and Equipment
Property
and equipment is 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. Estimated useful lives in years for depreciation are 5 to 7
years for property and equipment. 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.
Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. At
December 31, 2009, the Company had a full valuation allowance against its
deferred tax assets.
Estimated
Fair Value of Financial Instruments
The
Company's financial instruments include cash, accounts receivable, accounts
payable, line of credit and due to related parties. Management believes the
estimated fair value these accounts at December 31, 2009 approximate their
carrying value as reflected in the balance sheets due to the short-term nature
of these instruments or the use of market interest rates for debt
instruments.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles 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. Actual
results could differ from these estimates.
Revenue
Recognition
The
Company’s revenues consist principally of storage revenues. Storage revenues
consist of monthly charges related to the storage of materials or data
(generally on a per unit basis). Sales are generally recorded in the
month the service is provided. For customers who are billed on an
annual basis, deferred revenue is recorded and amortized over the life of the
contract.
Advertising
Costs
The
Company expenses the costs associated with advertising as they are incurred.
The Company incurred $30,399 and $32,477 for advertising costs for the
years ended December 31, 2009 and 2008, respectively.
Net
Income (Loss) per Common Share
In
accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per
share is computed by dividing net income (loss) by the weighted average number
of shares of common stock outstanding during the period. Diluted earnings per
share is computed by dividing net income (loss) adjusted for income or loss that
would result from the assumed conversion of potential common shares from
contracts that may be settled in stock or cash by the weighted average number of
shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period. The inclusion of the potential common
shares to be issued have an anti-dilutive effect on diluted loss per share
because under the treasury stock method the average market price of the
Company's common stock was less than the exercise prices of the warrants, and
therefore they are not included in the calculation. Potentially dilutive
securities at December 31, 2009 include 30,204 warrants and 2,929,432
options.
Note
3 Property and Equipment
Property
and equipment, at cost, consist of the following:
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
$
|
838,912
|
$
|
766,646
|
|||||
Website
and software
|
166,933
|
150,208
|
||||||
Furniture
and fixtures
|
22,837
|
22,837
|
||||||
Computer
hardware and software
|
81794
|
75,498
|
||||||
Data Center
|
111,230
|
100,795
|
||||||
1,221,706
|
1,115,984
|
|||||||
Less:
Accumulated depreciation
|
913,383
|
793,110
|
||||||
Net
property and equipment
|
$
|
308,323
|
$
|
322,874
|
Depreciation
expense for the years ended December 31, 2009 and 2008 was $131,361 and
$119,789, respectively.
Note 4
Intangible Asset – Customer list
Costs
incurred in connection with obtaining customer lists have been capitalized and
are being amortized using the straight line method over a fifteen year
life. The Company’s intangible assets consisted of the following at
December 31, 2009 and 2008:
2009
|
2008
|
|||||||
Customer
lists
|
$
|
257,098
|
$
|
285,607
|
||||
Accumulated
amortization
|
(121,167
|
)
|
(110,079
|
)
|
||||
Net
Cost
|
$
|
135,931
|
$
|
175,528
|
On
September 4, 2009 an agreement was entered into whereby both parties to the
NovaStor asset acquisition agreed to reduce the purchase price based upon the
results of subsequent customer revenue. The final purchase price was
reduced by $28,509.
Amortization
expense for the year ended December 31, 2009 and 2008 were $14,186 and $443
respectively
Amortization
of the intangible assets for the next five years are as follows: