GlobeNewswire Inc | Nov 15, 2021 08:00AM EST

November 15, 2021

MELVILLE, N.Y., Nov. 15, 2021 (GLOBE NEWSWIRE) -- Data Storage Corporation (Nasdaq: DTST) (DSC and the Company), a provider of diverse business continuity, disaster recovery protection, IBM Power infrastructure-as-a-service, cyber-security based and data analytics solutions, today provided a business update and reported its financial results for the third quarter ended September 30, 2021.

Chuck Piluso, CEO of Data Storage Corporation, commented, Im pleased to report revenue for the third quarter increased 42% compared to the same period last year, and we continue to generate positive net income, while investing in the future growth of the Company. We saw a meaningful increase in sales across Infrastructure & Disaster Recovery/Cloud Services, which increased 27%; an increase in Managed Services; and Nexxis VoIP services, which increased 17%. This increase was partially offset by a decline in Equipment and Software, reflecting our focus on recurring and high margin cloud-based subscription services. Our solid results for the quarter are a direct reflection of our new sales and marketing strategy, as well as the continued growth and synergies that are being realized from the recent Flagship merger.

We continue to expand our offerings, as illustrated by the recent partnership with Precisely, a global leader in data integrity and security software solutions, providing us new and valuable opportunities within the market. As more companies migrate their businesses to the cloud, there is an increasing need for solutions that prioritize privacy and compliance adherence. Precisely has proven to be an ideal partner to enhance our IBM i ezSecurity solution, as evidenced by the increased demand and new sales opportunities.

Overall, with our new capital we are investing in our organic growth, including new employees and marketing campaigns. We are establishing special incentives for cross selling our solutions between our three subsidiaries and leveraging our distribution channels. We believe we are positioned for solid organic growth in 2022 creating the baseline of subscription recurring revenue for futures years and continuing our high contract renewal rate of 94%. Our primary objectives going into 2022 are to establish more accretive partnerships and to increase our sales presence across all our product lines. At the same time, we have maintained a strong balance sheet with approximately $12.9 million of cash and cash equivalents as of September 30, 2021. Our cash position enables us to execute on our growth strategy as well as explore opportunistic acquisitions that would enhance our offerings. Looking ahead, we believe we are on track to make considerable progress towards achieving our goals and look forward to providing further updates as developments unfold.

Financial Results

Revenue for the three months ended September 30, 2021 was $3.86 million, an increase of 42%, compared to $2.72 million for the three months ended September 30, 2020. The increase was primarily attributable to additional sales from the Flagship merger and an increase in monthly subscription revenues.

Selling, general and administrative expenses for the three months ended September 30, 2021 were $2.02 million compared to $1.02 million for the three months ended September 30, 2020. The increase in expenses was primarily attributable to increases in salaries, professional fees, advertising expenses, commission expenses, and interest expenses.

Net income attributable to common shareholders for the three months ended September 30, 2021 was $0.14 million, or $0.02 per share, as compared to $0.01 million, or $0.00 per share, for the three months ended September 30, 2020.

Conference Call

The Company plans to host a conference call at 11:30 am Eastern Time today, November 15, 2021 to discuss the Companys financial results for the third quarter ended September 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: 737560. A webcast of the call may be accessed at https://www.webcaster4.com/Webcast/Page/2763/43671, 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 November 15, 2022. A telephone replay of the call will be available approximately one hour following the call, through November 29, 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: 43671.

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 Data Storage 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. 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. 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.

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

SOURCE: Data Storage Corporation

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DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

September 30, December 31, 2021 2020 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 12,889,032 $ 893,598 Accounts receivable (less allowance fordoubtful accounts of $19,896 and $30,000 in 1,837,053 554,587 2021 and 2020, respectively)Prepaid expenses and other current assets 521,958 239,472 Total Current Assets 15,248,043 1,687,657 Property and Equipment: Property and equipment 6,443,075 7,845,423 Less?Accumulated depreciation (4,406,987 ) (5,543,822 )Net Property and Equipment 2,036,088 2,301,601 Other Assets: Goodwill 6,610,021 3,015,700 Operating lease right-of-use assets 469,643 241,911 Other assets 72,153 49,310 Intangible assets, net 2,355,463 455,935 Total Other Assets 9,507,280 3,762,856 Total Assets $ 26,791,411 $ 7,752,114 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities: Accounts payable and accrued expenses $ 1,287,525 $ 979,552 Dividend payable ? 1,115,674 Deferred revenue 379,526 461,893 Line of credit 50,000 24 Finance leases payable 177,175 168,139 Finance leases payable related party 805,890 1,149,403 Operating lease liabilities short term 204,598 104,549 Note payable ? 374,871 Total Current Liabilities 2,904,714 4,354,105 Note payable long term ? 107,106 Deferred tax liability long term 429,619 ? Operating lease liabilities long term 274,702 147,525 Finance leases payable, long term 126,645 247,677 Finance leases payable related party, long 482,069 974,743 termTotal Long Term Liabilities 1,313,035 1,477,051 Total Liabilities 4,217,749 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; 6,692,742 and 3,213,486 6,693 3,213 shares issued and outstanding in 2021 and2020, respectivelyAdditional paid in capital 38,189,610 17,745,785 Accumulated deficit (15,521,578 ) (15,734,737 )Total Data Storage Corp Stockholders' 22,674,725 2,015,663 EquityNon-controlling interest in consolidated (101,063 ) (94,705 )subsidiaryTotal Stockholder's Equity 22,573,662 1,920,958 Total Liabilities and Stockholders' Equity $ 26,791,411 $ 7,752,114

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

Three Months Ended September Nine Months Ended September 30, 30, 2021 2020 2021 2020 Sales $ 3,860,258 $ 2,723,532 $ 9,963,198 $ 6,827,867 Cost of sales 2,167,622 1,621,008 5,609,845 3,977,546 Gross Profit 1,692,636 1,102,524 4,353,353 2,850,321 Selling,general and 2,024,304 1,017,863 4,745,022 2,882,755 administrative Income (loss) (331,668 ) 84,661 (391,669 ) (32,434 )from Operations Other Income (Expense)Interestincome 1 1 5 21 Interest (15,727 ) (42,727 ) (97,397 ) (132,866 )expenseGain oncontingent ? ? ? 350,000 liabilityLoss on sale of ? ? (29,732 ) ? equipmentGain onforgiveness of 481,977 ? 789,277 ? debtTotal OtherIncome 466,251 (42,726 ) 662,153 217,155 (Expense) Income beforeprovision for 134,583 41,935 270,484 184,721 income taxes Provision for ? ? ? ? income taxes Net Income 134,583 41,935 270,484 184,721 Non-controllinginterest in 1,047 4,283 6,358 17,833 consolidatedsubsidiary Net Incomeattributable to 135,630 46,218 276,842 202,554 Data StorageCorp Preferred Stock ? (36,650 ) (63,683 ) (105,877 )Dividends Net IncomeAttributable to $ 135,630 $ 9,568 $ 213,159 $ 96,677 CommonStockholders Earning per $ 0.02 $ 0.00 $ 0.05 $ 0.03 Share ? BasicEarning per $ 0.02 $ 0.00 $ 0.05 $ 0.03 Share ? DilutedWeightedAverage Number 6,350,826 3,213,485 4,530,188 3,212,821 of Shares -BasicWeightedAverage Number 6,482,577 3,383,499 4,720,546 3,365,675 of Shares -Diluted

DATA STORAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2021 2020Cash Flows from Operating Activities: Net Income $ 270,484 $ 184,721 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 947,669 754,243 Stock based compensation 120,251 116,557 Gain on forgiveness of debt (789,277 ) ? Gain on contingent liability ? (350,000 )Loss on sale of equipment 29,732 ? Changes in Assets and Liabilities: Accounts receivable 106,797 (241,675 )Other assets (344 ) 16,125 Prepaid expenses and other current assets (154,912 ) (98,874 )Right of use asset (227,732 ) 61,233 Accounts payable and accrued expenses (206,384 ) 252,717 Deferred revenue (151,103 ) 61,687 Deferred tax liability (19,362 ) ? Deferred rent ? ? Operating lease liability 227,226 (60,647 )Net CashProvided by Operating Activities 153,045 696,087 Cash Flows from Investing Activities: Capital expenditures (418,422 ) (164,796 )Cash acquired in business acquisition 212,068 ? Cash consideration for business acquisition (6,149,343 ) ? Net Cash Used in Investing Activities (6,355,697 ) (164,796 )Cash Flows from Financing Activities: Proceeds from issuance of note payable ? 481,977 Proceedsfrom line of credit 50,000 ? Repayments of finance lease obligations related (886,188 ) (641,170 )partyRepayments of finance lease obligations (111,995 ) (24,320 )Proceeds from issuance of common stock and 16,944,380 ? warrantsCash received for the exercise of Warrants 3,381,270 ? Cash 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 (Used) in Financing 18,198,086 (253,089 )Activities Increase in Cash and Cash Equivalents 11,995,434 278,202 Cash and Cash Equivalents, Beginning of Period 893,598 326,561 Cash and Cash Equivalents, End of Period $ 12,889,032 $ 604,763 Supplemental Disclosures: Cash paid for interest $ 92,779 $ 124,297 Cash paid for income taxes $ ? $ ? Non-cash investing and financingactivities: Accrual of preferred stock dividend $ 63,683 $ 105,877 Assets acquired by finance lease $ 50,000 $ 808,261