GlobeNewswire Inc | Aug 16, 2021 08:00AM EDT

August 16, 2021

MELVILLE, N.Y., Aug. 16, 2021 (GLOBE NEWSWIRE) -- Data Storage Corporation (Nasdaq: DTST) (the Company), a provider of diverse business continuity, disaster recovery protection, and cloud infrastructure solutions and services, today provided a business update and reported its financial results for the second quarter ended June 30, 2021.

Chuck Piluso, CEO of Data Storage Corporation, stated, I am pleased to report we achieved a 76% increase in revenue for the three months ended June 30, 2021, compared to the same period last year. Specifically, we reported growth across all of our product lines, and expect to maintain strong organic growth going forward. Specifically, revenue for Infrastructure & Disaster Recovery/Cloud Services increased 25%; revenue for Equipment and Software increased 208%; revenue for Managed Services increased 269%; and revenue for Nexxis VoIP services increased 19%. We attribute this success to an increase in monthly subscription revenue and additional sales from the Flagship Solutions merger.

As a leading provider of IBM solutions, managed services and cloud solutions, Flagships offerings and established customers are highly complementary to our business. Its also important to note that the increase in reported revenue for the second quarter of 2021 includes just one month of Flagship results, June, since we completed the merger on May 31, 2021. Looking ahead, we see substantial opportunities to cross-sell solutions across Data Storage and Flagships respective clients. We are also benefitting from other synergies following the acquisition, which we believe will help drive further operational efficiency across the organization.

Given our expanded offering following the acquisition, we realigned our sales and marketing strategy to focus more heavily on four key verticals, where we have particularly strong sector expertise and see significant growth opportunities. These verticals include sports, banking & finance, healthcare, and government. Although we will still focus on opportunities in other sectors, we believe this new strategy will help accelerate our organic growth. Overall, we believe we are well positioned. The target marketplace for Infrastructure as a Service and Disaster Recovery as a Service is estimated at over one million logical partitions, virtual servers, in this mission critical technical environment. Our goal for the remainder of 2021 is to increase our presence in the IBM Power infrastructure cloud and business continuity marketplace and to further enhance our position as a leader in this market.

Finally, we have significantly enhanced our balance sheet. We ended the second quarter of 2021 with approximately $3.1 million of cash and cash equivalents after payments for the acquisition of Flagship. Since the end of the second quarter, we generated an additional $3.4 million in net proceeds from the exercise of warrants and raised $7.6 million through our recent registered direct in July. As a result, we believe we are positioned to execute on our organic growth strategy, as well as explore opportunistic and accretive acquisitions.

Financial Results

Revenue for the three months ended June 30, 2021 was $3.5 million, an increase of 76%, compared to $2.0 million for the three months ended June 30, 2020. The increase was primarily attributable to additional sales from the Flagship merger and an increase in software and equipment sales, and Infrastructure &Disaster Recovery/Cloud Services.

Selling, general and administrative expenses for the three months ended June 30, 2021 were $1.6 million compared to $1.0 million for the three months ended June 30, 2020. The increase in expenses was primarily attributable to increases in salaries, professional fees, and advertising expenses as a result of the Flagship merger.

Net income for the three months ended June 30, 2020 was $135,500 or $0.03 per share, as compared to $183,000 or $0.05 per share for the three months ended June 30, 2020.

Conference Call

The Company plans to host a conference call at 11:00 AM Eastern Time on Monday, August 16, 2021, to discuss the Companys financial results for the second quarter ended June 30, 2021, as well as corporate progress and other developments.

The conference call will be available via telephone by dialing toll free 888-506-0062 for U.S. callers or for international callers +1 973-528-0011 and using entry code: 518430. A webcast of the call may be accessed at https://www.webcaster4.com/Webcast/Page/2763/42513, or on the Companys Investor Relations section of the website, ir.datastoragecorp.com.

A webcast replay of the call will be available on the Companys Investor Relations section of the website (ir.datastoragecorp.com) through August 16, 2022. A telephone replay of the call will be available approximately one hour following the call, through August 30, 2021 and can be accessed by dialing 877-481-4010 for U.S. callers or +1 919-882-2331 for international callers and entering conference ID: 42513.

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, cyber security, data analytics, 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 are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words believes, expects, anticipates, intends, projects, estimates, plans and similar expressions or future or conditional verbs such as will, should, would, may and could are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. The forward-looking statements include statements regarding theexpansion of the existing relationship with the Falcons illustrating the scalability and performance of Flagships solutions. 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 Companys expectations include, but are not limited to, the Companys ability to leverage the scalability and performance of Flagships solutions, the Companys ability to benefit from the IBM cloud migration underway, the Companys ability to position itself for future profitability and the Companys ability to maintain its Nasdaq listing. These risks should not be construed as exhaustive and should be read together with the other cautionary statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2020, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it was initially made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or otherwise.

Investor Relations Contact:Crescendo Communications, LLCTel: 212-671-1021Email: DTST@crescendo-ir.com

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DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

June 30, 2021 December 31, 2020 ASSETS Current Assets: Cash and cash equivalents $ 3,076,120 $ 893,598 Accounts receivable (less allowance fordoubtful accounts of $59,067 and $30,000 in 1,558,716 554,587 2021 and 2020, respectively)Prepaid expenses and other current assets 392,489 239,472 Total Current Assets 5,027,325 1,687,657 Property and Equipment: Property and equipment 6,327,875 7,845,423 Less?Accumulated depreciation (4,177,560 ) (5,543,822 )Net Property and Equipment 2,150,315 2,301,601 Other Assets: Goodwill 13,216,040 3,015,700 Operating lease right-of-use assets 198,549 241,911 Other assets 72,153 49,310 Intangible assets, net 391,662 455,935 Total Other Assets 13,878,404 3,762,856 Total Assets $ 21,056,044 $ 7,752,114 LIABILITIES AND STOCKHOLDERS? DEFICIT Current Liabilities: Accounts payable and accrued expenses $ 1,547,763 $ 979,552 Dividend payable ? 1,115,674 Deferred revenue 431,047 461,893 Line of credit ? 24 Finance leases payable 174,110 168,139 Finance leases payable related party 973,245 1,149,403 Operating lease liabilities short term 106,102 104,549 Contingent Consideration 4,950,000 ? Note payable 481,977 374,871 Total Current Liabilities 8,664,244 4,354,105

Note payable long term ? 107,106 Operating lease liabilities long term 102,407 147,525 Finance leases payable, long term 167,694 247,677 Finance leases payable related party, long 597,408 974,743 termTotal Long Term Liabilities 867,509 1,477,051 Total Liabilities 9,531,753 5,831,156 Stockholders? Equity: Preferred stock, Series A par value $.001;10,000,000 shares authorized; 0 and ? 1,402 1,401,786 shares issued and outstanding in2021 and 2020, respectivelyCommon stock, par value $.001; 250,000,000shares authorized; 4,862,352 and 3,213,486 4,862 3,213 shares issued and outstanding in 2021 and2020, respectivelyAdditional paid in capital 27,276,653 17,745,785 Accumulated deficit (15,657,208 ) (15,734,737 )Total Data Storage Corp Stockholders? 11,624,307 2,015,663 EquityNon-controlling interest in consolidated (100,016 ) (94,705 )subsidiaryTotal Stockholder?s Equity 11,524,291 1,920,958 Total Liabilities and Stockholders? Equity $ 21,056,044 $ 7,752,114

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Sales $ 3,528,249 $ 2,005,625 $ 6,102,940 $ 4,104,335 Cost of sales 2,021,324 1,140,421 3,442,223 2,356,538 Gross Profit 1,506,925 865,204 2,660,717 1,747,797 Selling,general and 1,602,311 988,266 2,720,718 1,864,892 administrative Income (loss) (95,386 ) (123,062 ) (60,001 ) (117,095 )from Operations Other Income (Expense)Interestincome 2 ? 4 20 Interest (46,623 ) (43,679 ) (81,670 ) (90,139 )expenseGain oncontingent ? 350,000 ? 350,000 liabilityLoss ondisposal of (29,732 ) ? (29,732 ) ? equipmentGain onforgiveness of 307,300 ? 307,300 ? debtTotal OtherIncome 230,947 306,321 195,902 259,881 (Expense) Income beforeprovision for 135,561 183,259 135,901 142,786 income taxes Provision for ? ? ? ? income taxes Net Income 135,561 183,259 135,901 142,786 Non-controllinginterest in 3,552 7,487 5,311 13,550 consolidatedsubsidiary Net Incomeattributable to 139,113 190,746 141,212 156,336 Data StorageCorp Preferred Stock (24,800 ) (35,041 ) (63,683 ) (69,227 )Dividends

Net IncomeAttributable to $ 114,313 $ 155,705 $ 77,529 $ 87,109 CommonStockholders Earnings per $ 0.03 $ 0.05 $ 0.02 $ 0.03 Share ? BasicEarnings per $ 0.03 $ 0.05 $ 0.02 $ 0.03 Share ? DilutedWeightedAverage Number 3,981,402 3,213,485 3,607,909 3,212,822 of Shares -BasicWeightedAverage Number 4,118,989 3,357,589 3,611,242 3,356,926 of Shares -Diluted

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2021 2020Cash Flows from Operating Activities: Net Income $ 135,901 $ 142,786 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 577,044 494,467 Stock based compensation 76,221 74,386 Gain on forgiveness of debt (307,300 ) ? Gain on contingent liability ? (350,000 )Loss on disposal of equipment 29,732 ? Changes in Assets and Liabilities: Accounts receivable 385,134 72,069 Other assets (344 ) 16,125 Prepaid expenses and other current assets (25,443 ) (71,168 )Right of use asset 43,362 40,473 Accounts payable and accrued expenses 53,857 (55,529 )Deferred revenue (99,582 ) 56,517 Operating lease liability (43,565 ) (39,168 )Net CashProvided by Operating Activities 825,017 380,958 Cash Flows from Investing Activities: Capital expenditures (303,228 ) (101,850 )Cash consideration for business acquisition (5,937,275 ) ? Net Cash Used in Investing Activities (6,240,503 ) (101,850 )Cash Flows from Financing Activities: Proceeds from issuance of note payable ? 481,977 Repayments of finance lease obligations related (603,495 ) (397,719 )partyRepayments of finance lease obligations (74,010 ) (4,109 )Proceeds from issuance of common stock and 9,454,894 ? warrantsCash received for the exercised of options ? 5,400 Repayments of Dividend payable (1,179,357 ) ? Repayment of line of credit (24 ) (74,976 )Net Cash Provided by Financing Activities 7,598,008 10,573 Increase in Cash and Cash Equivalents 2,182,522 289,681 Cash and Cash Equivalents, Beginning of Period 893,598 326,561 Cash and Cash Equivalents, End of Period $ 3,076,120 $ 616,242 Supplemental Disclosures Cash paid for interest $ 78,136 $ 77,095 Cash paid for income taxes $ ? $ ? Non-cash investing and financingactivities: Accrual of preferred stock dividend $ 63,683 $ 69,227 Assets acquired by finance lease $ 50,000 $ 663,078