UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-35384

DATA STORAGE CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		98-0530147
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

48 South Service Road Melville, NY		11747
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 564-4922

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	DTST	The Nasdaq Capital Market

Warrants to purchase shares of Common Stock, par value $0.001 per share	DTSTW	The Nasdaq Capital Market

Indicate by check mark whether the registrant (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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company filer. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☒	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, $0.001 par value per share, outstanding as of August 11, 2023, was 6,834,627.

DATA STORAGE CORPORATION

FORM 10-Q

INDEX

			Page
PART I- FINANCIAL INFORMATION

	Item 1	Financial Statements

		Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	2

		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)	3

		Condensed Consolidated Statements of Stockholders’ Equity for three and six months ended June 30, 2023 and 2022 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

	Item 4.	Control and Procedures	30

PART II- OTHER INFORMATION			31

	Item 1.	Legal Proceedings	31

	Item 1A.	Risk Factors	31

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

	Item 3.	Defaults Upon Senior Securities	31

	Item 4.	Mine Safety Disclosures	31

	Item 5.	Other Information	31

	Item 6.	Exhibits	31

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,437,039		$	2,286,722
Accounts receivable (less allowance for credit losses of $39,622 and $27,250 in 2023 and 2022, respectively)		2,221,602			3,502,836
Marketable securities		9,230,254			9,010,968
Prepaid expenses and other current assets		736,386			584,666
Total Current Assets		13,625,281			15,385,192

Property and Equipment:
Property and equipment		7,458,932			7,168,488
Less—Accumulated depreciation		(4,531,811	)		(4,956,698	)
Net Property and Equipment		2,927,121			2,211,790

Other Assets:
Goodwill		4,238,671			4,238,671
Operating lease right-of-use assets		124,475			226,501
Other assets		48,436			48,437
Intangible assets, net		1,836,378			1,975,644
Total Other Assets		6,247,960			6,489,253

Total Assets	$	22,800,362		$	24,086,235

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,088,477		$	3,207,577
Deferred revenue		314,066			281,060
Finance leases payable		279,461			359,868
Finance leases payable related party		368,433			520,623
Operating lease liabilities short term		117,627			160,657
Total Current Liabilities		3,168,064			4,529,785

Operating lease liabilities		9,226			71,772
Finance leases payable		125,167			281,242
Finance leases payable related party		100,426			256,241
Total Long-Term Liabilities		234,819			609,255

Total Liabilities		3,402,883			5,139,040

Commitments and contingencies (Note 6)		—			—

Stockholders’ Equity:
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 0 and 0 shares issued and outstanding in 2023 and 2022, respectively		—			—
Common stock, par value $.001; 250,000,000 shares authorized; 6,847,127 and 6,822,127 shares issued and outstanding in 2023 and 2022, respectively		6,847			6,822
Additional paid in capital		39,191,598			38,982,440
Accumulated deficit		(19,609,889	)		(19,887,378	)
Total Data Storage Corp Stockholders’ Equity		19,588,556			19,101,884
Non-controlling interest in consolidated subsidiary		(191,077	)		(154,689	)
Total Stockholder’s Equity		19,397,479			18,947,195
Total Liabilities and Stockholders’ Equity	$	22,800,362		$	24,086,235

The accompanying notes are an integral part of these condensed consolidated Financial Statements.

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022

Sales	$	5,904,391	$	4,827,749		$	12,784,114	$	13,484,948

Cost of sales		3,325,637		3,269,187			8,115,615		9,280,476

Gross Profit		2,578,754		1,558,562			4,668,499		4,204,472

Selling, general and administrative		2,472,010		2,594,204			4,602,769		5,054,070

Income (Loss) from Operations		106,744		(1,035,642	)		65,730		(849,598	)

Other Income (Expense)
Interest income (expense), net		99,294		(113,664	)		175,371		(156,324	)
Total Other Income (Expense)		99,294		(113,664	)		175,371		(156,324	)

Income (Loss) before provision for income taxes		206,038		(1,149,306	)		241,101		(1,005,922	)

Benefit from income taxes		—		—			—		—

Net Income (Loss)		206,038		(1,149,306	)		241,101		(1,005,922	)

Loss in Non-controlling interest of consolidated subsidiary		20,785		10,207			36,388		22,833

Net Income (Loss) attributable to Data Storage Corp	$	226,823	$	(1,139,099	)	$	277,489	$	(983,089	)

Earnings per Share – Basic	$	0.03	$	(0.17	)	$	0.04	$	(0.15	)
Earnings per Share – Diluted	$	0.03	$	(0.17	)	$	0.04	$	(0.15	)
Weighted Average Number of Shares - Basic		6,834,627		6,758,238			6,828,446		6,727,108
Weighted Average Number of Shares - Diluted		7,022,275		6,758,238			7,016,094		6,727,108

The accompanying notes are an integral part of these condensed consolidated Financial Statements.

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022


	Preferred Stock				Common Stock					Additional Paid-in		Accumulated			Non-Controlling			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Deficit			Interest			Equity

Balance April 1, 2022		—	$	—		6,697,127		$	6,697	$	38,314,591	$	(15,374,566	)	$	(115,254	)	$	22,831,468
Stock-based compensation		—		—		125,000	<

SEC Form 10-Q filed by Data Storage Corporation