GlobeNewswire Inc | Apr 1, 2021 08:00AM EDT

April 01, 2021

MELVILLE, N.Y., April 01, 2021 (GLOBE NEWSWIRE) -- Data Storage Corporation (OTC: DTST) (DSC and the Company), a provider of diverse business continuity, disaster recovery protection, and cloud infrastructure solutions and services, today provided a business update and announced its 2020 financial results.

Chuck Piluso, CEO of Data Storage Corporation, commented, We continue to achieve meaningful financial performance and profitability despite the impact of COVID-19 on the global markets, as evidenced by a 10% increase in revenue to $9.3 million for the year ending December 31, 2020 as compared to the year ended December 31, 2019. Importantly, we had strong revenue growth in each of our key products: Nexxis VoIP Services increased by 44%; Infrastructure & Disaster Recovery/Cloud Services increased by 6.8%; Equipment and Software increased by 16%; and Managed Services increased by 4%. We achieved profitability while investing resources and capital in Nexxis, adding leadership for channel management, rounding out our product suite, as well as investing our income into further advancements in our infrastructure and operations to support our long-term growth initiatives. At the same time, we continue to carefully manage our expenses. Overall, we have built a scalable business model focused on high-margin recurring revenues.

Heading into 2021, we believe we have set the stage for continued growth. Due to the COVID-19 outbreak and the critical need for safe remote collaboration, we expanded our offering of cybersecurity solutions for remote tele-computing with our new product, ezSecurity. We also launched a new remote collaboration program for small and medium-sized businesses. As part of this new program, we are offering free migration services from Microsoft Exchange to Microsoft 365, along with support for comprehensive voice communications (Hosted VoIP, IP Phones, Cloud PBX) and video conferencing. In addition, we expanded capacity through our new Dallas data center location to accommodate increased demand for our portfolio of ezServices, including ezBackup, ezRecovery and ezAvailability, adding to our existing network of data centers and fiber backbone.

At the same time, we expanded our North American footprint, including new markets in Canada, where we added two new Tier 3 enterprise-level data centers. We also recently announced a joint venture with Able-One Systems Inc, an IBM market leader, to provide our portfolio of enterprise-level IBM cloud infrastructure services to customers in Canada. We look forward to working closely with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superior IBM infrastructure and Disaster Recovery services.

In addition to our organic growth, we are also exploring potential opportunities to acquire cash flow positive businesses with complementary products and services. Most recently, we entered into a definitive Agreement with Flagship Solutions, LLC to merge into our wholly owned subsidiary, Data Storage FL, LLC, at which time Flagship will become a wholly owned subsidiary of our Company. Flagship is a provider of IBM Software, Services, Equipment and cutting edge intelligent analytical and decision-making solutions, providing managed services and cloud solutions worldwide that include cloud-based server monitoring and management, 247 help desk support, and data center infrastructure management. We believe this transaction will be highly synergistic with our existing IBM business. This merger provides a comprehensive one-stop provider approach to cross-sell solutions across our respective enterprises and middle-market customers. Overall, we remain extremely encouraged by the outlook for the business and believe 2021 will be a transformative year for the Company.

Financial Results

Net sales for the year ended December 31, 2020 were $9,320,933, an increase of $837,325 or 10%, compared to $8,483,608 for the year ended December 31, 2019. The increase was primarily attributable to an increase in our infrastructure & disaster recover / cloud subscription services due to a higher demand for IBM Power Systems cloud hosting, increased equipment sales, as well as an increase in demand for our VoIP services related to the Nexxis division in which we have invested $488,438 which impacted our core profitability by $(133,282).

Cost of Sales for the year ended December 31, 2020 was $5,425,205, an increase of $678,904 or 14%, from $4,746,031 for the year ended December 31, 2019. The increase in cost of sales was primarily attributable to improvements and expenses associated with the data centers for infrastructure and disaster recovery cloud services, including new IBM systems, storage and network equipment for the Raleigh, NC expansion and new Dallas data center location. There were also additional costs related to the Nexxis division, and equipment purchases for sale.

Operating expenses for the year ended December 31, 2020 were $3,896,791, an increase of $365,738, or 13%, as compared to $3,531,053 for the year ended December 31, 2019. The net increase was a result of an increase in salaries, stock option compensation, software as a service, advertising and Nexxis.

Net income for the year ended December 31, 2020 was $173,359, as compared to a net income of $29,323 for the year ended December 31, 2019.

About Data Storage Corporation

The Company delivers and supports a broad range of premium technology solutions focusing on IaaS, data storage protection and IT management. Clients look to DSC to ensure disaster recovery, business continuity, enhance security, and to meet increasing industry, state and federal regulations. The Company markets to businesses, government, education and the healthcare industry by leveraging leading technologies. Through its business units, the Company provides IaaS, SaaS, DRaaS, VoIP, IBM Power systems and storage hardware with managed IT services. For more information, please visit http://www.DataStorageCorp.com.

Safe Harbor Provision

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "projects," "estimates," "anticipates," or "believes" or the negative thereof or any variation thereon or similar terminology or expressions. These forward-looking statements are based upon current estimates and assumptions and include statements regarding the Companys future revenue, setting the stage for the Companys accelerated growth, working with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superior IBM infrastructure and disaster Recovery services, exploring potential opportunities to acquire cash flow positive businesses with complementary products and services, completion of the pending acquisition of Flagship Solutions, LLC, the Flagship acquisition being highly synergistic with the Companys existing IBM business, and 2021 being a transformative year for the Company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from results proposed in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to, the Companys ability to continue to generate revenue at current levels, the Companys ability to achieve accelerated growth, the Companys ability to work with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superior IBM infrastructure and disaster Recovery services, the Companys ability to acquire cash flow positive businesses with complementary products and services, the Companys ability to complete the acquisition of Flagship Solutions, LLC, the Companys ability to integrate Flagships business with the Companys existing IBM business, the Companys ability to make 2021 a transformative year for the Company and those risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 and its other filings and submissions with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements.

Contact:Crescendo Communications, LLC212-671-1020DTST@crescendo-ir.com

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31,

2020 2019 ASSETS Current Assets: Cash and cash equivalents $ 893,598 $ 326,561 Accounts receivable (less allowance fordoubtful accounts of $30,000 in 2020 and 554,587 691,436 2019)Prepaid expenses and other current assets 239,472 80,728 Total Current Assets 1,687,657 1,098,725 Property and Equipment: Property and equipment 7,845,423 6,894,087 Less?Accumulated depreciation (5,543,822 ) (4,705,256 )Net Property and Equipment 2,301,601 2,188,831 Other Assets: Goodwill 3,015,700 3,015,700 Operating lease right-of-use assets 241,911 324,267 Other assets 49,310 65,433 Intangible assets, net 455,935 649,934 Total Other Assets 3,762,856 4,055,334 Total Assets $ 7,752,114 $ 7,342,890 LIABILITIES AND STOCKHOLDERS? DEFICIT Current Liabilities: Accounts payable and accrued expenses $ 979,552 $ 906,716 Dividend payable 1,115,674 970,997 Deferred revenue 461,893 432,942 Line of credit 24 75,000 Finance leases payable 168,139 - Finance leases payable related party 1,149,403 833,148 Operating lease liabilities short term 104,549 101,505 Note payable 374,871 350,000 Total Current Liabilities 4,354,105 3,670,308 Note payable long term 107,106 -- Operating lease liabilities long term 147,525 231,312 Finance leases payable, long term 247,677 -- Finance leases payable related party, long 974,743 1,713,122 termTotal Long Term Liabilities 1,477,051 1,944,434 Total Liabilities 5,831,156 5,614,742 Stockholders? Equity: Preferred stock, Series A par value $.001;10,000,000 shares authorized; 1,401,786 1,402 1,402 sharesissued and outstanding in each yearCommon stock, par value $.001; 250,000,000shares authorized; 128,539,418 and128,439,418 128,539 128,439 shares issued and outstanding in 2020 and2019, respectivelyAdditional paid in capital 17,620,459 17,456,431 Accumulated deficit (15,734,737 ) (15,790,076 )Total Data Storage Corp Stockholders? 2,015,663 1,796,196 EquityNon-controlling interest in consolidated (94,705 ) (68,048 )subsidiaryTotal Stockholders? Equity 1,920,958 1,728,148 Total Liabilities and Stockholders? Equity $ 7,752,114 $ 7,342,890

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSYEARS ENDED DECEMBER 31,

2020 2019 Sales $ 9,320,933 $ 8,483,608 Cost of sales 5,425,205 4,746,031 Gross Profit 3,895,728 3,737,577 Selling, general and administrative 3,896,791 3,531,053 (Loss) Income from Operations (1,063 ) 206,524 Other Income (Expense) Interestincome 24 250 Interest expense (175,602 ) (177,451 )Gain on extinguishment of contingent 350,000 - liabilityTotal Other Income (Expense) 174,422 (177,201 ) Incomebefore provision for income taxes 173,359 29,323 Provision for income taxes -- ? Net Income 173,359 29,323 Non-controlling interest in consolidated 26,657 40,537 subsidiary Net Income attributable to Data Storage 200,016 69,860 Corporation Preferred Stock Dividends (144,677 ) (124,312 ) Net Income (Loss) Attributable to Common $ 55,339 $ (54,452 )Stockholders Earnings (Loss) per Share ? Basic $ 0.00 $ 0.00 Earnings (Loss) per Share ? Diluted $ 0.00 $ 0.00 Weighted Average Number of Shares - Basic 128,526,267 128,156,678 Weighted Average Number of Shares - Diluted 134,640,419 128,156,678

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows from Operating Activities: Net Income $ 173,359 $ 29,323 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 1,032,566 896,697 Stock based compensation 158,728 41,340 Gain on extinguishment of contingent liability (350,000 ) -- Changes in Assets and Liabilities: Accounts receivable 136,849 (160,191 )Other assets 16,126 -- Prepaid expenses and other current assets (132,132 ) 87,163 Right of use asset 82,356 (324,267 )Accounts payable and accrued expenses 44,620 (81,862 )Deferred revenue 28,951 (2,464 )Deferred rent -- (18,890 )Operating lease liability (80,743 ) 332,817 Net CashProvided by Operating Activities 1,110,679 799,666 Cash Flows from Investing Activities: Capital expenditures (181,072 ) (40,355 )Net Cash Used in Investing Activities (181,072 ) (40,355 )Cash Flows from Financing Activities: Repayments of capital lease obligations -- -- Proceeds from issuance of note payable 481,977 - Repayments of finance lease obligations related (718,690 ) (741,940 )partyRepayments of finance lease obligations (56,281 ) -- Cash received for the exercised of options 5,400 5,400? Advance from Credit Line -- 75,000? Repayment of Credit Line (74,976 ) -- Net Cash Used in Financing Activities (362,570 ) (661,540 )Increase in Cash and Cash Equivalents 567,037 97,771 Cash and Cash Equivalents, Beginning of Year 326,561 228,790 Cash and Cash Equivalents, End of Year $ 893,598 $ 326,561 Supplemental Disclosures: Cash paid for interest $ 168,837 $ 177,451 Cash paid for income taxes $ -- $ -- Non-cash investing and financingactivities: Accrual of preferred stock dividend $ 144,677 $ 124,312 Assets acquired by finance lease $ 808,261 $ 1,560,021