Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Name	Symbol	Market	Type
Data Storage Corporation	NASDAQ:DTSTW	NASDAQ	Equity Warrant

	Price Change	% Change	Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Traded	Last Trade
	-0.07	-15.22%	0.39	0.22	0.42	0.44	0.35	0.43	11,891	21:00:10

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 March 31, 2024

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

For the transition period from _____________to____________________________

Commission File No. 000-35384

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.)

225 Broadhollow Road, Suite 307 Melville, NY		11747
(Address of principal executive offices)		(Zip Code)

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

Securities registered under Section 12(b) of the Exchange 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 ST (§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 and an “emerging growth company.” See the definitions 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 outstanding as of May 15, 2024, was 6,970,943.

DATA STORAGE CORPORATION

FORM 10-Q

INDEX

			Page
PART I - FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	2

		Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)	3

		Condensed Consolidated Statements of Stockholders’ Equity for three months ended March 31, 2024 and 2023 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)	5

		Notes to Condensed Consolidated Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

	Item 4.	Control and Procedures	26
		PART II- OTHER INFORMATION
	Item 1.	Legal Proceedings	27
	Item 1A.	Risk Factors	27
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
	Item 3.	Defaults Upon Senior Securities	28
	Item 4.	Mine Safety Disclosures	28
	Item 5.	Other Information	28
	Item 6.	Exhibits	29

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	March 31, 2024 (Unaudited)			December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	640,742		$	1,428,730
Accounts receivable (less provision for credit losses of $62,051 and $7,915 in 2024 and 2023, respectively)		4,437,666			1,259,972
Marketable securities		11,261,565			11,318,196
Prepaid expenses and other current assets		666,957			513,175
Total Current Assets		17,006,930			14,520,073

Property and Equipment:
Property and equipment		8,196,862			7,838,225
Less—Accumulated depreciation		(5,331,503	)		(5,105,451	)
Net Property and Equipment		2,865,359			2,732,774

Other Assets:
Goodwill		4,238,671			4,238,671
Operating lease right-of-use assets		36,160			62,981
Other assets		48,436			48,436
Intangible assets, net		1,628,937			1,698,084
Total Other Assets		5,952,204			6,048,172

Total Assets	$	25,824,493		$	23,301,019

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	4,835,868		$	2,608,938
Deferred revenue		310,123			336,201
Finance leases payable		214,961			263,600
Finance leases payable related party		155,164			235,944
Operating lease liabilities short term		36,733			63,983
Total Current Liabilities		5,552,849			3,508,666

Finance leases payable		—			17,641
Finance leases payable related party		—			20,297
Total Long-Term Liabilities		—			37,938

Total Liabilities		5,552,849			3,546,604

Commitments and contingencies (Note 7)		—			—

Stockholders’ Equity:
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023		—			—
Common stock, par value $.001; 250,000,000 shares authorized; 6,929,950 and 6,880,460 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		6,930			6,881
Additional paid in capital		39,661,561			39,490,285
Accumulated deficit		(19,148,701	)		(19,505,803	)
Total Data Storage Corporation Stockholders’ Equity		20,519,790			19,991,363
Non-controlling interest in consolidated subsidiary		(248,146	)		(236,948	)
Total Stockholder’s Equity		20,271,644			19,754,415
Total Liabilities and Stockholders’ Equity	$	25,824,493		$	23,301,019

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended March 31,
	2024			2023

Sales	$	8,235,747		$	6,879,723

Cost of sales		5,269,275			4,789,978

Gross Profit		2,966,472			2,089,745

Selling, general and administrative		2,752,677			2,130,759

Income (loss) from Operations		213,795			(41,014	)

Other Income (Expense)
Interest income		143,369			103,424
Interest expense		(11,260	)		(27,347	)
Total Other Income (Expense)		132,109			76,077

Income before provision for income taxes		345,904			35,063

Provision from income taxes		—			—

Net Income		345,904			35,063

Loss in Non-controlling interest in consolidated subsidiary		11,198			15,603

Net Income Attributable to Common Stockholders	$	357,102		$	50,666

Earnings per Share – Basic	$	0.05		$	0.01
Earnings per Share – Diluted	$	0.05		$	0.01
Weighted Average Number of Shares – Basic		7,090,389			6,822,127
Weighted Average Number of Shares – Diluted		7,259,472			6,954,320

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 MARCH 31, 2024 AND 2023 (UNAUDITED)


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

Balance January 1, 2023		—	$	—		6,822,127	$	6,822	$	38,982,440	$	(19,887,378	)	$	(154,689	)	$	18,947,195
Stock-based compensation		—		—		12,500		13		86,456		—			—			86,469
Net Income (Loss)		—		—		—		—		—		50,666			(15,603	)		35,063
Balance, March 31, 2023		—	$	—		6,834,627	$	6,835	$	39,068,896	$	(19,836,712	)	$	(170,292	)	$	19,068,727

Balance January 1, 2024		—	$	—		6,880,460	$	6,881	$	39,490,285	$	(19,505,803	)	$	(236,948	)	$	19,754,415
Stock-based compensation		—		—		49,490		49		171,276		—			—			171,325
Net Income (Loss)		—		—		—		—		—		357,102			(11,198	)		345,904
Balance, March 31, 2024		—	$	—		6,929,950	$	6,930	$	39,661,561	$	(19,148,701	)	$	(248,146	)	$	20,271,644

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
	2024			2023
Cash Flows from Operating Activities:
Net income	$	345,904		$	35,063
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		295,198			288,710
Stock based compensation		171,325			86,469
Changes in Assets and Liabilities:
Accounts receivable		(3,177,694	)		(168,334	)
Other assets		—			(17,300	)
Prepaid expenses and other current assets		(153,782	)		(293,794	)
Right of use asset		26,821			50,659
Accounts payable and accrued expenses		2,226,932			491,669
Deferred revenue		(26,078	)		28,213
Operating lease liability		(27,250	)		(52,216	)
Net Cash (Used in) Provided by Operating Activities		(318,624	)		449,139
Cash Flows from Investing Activities:
Capital expenditures		(358,637	)		(426,671	)
Sale of marketable securities		200,000			—
Purchase of marketable securities		(143,369	)		(103,423	)
Net Cash Used in Investing Activities		(302,006	)		(530,094	)
Cash Flows from Financing Activities:
Repayments of finance lease obligations related party		(66,280	)		(183,464	)
Repayments of finance lease obligations		(101,078	)		(140,264	)
Net Cash Used in Financing Activities		(167,358	)		(323,728	)

Decrease in Cash and Cash Equivalents		(787,988	)		(404,683	)

Cash and Cash Equivalents, Beginning of Period		1,428,730			2,286,722

Cash and Cash Equivalents, End of Period	$	640,742		$	1,882,039
Supplemental Disclosures:
Cash paid for interest	$	8,855		$	24,863
Cash paid for income taxes	$	—		$	—

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2024

Note 1 – Basis of Presentation, Organization and Other Matters

Data Storage Corporation (“DSC” or the “Company”) provides subscription based, long term agreements for disaster recovery solutions, cloud infrastructure, Cyber Security and Voice and Data solutions.

Headquartered in Melville, NY, DSC offers solutions and services to businesses within the healthcare, banking and finance, distribution services, manufacturing, construction, education, and government industries. DSC derives its revenues from subscription services and solutions, managed services, software and maintenance, equipment, and onboarding provisioning. DSC maintains infrastructure and storage equipment in six technical centers in New York, Massachusetts, Texas, North Carolina, and Canada.

On May 31, 2021, the Company completed a merger of Flagship Solutions, LLC (“Flagship”) (a Florida limited liability company) and the Company’s wholly-owned subsidiary, Data Storage FL, LLC. Flagship is a provider of Hybrid Cloud solutions, managed services, and cloud solutions. On January 1, 2024 Flagship Solutions, LLC was consolidated into CloudFirst Technologies Corporation.

On January 27, 2022, the Company formed Information Technology Acquisition Corporation a special purpose acquisition company for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization, or other similar business combination with one or more businesses or entities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2023 Form 10-K and are updated, as necessary, in this Form 10-Q. The December 31, 2023 condensed consolidated balance sheet data presented for comparative purposes was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, (i) CloudFirst Technologies Corporation, a Delaware corporation, (ii) Information Technology Acquisition Corporation, a Delaware corporation, and (iii) its majority-owned subsidiary, Nexxis Inc, a Nevada corporation. All inter-company transactions and balances have been eliminated in consolidation.

Reclassifications

Certain prior year amounts in the Condensed Consolidated Financial Statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ equity, net income, or net cash provided by operating activities. During the three months ended March 31, 2024, the Company adopted a change in presentation on its Condensed Consolidated Financial Statements in order to present segments in line with how its Chief Operating Decision Maker (“CODM”) evaluates performance of each segment. Prior periods have been revised to reflect this change in the presentation.

Recently Issued and Newly Adopted Accounting Pronouncements

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842): Common Control Arrangements.” The new accounting rules require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements to the common control group (regardless of the lease term) as long as the lessee controls the use of the underlying asset (the leased asset) through a lease. These leases should also be accounted for as a transfer between entities under common control through an adjustment to equity if, and when, the lessee no longer controls the use of the underlying asset. The Company adopted ASU 2023-01 and it did not have a material impact to our Condensed Consolidated Financial statement.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the ASU and expects to include updated segment expense disclosures in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the ASU and expects to include updated income tax disclosures.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Estimated Fair Value of Financial Instruments

The Company’s financial instruments include cash, accounts receivable, accounts payable and lease commitments. Management believes the estimated fair value of these accounts on March 31, 2024, approximate their carrying value as reflected in the balance sheet due to their short-term nature. The carrying values of certain of the Company’s notes payable and capital lease obligations approximate their fair values based upon a comparison of the interest rate and terms of such debt given the level of risk to the rates and terms of similar debt currently available to the Company in the marketplace.

The fair value measurement disclosures are grouped into three levels based on valuation factors:

●

Level 1 – quoted prices in active markets for identical investments

●

Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

●

Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

The Company’s Level 1 assets/liabilities include cash, accounts receivable, marketable securities, accounts payable, prepaid, and other current assets. Management believes the estimated fair value of these accounts at March 31, 2024, approximate their carrying value as reflected in the balance sheets due to the short-term nature of these instruments.

The Company’s Level 2 assets/liabilities includes the Company’s finance and operating lease assets and liabilities. Their carrying value approximates their fair values based upon a comparison of the interest rate and terms of the leases.

The Company’s Level 3 assets/liabilities include goodwill and intangible assets. Inputs to determine fair value are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore discounted cash flow models. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, operating lease right-of-use assets, goodwill, and other intangible assets. These assets are measured using Level 3 inputs, if determined to be impaired.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity, or remaining maturity at the time of purchase, of three months or less, to be cash equivalents. As of March 31, 2024, and December 31, 2023, the Company had cash and cash equivalents of $640,742 and $1,428,730, respectively.

Investments

Marketable securities that are bought and held principally for the purpose of selling them in the near term and are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings.

The following table sets forth a summary of the changes in equity investments during the three months ended March 31, 2024, and the year ended December 31, 2023:


	For the year ended December 31, 2023
	Total
As of January 1, 2023	$	9,010,968
Purchase of equity investments		2,307,228
Unrealized gains		—
As of December 31, 2023	$	11,318,196

	For the three months ended March 31, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		143,369
Unrealized gains		—
Sale of equity investments		(200,000	)
As of March 31, 2024	$	11,261,565

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments and assets subjecting the Company to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments, and trade accounts receivable. The Company’s cash and cash equivalents are maintained at major U.S. financial institutions. Deposits in these institutions may exceed the amount of insurance provided on such deposits.

The Company’s customers are primarily concentrated in the United States.

As of March 31, 2024, DSC had one customer with an accounts receivable balance representing 59% of total accounts receivable. As of December 31, 2023, the Company had one customer with an accounts receivable balance representing 20% of total accounts receivable.

For the three months ended March 31, 2024, the Company had one customer that accounted for 32% of revenue. For the three months ended March 31, 2023, the Company had one customer that accounted for 33% of revenue.

Accounts Receivable / Provision for Credit Losses

The Company sells its services to customers on an open credit basis. Accounts receivables are uncollateralized, non-interest-bearing customer obligations. Accounts receivable are typically due within 30 days. ASU 2016-13 requires the recognition of lifetime estimated credit losses expected to occur for trade accounts receivable. The guidance also requires we pool assets with similar risk characteristics and consider current economic conditions when estimating losses. During the three months ended March 31, 2024 and 2023 the Company recorded $54,136, and $3,886 respectively as the change in expected credit losses. Clients invoiced in advance for services are reflected in deferred revenue on the Company’s balance sheet.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives or the term of the lease using the straight-line method for financial statement purposes. Estimated useful lives in years for depreciation are five to seven years for property and equipment. Additions, betterments, and replacements are capitalized, while expenditures for repairs and maintenance are charged to operations when incurred. As units of property are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income.

Goodwill and Other Intangibles

The Company tests goodwill and other intangible assets for impairment on at least an annual basis. Impairment exists if the carrying value of a reporting unit exceeds its estimated fair value. To determine the fair value of goodwill and intangible assets, the Company uses many assumptions and estimates using an income-based approach that directly impacts the results of the testing. In making these assumptions and estimates, the Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management.

The Company tests goodwill for impairment on an annual basis on December 31, or more frequently if events occur or circumstances change indicating that the fair value of the goodwill may be below its carrying amount. The Company has four reporting units. The Company uses an income-based approach to determine the fair value of the reporting units. This approach uses a discounted cash flow methodology and the ability of the Company’s reporting units to generate cash flows as measures of fair value of its reporting units.

Revenue Recognition

Nature of goods and services

The following is a description of the products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:

Cloud Infrastructure and Disaster Recovery Revenue

Cloud Infrastructure provides clients with the ability to migrate their on-premises computing and digital storage to DSC’s enterprise-level technical compute and digital storage assets located in Tier 3 data centers. DSC owns the assets and provides a turnkey solution whereby achieving reliable and cost-effective, multi-tenant IBM Power compute, x86/intel, flash digital storage, while providing disaster recovery and cyber security while eliminating client capital expenditures. The client pays a monthly fee and can increase capacity as required.

Clients can subscribe to an array of disaster recovery solutions without subscribing to cloud infrastructure. Product offerings provided directly from DSC are High Availability, Data Vaulting, and retention solutions, including standby servers which allows clients to centralize and streamline their mission-critical digital information and technical environment while ensuring business continuity if they experience a cyber-attack or natural disaster. Client’s data is vaulted at two data centers with the maintenance of retention schedules for corporate governances and regulations all to meet their back to work objective in a disaster.

Managed Services

These services are performed at the inception of a contract. The Company provides professional assistance to its clients during the implementation processes. On-boarding and set-up services ensure that the solution or software is installed properly and function as designed to provide clients with the best solutions. In addition, clients that are managed service clients have a requirement for DSC to offer time and material billing supplementing the client’s staff.

The Company also derives both one-time and subscription-based revenue from providing support, management and renewal of software, hardware, third party maintenance contracts and third-party cloud services to clients. The managed services include help desk, remote access, operating system and software patch management, annual recovery tests and manufacturer support for equipment and on-going monitoring of client system performance.

Equipment and Software

The Company provides equipment and software and actively participates in collaboration with IBM to provide innovative business solutions to clients. The Company is a partner of IBM and the various software, infrastructure and hybrid cloud solutions provided to clients.

Nexxis Voice over Internet and Direct Internet Access

The Company provides VoIP, Internet access and data transport services to ensure businesses are fully connected to the internet from any location, remote and on premise. The Company provides Hosted VoIP solutions with equipment options for IP phones and internet speeds of up to 10Gb delivered over fiber optics.

Disaggregation of revenue

In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition.


For the Three Months
Ended March 31, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,853,249	$	99,646	$	2,952,895
Equipment and Software		4,084,647		—		4,084,647
Managed Services		843,407		—		843,407
Nexxis VoIP Services		276,467		—		276,467
Other		67,893		10,438		78,331
Total Revenue	$	8,125,663	$	110,084	$	8,235,747

For the Three Months
Ended March 31, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,137,317	$	52,324	$	2,189,641
Equipment and Software		3,504,796		—		3,504,796
Managed Services		876,423		35,107		911,530
Nexxis VoIP Services		231,772		—		231,772
Other		41,984		—		41,984
Total Revenue	$	6,792,292	$	87,431	$	6,879,723

For the Three Months
Ended March 31,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	1,045,977	$	3,564,543
Products and services transferred over time		7,189,770		3,315,180
Total Revenue	$	8,235,747	$	6,879,723

Contract receivables are recorded at the invoiced amount and are uncollateralized, non-interest-bearing client obligations. Provisions for estimated uncollectible accounts receivable are made for individual accounts based upon specific facts and circumstances including criteria such as their age, amount, and client standing.

Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract.

Transaction price allocated to the remaining performance obligations

The Company has the following performance obligations:

Data Vaulting: Subscription-based cloud service that encrypts and transfers data to a secure Tier 3 data center and further replicates the data to a second Tier 3 DSC technical center where it remains encrypted. Ensuring client retention schedules for corporate compliance and disaster recovery. Provides for twenty-four (24) hour or less recovery time and utilizes advanced data reduction, reduplication technology to shorten back-up and restore time.

2)	High Availability: A managed cloud subscription-based service that provides cost-effective mirroring software replication technology and provides one (1) hour or less recovery time for a client to be back in business.

3)	Cloud Infrastructure: subscription-based cloud service provides for “capacity on-demand” for IBM Power and X86 Intel server systems.

4)	Internet: Subscription-based service, offering continuous internet connection combined with FailSAFE which provides disaster recovery for both a clients’ voice and data environments.

5)	Support and Maintenance: Subscription based service offers support for clients on their servers, firewalls, desktops, or software. Services are provided 24x7x365 to the Company’s clients.

6)	Implementation / Set-Up Fees: Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security.

7)	Equipment sales: Sale of servers and data storage equipment to the client.

9)	License: Granting SSL certificates and licenses.

Disaster Recovery and Business Continuity Solutions

Subscription services allow clients to access data or receive services for a predetermined period of time. As the client obtains access at a point in time and continues to have access for the remainder of the subscription period, the client is considered to simultaneously receive and consume the benefits provided by the entity’s performance as the entity performs. Accordingly, the related performance obligation is considered to be satisfied ratably over the contract term. As the performance obligation is satisfied evenly across the term of the contract, revenue is recognized on a straight-line basis over the contract term.

Initial Set-Up Fees

The Company accounts for set-up fees as a separate performance obligation. Set-up services are performed one-time and accordingly the revenue is recognized at the point in time, and is non-refundable, and the Company is entitled to the payment.

Equipment Sales

The obligation for the equipment sales is such that the control of the product transfer is at a point in time (i.e., when the goods have been shipped or delivered to the client’s location, depending on shipping terms). Noting that the satisfaction of the performance obligation, in this sense, does not occur over time, the performance obligation is considered to be satisfied at a point in time when the obligation to the client has been fulfilled (i.e., when the goods have left the shipping facility or delivered to the client, depending on shipping terms).

License - granting SSL certificates and other licenses

Performance obligations as it relates to licensing is when the control of the product transfers, either at a point in time or over time, depending on the nature of the license. The revenue standard identifies two types of licenses of IP: (i) a right to access IP; and (ii) a right to use IP. To assist in determining whether a license provides a right to use or a right to access IP, ASC 606 defines two categories of IP: Functional and Symbolic. The Company’s license arrangements typically do not require the Company to make its proprietary content available to the client either through a download or through a direct connection. Throughout the life of the contract the Company does not continue to provide updates or upgrades to the license granted. Based on the guidance, the Company considers its license offerings to be akin to functional IP and recognizes revenue at the point in time the license is granted and/or renewed for a new period.

Payment Terms

The typical terms of subscription contracts range from 12 to 36 months, with auto-renew options extending the contract for an additional term. The Company invoices clients one month in advance for its services, in addition to any contractual data overages or for additional services.

Warranties

The Company offers guaranteed service levels and service guarantees on some of its contracts. These warranties are not sold separately and are accounted as “assurance warranties.”

Significant Judgement

In the instance where contracts have multiple performance obligations the Company uses judgment to establish a stand-alone price for each performance obligation. The price for each performance obligation is determined by reviewing market data for similar services as well as the Company’s historical pricing of each individual service. The sum of each performance obligation is calculated to determine the aggregate price for the individual services. The proportion of each individual service to the aggregate price is determined. The ratio is applied to the total contract price in order to allocate the transaction price to each performance obligation.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying value exceeds the fair value, is recognized if the carrying amount exceeds estimated un-discounted future cash flows.

Advertising Costs

The Company expenses the costs associated with advertising as they are incurred. The Company incurred $232,240 and $189,878 for advertising costs for the three months ended March 31, 2024, and 2023, respectively.

Stock-Based Compensation

The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees. The Company has agreements and arrangements that call for stock to be awarded to the employees and consultants at various times as compensation and periodic bonuses. The expense for this stock-based compensation is equal to the fair value of the stock price on the day the stock was awarded multiplied by the number of shares awarded. The Company has a relatively low forfeiture rate of stock-based compensation, and forfeitures are recognized as they occur.

The valuation methodology used to determine the fair value of the options issued during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment.

Estimated volatility is a measure of the amount by which DSC’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards.

Net Income Per Common Share

Basic income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income adjusted for income or loss that would result from the assumed conversion of potential common shares from contracts that may be settled in stock or cash by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

The following table sets forth the information needed to compute basic and diluted earnings per share for the three months ended March 31, 2024, and 2023:


	Three Months ended March 31,
	2024		2023

Net Income Available to Common Shareholders	$	357,102	$	50,666

Weighted average number of common shares - basic		7,090,389		6,822,127
Dilutive securities
Options		169,083		130,526
Warrants		—		1,667
Weighted average number of common shares - diluted		7,259,472		6,954,320

Earnings per share, basic	$	0.05	$	0.01
Earnings per share, diluted	$	0.05	$	0.01

The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share because their effect was anti-dilutive:

Schedule of anti-dilutive shares
		Three Months ended March 31,
		2024		2023
	Options		560,071		385,257
	Warrants		2,415,860		2,415,860
			2,975,931		2,801,117

Note 3 - Prepaids and other current assets

Prepaids and other current assets consist of the following:


	March 31,		December 31,
	2024		2023
Prepaid marketing & promotion	$	53,350	$	13,525
Prepaid subscriptions and license		452,610		362,760
Prepaid maintenance		31,532		31,311
Prepaid insurance		93,589		63,247
Other		35,876		42,332
Total prepaids and other current assets	$	666,957	$	513,175

Note 4- Property and Equipment

Property and equipment, at cost, consist of the following:

Schedule of property and equipment
	March 31,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		21,625			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		123,792			117,379
Data center equipment		7,970,174			7,617,950
Gross Property and equipment		8,196,862			7,838,225
Less: Accumulated depreciation		(5,331,503	)		(5,105,451	)
Net property and equipment	$	2,865,359		$	2,732,774

Depreciation expense for the three months ended March 31, 2024, and 2023 was $226,051 and $218,979, respectively.

Note 5 - Goodwill and Intangible Assets

Goodwill and intangible assets consisted of the following:


	Estimated life in years		Gross amount		December 31, 2023, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,434,218		1,179,881
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		29,067		3,935
Total intangible assets subject to amortization				3,889,248		2,705,432		1,183,816
Total Goodwill and Intangible Assets			$	8,642,187	$	2,705,432	$	5,936,755

	Estimated life in years		Gross amount		March 31, 2024, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,501,004		1,113,095
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		31,428		1,574
Total intangible assets subject to amortization				3,889,248		2,774,579		1,114,669
Total Goodwill and Intangible Assets			$	8,642,187	$	2,774,579	$	5,867,608

Scheduled amortization over the next five years are as follows:


Period ending December 31,
	2024	$	201,931
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,114,669

Amortization expense for the three months ended March 31, 2024, and 2023 was $69,147 and $69,731, respectively.

Note 6-Leases

Operating Leases

The Company currently maintains three leases for office space located in Melville, NY.

The first lease for office space in Melville, NY commenced on September 1, 2019. The term of this lease is for three years and eleven months and runs co-terminus with the Company’s existing lease in the same building. The base annual rent is $11,856 payable in equal monthly installments of $988.

On July 31, 2021, the Company signed a three-year lease for approximately 2,880 square feet of office space at 980 North Federal Highway, Boca Raton, FL. The commencement date of the lease was August 2, 2021. The monthly rent is approximately $4,965.

On January 1, 2022, the Company entered into a lease agreement for office space with WeWork in Austin, TX. The lease term is six months and requires monthly payments of $1,470 and expires on June 30, 2022. Subsequent to June 30, 2022, the Company is on a $3,073 month-to-month lease with WeWork in Austin, TX.

On January 17, 2024, the Company entered into a lease agreement for office space in Melville, NY. The lease commences on April 1, 2024, and has a term of sixty-seven months and requires monthly payments of $11,931 and expires on October 30, 2029.

On April 10, 2024, the Company entered into a lease agreement for storage space in Melville, NY. The lease commences on May 15, 2024, and requires monthly payments of $355. On each anniversary of this agreement the monthly rent shall increase by 3% over the previous year’s monthly rent. This lease expires on October 30, 2029.

Finance Lease Obligations

On November 1, 2021, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $3,152. The lease carries an interest rate of 6% and is a three-year lease. The term of the lease ends November 1, 2024.

On January 1, 2022, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $17,718. The lease carries an interest rate of 5% and is a three-year lease. The term of the lease ends February 1, 2025.

On January 1, 2022, the Company entered into a technical equipment lease with a finance company. The lease obligation is payable in monthly installments of $2,037. The lease carries an interest rate of 6% and is a three-year lease. The term of the lease ends January 1, 2025.

On May 7, 2024, the Company entered into a technical equipment lease with a finance company. The lease obligation is payable in monthly installments of $51,680.19. The term of the lease ends June 1, 2029.

Finance Lease Obligations – Related Party

On March 4, 2021, the Company entered into a lease agreement with Systems Trading effective April 1, 2021. This lease obligation is payable to Systems Trading with monthly installments of $1,567 and expires on March 1, 2024. The lease carries an interest rate of 8%.

On January 1, 2022, the Company entered into a lease agreement with Systems Trading effective January 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $7,145 and expires on February 1, 2025. The lease carries an interest rate of 8%.

On April 1, 2022, the Company entered into a lease agreement with Systems Trading effective May 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $6,667 and expires on March 1, 2025. The lease carries an interest rate of 8%.

The Company determines if an arrangement contains a lease at inception. Right of Use “ROU” assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company’s lease term includes options to extend the lease when it is reasonably certain that it will exercise that option. Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred. A discount rate of 5% was used in preparation of the ROU asset and operating liabilities.

The components of lease expense were as follows:

Schedule of components of lease expense
	Three Months Ended March 31, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	196,069
Interest on lease liabilities, included in interest expense		8,855
Operating lease:
Amortization of assets, included in total operating expense		27,250
Interest on lease liabilities, included in total operating expense		515
Total net lease cost	$	232,689
Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	36,160

Current operating lease liabilities	$	36,733
Noncurrent operating lease liabilities		—
Total operating lease liabilities	$	36,733

	March 31, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,689,273	)
Property and equipment, net	$	832,443

Current obligations of finance leases	$	370,125
Finance leases, net of current obligations		—
Total finance lease liabilities	$	370,125

Supplemental cash flow and other information related to leases were as follows:


	Three Months Ended March 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	27,250
Financing cash flows related to finance leases	$	167,358

Weighted average remaining lease term (in years):
Operating leases		0.84
Finance leases		0.80

Weighted average discount rate:
Operating leases		4	%
Finance leases		7	%

Long-term obligations under the operating and finance leases at March 31, 2024, mature as follows:


For the Twelve Months Ended March 31,	Operating Leases			Finance Leases
2024		37,020			381,829
2025		—			—
Total lease payments		37,020			381,829
Less: Amounts representing interest		(287	)		(11,704	)
Total lease obligations		36,733			370,125
Less: long-term obligations		—			—
Total current	$	36,733		$	370,125

As of March 31, 2024, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the three months ended March 31, 2024 and 2023 was $73,303 and $60,572, respectively.

Note 7 - Commitments and Contingencies

As part of the Flagship acquisition the Company acquired a licensing agreement for marketing related materials with a National Football League team. The Company has approximately $0.6 million in payments over the next 3 years.

Subsequent to March 31, 2024, the Company received communication regarding state sales and use taxes. The Company is in discussions with the agency and evaluating the amount owed. Based on an examination of all information currently available to the Company, the Company has determined that it is probable that an accrual is needed related to this issue. After our analysis, the Company expects the liability range to be between $75,000 and $97,000. The Company recorded $89,000 in accrued expenses during the three months ended March 31, 2024.

Note 8 - Stockholders’ Equity

Capital Stock

The Company has 260,000,000 authorized shares of capital stock, consisting of 250,000,000 shares of Common Stock, par value $0.001, and 10,000,000 shares of Preferred Stock, par value $0.001 per share.

Common Stock Options

A summary of the Company’s options activity and related information follows:


	Number of			Weighted		Weighted
	Shares			Average		Average
	Under			Exercise		Contractual
	Options			Price		Life
Options Outstanding at December 31, 2023		595,347		$	3.46		5.82
Options Granted		136,255			3.32		5.15
Exercised		—			—		—
Expired/Cancelled		(2,448	)		5.41		—
Options Outstanding at March 31, 2024		729,154		$	2.66		6.83

Options Exercisable at March 31, 2024		282,072		$	2.97		5.91

Share-based compensation expense for options totaling $104,163 and $54,433 was recognized in the Company’s results for the three months ended March 31, 2024, and 2023, respectively.

The intrinsic value of outstanding options as of March 31, 2024 and December 31, 2023, was $653,725 and $391,283, respectively.

The valuation methodology used to determine the fair value of the options issued during the year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options.

The risk-free interest rate assumption is based upon observed interest rates on zero-coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options.

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices of the Company over a period equal to the expected life of the awards.

As of March 31, 2024, there was $851,984 of total unrecognized compensation expense related to unvested employee options granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately 1.6 years.

The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the three months ended March 31, 2024, and 2023, are set forth in the table below.


	2024			2023
Weighted average fair value of options granted	$	3.32		$	1.77
Risk-free interest rate		3.94% - 4.21	%		3.48% – 4.01	%
Volatility		126 – 159	%		196% – 199	%
Expected life (years)		3.5 – 6 years			10 years
Dividend yield		—	%		—	%

Share-based awards, restricted stock award (“RSAs”)

On January 2, 2024, the Company granted certain employees an aggregate of 53,328 RSA’s. Compensation as a group amount to $156,251. The shares vest one third each year for three years after issuance.

On March 31, 2024, the Board resolved that the Company shall issue to Board members an aggregate of 14,166 RSAs Compensation as a group amount of $81,030. The shares vest one year after issuance.

A summary of the activity related to RSUs for the three months ended March 31, 2024, is presented below:


Restricted Stock Units (RSUs)	Shares		Weighted Average Fair Value $
RSUs non-vested at January 1, 2024		208,472		1.90
RSUs granted		84,559		3.40
RSUs vested		49,490		1.74
RSUs forfeited		—		—
RSUs non-vested at March 31, 2024		243,541		2.45

Stock-based compensation for RSU’s has been recorded in the consolidated statements of operations and totaled $67,162 and $52,285 for the three months ended March 31, 2024, and 2023, respectively.

As of March 31, 2024, there was $505,795 of total unrecognized compensation expense related to unvested RSUs granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately 1.5 years.

Note 9 – Litigation

The Company is currently not involved in any litigation that it believes could have a materially adverse effect on its financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting DSC, its common stock, any of its subsidiaries or of DSC’s or DSC’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Note 10 – Related Party Transactions

Nexxis Capital LLC

Charles M. Piluso (Chairman and CEO) and Harold Schwartz (President) collectively own 100% of Nexxis Capital LLC (“Nexxis Capital”). Nexxis Capital was formed to purchase equipment and provide leases to Nexxis Inc.’s customers. The Company did not receive any funds during the three months ended March 31, 2024, and 2023, respectively.

Eisner & Maglione CPA’s LLC

Lawrence Maglione, a member of the Board of Directors, is a partner of Eisner & Maglione CPA’s LLC. The Company paid Mr. Maglione’s firm $3,700 and $495 for accounting and consulting services during the three months ended March 31, 2024, and 2023, respectively.

Note 12 – Segment Information

The Company operates in two reportable segments: CloudFirst, and Nexxis. Its segments were determined based on the Company’s internal organizational structure, the manner in which its operations are managed, and the criteria used by its Chief Operating Decision Maker (“CODM”) to evaluate performance, which is generally the segment’s assets, liabilities, and operating income or losses. The FSG acquisition in June of 2021 has benefited DSC with a client base, experienced sales and marketing talent, and a strong experienced technical team. Based on over two years of information and our experience with FSG the Company decided, based on the services and product set, as well as the talented team at FSG, to bring together both CloudFirst and FSG. This unification on January 2024 has strengthened our overall technical teams and provided for cross selling opportunities while reducing overall expenses.


Operations of:		Products and services provided:

CloudFirst Technologies Corporation		CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts.
Nexxis Inc.		Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment.

The following tables present certain financial information related to the Company’s reportable segments and Corporate:


	As of March 31, 2024

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	4,388,536	$	49,130		—	$	4,437,666
Prepaid expenses and other current assets			459,130		29,498		178,329		666,957
Net property and equipment			2,860,215		2,694		2,450		2,865,359
Intangible assets, net			1,628,937		—		—		1,628,937
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			36,160		—		—		36,160
All other assets			—		—		11,950,743		11,950,743
Total assets		$	13,611,649	$	81,322	$	12,131,522	$	25,824,493

Accounts payable and accrued expenses		$	4,483,430	$	75,203	$	277,235	$	4,835,868
Deferred revenue			310,123		—		—		310,123
Finance leases payable			214,961		—		—		214,961
Finance leases payable related party			155,164		—		—		155,164
Operating lease liabilities			36,733		—		—		36,733
Total liabilities		$	5,200,411	$	75,203	$	277,235	$	5,552,849


	As of December 31, 2023

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	1,229,820	$	30,152		—	$	1,259,972
Prepaid expenses and other current assets			419,254		18,157		75,764		513,175
Net property and equipment			2,727,225		2,905		2,644		2,732,774
Intangible assets, net			1,698,084		—		—		1,698,084
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			62,981		—		—		62,981
All other assets			—		—		12,795,362		12,795,362
Total assets		$	10,376,035	$	51,214	$	12,873,770	$	23,301,019

Accounts payable and accrued expenses		$	2,020,963	$	65,161	$	522,814	$	2,608,938
Deferred revenue			336,201		—		—		336,201
Finance leases payable			281,241		—		—		281,241
Finance leases payable related party			256,241		—		—		256,241
Operating lease liabilities			63,983		—		—		63,983
Total liabilities		$	2,958,629	$	65,161	$	522,814	$	3,546,604


	For the three months ended March 31, 2024

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	7,954,958		$	280,789		$	—		$	8,235,747
Cost of sales			5,102,635			166,640			—			5,269,275
Gross profit			2,852,323			114,149			—			2,966,472

Selling, general and administrative			1,631,897			176,879			648,703			2,457,479
Depreciation and amortization			294,794			211			193			295,198
Total operating expenses			1,926,691			177,090			648,896			2,752,677

Income (loss) from operations			925,632			(62,941	)		(648,896	)		213,795

Interest income			—			—			143,369			143,369
Interest expense			(11,260	)		—			—			(11,260	)
Total other income (expense)			(11,260	)		—			143,369			132,109

Income (Loss) before provision for income taxes		$	914,372		$	(62,941	)	$	(505,527	)	$	345,904


	For the three months ended March 31, 2023

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	6,614,927		$	264,796		$	—		$	6,879,723
Cost of sales			4,611,857			178,121			—			4,789,978
Gross profit			2,003,070			86,675			—			2,089,745

Selling, general and administrative			1,146,779			124,750			570,520			1,842,049
Depreciation and amortization			288,525			71			114			288,710
Total operating expenses			1,435,304			124,821			570,634			2,130,759

Income (loss) from operations			567,766			(38,146	)		(570,634	)		(41,014	)

Interest income						—			103,423			103,423
Interest expense			(27,346	)		—			—			(27,346	)
Total Other Income (Expense)			(27,346	)		—			103,423			76,077

Income (loss) before provision for income taxes		$	540,420		$	(38,146	)	$	(467,211	)	$	35,063

Note 13 - Subsequent Events

Subsequent to March 31, 2024, options were exercised to obtain 21,667 shares of common stock. These options were exercised for $50,209.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on March 28, 2024 (the “2023 Annual Report”) with the U.S. Securities and Exchange Commission (the “SEC”). This Quarterly Report on Form 10-Q contains forward-looking statements, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions, and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) our plans, strategies, objectives, expectations, and intentions are subject to change at any time at our discretion; (ii) our plans and results of operations will be affected by our ability to manage growth; and (iii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terminology such as ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘expects,’ ‘plans,’ ‘intends,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘predicts,’ ‘potential,’ or ‘continue’ or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We are under no duty to update any of the forward-looking statements after the date of this report.

Company Overview

Data Storage Corporation is headquartered in Melville, New York. The Nasdaq ticker symbol is DTST. We operate through two subsidiaries; CloudFirst Technologies Corporation, a Delaware corporation formally referred to as DSC; and Nexxis Inc. These subsidiaries provide solutions and services to a broad range of clients in several industries including healthcare, banking and finance, distribution services, manufacturing, construction, education, and government. The subsidiaries maintain business development teams, as well as independent distribution channels.

Strategic Growth and Infrastructure: In response to a capital raise and Nasdaq uplisting in 2021, we expanded our distribution networks and bolstered our team, focusing on enhancing our sales, marketing, and technological capabilities. Data Storage Corporation operates six geographically diverse data centers across the U.S. and Canada, supporting its commitment to providing secure and reliable subscription-based services.

Core Services:

●

Business Continuity Solutions: Offers rapid recovery from system outages and disasters, ensuring minimal operational disruption.

●

Managed Cloud Infrastructure Services: Facilitates cloud migration and provides ongoing support for software applications and technical workloads in a multi-cloud environment.

●

Cyber Security: Delivers comprehensive security consultation, data protection, disaster recovery, and remote monitoring services, either integrated into cloud solutions or as standalone offerings.

Client Engagement and Revenue Generation: The Company engages with clients through direct business development efforts and a broad distribution network, offering solutions that lower barriers to entry for disaster recovery and cloud infrastructure services. While subscription-based services constitute a significant portion of its revenue, Data Storage Corporation also generates income from the sale of equipment and software, emphasizing cybersecurity, data storage, and IBM Power systems solutions.

This overview highlights Data Storage Corporation’s strategic approach to leveraging technology and expertise to meet the complex needs of its diverse client base, ensuring business continuity and security in an increasingly digital world.

2024 Business Update Summary

In a strategic move to bolster its offerings and market presence, Data Storage Corporation successfully completed a merger with Flagship Solutions, LLC, a Florida-based provider of IBM solutions, managed services, cyber security, and cloud solutions, on May 31, 2021. This merger, formalized through an Agreement and Plan of Merger with Data Storage FL, LLC, a wholly-owned subsidiary, enhanced operational efficiencies and synergize with Data Storage Corporation’s existing IBM business segment.

Key Merger Highlights:

●

Synergistic Integration: The merger with Flagship created a unified platform that leverages both entities’ strengths in IBM solutions, managed services, and cloud-based security, promising enhanced operational efficiency.

●

Expanded Offerings: The combined expertise of Data Storage Corporation and Flagship Solutions offers a comprehensive range of multi-cloud IT solutions, including Infrastructure as a Service (IaaS), Disaster Recovery as a Service (DRaaS), and Cyber Security as a Service (CSaaS), targeting both enterprise and mid-market customers.

●

Strategic Growth: Post-merger, the focus remains on harnessing this strategic integration to extend the range of high-security, reliable cloud services for IBM Power systems, Microsoft Windows, and Linux platforms. The Company is committed to continuing its growth through further synergistic acquisitions. As of January 1, 2024, CloudFirst Technologies and Flagship Solutions LLC have merged.

Operational Footprint:

Data Storage Corporation operates from offices in New York, Florida, and Texas, equipped with technology centers designed to meet client requirements effectively. The Company also employs remote staff to complement its office teams and manages a robust infrastructure across seven geographically diverse data centers in the United States and Canada, supporting its comprehensive subscription-based solutions.

This merger represents a pivotal step in Data Storage Corporation’s strategy to expand its service offerings and enhance its competitive edge in the rapidly evolving cloud services and IT solutions market.

Recent Developments

On January 12, 2024, the Board appointed Clifford Stein to serve as a director of the Company.

On January 16, 2024, we issued a press release regarding the merger of our subsidiaries, Flagship Solutions Group and CloudFirst. We expect that the merger of Flagship Solutions Group and CloudFirst will enable us to continue to streamline operations, grow our technical teams, achieve further economies of scale, enhance resource allocation internally and provide a unified platform to capitalize on the opportunities within the market and increase customer penetration.

On March 5, 2024, the Board appointed Nancy M. Stallone, CPA and Uwayne A. Mitchell, Esq. to serve as directors of the Company. Ms. Stallone was appointed to serve as a member of the Audit Committee of the Board and serves as the financial expert.

On May 3, 2024, the Board amended our Bylaws to provide that at each meeting of stockholders, except where otherwise provided by law, the presence in person or by proxy of the holders of thirty-three and one-third percent of the outstanding shares of the Company’s voting stock shall constitute a quorum.

RESULTS OF OPERATIONS

Three months ended March 31, 2024, as compared to March 31, 2023

Total Revenue. For the three months ended March 31, 2024, total revenue was $8,235,747, an increase of $1,356,024 or 20% compared to $6,879,723 for the three months ended March 31, 2023. The increase is primarily attributed to an increase in Infrastructure & Disaster Recovery/Cloud Services and one time Equipment and Software Sales.

Revenue	For the Three Months
	Ended March 31,
	2024		2023		$ Change			% Change
Infrastructure & Disaster Recovery/Cloud Service	$	2,952,895	$	2,189,641	$	763,254			35	%
Equipment and Software		4,084,647		3,504,796		579,851			17	%
Managed Services		843,407		911,530		(68,123	)		(7	)%
Nexxis VoIP Services		276,467		231,772		44,695			19	%
Other		78,331		41,984		36,347			87	%
Total Revenue	$	8,235,747	$	6,879,723	$	1,356,024			20	%

Cost of Sales. For the three months ended March 31, 2024, cost of sales was $5,269,275, an increase of $479,297 or 10% compared to $4,789,978 for the three months ended March 31, 2023. The increase of 10% was mostly related to the increase in Infrastructure & Disaster Recovery/Cloud Services and one time Equipment and Software sales.

Selling, general and administrative expenses. For the three months ended March 31, 2024, selling, general and administrative expenses were $2,752,677, an increase of $621,918, or 29%, as compared to $2,130,759 for the three months ended March 31, 2023. The net increase is reflected in the chart below.

Selling, general and administrative expenses	For the Three Months
	Ended March 31,
	2024		2023		$ Change			% Change
Increase in Salaries	$	1,356,388	$	1,156,494	$	199,894			17	%
Increase in Professional Fees		256,583		220,827		35,756			16	%
Increase in Software as a Service Expense		60,896		39,975		20,921			52	%
Increase in Advertising Expense		232,240		189,878		42,362			22	%
Increase in Commissions Expense		414,583		271,967		142,616			52	%
Decrease in Amortization and Depreciation Expense		72,128		73,772		(1,644	)		(2	)%
Increase in Travel and Entertainment		73,569		51,247		22,322			44	%
Decrease in Rent and Occupancy		59,688		61,808		(2,120	)		(3	)%
Increase in Insurance		31,796		26,490		5,306			20	%
Increase in all other Expenses		194,806		38,301		156,505			409	%
Total Expenses	$	2,752,677	$	2,130,759	$	621,918			29	%

Salaries. Salaries increased as a result of a result of an increase in headcount as well as an increase in stock based compensation.

Professional fees. Professional fees increased primarily due to an increase in accounting and auditing fees and an increase in consulting fees offset by a decrease in legal fees.

Software as a Service Expense (SaaS). SaaS increased due to special project related to one of our CRM platforms.

Advertising Expenses. Advertising Expenses increased due to the implementation of new marketing programs in 2024.

Commissions Expense. Commissions expenses increased due to the increase in revenue.

All Other Expenses. Other expenses increased primarily due to an increase of bad debt expense and an increase in sales and use tax expense.

Other Income (Expense). Other income for the three months ended March 31, 2024, increased $56,032 to $132,109 from $76,077 for the three months ended March 31, 2023. The increase in other income is primarily attributable to the increase in interest income from the marketable securities.

Net Income before provision for income taxes. Net income before provision for income taxes for the three months ended March 31, 2024 was $345,904, as compared to a net income of $35,063 for the three months ended March 31, 2023.

LIQUIDITY AND CAPITAL RESOURCES

The consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America (“GAAP”) applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business.

To the extent the Company is successful in growing its business, identifying potential acquisition targets, and negotiating the terms of such acquisition, the Company plans to use its working capital and the proceeds of financings to finance such acquisition costs.

The Company’s opinion concerning its liquidity is based on current information. If this information proves to be inaccurate, or if circumstances change, The Company may not be able to meet its liquidity needs, which will require a renegotiation of related party capital equipment leases, a reduction in advertising and marketing programs, and/or a reduction in salaries for officers that are major shareholders.

The Company has long-term contracts to supply its subscription-based solutions that are invoiced to clients monthly. The Company believes the total contract value of its subscription contracts with clients based on the actual contracts that it has to date, exceeds $10 million. Further, the Company continues to see an uptick in client interest distribution channel expansion and in sales proposals. In 2024, the Company intends to continue to work to increase its presence in the IBM “Power I” infrastructure cloud and business continuity marketplace in the niche of IBM “Power” and in the disaster recovery global marketplace utilizing its technical expertise, data centers utilization, assets deployed in the data centers, 24 x 365 monitoring and software.

During the three months ended March 31, 2024, Data Storage’s cash decreased by $787,988 to $640,742 from $1,428,730 on December 31, 2023. Net cash of $318,624 was used by Data Storage’s operating activities resulting primarily from the changes in assets and liabilities. Net cash of $302,006 was used in investing activities from the purchase of equipment and short-term investments. Net cash of $167,358 was used by financing activities resulting primarily from payments on capital lease obligations.

The Company’s working capital was $11,454,081 on March 31, 2024, increasing by $442,674 from $11,011,407 at December 31, 2023. The increase is primarily attributable to an increase in accounts receivable, prepaid expenses, and other current assets. This was offset by a decrease in cash and an increase in accounts payable, and accrued expenses.

Critical Accounting Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods. There are accounting policies, each of which requires significant judgments and estimates on the part of management, that we believe are significant to the presentation of our consolidated financial statements. The critical accounting estimates that affect the consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of the 2023 Annual Report.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.”

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 to adjusted EBITDA for the three months ended March 31, 2024, and 2023, respectively:

	For the three months ended March 31, 2024

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income	$	914,372	$	(62,941	)	$	(505,527	)	$	345,904

Non-GAAP adjustments:
Depreciation and amortization		294,793		211			194			295,198
Interest and letter of credit fees		—		—			(143,369	)		(143,369	)
Interest expense		11,260		—			—			11,260
Stock based compensation		52,969		6,671			111,685			171,325

Adjusted EBITDA	$	1,273,394	$	(56,059	)	$	(537,017	)	$	680,318

	For the three months ended March 31, 2023

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income	$	540,420	$	(38,146	)	$	(467,211	)	$	35,063

Non-GAAP adjustments:
Depreciation and amortization		290,827		71			114			291,012
Interest and letter of credit fees		27,346		—			(103,424	)		(76,078	)
Stock based compensation		38,996		2,181			45,291			86,468

Adjusted EBITDA	$	897,589	$	(35,894	)	$	(525,230	)	$	336,465

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company this item is not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Report, under the supervision and with the participation of DSC’s management, including its principal executive officer, DSC conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, management has determined that, there were no material weaknesses in our internal control over financial reporting and, management has concluded that, as of March 31, 2024, the Company maintained effective disclosure controls and procedures at the reasonable assurance level.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. The Company is not presently a party to any legal proceedings that, if determined adversely to it, would individually or taken together have a material adverse effect on its business, operating results, financial condition, or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

Investing in our securities involves a high degree of risk. You should carefully consider the following risks and the risk factors set forth in our 2023 Annual Report, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed financial statements and notes thereto. If any of the following risks actually materializes, our operating results, financial condition and liquidity could be materially adversely affected. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our 2023 Annual Report. Except as disclosed below, there have been no material changes from the risk factors disclosed in our 2023 Annual Report.

The Company has not generated a significant amount of net income and it may not be able to sustain profitability in the future.

As reflected in the consolidated financial statements, the Company had net income attributable to common shareholders of $357,102 for the quarter ended March 31, 2024, and $381,575 for the year ended December 31, 2023. As of March 31, 2024, the Company had cash of $640,742, marketable securities of $11,261,565, and working capital of $11,454,081. There can be no assurance that the Company will continue to generate income in the future.

We cannot be assured that we will be able to maintain our listing on the Nasdaq Capital Market.

Our securities are listed on The Nasdaq Capital Market, a national securities exchange. We cannot be assured that we will continue to comply with the rules, regulations or requirements governing the listing of our common stock on The Nasdaq Capital Market or that our securities will continue to be listed on Nasdaq Capital Market in the future. If Nasdaq should determine at any time that we fail to meet Nasdaq requirements, we may be subject to a delisting action by Nasdaq.

On January 18, 2024, Nasdaq notified the Company that due to the passing of Mr. Hoffman, the Company no longer compliant with Nasdaq’s audit committee requirements as set forth in Rule 5605(c)(2)(A) of the Nasdaq listing standards. Nasdaq further notified the Company that, consistent with Rule 5605(c)(4) of the Nasdaq listing standards, Nasdaq provided the Company a cure period in order to regain compliance until the earlier of the Company’s next annual meeting of shareholders or December 30, 2024 or, if the next annual meeting of shareholders is held before June 27, 2024, then the Company must provide evidence of compliance no later than June 27, 2024.

On April 2, 2024, the Company received a letter (the “Notification Letter”) from Nasdaq stating that based on the information regarding the appointment of Nancy M. Stallone, CPA to the Company’s Board of Directors and Audit Committee, Nasdaq has determined that the Company complies with the Audit Committee requirement for continued listing on The Nasdaq Capital Market set forth in Listing Rules 5605(c)(2), which requires that the Company maintain an audit committee of at least three members, each of whom must meet specified criteria, including certain independence criteria. Accordingly, the Nasdaq staff has determined that the Company has regained compliance with Nasdaq Listing Rule 5605(c)(2) and has indicated that the matter is now closed.

If Nasdaq delists our securities from trading on its exchange at some future date, we could face significant material adverse consequences, including:

	●	a limited availability of market quotations for our securities;

	●	reduced liquidity with respect to our securities;

	●	a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;

	●	a limited amount of news and analyst coverage for our company; and

	●	a decreased ability to issue additional securities or obtain additional financing in the future.

Upon exercise of the Company’s outstanding options or warrants, it will be obligated to issue a substantial number of additional shares of common stock which will dilute its present shareholders.

The Company is obligated to issue additional shares of its common stock in connection with any exercise or conversion, as applicable, of its outstanding options, warrants, and shares of its convertible preferred stock. As of March 31, 2024, there were options and warrants outstanding convertible into an aggregate of 3,145,014 shares of common stock. The exercise of warrants or options will cause the Company to issue additional shares of its common stock and will dilute the percentage ownership of its shareholders. In addition, the Company has in the past, and may in the future, exchange outstanding securities for other securities on terms that are dilutive to the securities held by other shareholders not participating in such an exchange.

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

(a) Unregistered Sales of Equity Securities

There were no unregistered sales of the Company’s equity securities during the period ended March 31, 2024, that were not previously reported in a Current Report on Form 8-K.

(b) Use of Proceeds

Not applicable.

(c) Issuer Purchase of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

There were no defaults upon senior securities during the period ended March 31, 2024.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “nonRule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

Exhibit No.		Description

3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form SB-2 (File No. 333-148167) filed on December 19, 2007).
3.2		Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 333-148167) filed on October 24, 2008).
3.3		Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 333-148167) filed on January 9, 2009).
3.4		Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form SB-2 (File No. 333- 148167) filed on December 19, 2007).
3.5		Amended Bylaws (incorporated by reference to Exhibit 3.2 to Form 8-K (File No. 333-148167) filed on October 24, 2008).
3.6		Form of Certificate of Amendment to the Articles of Incorporation (incorporated by reference to Appendix A to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.7		Form of Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated October 7, 2008 (incorporated by reference to Appendix C to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.8		Form of Certificate of Validation and Ratification of the Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated October 7, 2008 (incorporated by reference to Appendix C to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.9		Form of Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated October 16, 2008 (incorporated by reference to Appendix D to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.10		Form of Certificate of Validation and Ratification of the Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated October 16, 2008 (incorporated by reference to Appendix D to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.11		Form of Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated January 6, 2009 (incorporated by reference to Appendix E to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.12		Form of Certificate of Validation and Ratification of the Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated January 6, 2009 (incorporated by reference to Appendix E to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.13		Form of Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated June 24, 2009 (incorporated by reference to Appendix F to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.14		Form of Certificate of Validation and Ratification of the Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation dated June 24, 2009 (incorporated by reference to Appendix F to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.15		Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Data Storage Corporation (incorporated by reference to Appendix F to the Information Statement on Schedule 14C (File No. 001-35384) filed with the Securities and Exchange Commission on March 8, 2021).
3.16		Amendment to Bylaws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K (File No. 001-35384) filed with the Securities and Exchange Commission on May 6, 2024).
10.1		Sublease between Sentinel Benefits Group, LLC, and Sentinel Benefits Group, Inc., and Data Storage Corporation, dated as of January 17, 2024 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No. 001-35384) filed with the Securities and Exchange Commission on March 27, 2024).

31.1*		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2*		Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1*		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
32.2*		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
101.INS		XBRL Instant Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DATA STORAGE CORPORATION
Date: May 15, 2024
	By:	/s/ Charles M. Piluso
		Charles M. Piluso
		Chief Executive Officer
		(Principal Executive Officer)

Date: May 15, 2024
	By:	/s/ Chris H. Panagiotakos
		Chris H. Panagiotakos
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Charles M. Piluso, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Data Storage Corporation;

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 15, 2024	By:	/s/ Charles M. Piluso
		Charles M. Piluso
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Chris Panagiotakos, certify that:

	1.	I have reviewed this quarterly report on Form 10-Q of Data Storage Corporation;

	2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period during which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2024	By:	/s/ Chris H. Panagiotakos
		Chris H. Panagiotakos
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Data Storage Corporation (the “Company”), on Form 10-Q for the period ended March 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Charles M. Piluso, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	Such Quarterly Report on Form 10-Q for the period ended March 31, 2024, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in such Quarterly Report on Form 10-Q for the period ended March 31, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2024	By:	/s/ Charles M. Piluso
		Charles M. Piluso
		Chief Executive Officer
		(Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Data Storage Corporation (the “Company”), on Form 10-Q for the period ended March 31, 2024, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Chris Panagiotakos, Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	Such Quarterly Report on Form 10-Q for the period ended March 31, 2024, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in such Quarterly Report on Form 10-Q for the period ended March 31, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2024	By:	/s/ Chris H. Panagiotakos
		Chris H. Panagiotakos
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 15, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-35384
Entity Registrant Name	DATA STORAGE CORPORATION
Entity Central Index Key	0001419951
Entity Tax Identification Number	98-0530147
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	225 Broadhollow Road
Entity Address, Address Line Two	Suite 307
Entity Address, City or Town	Melville
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11747
City Area Code	212
Local Phone Number	564-4922
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,970,943
Common Stock, par value $0.001 per share [Member]
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	DTST
Security Exchange Name	NASDAQ
Warrants to purchase shares of Common Stock, par value $0.001 per share [Member]
Title of 12(b) Security	Warrants to purchase shares of Common Stock, par value $0.001 per share
Trading Symbol	DTSTW
Security Exchange Name	NASDAQ

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Current Assets:
Cash and cash equivalents	$ 640,742	$ 1,428,730
Accounts receivable (less provision for credit losses of $62,051 and $7,915 in 2024 and 2023, respectively)	4,437,666	1,259,972
Marketable securities	11,261,565	11,318,196
Prepaid expenses and other current assets	666,957	513,175
Total Current Assets	17,006,930	14,520,073
Property and Equipment:
Property and equipment	8,196,862	7,838,225
Less—Accumulated depreciation	(5,331,503)	(5,105,451)
Net Property and Equipment	2,865,359	2,732,774
Other Assets:
Goodwill	4,238,671	4,238,671
Operating lease right-of-use assets	36,160	62,981
Other assets	48,436	48,436
Intangible assets, net	1,628,937	1,698,084
Total Other Assets	5,952,204	6,048,172
Total Assets	25,824,493	23,301,019
Current Liabilities:
Accounts payable and accrued expenses	4,835,868	2,608,938
Deferred revenue	310,123	336,201
Finance leases payable	214,961	263,600
Finance leases payable related party	155,164	235,944
Operating lease liabilities short term	36,733	63,983
Total Current Liabilities	5,552,849	3,508,666
Finance leases payable	0	17,641
Finance leases payable related party	0	20,297
Total Long-Term Liabilities	0	37,938
Total Liabilities	5,552,849	3,546,604
Commitments and contingencies (Note 7)
Stockholders’ Equity:
Preferred stock, Series A par value $.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023	0	0
Common stock, par value $.001; 250,000,000 shares authorized; 6,929,950 and 6,880,460 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	6,930	6,881
Additional paid in capital	39,661,561	39,490,285
Accumulated deficit	(19,148,701)	(19,505,803)
Total Data Storage Corporation Stockholders’ Equity	20,519,790	19,991,363
Non-controlling interest in consolidated subsidiary	(248,146)	(236,948)
Total Stockholder’s Equity	20,271,644	19,754,415
Total Liabilities and Stockholders’ Equity	$ 25,824,493	$ 23,301,019

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Less provision for credit losses	$ 62,051	$ 7,915
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	6,929,950	6,880,460
Common stock, shares outstanding	6,929,950	6,880,460
Series A Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Sales	$ 8,235,747	$ 6,879,723
Cost of sales	5,269,275	4,789,978
Gross Profit	2,966,472	2,089,745
Selling, general and administrative	2,752,677	2,130,759
Income (loss) from Operations	213,795	(41,014)
Other Income (Expense)
Interest income	143,369	103,424
Interest expense	(11,260)	(27,347)
Total Other Income (Expense)	132,109	76,077
Income before provision for income taxes	345,904	35,063
Provision from income taxes	0	0
Net Income	345,904	35,063
Loss in Non-controlling interest in consolidated subsidiary	11,198	15,603
Net Income Attributable to Common Stockholders	$ 357,102	$ 50,666
Earnings per Share – Basic	$ 0.05	$ 0.01
Earnings per Share – Diluted	$ 0.05	$ 0.01
Weighted Average Number of Shares – Basic	7,090,389	6,822,127
Weighted Average Number of Shares – Diluted	7,259,472	6,954,320

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 6,822	$ 38,982,440	$ (19,887,378)	$ (154,689)	$ 18,947,195
Beginning balance, shares at Dec. 31, 2022	6,822,127
Stock-based compensation	$ 13	86,456			86,469
Stock-based compensation, shares	12,500
Net Income (Loss)			50,666	(15,603)	35,063
Ending balance, value at Mar. 31, 2023	$ 6,835	39,068,896	(19,836,712)	(170,292)	19,068,727
Ending balance, shares at Mar. 31, 2023	6,834,627
Beginning balance, value at Dec. 31, 2023	$ 6,881	39,490,285	(19,505,803)	(236,948)	19,754,415
Beginning balance, shares at Dec. 31, 2023	6,880,460
Stock-based compensation	$ 49	171,276			171,325
Stock-based compensation, shares	49,490
Net Income (Loss)			357,102	(11,198)	345,904
Ending balance, value at Mar. 31, 2024	$ 6,930	$ 39,661,561	$ (19,148,701)	$ (248,146)	$ 20,271,644
Ending balance, shares at Mar. 31, 2024	6,929,950

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash Flows from Operating Activities:
Net income	$ 345,904	$ 35,063
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	295,198	288,710
Stock based compensation	171,325	86,469
Changes in Assets and Liabilities:
Accounts receivable	(3,177,694)	(168,334)
Other assets	0	(17,300)
Prepaid expenses and other current assets	(153,782)	(293,794)
Right of use asset	26,821	50,659
Accounts payable and accrued expenses	2,226,932	491,669
Deferred revenue	(26,078)	28,213
Operating lease liability	(27,250)	(52,216)
Net Cash (Used in) Provided by Operating Activities	(318,624)	449,139
Cash Flows from Investing Activities:
Capital expenditures	(358,637)	(426,671)
Sale of marketable securities	200,000	0
Purchase of marketable securities	(143,369)	(103,423)
Net Cash Used in Investing Activities	(302,006)	(530,094)
Cash Flows from Financing Activities:
Repayments of finance lease obligations related party	(66,280)	(183,464)
Repayments of finance lease obligations	(101,078)	(140,264)
Net Cash Used in Financing Activities	(167,358)	(323,728)
Decrease in Cash and Cash Equivalents	(787,988)	(404,683)
Cash and Cash Equivalents, Beginning of Period	1,428,730	2,286,722
Cash and Cash Equivalents, End of Period	640,742	1,882,039
Supplemental Disclosures:
Cash paid for interest	8,855	24,863
Cash paid for income taxes	$ 0	$ 0

Pay vs Performance Disclosure - USD ($)	3 Months Ended
Pay vs Performance Disclosure - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss) Attributable to Parent	$ 357,102	$ 50,666

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation, Organization and Other Matters

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation, Organization and Other Matters

Note 1 – Basis of Presentation, Organization and Other Matters

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Principles of Consolidation

Reclassifications

Recently Issued and Newly Adopted Accounting Pronouncements

Use of Estimates

Estimated Fair Value of Financial Instruments

The fair value measurement disclosures are grouped into three levels based on valuation factors:

●

Level 1 – quoted prices in active markets for identical investments

●

Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

●

Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Cash and Cash Equivalents

Investments

The following table sets forth a summary of the changes in equity investments during the three months ended March 31, 2024, and the year ended December 31, 2023:


	For the year ended December 31, 2023
	Total
As of January 1, 2023	$	9,010,968
Purchase of equity investments		2,307,228
Unrealized gains		—
As of December 31, 2023	$	11,318,196

	For the three months ended March 31, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		143,369
Unrealized gains		—
Sale of equity investments		(200,000	)
As of March 31, 2024	$	11,261,565

Concentration of Credit Risk and Other Risks and Uncertainties

The Company’s customers are primarily concentrated in the United States.

Accounts Receivable / Provision for Credit Losses

Property and Equipment

Goodwill and Other Intangibles

Revenue Recognition

Nature of goods and services

Cloud Infrastructure and Disaster Recovery Revenue

Managed Services

Equipment and Software

Nexxis Voice over Internet and Direct Internet Access

Disaggregation of revenue

In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition.


For the Three Months
Ended March 31, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,853,249	$	99,646	$	2,952,895
Equipment and Software		4,084,647		—		4,084,647
Managed Services		843,407		—		843,407
Nexxis VoIP Services		276,467		—		276,467
Other		67,893		10,438		78,331
Total Revenue	$	8,125,663	$	110,084	$	8,235,747

For the Three Months
Ended March 31, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,137,317	$	52,324	$	2,189,641
Equipment and Software		3,504,796		—		3,504,796
Managed Services		876,423		35,107		911,530
Nexxis VoIP Services		231,772		—		231,772
Other		41,984		—		41,984
Total Revenue	$	6,792,292	$	87,431	$	6,879,723

For the Three Months
Ended March 31,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	1,045,977	$	3,564,543
Products and services transferred over time		7,189,770		3,315,180
Total Revenue	$	8,235,747	$	6,879,723

Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract.

Transaction price allocated to the remaining performance obligations

The Company has the following performance obligations:

2)	High Availability: A managed cloud subscription-based service that provides cost-effective mirroring software replication technology and provides one (1) hour or less recovery time for a client to be back in business.

3)	Cloud Infrastructure: subscription-based cloud service provides for “capacity on-demand” for IBM Power and X86 Intel server systems.

4)	Internet: Subscription-based service, offering continuous internet connection combined with FailSAFE which provides disaster recovery for both a clients’ voice and data environments.

5)	Support and Maintenance: Subscription based service offers support for clients on their servers, firewalls, desktops, or software. Services are provided 24x7x365 to the Company’s clients.

6)	Implementation / Set-Up Fees: Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security.

7)	Equipment sales: Sale of servers and data storage equipment to the client.

9)	License: Granting SSL certificates and licenses.

Disaster Recovery and Business Continuity Solutions

Initial Set-Up Fees

Equipment Sales

License - granting SSL certificates and other licenses

Payment Terms

Warranties

The Company offers guaranteed service levels and service guarantees on some of its contracts. These warranties are not sold separately and are accounted as “assurance warranties.”

Significant Judgement

Impairment of Long-Lived Assets

Advertising Costs

Stock-Based Compensation

Net Income Per Common Share

The following table sets forth the information needed to compute basic and diluted earnings per share for the three months ended March 31, 2024, and 2023:


	Three Months ended March 31,
	2024		2023

Net Income Available to Common Shareholders	$	357,102	$	50,666

Weighted average number of common shares - basic		7,090,389		6,822,127
Dilutive securities
Options		169,083		130,526
Warrants		—		1,667
Weighted average number of common shares - diluted		7,259,472		6,954,320

Earnings per share, basic	$	0.05	$	0.01
Earnings per share, diluted	$	0.05	$	0.01

The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share because their effect was anti-dilutive:

Schedule of anti-dilutive shares
		Three Months ended March 31,
		2024		2023
	Options		560,071		385,257
	Warrants		2,415,860		2,415,860
			2,975,931		2,801,117

Prepaids and other current assets

3 Months Ended

Mar. 31, 2024

Prepaids And Other Current Assets

Prepaids and other current assets

Note 3 - Prepaids and other current assets

Prepaids and other current assets consist of the following:


	March 31,		December 31,
	2024		2023
Prepaid marketing & promotion	$	53,350	$	13,525
Prepaid subscriptions and license		452,610		362,760
Prepaid maintenance		31,532		31,311
Prepaid insurance		93,589		63,247
Other		35,876		42,332
Total prepaids and other current assets	$	666,957	$	513,175

Property and Equipment

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 4- Property and Equipment

Property and equipment, at cost, consist of the following:

Schedule of property and equipment
	March 31,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		21,625			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		123,792			117,379
Data center equipment		7,970,174			7,617,950
Gross Property and equipment		8,196,862			7,838,225
Less: Accumulated depreciation		(5,331,503	)		(5,105,451	)
Net property and equipment	$	2,865,359		$	2,732,774

Depreciation expense for the three months ended March 31, 2024, and 2023 was $226,051 and $218,979, respectively.

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 5 - Goodwill and Intangible Assets

Goodwill and intangible assets consisted of the following:


	Estimated life in years		Gross amount		December 31, 2023, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,434,218		1,179,881
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		29,067		3,935
Total intangible assets subject to amortization				3,889,248		2,705,432		1,183,816
Total Goodwill and Intangible Assets			$	8,642,187	$	2,705,432	$	5,936,755

	Estimated life in years		Gross amount		March 31, 2024, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,501,004		1,113,095
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		31,428		1,574
Total intangible assets subject to amortization				3,889,248		2,774,579		1,114,669
Total Goodwill and Intangible Assets			$	8,642,187	$	2,774,579	$	5,867,608

Scheduled amortization over the next five years are as follows:


Period ending December 31,
	2024	$	201,931
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,114,669

Amortization expense for the three months ended March 31, 2024, and 2023 was $69,147 and $69,731, respectively.

Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

Note 6-Leases

Operating Leases

The Company currently maintains three leases for office space located in Melville, NY.

Finance Lease Obligations

Finance Lease Obligations – Related Party

The components of lease expense were as follows:

Schedule of components of lease expense
	Three Months Ended March 31, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	196,069
Interest on lease liabilities, included in interest expense		8,855
Operating lease:
Amortization of assets, included in total operating expense		27,250
Interest on lease liabilities, included in total operating expense		515
Total net lease cost	$	232,689
Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	36,160

Current operating lease liabilities	$	36,733
Noncurrent operating lease liabilities		—
Total operating lease liabilities	$	36,733

	March 31, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,689,273	)
Property and equipment, net	$	832,443

Current obligations of finance leases	$	370,125
Finance leases, net of current obligations		—
Total finance lease liabilities	$	370,125

Supplemental cash flow and other information related to leases were as follows:


	Three Months Ended March 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	27,250
Financing cash flows related to finance leases	$	167,358

Weighted average remaining lease term (in years):
Operating leases		0.84
Finance leases		0.80

Weighted average discount rate:
Operating leases		4	%
Finance leases		7	%

Long-term obligations under the operating and finance leases at March 31, 2024, mature as follows:


For the Twelve Months Ended March 31,	Operating Leases			Finance Leases
2024		37,020			381,829
2025		—			—
Total lease payments		37,020			381,829
Less: Amounts representing interest		(287	)		(11,704	)
Total lease obligations		36,733			370,125
Less: long-term obligations		—			—
Total current	$	36,733		$	370,125

Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 7 - Commitments and Contingencies

Stockholders’ Equity

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Stockholders’ Equity

Note 8 - Stockholders’ Equity

Capital Stock

Common Stock Options

A summary of the Company’s options activity and related information follows:


	Number of			Weighted		Weighted
	Shares			Average		Average
	Under			Exercise		Contractual
	Options			Price		Life
Options Outstanding at December 31, 2023		595,347		$	3.46		5.82
Options Granted		136,255			3.32		5.15
Exercised		—			—		—
Expired/Cancelled		(2,448	)		5.41		—
Options Outstanding at March 31, 2024		729,154		$	2.66		6.83

Options Exercisable at March 31, 2024		282,072		$	2.97		5.91

Share-based compensation expense for options totaling $104,163 and $54,433 was recognized in the Company’s results for the three months ended March 31, 2024, and 2023, respectively.

The intrinsic value of outstanding options as of March 31, 2024 and December 31, 2023, was $653,725 and $391,283, respectively.

The risk-free interest rate assumption is based upon observed interest rates on zero-coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options.

The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the three months ended March 31, 2024, and 2023, are set forth in the table below.


	2024			2023
Weighted average fair value of options granted	$	3.32		$	1.77
Risk-free interest rate		3.94% - 4.21	%		3.48% – 4.01	%
Volatility		126 – 159	%		196% – 199	%
Expected life (years)		3.5 – 6 years			10 years
Dividend yield		—	%		—	%

Share-based awards, restricted stock award (“RSAs”)

On March 31, 2024, the Board resolved that the Company shall issue to Board members an aggregate of 14,166 RSAs Compensation as a group amount of $81,030. The shares vest one year after issuance.

A summary of the activity related to RSUs for the three months ended March 31, 2024, is presented below:


Restricted Stock Units (RSUs)	Shares		Weighted Average Fair Value $
RSUs non-vested at January 1, 2024		208,472		1.90
RSUs granted		84,559		3.40
RSUs vested		49,490		1.74
RSUs forfeited		—		—
RSUs non-vested at March 31, 2024		243,541		2.45

Stock-based compensation for RSU’s has been recorded in the consolidated statements of operations and totaled $67,162 and $52,285 for the three months ended March 31, 2024, and 2023, respectively.

Litigation

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Litigation

Note 9 – Litigation

Related Party Transactions

3 Months Ended

Mar. 31, 2024

Related Party Transactions

Note 10 – Related Party Transactions

Nexxis Capital LLC

Eisner & Maglione CPA’s LLC

Segment Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Information

Note 12 – Segment Information


Operations of:		Products and services provided:

CloudFirst Technologies Corporation		CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts.
Nexxis Inc.		Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment.

The following tables present certain financial information related to the Company’s reportable segments and Corporate:


	As of March 31, 2024

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	4,388,536	$	49,130		—	$	4,437,666
Prepaid expenses and other current assets			459,130		29,498		178,329		666,957
Net property and equipment			2,860,215		2,694		2,450		2,865,359
Intangible assets, net			1,628,937		—		—		1,628,937
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			36,160		—		—		36,160
All other assets			—		—		11,950,743		11,950,743
Total assets		$	13,611,649	$	81,322	$	12,131,522	$	25,824,493

Accounts payable and accrued expenses		$	4,483,430	$	75,203	$	277,235	$	4,835,868
Deferred revenue			310,123		—		—		310,123
Finance leases payable			214,961		—		—		214,961
Finance leases payable related party			155,164		—		—		155,164
Operating lease liabilities			36,733		—		—		36,733
Total liabilities		$	5,200,411	$	75,203	$	277,235	$	5,552,849


	As of December 31, 2023

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	1,229,820	$	30,152		—	$	1,259,972
Prepaid expenses and other current assets			419,254		18,157		75,764		513,175
Net property and equipment			2,727,225		2,905		2,644		2,732,774
Intangible assets, net			1,698,084		—		—		1,698,084
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			62,981		—		—		62,981
All other assets			—		—		12,795,362		12,795,362
Total assets		$	10,376,035	$	51,214	$	12,873,770	$	23,301,019

Accounts payable and accrued expenses		$	2,020,963	$	65,161	$	522,814	$	2,608,938
Deferred revenue			336,201		—		—		336,201
Finance leases payable			281,241		—		—		281,241
Finance leases payable related party			256,241		—		—		256,241
Operating lease liabilities			63,983		—		—		63,983
Total liabilities		$	2,958,629	$	65,161	$	522,814	$	3,546,604


	For the three months ended March 31, 2024

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	7,954,958		$	280,789		$	—		$	8,235,747
Cost of sales			5,102,635			166,640			—			5,269,275
Gross profit			2,852,323			114,149			—			2,966,472

Selling, general and administrative			1,631,897			176,879			648,703			2,457,479
Depreciation and amortization			294,794			211			193			295,198
Total operating expenses			1,926,691			177,090			648,896			2,752,677

Income (loss) from operations			925,632			(62,941	)		(648,896	)		213,795

Interest income			—			—			143,369			143,369
Interest expense			(11,260	)		—			—			(11,260	)
Total other income (expense)			(11,260	)		—			143,369			132,109

Income (Loss) before provision for income taxes		$	914,372		$	(62,941	)	$	(505,527	)	$	345,904


	For the three months ended March 31, 2023

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	6,614,927		$	264,796		$	—		$	6,879,723
Cost of sales			4,611,857			178,121			—			4,789,978
Gross profit			2,003,070			86,675			—			2,089,745

Selling, general and administrative			1,146,779			124,750			570,520			1,842,049
Depreciation and amortization			288,525			71			114			288,710
Total operating expenses			1,435,304			124,821			570,634			2,130,759

Income (loss) from operations			567,766			(38,146	)		(570,634	)		(41,014	)

Interest income						—			103,423			103,423
Interest expense			(27,346	)		—			—			(27,346	)
Total Other Income (Expense)			(27,346	)		—			103,423			76,077

Income (loss) before provision for income taxes		$	540,420		$	(38,146	)	$	(467,211	)	$	35,063

Subsequent Events

3 Months Ended

Mar. 31, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 13 - Subsequent Events

Subsequent to March 31, 2024, options were exercised to obtain 21,667 shares of common stock. These options were exercised for $50,209.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Reclassifications

Reclassifications

Recently Issued and Newly Adopted Accounting Pronouncements

Recently Issued and Newly Adopted Accounting Pronouncements

Use of Estimates

Use of Estimates

Estimated Fair Value of Financial Instruments

Estimated Fair Value of Financial Instruments

The fair value measurement disclosures are grouped into three levels based on valuation factors:

●

Level 1 – quoted prices in active markets for identical investments

●

Level 2 – other significant observable inputs (including quoted prices for similar investments and market corroborated inputs)

●

Level 3 – significant unobservable inputs (including our own assumptions in determining the fair value of investments)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Cash and Cash Equivalents

Cash and Cash Equivalents

Investments

Investments

The following table sets forth a summary of the changes in equity investments during the three months ended March 31, 2024, and the year ended December 31, 2023:


	For the year ended December 31, 2023
	Total
As of January 1, 2023	$	9,010,968
Purchase of equity investments		2,307,228
Unrealized gains		—
As of December 31, 2023	$	11,318,196

	For the three months ended March 31, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		143,369
Unrealized gains		—
Sale of equity investments		(200,000	)
As of March 31, 2024	$	11,261,565

Concentration of Credit Risk and Other Risks and Uncertainties

Concentration of Credit Risk and Other Risks and Uncertainties

The Company’s customers are primarily concentrated in the United States.

Accounts Receivable / Provision for Credit Losses

Accounts Receivable / Provision for Credit Losses

Property and Equipment

Property and Equipment

Goodwill and Other Intangibles

Goodwill and Other Intangibles

Revenue Recognition

Revenue Recognition

Nature of goods and services

Cloud Infrastructure and Disaster Recovery Revenue

Managed Services

Equipment and Software

Nexxis Voice over Internet and Direct Internet Access

Disaggregation of revenue

In the following table, revenue is disaggregated by major product line, geography, and timing of revenue recognition.


For the Three Months
Ended March 31, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,853,249	$	99,646	$	2,952,895
Equipment and Software		4,084,647		—		4,084,647
Managed Services		843,407		—		843,407
Nexxis VoIP Services		276,467		—		276,467
Other		67,893		10,438		78,331
Total Revenue	$	8,125,663	$	110,084	$	8,235,747

For the Three Months
Ended March 31, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,137,317	$	52,324	$	2,189,641
Equipment and Software		3,504,796		—		3,504,796
Managed Services		876,423		35,107		911,530
Nexxis VoIP Services		231,772		—		231,772
Other		41,984		—		41,984
Total Revenue	$	6,792,292	$	87,431	$	6,879,723

For the Three Months
Ended March 31,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	1,045,977	$	3,564,543
Products and services transferred over time		7,189,770		3,315,180
Total Revenue	$	8,235,747	$	6,879,723

Sales are generally recorded in the month the service is provided. For clients who are billed on an annual basis, deferred revenue is recorded and amortized over the life of the contract.

Transaction price allocated to the remaining performance obligations

The Company has the following performance obligations:

2)	High Availability: A managed cloud subscription-based service that provides cost-effective mirroring software replication technology and provides one (1) hour or less recovery time for a client to be back in business.

3)	Cloud Infrastructure: subscription-based cloud service provides for “capacity on-demand” for IBM Power and X86 Intel server systems.

4)	Internet: Subscription-based service, offering continuous internet connection combined with FailSAFE which provides disaster recovery for both a clients’ voice and data environments.

5)	Support and Maintenance: Subscription based service offers support for clients on their servers, firewalls, desktops, or software. Services are provided 24x7x365 to the Company’s clients.

6)	Implementation / Set-Up Fees: Onboarding and set-up for cloud infrastructure and disaster recovery as well as Cyber Security.

7)	Equipment sales: Sale of servers and data storage equipment to the client.

9)	License: Granting SSL certificates and licenses.

Disaster Recovery and Business Continuity Solutions

Disaster Recovery and Business Continuity Solutions

Initial Set-Up Fees

Initial Set-Up Fees

Equipment Sales

Equipment Sales

License - granting SSL certificates and other licenses

License - granting SSL certificates and other licenses

Payment Terms

Payment Terms

Warranties

Warranties

The Company offers guaranteed service levels and service guarantees on some of its contracts. These warranties are not sold separately and are accounted as “assurance warranties.”

Significant Judgement

Significant Judgement

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Advertising Costs

Advertising Costs

Stock-Based Compensation

Stock-Based Compensation

Net Income Per Common Share

Net Income Per Common Share

The following table sets forth the information needed to compute basic and diluted earnings per share for the three months ended March 31, 2024, and 2023:


	Three Months ended March 31,
	2024		2023

Net Income Available to Common Shareholders	$	357,102	$	50,666

Weighted average number of common shares - basic		7,090,389		6,822,127
Dilutive securities
Options		169,083		130,526
Warrants		—		1,667
Weighted average number of common shares - diluted		7,259,472		6,954,320

Earnings per share, basic	$	0.05	$	0.01
Earnings per share, diluted	$	0.05	$	0.01

The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share because their effect was anti-dilutive:

Schedule of anti-dilutive shares
		Three Months ended March 31,
		2024		2023
	Options		560,071		385,257
	Warrants		2,415,860		2,415,860
			2,975,931		2,801,117

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of changes in equity investments measured at fair value


	For the year ended December 31, 2023
	Total
As of January 1, 2023	$	9,010,968
Purchase of equity investments		2,307,228
Unrealized gains		—
As of December 31, 2023	$	11,318,196

	For the three months ended March 31, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		143,369
Unrealized gains		—
Sale of equity investments		(200,000	)
As of March 31, 2024	$	11,261,565

Schedule of revenue is disaggregated by major product


For the Three Months
Ended March 31, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,853,249	$	99,646	$	2,952,895
Equipment and Software		4,084,647		—		4,084,647
Managed Services		843,407		—		843,407
Nexxis VoIP Services		276,467		—		276,467
Other		67,893		10,438		78,331
Total Revenue	$	8,125,663	$	110,084	$	8,235,747

For the Three Months
Ended March 31, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,137,317	$	52,324	$	2,189,641
Equipment and Software		3,504,796		—		3,504,796
Managed Services		876,423		35,107		911,530
Nexxis VoIP Services		231,772		—		231,772
Other		41,984		—		41,984
Total Revenue	$	6,792,292	$	87,431	$	6,879,723

For the Three Months
Ended March 31,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	1,045,977	$	3,564,543
Products and services transferred over time		7,189,770		3,315,180
Total Revenue	$	8,235,747	$	6,879,723

Schedule of earning per share basic and diluted


	Three Months ended March 31,
	2024		2023

Net Income Available to Common Shareholders	$	357,102	$	50,666

Weighted average number of common shares - basic		7,090,389		6,822,127
Dilutive securities
Options		169,083		130,526
Warrants		—		1,667
Weighted average number of common shares - diluted		7,259,472		6,954,320

Earnings per share, basic	$	0.05	$	0.01
Earnings per share, diluted	$	0.05	$	0.01

Schedule of anti-dilutive shares

Schedule of anti-dilutive shares
		Three Months ended March 31,
		2024		2023
	Options		560,071		385,257
	Warrants		2,415,860		2,415,860
			2,975,931		2,801,117

Prepaids and other current assets (Tables)

3 Months Ended

Mar. 31, 2024

Prepaids And Other Current Assets

Schedule of prepaids and other current assets


	March 31,		December 31,
	2024		2023
Prepaid marketing & promotion	$	53,350	$	13,525
Prepaid subscriptions and license		452,610		362,760
Prepaid maintenance		31,532		31,311
Prepaid insurance		93,589		63,247
Other		35,876		42,332
Total prepaids and other current assets	$	666,957	$	513,175

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Schedule of property and equipment
	March 31,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		21,625			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		123,792			117,379
Data center equipment		7,970,174			7,617,950
Gross Property and equipment		8,196,862			7,838,225
Less: Accumulated depreciation		(5,331,503	)		(5,105,451	)
Net property and equipment	$	2,865,359		$	2,732,774

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill and intangible assets


	Estimated life in years		Gross amount		December 31, 2023, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,434,218		1,179,881
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		29,067		3,935
Total intangible assets subject to amortization				3,889,248		2,705,432		1,183,816
Total Goodwill and Intangible Assets			$	8,642,187	$	2,705,432	$	5,936,755

	Estimated life in years		Gross amount		March 31, 2024, Accumulated Amortization		Net
Intangible assets not subject to amortization
Goodwill		Indefinite	$	4,238,671	$	—	$	4,238,671
Trademarks		Indefinite		514,268		—		514,268

Total intangible assets not subject to amortization				4,752,939		—		4,752,939
Intangible assets subject to amortization
Customer lists		7		2,614,099		1,501,004		1,113,095
ABC acquired contracts		5		310,000		310,000		—
SIAS acquired contracts		5		660,000		660,000		—
Non-compete agreements		4		272,147		272,147		—
Website and Digital Assets		3		33,002		31,428		1,574
Total intangible assets subject to amortization				3,889,248		2,774,579		1,114,669
Total Goodwill and Intangible Assets			$	8,642,187	$	2,774,579	$	5,867,608

Schedule of amortization over the next five years


Period ending December 31,
	2024	$	201,931
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,114,669

Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases

Schedule of components of lease expense

Schedule of components of lease expense
	Three Months Ended March 31, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	196,069
Interest on lease liabilities, included in interest expense		8,855
Operating lease:
Amortization of assets, included in total operating expense		27,250
Interest on lease liabilities, included in total operating expense		515
Total net lease cost	$	232,689
Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	36,160

Current operating lease liabilities	$	36,733
Noncurrent operating lease liabilities		—
Total operating lease liabilities	$	36,733

	March 31, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,689,273	)
Property and equipment, net	$	832,443

Current obligations of finance leases	$	370,125
Finance leases, net of current obligations		—
Total finance lease liabilities	$	370,125

Schedule of supplemental cash flow and other information related to leases


	Three Months Ended March 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	27,250
Financing cash flows related to finance leases	$	167,358

Weighted average remaining lease term (in years):
Operating leases		0.84
Finance leases		0.80

Weighted average discount rate:
Operating leases		4	%
Finance leases		7	%

Schedule of long term obligations operating and finance leases


For the Twelve Months Ended March 31,	Operating Leases			Finance Leases
2024		37,020			381,829
2025		—			—
Total lease payments		37,020			381,829
Less: Amounts representing interest		(287	)		(11,704	)
Total lease obligations		36,733			370,125
Less: long-term obligations		—			—
Total current	$	36,733		$	370,125

Stockholders’ Equity (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Schedule of options activity and related information


	Number of			Weighted		Weighted
	Shares			Average		Average
	Under			Exercise		Contractual
	Options			Price		Life
Options Outstanding at December 31, 2023		595,347		$	3.46		5.82
Options Granted		136,255			3.32		5.15
Exercised		—			—		—
Expired/Cancelled		(2,448	)		5.41		—
Options Outstanding at March 31, 2024		729,154		$	2.66		6.83

Options Exercisable at March 31, 2024		282,072		$	2.97		5.91

Schedule of weighted average fair value of options granted


	2024			2023
Weighted average fair value of options granted	$	3.32		$	1.77
Risk-free interest rate		3.94% - 4.21	%		3.48% – 4.01	%
Volatility		126 – 159	%		196% – 199	%
Expected life (years)		3.5 – 6 years			10 years
Dividend yield		—	%		—	%

Schedule of non-vested restricted stock units


Restricted Stock Units (RSUs)	Shares		Weighted Average Fair Value $
RSUs non-vested at January 1, 2024		208,472		1.90
RSUs granted		84,559		3.40
RSUs vested		49,490		1.74
RSUs forfeited		—		—
RSUs non-vested at March 31, 2024		243,541		2.45

Segment Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Schedule of segment reporting income or losses


Operations of:		Products and services provided:

CloudFirst Technologies Corporation		CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts.
Nexxis Inc.		Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment.

Schedule of financial information related to reportable segments


	As of March 31, 2024

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	4,388,536	$	49,130		—	$	4,437,666
Prepaid expenses and other current assets			459,130		29,498		178,329		666,957
Net property and equipment			2,860,215		2,694		2,450		2,865,359
Intangible assets, net			1,628,937		—		—		1,628,937
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			36,160		—		—		36,160
All other assets			—		—		11,950,743		11,950,743
Total assets		$	13,611,649	$	81,322	$	12,131,522	$	25,824,493

Accounts payable and accrued expenses		$	4,483,430	$	75,203	$	277,235	$	4,835,868
Deferred revenue			310,123		—		—		310,123
Finance leases payable			214,961		—		—		214,961
Finance leases payable related party			155,164		—		—		155,164
Operating lease liabilities			36,733		—		—		36,733
Total liabilities		$	5,200,411	$	75,203	$	277,235	$	5,552,849


	As of December 31, 2023

		CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable		$	1,229,820	$	30,152		—	$	1,259,972
Prepaid expenses and other current assets			419,254		18,157		75,764		513,175
Net property and equipment			2,727,225		2,905		2,644		2,732,774
Intangible assets, net			1,698,084		—		—		1,698,084
Goodwill			4,238,671		—		—		4,238,671
Operating lease right-of-use assets			62,981		—		—		62,981
All other assets			—		—		12,795,362		12,795,362
Total assets		$	10,376,035	$	51,214	$	12,873,770	$	23,301,019

Accounts payable and accrued expenses		$	2,020,963	$	65,161	$	522,814	$	2,608,938
Deferred revenue			336,201		—		—		336,201
Finance leases payable			281,241		—		—		281,241
Finance leases payable related party			256,241		—		—		256,241
Operating lease liabilities			63,983		—		—		63,983
Total liabilities		$	2,958,629	$	65,161	$	522,814	$	3,546,604


	For the three months ended March 31, 2024

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	7,954,958		$	280,789		$	—		$	8,235,747
Cost of sales			5,102,635			166,640			—			5,269,275
Gross profit			2,852,323			114,149			—			2,966,472

Selling, general and administrative			1,631,897			176,879			648,703			2,457,479
Depreciation and amortization			294,794			211			193			295,198
Total operating expenses			1,926,691			177,090			648,896			2,752,677

Income (loss) from operations			925,632			(62,941	)		(648,896	)		213,795

Interest income			—			—			143,369			143,369
Interest expense			(11,260	)		—			—			(11,260	)
Total other income (expense)			(11,260	)		—			143,369			132,109

Income (Loss) before provision for income taxes		$	914,372		$	(62,941	)	$	(505,527	)	$	345,904


	For the three months ended March 31, 2023

		CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales		$	6,614,927		$	264,796		$	—		$	6,879,723
Cost of sales			4,611,857			178,121			—			4,789,978
Gross profit			2,003,070			86,675			—			2,089,745

Selling, general and administrative			1,146,779			124,750			570,520			1,842,049
Depreciation and amortization			288,525			71			114			288,710
Total operating expenses			1,435,304			124,821			570,634			2,130,759

Income (loss) from operations			567,766			(38,146	)		(570,634	)		(41,014	)

Interest income						—			103,423			103,423
Interest expense			(27,346	)		—			—			(27,346	)
Total Other Income (Expense)			(27,346	)		—			103,423			76,077

Income (loss) before provision for income taxes		$	540,420		$	(38,146	)	$	(467,211	)	$	35,063

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Fair value of investments, beginning balance	$ 11,318,196	$ 9,010,968
Purchase of equity investments	143,369	2,307,228
Unrealized gains	0	0
Sale of equity investments	(200,000)
Fair value of investments, ending balance	$ 11,261,565	$ 11,318,196

Summary of Significant Accounting Policies (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Product Information [Line Items]
Disaggregation of revenue	$ 8,235,747	$ 6,879,723
Transferred at Point in Time [Member]
Product Information [Line Items]
Disaggregation of revenue	1,045,977	3,564,543
Transferred over Time [Member]
Product Information [Line Items]
Disaggregation of revenue	7,189,770	3,315,180
UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	8,125,663	6,792,292
International [Member]
Product Information [Line Items]
Disaggregation of revenue	110,084	87,431
Service [Member]
Product Information [Line Items]
Disaggregation of revenue	2,952,895	2,189,641
Service [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	2,853,249	2,137,317
Service [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	99,646	52,324
Equipment and Software [Member]
Product Information [Line Items]
Disaggregation of revenue	4,084,647	3,504,796
Equipment and Software [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	4,084,647	3,504,796
Equipment and Software [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	0
Managed Services [Member]
Product Information [Line Items]
Disaggregation of revenue	843,407	911,530
Managed Services [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	843,407	876,423
Managed Services [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	35,107
Nexxis Voip Services [Member]
Product Information [Line Items]
Disaggregation of revenue	276,467	231,772
Nexxis Voip Services [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	276,467	231,772
Nexxis Voip Services [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	0
Other [Member]
Product Information [Line Items]
Disaggregation of revenue	78,331	41,984
Other [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	67,893	41,984
Other [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	$ 10,438	$ 0

Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accounting Policies [Abstract]
Net Income Available to Common Shareholders	$ 357,102	$ 50,666
Weighted average number of common shares - basic	7,090,389	6,822,127
Dilutive securities
Options	169,083	130,526
Warrants	0	1,667
Weighted average number of common shares - diluted	7,259,472	6,954,320
Earnings per share, basic	$ 0.05	$ 0.01
Earnings per share, diluted	$ 0.05	$ 0.01

Summary of Significant Accounting Policies (Details 3) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	2,975,931	2,801,117
Warrant [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	2,415,860	2,415,860
Options Held [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	560,071	385,257

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Product Information [Line Items]
Cash and cash equivalents	$ 640,742		$ 1,428,730
Bad debt expense	54,136	$ 3,886
Advertising Expense	$ 232,240	$ 189,878
One Customer [Member] \| Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration Risk, Percentage	59.00%		20.00%
One Customer [Member] \| Revenue Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration Risk, Percentage	32.00%	33.00%

Prepaids and other current assets (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Prepaids And Other Current Assets
Prepaid marketing & promotion	$ 53,350	$ 13,525
Prepaid subscriptions and license	452,610	362,760
Prepaid maintenance	31,532	31,311
Prepaid insurance	93,589	63,247
Other	35,876	42,332
Total prepaids and other current assets	$ 666,957	$ 513,175

Property and Equipment (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 8,196,862	$ 7,838,225
Less: Accumulated depreciation	(5,331,503)	(5,105,451)
Net property and equipment	2,865,359	2,732,774
Technology Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	60,288	60,288
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	21,625	21,625
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	20,983	20,983
Computer Hardware And Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	123,792	117,379
Data Center Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 7,970,174	$ 7,617,950

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 226,051	$ 218,979

Goodwill and Intangible Assets (Details) - USD ($)	3 Months Ended	12 Months Ended
Goodwill and Intangible Assets (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Total intangible assets not subject to amortization, gross amount	$ 4,752,939	$ 4,752,939
Total intangible assets not subject to amortization, accumulated amortization	0	0
Total intangible assets not subject to amortization, net	4,752,939	4,752,939
Total intangible assets subject to amortization, gross amount	3,889,248	3,889,248
Total intangible assets subject to amortization, accumulated amortization	2,774,579	2,705,432
Total intangible assets subject to amortization, net	1,114,669	1,183,816
Total goodwill and intangible assets, gross amount	8,642,187	8,642,187
Total goodwill and intangible assets, accumulated amortization	2,774,579	2,705,432
Total goodwill and intangible assets, net	$ 5,867,608	$ 5,936,755
Goodwill [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life in years	Indefinite	Indefinite
Total intangible assets not subject to amortization, gross amount	$ 4,238,671	$ 4,238,671
Total intangible assets not subject to amortization, accumulated amortization	0	0
Total intangible assets not subject to amortization, net	$ 4,238,671	$ 4,238,671
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated life in years	Indefinite	Indefinite
Total intangible assets not subject to amortization, gross amount	$ 514,268	$ 514,268
Total intangible assets not subject to amortization, accumulated amortization	0	0
Total intangible assets not subject to amortization, net	$ 514,268	$ 514,268
Customer Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	7 years	7 years
Total intangible assets subject to amortization, gross amount	$ 2,614,099	$ 2,614,099
Total intangible assets subject to amortization, accumulated amortization	1,501,004	1,434,218
Total intangible assets subject to amortization, net	$ 1,113,095	$ 1,179,881
ABC Acquired Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	5 years	5 years
Total intangible assets subject to amortization, gross amount	$ 310,000	$ 310,000
Total intangible assets subject to amortization, accumulated amortization	310,000	310,000
Total intangible assets subject to amortization, net	$ 0	$ 0
SIAS Acquired Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	5 years	5 years
Total intangible assets subject to amortization, gross amount	$ 660,000	$ 660,000
Total intangible assets subject to amortization, accumulated amortization	660,000	660,000
Total intangible assets subject to amortization, net	$ 0	$ 0
Noncompete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	4 years	4 years
Total intangible assets subject to amortization, gross amount	$ 272,147	$ 272,147
Total intangible assets subject to amortization, accumulated amortization	272,147	272,147
Total intangible assets subject to amortization, net	$ 0	$ 0
Website And Digital Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	3 years	3 years
Total intangible assets subject to amortization, gross amount	$ 33,002	$ 33,002
Total intangible assets subject to amortization, accumulated amortization	31,428	29,067
Total intangible assets subject to amortization, net	$ 1,574	$ 3,935

Goodwill and Intangible Assets (Details 1)	Mar. 31, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 201,931
2025	267,143
2026	267,143
2027	267,143
2028	111,309
Thereafter	0
Total	$ 1,114,669

Goodwill and Intangible Assets (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 69,147	$ 69,731

Leases (Details) - USD ($)	3 Months Ended
Leases (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Leases
Amortization of assets, included in depreciation and amortization expense	$ 196,069
Interest on lease liabilities, included in interest expense	8,855
Amortization of assets, included in total operating expense	27,250
Interest on lease liabilities, included in total operating expense	515
Total net lease cost	232,689
Operating lease right-of-use asset	36,160	$ 62,981
Current operating lease liabilities	36,733	63,983
Noncurrent operating lease liabilities	0
Total operating lease liabilities	36,733	$ 63,983
Property and equipment, at cost	5,521,716
Accumulated amortization	(4,689,273)
Property and equipment, net	832,443
Current obligations of finance leases	370,125
Finance leases, net of current obligations	0
Total finance lease liabilities	$ 370,125

Leases (Details 1)	3 Months Ended
Leases (Details 1)	Mar. 31, 2024 USD ($)
Leases
Operating cash flows related to operating leases	$ 27,250
Financing cash flows related to finance leases	$ 167,358
Weighted average remaining lease term (in years): Operating leases	10 months 2 days
Weighted average remaining lease term (in years): Finance leases	9 months 18 days
Weighted average discount rate: Operating leases	4.00%
Weighted average discount rate: Finance leases	7.00%

Leases (Details 2) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Leases
Operating Leases 2024	$ 37,020
Finance Leases 2024	381,829
Operating Leases 2025	0
Finance Leases 2025	0
Operating leases total lease payments	37,020
Finance leases total lease payments	381,829
Operating leases less: amounts representing interest	(287)
Finance leases less: amounts representing interest	(11,704)
Operating leases total lease obligations	36,733	$ 63,983
Finance leases total lease obligations	370,125
Operating leases less: long-term obligations	0
Finance leases less: long-term obligations	0
Operating leases total current	36,733
Finance leases total current	$ 370,125

Leases (Details Narrative) - USD ($)									3 Months Ended
Leases (Details Narrative) - USD ($)	May 07, 2024	Apr. 10, 2024	Jan. 17, 2024	Apr. 02, 2022	Jan. 02, 2022	Nov. 01, 2021	Jul. 31, 2021	Mar. 04, 2021	Mar. 31, 2024	Mar. 31, 2023	Jul. 01, 2022
Subsequent Event [Line Items]
Annual rent									$ 11,856
Operating leases contingent monthly rental payments									$ 988
Monthly lease rent							$ 4,965
Annual base rent		$ 355	$ 11,931		$ 1,470
Lease expiration date		Oct. 30, 2029	Oct. 30, 2029		Jun. 30, 2022
Month to month lease payment											$ 3,073
Interest rate		3.00%
Discount rate									5.00%
Operating leases rent expenses net									$ 73,303	$ 60,572
Systems Trading [Member]
Subsequent Event [Line Items]
Operating leases contingent monthly rental payments				$ 6,667	$ 7,145			$ 1,567
Lease expiration date				Mar. 01, 2025	Feb. 01, 2025			Mar. 01, 2024
Interest rate				8.00%	8.00%			8.00%
Technical Equipment [Member]
Subsequent Event [Line Items]
Lease expiration date					Feb. 01, 2025	Nov. 01, 2024
Interest rate					5.00%	6.00%
Finance leases contingent monthly rental payments					$ 17,718	$ 3,152
Technical Equipment [Member] \| Subsequent Event [Member]
Subsequent Event [Line Items]
Lease expiration date	Jun. 01, 2029
Finance leases contingent monthly rental payments	$ 51,680
Technical Equipment 1 [Member]
Subsequent Event [Line Items]
Lease expiration date					Jan. 01, 2025
Interest rate					6.00%
Finance leases contingent monthly rental payments					$ 2,037

Commitments and Contingencies (Details Narrative)	3 Months Ended
Commitments and Contingencies (Details Narrative)	Mar. 31, 2024 USD ($)
Loss Contingencies [Line Items]
Accrued expenses	$ 89,000
Minimum [Member]
Loss Contingencies [Line Items]
Accrued expenses	75,000
Maximum [Member]
Loss Contingencies [Line Items]
Accrued expenses	97,000
Flagship Acquisition [Member]
Loss Contingencies [Line Items]
Business acquisition	$ 600,000
Business acquisition period	3 years

Stockholders' Equity (Details) - Share-Based Payment Arrangement, Option [Member] - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares under options outstanding, beginning	595,347
Weighted average exercise price outstanding, beginning	$ 3.46
Weighted average contractual life	6 years 9 months 29 days	5 years 9 months 25 days
Number of shares under options, granted	136,255
Weighted average exercise price, granted	$ 3.32
Weighted average contractual life, granted	5 years 1 month 24 days
Number of shares under options, exercised	0
Weighted average exercise price, exercised	$ 0
Number of shares under options, expired/cancelled	(2,448)
Weighted average exercise price, expired/cancelled	$ 5.41
Number of shares under options outstanding, ending	729,154	595,347
Weighted average exercise price outstanding, ending	$ 2.66	$ 3.46
Number of shares under options, exercisable	282,072
Weighted average exercise price, exercisable	$ 2.97
Weighted average contractual life, exercisable	5 years 10 months 28 days

Stockholders' Equity (Details 1) - $ / shares	3 Months Ended
Stockholders' Equity (Details 1) - $ / shares	Mar. 31, 2024	Mar. 31, 2023
Weighted average fair value of options granted	$ 3.32	$ 1.77
Expected life (years)		10 years
Dividend yield	0.00%	0.00%
Minimum [Member]
Risk-free interest rate	3.94%	3.48%
Volatility	126.00%	196.00%
Expected life (years)	3 years 6 months
Maximum [Member]
Risk-free interest rate	4.21%	4.01%
Volatility	159.00%	199.00%
Expected life (years)	6 years

Stockholders' Equity (Details 2)	3 Months Ended
Stockholders' Equity (Details 2)	Mar. 31, 2024 $ / shares shares
Equity [Abstract]
RSUs non-vested shares, beginning \| shares	208,472
Weighted average fair value, beginning \| $ / shares	$ 1.90
RSUs granted shares \| shares	84,559
Weighted average fair value, granted \| $ / shares	$ 3.40
RSUs vested shares \| shares	49,490
Weighted average fair value, vested \| $ / shares	$ 1.74
RSUs forfeited shares \| shares	0
Weighted average fair value, forfeited \| $ / shares	$ 0
RSUs non-vested shares, ending \| shares	243,541
Weighted average fair value, ending \| $ / shares	$ 2.45

Stockholders’ Equity (Details Narrative) - USD ($)		3 Months Ended
Stockholders’ Equity (Details Narrative) - USD ($)	Jan. 02, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Class of Stock [Line Items]
Capital stock authorized		260,000,000
Common stock, authorized		250,000,000		250,000,000
Common stock, par value		$ 0.001		$ 0.001
Share-based compensation expense for options		$ 104,163	$ 54,433
Intrinsic value of stock options outstanding		653,725		$ 391,283
Total unrecognized compensation expense		$ 851,984
Weighted average period expected to recognized compensation expense (in years)		1 year 7 months 6 days
Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Share-based compensation expense for options		$ 67,162	$ 52,285
Total unrecognized compensation expense		$ 505,795
Weighted average period expected to recognized compensation expense (in years)		1 year 6 months
Shares granted	53,328	14,166
Restricted stock expense	$ 156,251	$ 81,030
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, authorized		10,000,000		10,000,000
Preferred stock, par value		$ 0.001		$ 0.001

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Proceeds from related party debt	$ 0	$ 0
Eisner Maglione CPAs LLC [Member]
Repayment of related party	$ 3,700	$ 495

Segment Information (Details)	3 Months Ended
Segment Information (Details)	Mar. 31, 2024
Cloud First Technologies Corporation [Member]
Revenue from External Customer [Line Items]
Products and services provided	CloudFirst provides services from CloudFirst technological assets deployed in six Tier 3 data centers throughout the USA and Canada. This technology has been developed by CloudFirst. Clients are invoiced for cloud infrastructure and disaster recovery on the CloudFirst platform. Services provided to clients are provided on a subscription basis on long term contracts.
Nexxis Inc [Member]
Revenue from External Customer [Line Items]
Products and services provided	Nexxis is a single-source solution provider that delivers fully-managed cloud-based voice services, data transport, internet access, and SD-WAN solutions focused on business continuity for today’s modern business environment.

Segment Information (Details 1) - USD ($)	3 Months Ended
Segment Information (Details 1) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Segment Reporting Information [Line Items]
Accounts receivable	$ 4,437,666		$ 1,259,972
Prepaid expenses and other current assets	666,957		513,175
Net property and equipment	2,865,359		2,732,774
Intangible assets, net	1,628,937		1,698,084
Goodwill	4,238,671		4,238,671
Operating lease right-of-use assets	36,160		62,981
All other assets	11,950,743		12,795,362
Total assets	25,824,493		23,301,019
Accounts payable and accrued expenses	4,835,868		2,608,938
Deferred revenue	310,123		336,201
Finance leases payable	214,961		281,241
Finance leases payable related party	155,164		256,241
Operating lease liabilities	36,733		63,983
Total liabilities	5,552,849		3,546,604
Sales	8,235,747	$ 6,879,723
Cost of sales	5,269,275	4,789,978
Gross profit	2,966,472	2,089,745
Selling, general and administrative	2,457,479	1,842,049
Depreciation and amortization	295,198	288,710
Total operating expenses	2,752,677	2,130,759
Income (loss) from operations	213,795	(41,014)
Interest income	143,369	103,423
Interest expense	(11,260)	(27,346)
Total Other Income (Expense)	132,109	76,077
Income (loss) before provision for income taxes	345,904	35,063
Cloud First Technologies [Member]
Segment Reporting Information [Line Items]
Accounts receivable	4,388,536		1,229,820
Prepaid expenses and other current assets	459,130		419,254
Net property and equipment	2,860,215		2,727,225
Intangible assets, net	1,628,937		1,698,084
Goodwill	4,238,671		4,238,671
Operating lease right-of-use assets	36,160		62,981
All other assets	0		0
Total assets	13,611,649		10,376,035
Accounts payable and accrued expenses	4,483,430		2,020,963
Deferred revenue	310,123		336,201
Finance leases payable	214,961		281,241
Finance leases payable related party	155,164		256,241
Operating lease liabilities	36,733		63,983
Total liabilities	5,200,411		2,958,629
Sales	7,954,958	6,614,927
Cost of sales	5,102,635	4,611,857
Gross profit	2,852,323	2,003,070
Selling, general and administrative	1,631,897	1,146,779
Depreciation and amortization	294,794	288,525
Total operating expenses	1,926,691	1,435,304
Income (loss) from operations	925,632	567,766
Interest income	0
Interest expense	(11,260)	(27,346)
Total Other Income (Expense)	(11,260)	(27,346)
Income (loss) before provision for income taxes	914,372	540,420
Nexxis Inc [Member]
Segment Reporting Information [Line Items]
Accounts receivable	49,130		30,152
Prepaid expenses and other current assets	29,498		18,157
Net property and equipment	2,694		2,905
Intangible assets, net	0		0
Goodwill	0		0
Operating lease right-of-use assets	0		0
All other assets	0		0
Total assets	81,322		51,214
Accounts payable and accrued expenses	75,203		65,161
Deferred revenue	0		0
Finance leases payable	0		0
Finance leases payable related party	0		0
Operating lease liabilities	0		0
Total liabilities	75,203		65,161
Sales	280,789	264,796
Cost of sales	166,640	178,121
Gross profit	114,149	86,675
Selling, general and administrative	176,879	124,750
Depreciation and amortization	211	71
Total operating expenses	177,090	124,821
Income (loss) from operations	(62,941)	(38,146)
Interest income	0	0
Interest expense	0	0
Total Other Income (Expense)	0	0
Income (loss) before provision for income taxes	(62,941)	(38,146)
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Accounts receivable	0		0
Prepaid expenses and other current assets	178,329		75,764
Net property and equipment	2,450		2,644
Intangible assets, net	0		0
Goodwill	0		0
Operating lease right-of-use assets	0		0
All other assets	11,950,743		12,795,362
Total assets	12,131,522		12,873,770
Accounts payable and accrued expenses	277,235		522,814
Deferred revenue	0		0
Finance leases payable	0		0
Finance leases payable related party	0		0
Operating lease liabilities	0		0
Total liabilities	277,235		$ 522,814
Sales	0	0
Cost of sales	0	0
Gross profit	0	0
Selling, general and administrative	648,703	570,520
Depreciation and amortization	193	114
Total operating expenses	648,896	570,634
Income (loss) from operations	(648,896)	(570,634)
Interest income	143,369	103,423
Interest expense	0	0
Total Other Income (Expense)	143,369	103,423
Income (loss) before provision for income taxes	$ (505,527)	$ (467,211)

Subsequent Events (Details Narrative) - Subsequent Event [Member]	Apr. 02, 2024 USD ($) shares
Subsequent Event [Line Items]
Options exercised, shares \| shares	21,667
Options exercised, value \| $	$ 50,209

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DTSTW Data Storage Corporation