Data Storage Corporation Reports 37% Increase in Revenue for the Second Quarter of 2022

Management to host conference call today, August 11, at 10:00 AM Eastern Time

MELVILLE, N.Y., Aug. 11, 2022 (GLOBE NEWSWIRE) -- Data Storage Corporation (Nasdaq: DTST) (“DSC” and the “Company”), a provider of diverse business continuity solutions for disaster-recovery, cloud infrastructure and cyber-security solutions, today provided a business update and reported financial results for the second quarter ended June 30, 2022.

Chuck Piluso, CEO of Data Storage Corporation, commented, “We continue to generate solid year-over-year growth, with revenue increasing 37% and 121% for the three and six months ended June 30, 2022, respectively. The higher increase in revenue for the six month period relates to the timing of one-time equipment sales, which were front-end loaded in the first quarter. Importantly, we have been increasing our focus on monthly recurring, subscription-based cloud and managed services, which increased 47% in the second quarter of 2022, compared to the same period last year. Given our established leadership position, we believe we are extremely well positioned to capitalize on growing opportunities as more companies seek to migrate their IBM Power infrastructure to the cloud. I’m also pleased to report that despite the lumpiness of equipment sales, we achieved positive EBITDA in the second quarter of 2022, and believe we are well positioned to drive increased profitability going forward given the scalability of our business model. We also ended the quarter with over $11 million of cash and cash equivalents and no long-term debt, which provides us a solid foundation to accelerate our business model.”

Conference Call

The Company plans to host a conference call at 10:00 am Eastern Time today, August 11, 2022, to discuss the company's financial results for the second quarter ended June 30, 2022, as well as corporate progress and other developments.

The conference call will be available via telephone by dialing toll-free 844-369-8770 for U.S. callers or for international callers +1 862-298-0840. A webcast of the call may be accessed at  https://www.webcaster4.com/Webcast/Page/2763/46363, or on the Company’s News & Events section of the website,  https://www.dtst.com/news-events/ir-calendar.

A webcast replay of the call will be available on the Company’s website (www.DTST.com) through August 11, 2023. A telephone replay of the call will be available approximately one hour following the call, through August 25, 2022, 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: 46363. 

About Data Storage Corporation

The Company provides a broad range of premium business continuity solutions from seven data center facilities and two technical labs throughout the USA and Canada. The Company serves its clients with cloud infrastructure, disaster recovery and cyber security solutions. Clients look to Data Storage Corporation to ensure disaster recovery, business continuity, enhance cyber security, and meet increasing industry, state, and federal regulations. The Company markets to businesses, government, education, and the healthcare industry.

For more information, please visit http://www.DTST.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 Company’s Annual Report on Form 10-K for the year ended December 31, 2021, 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, LLC
212-671-1020
DTST@crescendo-ir.com

SOURCE: Data Storage Corporation


[Tables follow] 

 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    June 30,
2022
  December 31,
2021
    (Unaudited)    
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 11,214,436     $ 12,135,803  
Accounts receivable (less allowance for credit losses of $28,355 and $30,000 in 2022 and 2021, respectively)     2,484,857       2,384,367  
Prepaid expenses and other current assets     974,845       536,401  
Total Current Assets     14,674,138       15,056,571  
                 
Property and Equipment:                
Property and equipment     7,092,451       6,595,236  
Less—Accumulated depreciation     (4,510,837 )     (4,657,765 )
Net Property and Equipment     2,581,614       1,937,471  
                 
Other Assets:                
 Goodwill     6,560,671       6,560,671  
 Operating lease right-of-use assets     325,745       422,318  
 Other assets     103,436       103,226  
 Intangible assets, net     2,115,105       2,254,566  
Total Other Assets     9,104,957       9,340,781  
                 
Total Assets   $ 26,360,709     $ 26,334,823  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
Current Liabilities:                
Accounts payable and accrued expenses   $ 1,312,387     $ 1,343,391  
Deferred revenue     249,482       366,859  
Finance leases payable     424,603       216,299  
Finance leases payable related party     706,001       839,793  
Operating lease liabilities short term     207,062       205,414  
Total Current Liabilities     2,899,535       2,971,756  
                 
 Operating lease liabilities     128,952       226,344  
Finance leases payable     421,648       157,424  
Finance leases payable related party     450,970       364,654  
Total Long Term Liabilities     1,001,570       748,422  
                 
Total Liabilities     3,901,105       3,720,178  
                 
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 2022 and 2021, respectively            
Common stock, par value $.001; 250,000,000 shares authorized; 6,822,127 and 6,693,793 shares issued and outstanding in 2022 and 2021, respectively     6,822       6,694  
Additional paid in capital     38,799,853       38,241,155  
Accumulated deficit     (16,221,610 )     (15,530,576 )
Total Data Storage Corp Stockholders’ Equity     22,585,065       22,717,273  
Non-controlling interest in consolidated subsidiary     (125,461 )     (102,628 )
Total Stockholder’s Equity     22,459,604       22,614,645  
Total Liabilities and Stockholders’ Equity   $ 26,360,709     $ 26,334,823  
                 


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2022   2021   2022   2021
                 
Sales   $ 4,827,749     $ 3,528,249     $ 13,484,948     $ 6,102,940  
                                 
Cost of sales     2,977,132       2,021,324       8,988,421       3,442,223  
                                 
Gross Profit     1,850,617       1,506,925       4,496,527       2,660,717  
                                 
Selling, general and administrative     2,594,204       1,602,311       5,054,070       2,720,718  
                                 
Loss from Operations     (743,587 )     (95,386 )     (557,543 )     (60,001 )
                                 
Other Income (Expense)                                
Interest expense, net     (113,664 )     (46,621 )     (156,324 )     (81,666 )
Loss on disposal of equipment           (29,732 )           (29,732 )
Gain on forgiveness of debt           307,300             307,300  
Total Other Income (Expense)     (113,664 )     230,947       (156,324 )     195,902  
                                 
Income (Loss) before provision for income taxes     (857,251 )     135,561       (713,867 )     135,901  
                                 
Provision for income taxes                        
                                 
Net Income (Loss)     (857,251 )     135,561       (713,867 )     135,901  
                                 
Non-controlling interest in consolidated subsidiary     10,207       3,552       22,833       5,311  
                                 
Net Income (Loss) attributable to Data Storage Corp     (847,044 )     139,113       (691,034 )     141,212  
                                 
Preferred Stock Dividends           (24,800 )           (63,683 )
                                 
Net Income (Loss) Attributable to Common Stockholders   $ (847,044 )   $ 114,313     $ (691,034 )   $ 77,529  
                                 
Earnings (Loss) per Share – Basic   $ (0.13 )   $ 0.03     $ (0.10 )   $ 0.02  
Earning (Loss) pers Share – Diluted   $ (0.13 )   $ 0.03     $ (0.10 )   $ 0.02  
Weighted Average Number of Shares - Basic     6,758,238       3,981,402       6,727,108       3,607,909  
Weighted Average Number of Shares - Diluted     6,758,238       4,118,989       6,758,238       3,611,242  
                                 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited)
         
    Six Months Ended June 30,
    2022   2021
Cash Flows from Operating Activities:                
Net Income   $ (713,867 )   $ 135,901  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     640,589       577,044  
Stock based compensation     551,892       76,221  
Gain on contingent liability           (307,300 )
Loss on disposal of equipment           29,732  
Changes in Assets and Liabilities:                
Accounts receivable     (100,490 )     385,134  
Other assets     (211 )     (344 )
Prepaid expenses and other current assets     (438,444 )     (25,443 )
Right of use asset     96,573       43,362  
Accounts payable and accrued expenses     (31,003 )     53,857  
Deferred revenue     (117,377 )     (99,582 )
Operating lease liability     (95,744 )     (43,565 )
Net Cash (Used in) Provided by Operating Activities     (208,082 )     825,017  
Cash Flows from Investing Activities:                
 Capital expenditures     (51,220 )     (303,228 )
 Cash consideration for business acquisition           (5,937,275 )
Net Cash Used in Investing Activities     (51,220 )     (6,240,503 )
Cash Flows from Financing Activities:                
Repayments of finance lease obligations related party     (487,403 )     (603,495 )
Repayments of finance lease obligations     (181,597 )     (74,010 )
Proceeds from issuance of common stock and warrants           9,454,894  
Cash received for the exercised of options     6,935        
Repayments of Dividend payable           (1,179,357 )
Repayment of line of credit           (24 )
Net Cash (Used in) Provided by Financing Activities     (662,065 )     7,598,008  
                 
Increase (decrease) in Cash and Cash Equivalents     (921,367 )     2,182,522  
                 
Cash and Cash Equivalents, Beginning of Period     12,135,803       893,598  
                 
Cash and Cash Equivalents, End of Period   $ 11,214,436     $ 3,076,120  
Supplemental Disclosures:                
Cash paid for interest   $ 76,874     $ 78,136  
Cash paid for income taxes   $     $  
Non-cash investing and financing activities:                
Accrual of preferred stock dividend   $     $ 63,683  
Assets acquired by finance lease   $ 1,094,051     $ 50,000  
                 

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

To supplement our consolidated financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we consider and are including herein Adjusted EBITDA, a Non-GAAP financial measure. We view Adjusted EBITDA as an operating performance measure and, as such, we believe that the GAAP financial measure most directly comparable to it is net income (loss). We define Adjusted EBITDA as net income adjusted for interest and financing fees, depreciation, amortization, stock-based compensation, and other non-cash income and expenses. We believe that Adjusted EBITDA provides us an important measure of operating performance because it allows management, investors, debtholders and others to evaluate and compare ongoing operating results from period to period by removing the impact of our asset base, any asset disposals or impairments, stock-based compensation and other non-cash income and expense items associated with our reliance on issuing equity-linked debt securities to fund our working capital.

Our use of Adjusted EBITDA has limitations as an analytical tool, and this measure should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP, as the excluded items may have significant effects on our operating results and financial condition. Additionally, our measure of Adjusted EBITDA may differ from other companies’ measure of Adjusted EBITDA. When evaluating our performance, Adjusted EBITDA should be considered with other financial performance measures, including various cash flow metrics, net income and other GAAP results. In the future, we may disclose different non-GAAP financial measures in order to help our investors and others more meaningfully evaluate and compare our future results of operations to our previously reported results of operations.

The following table shows our reconciliation of net income (loss) to adjusted EBITDA for the three and six months ended June 30, 2022 and 2021, respectively:
  

    For the Three Months Ended   For the Six Months Ended
    June 30,   June 30,   June 30,   June 30,
    2022   2021   2022   2021
                 
Net income (loss)   $ (857,251 )   $ 135,561     $ (713,867 )   $ 135,901  
                                 
Non-GAAP adjustments:                                
Depreciation and amortization     289,251       309,855       640,589       577,044  
Interest income and expense     115,501       46,621       158,161       81,666  
Flagship acquisition costs                 605        
Loss on disposal of equipment           29,732             29,732  
Gain on forgiveness of debt           (307,300 )           (307,300 )
Stock based compensation     485,387       34,050       551,892       76,221  
                                 
Adjusted EBITDA   $ 32,888     $ 248,519     $ 637,380     $ 593,264  
                                 

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Source: Data Storage Corp.