|EX-32.1 - EXHIBIT 32.1 - Data Storage Corp||s108043_ex32-1.htm|
|EX-31.1 - EXHIBIT 31.1 - Data Storage Corp||s108043_ex31-1.htm|
|EX-10.23 - EXHIBIT 10.23 - Data Storage Corp||s108043_ex10-23.htm|
|EX-10.22 - EXHIBIT 10.22 - Data Storage Corp||s108043_ex10-22.htm|
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No. 001-35384
DATA STORAGE CORPORATION
(Exact name of registrant as specified in its charter)
or other jurisdiction of
incorporation or organization)
68 South Service Road
|(Address of principal executive offices)||(Zip Code)|
Registrant’s telephone number, including area code: (212) 564-4922
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 ☒ No ☐
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 ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|Large Accelerated Filer ☐||Accelerated Filer ☐|
|Non-Accelerated Filer ☐||Smaller Reporting Company ☒|
|(Do not check if a smaller reporting company)||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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares of the registrant’s common stock outstanding as of September 30, 2017, was 128,139,418
DATA STORAGE CORPORATION
|ITEM 1.||Financial Statements|
DATA STORAGE CORPORATION AND SUBSIDIARY
|Cash and cash equivalents||$||156,305||$||255,817|
|Accounts receivable (less allowance for doubtful accounts of $90,000 in 2017 and $90,000 in 2016)||582,086||807,515|
|Prepaid expenses and other current assets||160,646||231,432|
|Total Current Assets||899,037||1,294,764|
|Property and Equipment:|
|Property and equipment||5,226,246||3,401,251|
|Net Property and Equipment||1,710,238||178,660|
|Intangible assets, net||303,766||329,242|
|Total Other Assets||4,346,833||4,369,446|
|LIABILITIES AND STOCKHOLDERS’ DEFICIT|
|Accounts payable and accrued expenses||996,717||1,219,247|
|Revolving credit facility||—||50,412|
|Accounts payable from acquisition||—||374,762|
|Leases payable – related party||658,307||254,078|
|Note payable – bank||350,000||350,000|
|Total Current Liabilities||3,406,608||3,786,740|
|Deferred rental obligation||1,305||1,904|
|Note Payable – related party||328,265||190,000|
|Leases payable long-term – related party||1,135,089||133,825|
|Total Long-Term Liabilities||1,464,659||325,729|
|Stockholders’ Deficit: Preferred Stock, $.001 par value; 10,000,000 shares authorized; 1,401,786 shares issued and outstanding in each period||1,402||1,402|
|Common stock, par value $0.001; 250,000,000 shares authorized; 128,139,418 and 128,039,418 shares issued and outstanding in 2017 and 2016, respectively||128,139||128,039|
|Additional paid in capital||17,203,590||17,194,383|
|Total Stockholders’ (Deficit) Equity||2,084,841||1,730,401|
|Total Liabilities and Stockholders’ (Deficit)||$||6,956,108||$||5,842,870|
The accompanying notes are an integral part of these consolidated financial statements.
DATA STORAGE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
|Three Months Ended|
|Nine Months Ended|
|Cost of sales||1,226,430||646,364||3,766,448||1,930,788|
|Selling, general and administrative||741,503||389,684||2,090,706||1,285,145|
|Income (Loss) from Operations||68,366||(113,129||)||530,345||(303,780||)|
|Other Income (Expense)|
|Bad Debt Recovery||—||—||1,542||1,508|
|Net gain (loss) on equity method investment||—||(2,362||)||—||(2,572||)|
|Total Other Income (Expense)||(34,746||)||(72,593||)||(98,438||)||(205,531||)|
|Income (loss) before provision for income taxes||33,620||(185,722||)||431,907||(509,311||)|
|Provision for income taxes||—||—||—||—|
|Net Income (loss)||33,620||(185,722||)||431,907||(509,311||)|
|Preferred Stock Dividends||(29,648||)||(26,838||)||(86,774||)||(78,550||)|
|Net Income (loss) Attributable to Common Stockholders||$||3,972||$||(212,560||)||$||345,133||$||(587,861||)|
|Income (loss) per Share – Basic and Diluted||$||0.00||$||(0.01||)||$||0.00||$||(0.01||)|
|Weighted Average Number of Shares – Basic||128,139,418||36,588,240||128,077,148||36,588,240|
|Weighted Average Number of Shares - Diluted||128,272,752||36,588,240||128,210,482||36,588,240|
The accompanying notes are an integral part of these condensed consolidated financial statements
DATA STORAGE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Nine months ended|
|Cash Flows from Operating Activities:|
|Net Income (loss)||$||431,907||$||(509,311||)|
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:|
|Depreciation and amortization||318,893||157,071|
|Write off employee loan||—||85,800|
|Net (gain) loss on equity method investment||—||2,572|
|Non-cash interest expense||—||174,851|
|Stock based compensation||9,307||36,420|
|Changes in Assets and Liabilities:|
|Prepaid expenses and other current assets||65,787||(43,965||)|
|Accounts payable and accrued expenses||(267,472||)||392,816|
|Net Cash Provided by Operating Activities||561,957||208,577|
|Cash Flows from Financing Activities:|
|Issuance of Convertible Debt||—||10,000|
|Repayment of loan obligations||(428,873||)||—|
|Repayments of capital lease obligations||(232,596||)||(180,151||)|
|Net Cash Used in Financing Activities||(661,469||)||(170,151||)|
|Increase (Decrease) in Cash and Cash Equivalents||(99,512||)||38,426|
|Cash and Cash Equivalents, Beginning of Period||255,817||67,045|
|Cash and Cash Equivalents, End of Period||$||156,305||$||105,471|
|Cash paid for interest||$||100,650||$||29,615|
|Cash paid for income taxes||$||—||$||—|
|Non-cash investing and financing activities:|
|Accrual of preferred stock dividend||$||86,774||$||78,550|
|Assets acquired by capital lease||$||1,824,996||$||—|
The accompanying notes are an integral part of these condensed consolidated financial statements.
DATA STORAGE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
Note 1 - Basis of presentation, organization and other matters
Headquartered in Melville, NY, Data Storage Corporation (“DSC” or the “Company”) offers its solutions and services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government sectors. The Company focuses on cyber security solutions, cloud solutions and compliance services. DSC provides Infrastructure as a Service, Disaster Recovery as a Service and Email Archival and Compliance Solutions. DSC’s mission: Protecting client data, ensuring business continuity, assisting in their compliance requirements and providing better control over their digital information.
DSC maintains equipment for cloud storage and cloud computing in our data centers in New York State and Massachusetts. DSC delivers its solutions over highly reliable, redundant and secure fiber optic networks with separate and diverse routes to the Internet. DSC’s network and geographical diversity is important to clients seeking storage hosting and disaster recovery solutions, ensuring protection of data and continuity of business in the case of a network interruption.
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 nine months ended September 30, 2017, the Company has generated revenues of $6,387,499 and achieved a net income attributable to common shareholders of $345,133.
Note 2 - Summary of Significant Accounting Policies
Stock Based Compensation
The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees. The Company has stock-based incentives for consultants and employees that over achieve. This plan is discretionary. The expense for this stock-based compensation is equal to the fair value of the stock that was determined by using closing price on the day the stock was awarded multiplied by the number of shares awarded. The Company records its options at fair value using the Black-Scholes valuation model.
Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method. The Company’s share of its equity method investee’s earnings or losses is included in other income in the accompanying Consolidated Statements of Operations.
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.
Estimated Fair Value of Financial Instruments
The Company’s financial instruments include cash, accounts receivable, and accounts payable, line of credit and due to related parties. Management believes the estimated fair value of these accounts at September 30, 2017 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. The carrying values of certain of the Company’s notes payable and capital lease obligations approximate their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace.
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.
Recently Issued and Newly Adopted Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2016, the FASB voted to delay the effective date of ASU 2014-09 by one year to the first quarter of 2018 to provide companies sufficient time to implement the standards. Early adoption will be permitted, but not before the first quarter of 2017. Adoption can occur using one of two prescribed transition methods. In March and April 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” and ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” which provide supplemental adoption guidance and clarification to ASC 2014-09. ASU 2016-08 and ASU 2016-10 must be adopted concurrently with the adoption of ASU 2014-09.
On May 28, 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” and issued subsequent amendments to the initial guidance contained within ASU 2017-13, ASU 2016-20, ASU 2016-12, ASU 2016-10 and ASU 2016-08. Previous revenue recognition guidance in U.S. GAAP comprised broad revenue recognition concepts together with numerous revenue requirements for particular industries or transactions, which sometimes resulted in different accounting for economically similar transactions. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be titled in exchange for those goods or services. In addition, ASU 2014-09 expands and enhances disclosure requirements which require disclosing sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This includes both qualitative and quantitative information. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted. The guidance permits two methods of adoption: full retrospective in which the standard is applied to all of the periods presented or modified retrospective where an entity will have to recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. The Company is currently in the process of concluding on which transition approach it will utilize and the impact of adopting ASU 2014-09 and subsequent updates will have on its consolidated financial statements and related disclosures. The Company will adopt these standards with an effective date of January 1, 2018.
On August 2015, FASB issued Accounting Standards Update No. 2014-15, “Presentation of Financial Statements - Going Concerns (Subtopic 205-40): Disclosures of Uncertainties about an Entity’s Ability to continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The Company adopted this ASU effective January 1, 2017. The adoption of ASU 2014-15 did not have a material impact on our financial position or results of operations.
In April 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU provides clarification on whether a cloud computing arrangement includes a software license. If a software license is included, the customer should account for the license consistent with its accounting of other software licenses. If a software license is not included, the arrangement should be accounted for as a service contract. This ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years. Adoption of ASU 2016-05 did not have a material impact on our financial position or results of operations.
During February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). The standard requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the new standard.
In March 2016, FASB issued ASU No. 2016-09, “Improvements to Employee Share-based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the standard and the impact on its consolidated financial statements and footnote disclosures.
In January 2017, FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other Simplifying the Accounting for Goodwill” (ASU 2017-04”), which requires goodwill impairment loss to be measured as the excess of a reporting unit’s carrying amount over its fair value (not to exceed the total goodwill allocated to that reporting unit). The new guidance eliminates Step 2, which an entity used to measure goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. “In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination,” the ASU is effect for the company on January 1, 2020. The Company will adopt the standard on that date.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments”, which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017 and early adoption is permitted. ASU 2016-15 provides for retrospective application for all periods presented. The Company is assessing the impact of ASU 2016-15 and will adopt it when effective.
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 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 nine months ended September 30, 2017 and the nine months ended September 30, 2016 DSC did not have any customer concentrations.
Accounts Receivable/Allowance for Doubtful Accounts
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. Clients are invoiced in advance for services as reflected in deferred revenue on the Company’s balance sheet.
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.
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 September 30, 2017, the Company had a full valuation allowance against its deferred tax assets.
Per FASB ASC 740-10, disclosure is not required of an uncertain tax position unless it is considered probable that a claim will be asserted and there is a more-likely-than-not possibility that the outcome will be unfavorable. Using this guidance, as of September 30, 2017 and September 30, 2016, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company’s 2015, 2013 and 2012 Federal and State tax returns remain subject to examination by their respective taxing authorities. Neither of the Company’s Federal or State tax returns are currently under examination.
Goodwill and Other Intangibles
In accordance with GAAP, the Company tests goodwill and other intangible assets for impairment on at least an annual basis. Goodwill impairment exists if the net book value of a reporting unit exceeds its estimated fair value. The impairment testing is performed in two steps: (i) the Company determines impairment by comparing the fair value of a reporting unit with its carrying value, and (ii) if there is an impairment, the Company measures the amount of impairment loss by comparing the implied fair value of goodwill with the carrying amount of that goodwill. To determine the fair value of these intangible assets, the Company uses many assumptions and estimates using a market participant approach that directly impact the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management.
The Company’s revenues consist principally of cloud storage and cloud computing revenues, SaaS and IaaS. 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. Set up fees charged in connection with storage contracts are deferred and recognized on a straight-line basis over the life of the contract.
Our revenue is also derived from equipment sales for cyber security, storage and managed service solutions. Revenue for equipment sales is recognized when persuasive evidence that an arrangement exists, installation has occurred, selling price is fixed or determinable, and collection is reasonably assured.
Impairment of Long-Lived Assets
In accordance with FASB ASC 360-10-35, we review our long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated undiscounted future cash flows.
The Company expenses the costs associated with advertising as they are incurred. The Company incurred $119,574 and $106,865 for advertising costs for the years ended September 30, 2017 and 2016, respectively.
Net Income (Loss) Per Common Share
In accordance with FASB ASC 260-10-5 Earnings Per Share, basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The inclusion of the potential common shares to be issued have an anti-dilutive effect on diluted loss per share and therefore they are not included in the calculation. Potentially dilutive securities at September 30, 2017 include 133,334 warrants.
Note 3 - Property and Equipment
Property and equipment, at cost, consist of the following:
|Website and software||533,418||533,418|
|Furniture and fixtures||14,037||14,037|
|Computer hardware and software||86,184||86,184|
|Data Center Equipment||2,491,675||666,680|
|Less: Accumulated depreciation||3,516,008||3,222,591|
|Net property and equipment||$||1,710,238||178,660|
Depreciation expense for the nine months ended September 30, 2017 and 2016 was $293,417 and $134,095, respectively.
Note 4 - Goodwill and Intangible Assets
Goodwill and intangible assets consisted of the following:
|Intangible assets not subject to amortization|
|Intangible assets subject to amortization|
|Customer list||5 - 15||897,274||894,721|
|Non-compete agreements||3 - 4||272,147||265,202|
|Total Intangible Assets||1,463,689||1,159,923|
|Total Goodwill and Intangible Assets||$||5,449,389||$||1,159,923|
Scheduled amortization over the next three years as follows:
|For the Twelve Months ending September 30,|
Amortization expense for the nine months ended September 30, 2017 and 2016 was $25,476 and $22,976, respectively. Goodwill is amortized on a straight-line basis.
Note 4 – Capital Lease Obligations – Related Party
On May 1, 2014 the Company entered into a new lease agreement with Systems Trading, Inc. (“Systems Trading”), an entity 100% owned by DSC President and director, Harold J. Schwartz to refinance all outstanding leases into one capital lease. This lease obligation is payable to Systems Trading, Inc. with monthly installments of $21,826 from June 1, 2014 through May 1, 2018. This lease is secured with the computer equipment and has been capitalized. Pursuant to Accounting Standards Codification (“ASC”) 470-50-40, Debt Modifications and Extinguishments-Derecognition, the Company determined that modification accounting applied to the refinancing. The new capital lease obligation has an effective interest rate of 7.22%.
On July 10, 2016, the Company entered into a lease with Systems Trading. The lease is for $14,443, calls for monthly payments of $420 and expires on August 1, 2018. It carries an interest rate of 3%. On November 1, 2016, the Company added to the existing lease with Systems Trading. The lease addendum totaled $7,998, calls for monthly payments of $258 and expires on March 1, 2018. It carries no interest.
On January 24, 2017, the Company entered into a lease with Systems Trading to refinance old leases referenced above and to add newly acquired data center equipment. The lease is for calls for monthly payments of $59,940 and expires on February 1, 2020. It carries an interest rate of 6%.
On April 27, 2017, the Company entered into a lease with Systems Trading to add newly-acquired data center equipment. The lease is for calls for monthly payments of $2,300, and expires on May 1, 2020. It carries an interest rate of 4%.
Future minimum lease payments under the capital leases are as follows:
|As of September 30,2017||$||1,937,357|
|Less amount representing interest||(143,961||)|
|Total obligations under capital leases||1,793,396|
|Less current portion of obligations under capital leases||(658,307||)|
|Long-term obligations under capital leases||$||1,135,089|
Long-term obligations under the capital leases at September 30, 2017 mature as follows:
|For the twelve months ending September 30,|
The assets held under the capital leases are included in property and equipment as follows:
|Less: accumulated depreciation||1,333,018|
Note 5 - Commitments and Contingencies
The Company currently leases two office spaces in Melville, NY, and one in Warwick, RI.
The lease for office space in Melville, NY calls for monthly payments of $3,498 beginning July 1, 2016. This lease commenced on June 1, 2016 and continues through December 31, 2017. On July 20, 2017, the Company rented additional office space in Melville, NY and commences on August 1, 2017 and continues through December 31, 2017. This new lease for the additional office space calls for monthly payments of $1,464.
A second location that was part of the acquisition is also located in Melville, calls for monthly payments of $8,382 with a lease terminating in August 31, 2019.
The lease for office space in Warwick, RI calls for monthly payments of $2,324 beginning February 1, 2015 which escalates to $2,460 on February 1, 2017. This lease commenced on February 1, 2015 and continues through January 31, 2019.
Minimum obligations under these lease agreements are as follows:
|For the Year Ending September 30,|
Rent expense for the nine months ended September 30, 2017 and 2016 was $160,085 and $101,865, respectively.
Note 6 - Acquisition of business
The unaudited pro forma condensed combined financial statements presented below have been prepared in order to present combined results of operations of the Company, ABC Services, Inc. and ABC Services II, Inc. (collectively, “ABC”) as if the asset acquisition had occurred as of January 1, 2016.
|Income from operations||558,206|
|Net Income attributable to common shareholders||379,425|
|Earnings per share||0.01|
Note 7 - Note Payable – Related Party
On January 24, 2017, the Company refinanced accounts payable acquired in the business acquisition on October 25, 2016 with a non-interest-bearing note to the Company’s President in consideration for a $247,020 loan. The repayment terms of the note are $10,292 for a term of 24 months commencing on February 1, 2017.
Note 8 – Note Payable – bank
There has been no default notice from Enterprise Bank. Enterprise Bank has requested that we move from an interest only payment to a self-amortized arrangement. The Company is in the process of renegotiating a new payment plan. Interest only payments have been paid with the last monthly payment made in September 2017. The interest rate on this note was 5.32%. The Company is in current negotiations to either modify or extend this loan.
Note 9 - Stockholders’ Equity
During the nine months ended September 30, 2017, the Company granted 100,000 shares of its common stock to a CTO of the company for services performed.
The Company has 260,000,000 shares of capital stock authorized, consisting of 250,000,000 shares of Common Stock, par value $0.001, 10,000,000 shares of Preferred Stock, par value $0.001 per share.
Note 10 – Subsequent Events
The Company has entered into a new lease agreement with RXR Realty LLC to rent office space at 48 South Service Rd., Melville, New York to commence on February 1, 2018. The lease calls for monthly payments of $7,189 with a lease terminating May 31, 2023.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q contains forward looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.
In some cases, you can identify forward-looking statements by terminology such as ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘expects,’ ‘plans,’ ‘intends,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘predicts,’ ‘potential,’ or ‘continue’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this report.
Data Storage Corporation (“DSC” or “the Company”) focuses on cyber security solutions, cloud solutions and compliance services. DSC provides Hybrid Cloud, Infrastructure as a Service, Disaster Recovery as a Service and Email Archival and Compliance Solutions. Over 35% of our revenue is derived from equipment sales for cyber security, storage and managed service solutions. Our mission: Protecting our client’s data, ensuring business continuity, assisting in their compliance requirements and providing better control over their digital information. The Company’s October 2016 acquisition of the assets of ABC Services, Inc. and ABC Services II, Inc. (collectively, “ABC”), and its acquisition of the remaining 50% of the assets of Secure Infrastructure and Services LLC supports the Company’s strategy. These acquisitions accelerated our strategy into managed services, expanded cyber security solutions and our hybrid cloud solutions with the ability to provide equipment and expanded technical support.
The Company provides its solutions through its business development team and contracted distribution channels. DSC owns intellectual property with our proprietary email archival and data analytics software, Message Logic. DSC is marketing Message Logic on the Amazon AWS Marketplace and IBM’s cloud marketplace including the ability to subscribe for services on the DSC website. DSC’s contracted approved distributors have the ability to provide Recovery and Hybrid Cloud solutions, cloud solutions without capital investment lowering their barrier of entry in providing these solutions to their client base.
Headquartered in Melville, NY, with additional offices in Warwick, RI, DSC offers solutions and services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government industries.
DSC derives its revenues from subscription services and solutions, managed services, software and maintenance, equipment and onboarding provisioning. DSC maintains infrastructure and storage equipment in several technical centers in New York and Massachusetts.
DSC services clients from its staffed technical offices in New York and Rhode Island, which consist of modern offices and a technology suite adapted to meet the needs of a technology based business.
DSC varies its use of resources, technology and work processes to meet the changing opportunities and challenges presented by the market and the internal customer requirements. The Company supports clients twenty-four hours a day, 365 days a year.
RESULTS OF OPERATIONS
For the three months ended September 30, 2017 as compared to the three months ended September 30, 2016
Net Sales. Net sales for the three months ended September 30, 2017 were $2,036,299, an increase of $1,113,380, or 120.64% compared to $922,919 for the three months ended September 30, 2016. The increase is attributable to the acquisitions of ABC Services Inc. and ABC Services II Inc (collectively, “ABC”).
Cost of Sales. For the three months ended September 30, 2017, cost of sales were $1,226,430, an increase of $580,066, or 89.74% compared to $646,364 for the three months ended September 30, 2016. The increase is attributable to the acquisition of ABC.
Operating Expenses. For the three months ended September 30, 2017, operating expenses were $741,503, an increase of $351,819, or 90.28%, as compared to $389,684 for the three months ended September 30, 2016. The increase is attributable to the acquisition of ABC.
Other Income (Expense). Interest income for the three months ended September 30, 2017 increased $2 to $2 from $0 for the three months ended September 30, 2016. Interest expense for the three months ended September 30, 2017 decreased $35,483 to $34,748 from $70,231 for the three months ended September 30, 2016. This decrease is a result of the Company entering into conversion agreements for outstanding convertible debt.
Net Income (loss). Net income for the three months ended September 30, 2017 was $33,620 an increase of $219,342, or 118.10%, as compared to a net loss of ($185,722) for the three months ended September 30, 2016. We believe that continual cost cutting based on synergies, as well as economies of scale, will further improve our profit and margins.
For the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016
Net Sales. Net sales for the nine months ended September 30, 2017 were $6,387,499, an increase of $3,475,346, or 119.34%, compared to $2,912,153 for the nine months ended September 30, 2016. The increase is attributable to the acquisition of ABC.
Cost of Sales. For the nine months ended September 30, 2017, cost of sales were $3,766,448, an increase of $1,835,660, or 95.07%, compared to $1,930,788 for the nine months ended September 30, 2016. The increase is attributable to the acquisition of ABC.
Operating Expenses. For the nine months ended September 30, 2017, operating expenses were $2,090,706, an increase of $805,561, or 62.68%, as compared to $1,285,145 for the nine months ended September 30, 2016. The increase is attributable to the acquisition of ABC.
Other Income (expense). Interest income for the nine months ended September 30, 2017 increased $34 to $34 from $0 for the nine months ended September 30, 2017. Interest expense for the nine months ended September 30, 2017 decreased $103,817 to $100,650 from $204,467 for the nine months ended September 30, 2016. This decrease is a result of the Company entering into conversion agreements for outstanding convertible debt.
Net Profit (loss). Net profit or the nine months ended September 30, 2017 was $431,907 an increase of $941,218 as compared to net loss of ($509,311) for the nine months ended September 30, 2016.
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. Furthermore, we believe that the Company will continue its trend of profitability throughout November 2018 and the foreseeable future. Historically, the Company has been successful in raising money as needed. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could be dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing that we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be affected. Further it is the intention of management to continue to raise money through stock issuances to continue on their growth path in creating value.
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 circumstances change, we may not be able to meet our liquidity needs.
During the nine months ended September 30, 2017 the Company’s cash decreased $99,512 to $156,305 from $255,817 at December 31, 2016. Net cash of $561,957 was provided by the Company’s operating activities. Net cash of $661,469 was used in the Company’s financing activities, primarily due to refinancing of old capital leases and additional capital lease financing to refresh equipment and derive anticipated reduced costs for our company and clients.
DSC’s working capital deficit was $2,507,571 at September 30, 2017, increasing $15,595 or 0.625% from $2,491,976 at December 31, 2016. The increase is attributable to an increase in sales, planned economies of scale, operation efficiencies and overall synergies in several areas which have led to an operating profit.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
Interest due on the Company’s loans is based upon the applicable stated fixed contractual rate with the lender. Interest earned on DSC bank accounts is linked to the applicable base interest rate. For the nine months ended September 30, 2017 and 2016, DSC had interest expense, net of interest income, of $100,616 and $204,467 respectively. DSC believes that its results of operations are not materially affected by changes in interest rates.
DSC’s exposure to market risk is confined to its cash and cash equivalents, all of which have maturities of less than three months and bear and pay interest in U.S. dollars. Since DSC invests in highly liquid, relatively low yield investments, we do not believe interest rate changes would have a material impact on us.
DSC does not hold any derivative instruments and does not engage in any hedging activities.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this Report, under the supervision and with the participation of DSC’s management, including its principal executive officer and principal financial officer, DSC conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, DSC’s principal executive officer and principal financial officers have concluded that DSC’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by DSC in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules based on the material weakness described below.
The material weaknesses identified during management’s assessment were (i) a lack of sufficient internal accounting expertise to provide reasonable assurance that our financial statements and notes thereto are prepared in accordance with GAAP and (ii) a lack of segregation of duties to ensure adequate review of financial statement preparation. In light of these material weaknesses, management has concluded that, as of September 30, 2017, DSC did not maintain effective internal control over financial reporting. As defined by the Public Company Accounting Oversight Board Auditing Standard No. 5, a material weakness is a deficiency or a combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected. In order to ensure the effectiveness of DSC’s disclosure controls in the future DSC intends on adding financial staff resources to our internal accounting and finance department.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in Internal Control Over Financial Reporting.
There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
|Item 1.||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 DSC, its common stock, any of its subsidiaries or of DSC’s or DSC’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
As a smaller reporting company, we are not required to provide disclosure pursuant to this item.
|Item 2.||Unregistered Sales of Equity Securities and Use of Proceeds.|
|Item 3.||Defaults Upon Senior Securities.|
There were no defaults upon senior securities during the period ended September 30, 2017.
|Item 4.||Mine Safety Disclosures|
|Item 5.||Other Information.|
As previously reported, on November 1, 2017, the Company issued a press release announcing its formation of Nexxis Inc., a new majority-owned subsidiary of the Company which will focus on the development of next-generation voice and data services.
On November 13, 2017, the Company entered into a Stockholders Agreement (the “Stockholders Agreement”) with Nexxis Inc. (“Nexxis”), a majority-owned subsidiary of the Company, and John Camello (the “Minority Stockholder”), pursuant to which Nexxis agreed to issue 100% of its initial issued and outstanding shares (the “Nexxis Shares”) to the Company and the Minority Stockholder pursuant to subscription agreements entered into contemporaneously with the Stockholders Agreement. After giving effect to the respective issuances of the Nexxis Shares to the Company and the Minority Stockholder, the Company owns 80% of the Nexxis Shares and the Minority Stockholder owns 20% of the Nexxis Shares, resulting in the Company owning 80% of Nexxis and the Minority Stockholder owning 20% of Nexxis. Pursuant to the Stockholders Agreement, the Company may acquire all of the shares of Nexxis held by the Minority Stockholder at any time after the 18-month anniversary of the filing of the Nexxis articles of incorporation based on a certain formula of 4.5 times Nexxis’s EBITDA. Annual post-audit profit distributions (the “Annual Distributions”) will be issued to the Nexxis stockholders in connection with the revenue of Nexxis (i) on a pro-rata basis, (ii) based on no less than 50% of each stockholder’s ownership of Nexxis and (iii) based on and comprised of available cash, provided, however, if cash is not available to issue Annual Distributions, any unissued Annual Distributions will accrue and be issued within 30 days of the requisite cash becoming available in connection with such unissued Annual Distributions. At the sole discretion of the Board of Directors of Nexxis, which will initially consist of three (3) directors, Annual Distributions may be issued to the Nexxis stockholders based on no more than 50% of each stockholder’s ownership of Nexxis. As additional cash of Nexxis may become available, additional distributions may be made to the Nexxis stockholders based on no less than 50% of each stockholder’s ownership of Nexxis. No Nexxis stockholder will have priority over any other stockholder either as to the return of his, her, or its capital infusions or as to any distributions made by Nexxis. In addition, during the term of the Stockholders Agreement the Company will provide certain services and resources to Nexxis, as set forth in the Stockholders Agreement. Additionally, the Minority Stockholder may not transfer any Nexxis Shares owned by the Minority Stockholder without the express written consent of the Company. Further, if the Company proposes to transfer its Nexxis Shares to a third-party buyer, the Company has the drag-along right to force the Minority Stockholder to participate in the transfer of such shares to the third-party buyer on the same terms, and if the Company proposes to sell any of its Nexxis Shares then the Minority Stockholder may include its Nexxis Shares in such sale. The Stockholders Agreement contains and other covenants and provisions customary for agreements of a type similar to the Stockholders Agreement.
On November 13, 2017, the Company entered into an Executive Employment Agreement (the “Camello Agreement”) with Nexxis Inc. (“Nexxis”), a majority-owned subsidiary of the Company, and John Camello, pursuant to which John Camello will serve as the President of Nexxis for a term of three (3) years (the “Term”). Pursuant to the Camello Agreement, Mr. Camello’s initial compensation will consist of (1) monthly distributions comprised of 100% of the adjusted gross profit of Nexxis (the “Initial Monthly Distributions”), and (2) an initial salary from the Company in the approximate amount of $46,000 (the “Initial Salary”). In addition to the Initial Salary, Mr. Camello will receive access to the Company’s benefits programs. Upon Mr. Camello achieving Initial Monthly Distributions in the amount of $16,667 per month for three (3) consecutive months (a) the Initial Monthly Distributions will cease being issued to Mr. Camello, (b) the Initial Salary will cease being paid to Mr. Camello and (c) Mr. Camello will be placed on an annual base salary from Nexxis in the amount of $150,000 (the “Base Salary”). Throughout the Term, Mr. Camello will also be entitled to an issuance of common stock options to acquire shares of common stock of the Company (the “Options”) in accordance with the stock incentive plan of the Company. The amount of such Options is currently being considered by the Board of Directors of the Company. During the Term, Mr. Camello will be entitled to receive (i) a management bonus comprised of twenty five percent (25%) of any Nexxis net profits which are available each quarter and (ii) additional compensation as may be granted to Mr. Camello by the Nexxis Board of Directors in its sole discretion. During the Term, Mr. Camello will be eligible to receive an executive bonus pursuant to which Mr. Camello may earn an additional bonus in the amount of $50,000 per annum which may be issued to Mr. Camello in the form of common stock options of the Company, cash or a combination thereof, upon Nexxis achieving certain milestones and/or benchmarks in accordance with the Nexxis business plan and objectives. At the sole discretion of the Board of Directors of the Company, Mr. Camello will be entitled to earn certain common stock options (the “Benchmark Options”) to acquire shares of common stock of the Company in accordance with a “Revenue Benchmark Program” and related vesting schedule, pursuant to which the Benchmark Options will be issued to Mr. Camello on a semi-annual basis for the first two (2) years of Mr. Camello’s employment upon Nexxis achieving certain milestones determined by the parties (the “Benchmarks”) in connection with the Revenue Benchmark Program, as set forth in the Camello Agreement.
|3.1||Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form SB-2 filed on December 17, 2007 (the “SB-2”)).|
|3.2||Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on October 24, 2008).|
|3.3||Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1.1 on Form 8-K filed on January 6, 2009).|
|3.4||Bylaws (incorporated by reference to Exhibit 3.2 to the SB-2).|
|3.5||Amended Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K filed on October 24, 2008).|
|4.3||Registration Rights Agreement, dated November 29, 2011, by and between Data Storage Corporation and Southridge Partners II, LP (incorporated herein by reference to Exhibit 10.2 to Form 8-K filed on December 2, 2011).|
|4.4||Equity Purchase Agreement, dated November 29, 2011, by and between Data Storage Corporation and Southridge Partners II, LP (incorporated herein by reference to Exhibit 10.2 to Form 8-K filed on December 2, 2011).|
|4.5||Convertible Promissory Note, dated February 28, 2013, by and between the Company and John F. Coghlan. (incorporated herein by reference to Exhibit 4.1 to Form 10-Q filed on May 20, 2013)|
|4.6||Warrant to Purchase Common Stock, dated February 28, 2013, by and between the Company and John F. Coghlan (incorporated herein by reference to Exhibit 4.2 to Form 10-Q filed on May 20, 2013)|
|4.7||Securities Purchase Agreement, dated February 28, 2013, by and between the Company and John F. Coghlan. (incorporated herein by reference to Exhibit 10.1 to Form 10-Q filed on May 20, 2013)|
|4.8||Securities Purchase Agreement between Charles M. Piluso and the Company dated as of August 9, 2013 (incorporated by reference to Exhibit 2.3 of Schedule 13D/A No. 1 filed by Charles M. Piluso on August 14, 2013 (File No. 005- 84248)).|
|4.9||10% Convertible Promissory Note due April 30, 2016 (incorporated by reference to Exhibit 2.4 of Schedule 13D/A No. 1 filed by Charles M. Piluso on August 14, 2013 (File No. 005-84248)).|
|4.10||Warrant to Purchase Common Stock dated as of August 9, 2013, (incorporated by reference to Exhibit 2.5 of Schedule 13D/A No. 1 filed by Charles M. Piluso on August 14, 2013 (File No. 005-84248)).|
|10.1||Asset Purchase Agreement dated November 10, 2008, by and between Novastor Corporation as Seller and Data Storage Corporation as Purchaser (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 12, 2008).|
|10.2||Joint Venture – Strategic Alliance Agreement, dated March 2, 2010, by and between Data Storage Corporation and United Telecomp, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 3, 2010).|
|10.3||Term Sheet for Acquisition by Data Storage Corporation of 80% of the Equity of e-ternity Business Continuity Consultants, Inc., dated May 16, 2012 (incorporated by reference to Exhibit 99.1 to Form 8-K, filed on May 30, 2012).|
|10.4||Term Sheet for Acquisition by Data Storage Corporation of Message Logic, Inc., dated August 31, 2012 (incorporated by reference to Exhibit 99.1 to Form 8-K filed on September 4, 2012).|
|10.5||Asset Purchase Agreement, dated June 17, 2010, between SafeData, LLC and Data Storage Corporation (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 23, 2010).|
|10.6||Asset Purchase Agreement, dated October 31, 2012, by and between Data Storage Corporation and Message Logic, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on January 30, 2013).|
|10.7||Stock Purchase Agreement, dated October 31, 2012, by and between Data Storage Corporation and Zojax Group, LLC (incorporated by reference to Exhibit 10. 1 to Form 8-K filed on November 7, 2012).|
|10.8||Form of Employment Agreement between Peter Briggs and Data Storage Corporation (incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 23, 2010).|
|10.9||Data Storage Corporation 2010 Incentive Award Plan (incorporated by reference to Exhibit 10.1 on Form S-8/A filed on October 25, 2010).|
|10.10||Amended and Restated Data Storage Corporation 2010 Incentive Award Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 26, 2012).|
|10.11||Stock Purchase Agreement, dated as of March 1, 2011, by and between Data Storage Corporation and John F. Coghlan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 7, 2011).|
|10.12||Stock Purchase Agreement, dated September ember 7, 2012, by and between Data Storage Corporation and John F. Coghlan (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September ember 13, 2012).|
|10.13||Stock Purchase Agreement, dated September ember 7, 2012, by and between Data Storage Corporation and Clifford Stein (incorporated by reference to Exhibit 2.2 to Form 8-K filed on September ember 13, 2012).|
|10.14||Stock Purchase Agreement, dated September ember 18, 2012, by and between Data Storage Corporation and Jan Burman (incorporated by reference to Exhibit 2.1 to Form 8-K filed on September ember 21, 2012).|
|10.15||Stock Purchase Agreement, dated September ember 18, 2012, by and between Data Storage Corporation and Charles M. Piluso (incorporated by reference to Exhibit 2.2 to Form 8-K filed on September ember 21, 2012).|
|10.16||Stock Purchase Agreement, dated September ember 18, 2012, by and between Data Storage Corporation and Piluso Family Associates (incorporated by reference to Exhibit 2.3 to Form 8-K filed on September ember 21, 2012).|
|10.18||(incorporated by reference to Exhibit 10.3 to Form 8K filed on October 31, 2016) Conversion Agreement by and between Data Storage Corporation and John F. Coghlan dated October 25, 2016|
|10.19||(incorporated by reference to Exhibit 10.4 to Form 8K filed on October 31, 2016)|
|21||List of Subsidiaries of Data Storage Corporation (incorporated by reference to Exhibit 21 to the Registration Statement on Form S-1 filed on February 6, 2012).|
|31.1||Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Exchange Act.|
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, thereunto duly authorized.
|DATA STORAGE CORPORATION|
|Date: November 13, 2017|
|By:||/s/ Charles M. Piluso|
|Charles M. Piluso|
|Chief Executive Officer|
|Chief Financial Officer|
|(Principal Executive, Financial and Accounting Officer)|