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

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 June 30, 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 Number: 001-35384

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 pursuant to Section 12(b) of the 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 S-T (§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 or 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, $0.001 par value per share, outstanding as of August 14, 2024, was 6,995,822.

DATA STORAGE CORPORATION

FORM 10-Q

INDEX

			Page
PART I- FINANCIAL INFORMATION

	Item 1	Financial Statements

		Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	2

		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)	3

		Condensed Consolidated Statements of Stockholders’ Equity for three and six months ended June 30, 2024 and 2023 (unaudited)	4

		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

	Item 4.	Control and Procedures	35

PART II- OTHER INFORMATION			36

	Item 1.	Legal Proceedings	36

	Item 1A.	Risk Factors	36

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

	Item 3.	Defaults Upon Senior Securities	37

	Item 4.	Mine Safety Disclosures	37

	Item 5.	Other Information	37

	Item 6.	Exhibits	38

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024 (Unaudited)			December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	779,986		$	1,428,730
Accounts receivable (less provision for credit losses of $22,596 and $7,915 in 2024 and 2023, respectively)		1,904,759			1,259,972
Marketable securities		11,214,006			11,318,196
Prepaid expenses and other current assets		759,979			513,175
Total Current Assets		14,658,730			14,520,073

Property and Equipment:
Property and equipment		8,740,796			7,838,225
Less—Accumulated depreciation		(5,602,454	)		(5,105,451	)
Net Property and Equipment		3,138,342			2,732,774

Other Assets:
Goodwill		4,238,671			4,238,671
Operating lease right-of-use assets		632,733			62,981
Other assets		109,843			48,436
Intangible assets, net		1,560,577			1,698,084
Total Other Assets		6,541,824			6,048,172

Total Assets	$	24,338,896		$	23,301,019

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,924,572		$	2,608,938
Deferred revenue		208,944			336,201
Finance leases payable		147,769			263,600
Finance leases payable related party		113,467			235,944
Operating lease liabilities short term		65,983			63,983
Total Current Liabilities		3,460,735			3,508,666

Operating lease liabilities		574,182			—
Finance leases payable		—			17,641
Finance leases payable related party		—			20,297
Total Long-Term Liabilities		574,182			37,938

Total Liabilities		4,034,917			3,546,604

Commitments and contingencies (Note 7)		—			—

Stockholders’ Equity:
Preferred stock, Series A par value $0.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		—			—
Common stock, par value $0.001; 250,000,000 shares authorized; 6,995,822 and 6,880,460 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively		6,995			6,881
Additional paid in capital		39,940,436			39,490,285
Accumulated deficit		(19,392,941	)		(19,505,803	)
Total Data Storage Corporation Stockholders’ Equity		20,554,490			19,991,363
Non-controlling interest in consolidated subsidiary		(250,511	)		(236,948	)
Total Stockholder’s Equity		20,303,979			19,754,415
Total Liabilities and Stockholders’ Equity	$	24,338,896		$	23,301,019

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023

Sales	$	4,910,492		$	5,904,391		$	13,146,239		$	12,784,114

Cost of sales		2,502,599			3,325,637			7,771,874			8,115,615

Gross Profit		2,407,893			2,578,754			5,374,365			4,668,499

Selling, general and administrative		2,796,679			2,472,010			5,549,356			4,602,769

Income (Loss) from Operations		(388,786	)		106,744			(174,991	)		65,730

Other Income (Expense)
Interest income		152,441			120,058			295,810			223,482
Interest expense		(10,260	)		(20,764	)		(21,520	)		(48,111	)
Total Other Income (Expense)		142,181			99,294			274,290			175,371

(Loss) Income before provision for income taxes		(246,605	)		206,038			99,299			241,101

Provision for income taxes		—			—			—			—

Net (Loss) Income		(246,605	)		206,038			99,299			241,101

Income in Non-controlling interest of consolidated subsidiary		2,365			20,785			13,563			36,388

Net (Loss) Income attributable to Common Stockholders	$	(244,240	)	$	226,823		$	112,862		$	277,489

Net (Loss) Income per Share – Basic	$	(0.04	)	$	0.03		$	0.02		$	0.04
Net (Loss) Income per Share – Diluted	$	(0.04	)	$	0.03		$	0.02		$	0.04
Weighted Average Number of Shares - Basic		6,973,068			6,834,627			6,902,138			6,828,446
Weighted Average Number of Shares - Diluted		6,973,068			7,022,275			7,499,839			7,016,094

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 JUNE 30, 2024 AND 2023

(Unaudited)


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

Balance April 1, 2023		—	$	—		6,834,627	$	6,835	$	39,068,896	$	(19,836,712	)	$	(170,292	)	$	19,068,727
Stock-based compensation		—		—		12,500		12		122,702		—			—			122,714
Net Income (Loss)		—		—		—		—		—		226,823			(20,785	)		206,038
Balance June 30, 2023		—	$	—		6,847,127	$	6,847	$	39,191,598	$	(19,609,889	)	$	(191,077	)	$	19,397,479

Balance April 1, 2024		—	$	—		6,929,950		6,930		39,661,561		(19,148,701	)		(248,146	)		20,271,644
Stock options exercised		—		—		36,546		36		71,057		—			—			71,093
Stock-based compensation		—		—		29,326		29		207,818		—			—			207,847
Net Loss		—		—		—		—		—		(244,240	)		(2,365	)		(246,605	)
Balance June 30, 2024		—	$	—		6,995,822	$	6,995	$	39,940,436	$	(19,392,941	)	$	(250,511	)	$	20,303,979

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 SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

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

Balance January 1, 2023		—	$	—		6,822,127	$	6,822	$	38,982,440	$	(19,887,378	)	$	(154,689	)	$	18,947,195
Stock-based compensation		—		—		25,000		25		209,158		—			—			209,183
Net Income (Loss)		—		—		—		—		—		277,489			(36,388	)		241,101
Balance June 30, 2023		—	$	—		6,847,127	$	6,847	$	39,191,598	$	(19,609,889	)	$	(191,077	)	$	19,397,479

Balance January 1, 2024		—	$	—		6,880,460	$	6,881	$	39,490,285	$	(19,505,803	)	$	(236,948	)	$	19,754,415
Stock Options exercise		—		—		36,546		36		71,057		—			—			71,093
Stock-based compensation		—		—		78,816		78		379,094		—			—			379,172
Net Income (Loss)		—		—		—		—		—		112,862			(13,563	)		99,299
Balance June 30, 2024		—	$	—		6,995,822	$	6,995	$	39,940,436	$	(19,392,941	)	$	(250,511	)	$	20,303,979

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Cash Flows from Operating Activities:
Net Income	$	99,299		$	241,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		634,509			589,660
Stock based compensation		379,172			209,183
Provision for credit losses		21,816			—
Changes in Assets and Liabilities:
Accounts receivable		(666,603	)		1,281,234
Other assets		(61,407	)		—
Prepaid expenses and other current assets		(246,804	)		(151,720	)
Right of use asset		78,206			102,026
Accounts payable and accrued expenses		315,636			(1,119,100	)
Deferred revenue		(127,257	)		33,006
Operating lease liability		(71,776	)		(105,576	)
Net Cash Provided by Operating Activities		354,791			1,079,814
Cash Flows from Investing Activities:
Capital expenditures		(902,571	)		(1,165,724	)
Purchase of marketable securities		(295,810	)		(219,286	)
Sale of marketable securities		400,000			—
Net Cash Used in Investing Activities		(798,381	)		(1,385,010	)
Cash Flows from Financing Activities:
Repayments of finance lease obligations related party		(142,774	)		(308,005	)
Repayments of finance lease obligations		(133,473	)		(236,482	)
Proceeds from exercise of stock options		71,093			—
Net Cash Used in Financing Activities		(205,154	)		(544,487	)

Decrease in Cash and Cash Equivalents		(648,744	)		(849,683	)

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

Cash and Cash Equivalents, End of Period	$	779,986		$	1,437,039
Supplemental Disclosures:
Cash paid for interest	$	14,303		$	41,062
Cash paid for income taxes	$	—		$	—
Non-cash investing and financing activities:
Assets acquired by operating lease	$	647,958		$	—

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

DATA STORAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

(Unaudited)

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 (“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 six months ended June 30, 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 and six months ended June 30, 2024, the Company reclassified disaggregated revenue and had 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 statements.

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 June 30, 2024, approximate their carrying value as reflected in the balance sheet due to their short-term nature. The carrying values of the Company’s finance lease obligations 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 June 30, 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 include 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 June 30, 2024, and December 31, 2023, the Company had cash and cash equivalents of $779,986 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 six months ended June 30, 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
As of December 31, 2023	$	11,318,196

	For the six months ended June 30, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		295,810
Sale of equity investments		(400,000	)
As of June 30, 2024	$	11,214,006

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 June 30, 2024, DSC had one customer with an accounts receivable balance representing 14% 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 June 30, 2024, the Company had one customer that accounted for 14% of revenue. For the three months ended June 30, 2023, the Company had two customers that accounted for 19% and 10% of revenue. For the six months ended June 30, 2024, the Company had two customers that accounted for 22% and 11% of revenue. For the six months ended June 30, 2023, the Company had one customer that accounted for 18% 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 and six months ended June 30, 2024, the Company recorded $(39,455), and $21,816 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 June 30, 2024


	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	3,037,184	$	128,532	$	3,165,716
Equipment and Software		782,303		—		782,303
Managed Services		642,518		—		642,518
Nexxis VoIP Services		275,830		—		275,830
Other		44,125		—		44,125
Total Sales	$	4,781,960	$	128,532	$	4,910,492

For the Three Months

Ended June 30, 2023

	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,366,601	$	51,584	$	2,418,185
Equipment and Software		2,379,822		—		2,379,822
Managed Services		791,816		34,927		826,743
Nexxis VoIP Services		240,712		—		240,712
Other		38,929		—		38,929
Total Sales	$	5,817,880	$	86,511	$	5,904,391

For the Three Months

Ended June 30,

Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	826,427	$	2,418,750
Products and services transferred over time		4,084,065		3,485,641
Total Sales	$	4,910,492	$	5,904,391

For the Six Months
Ended June 30, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	5,890,433	$	228,178	$	6,118,611
Equipment and Software		4,866,950		—		4,866,950
Managed Services		1,485,925		—		1,485,925
Nexxis VoIP Services		552,297		—		552,297
Other		112,018		10,438		122,456
Total Sales	$	12,907,623	$	238,616	$	13,146,239

For the Six Months
Ended June 30, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	4,621,056	$	103,908	$	4,724,964
Equipment and Software		5,902,381		—		5,902,381
Managed Services		1,533,338		70,034		1,603,372
Nexxis VoIP Services		472,484		—		472,484
Other		80,913		—		80,913
Total Sales	$	12,610,172	$	173,942	$	12,784,114

For the Six Months
Ended June 30,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	4,989,406	$	5,983,294
Products and services transferred over time		8,156,833		6,800,820
Total Sales	$	13,146,239	$	12,784,114

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 $249,147 and $226,142 for advertising costs for the three months ended June 30, 2024, and 2023, respectively. The Company incurred $481,387 and $416,020 for advertising costs for the six months ended June 30, 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 and six months ended June 30, 2024, and 2023:


	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2024			2023		2024		2023
Net Income (Loss) Available to Common Shareholders	$	(244,240	)	$	226,823	$	112,862	$	277,489

Weighted average number of common shares - basic		6,973,068			6,834,627		6,902,138		6,828,446
Dilutive securities
Options		—			185,981		363,326		185,981
Warrants		—			1,667		—		1,667
Restricted stock awards		—			—		234,375		—
Weighted average number of common shares - diluted		6,973,068			7,022,275		7,499,839		7,016,094
Earnings (Loss) per share, basic	$	(0.04	)	$	0.03	$	0.02	$	0.04
Earnings (Loss) per share, diluted	$	(0.04	)	$	0.03	$	0.02	$	0.04

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

Schedule of anti-dilutive shares
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Options		701,346		393,540		338,020		393,540
Warrants		2,495,860		2,415,860		2,495,860		2,415,860
Restricted stock awards		234,375		—		—		—
		3,431,581		2,809,400		2,833,880		2,809,400

Note 3 - Prepaids and other current assets

Prepaids and other current assets consist of the following:


	June 30,		December 31,
	2024		2023
Prepaid marketing & promotion	$	173,815	$	13,525
Prepaid subscriptions and license		347,477		362,760
Prepaid maintenance		144,490		31,311
Prepaid insurance		61,744		63,247
Other		32,453		42,332
Total prepaids and other current assets	$	759,979	$	513,175

Note 4- Property and Equipment

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

Schedule of property and equipment
	June 30,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		32,356			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		126,232			117,379
Data center equipment		8,500,937			7,617,950
Gross Property and equipment		8,740,796			7,838,225
Less: Accumulated depreciation		(5,602,454	)		(5,105,451	)
Net property and equipment	$	3,138,342		$	2,732,774

Depreciation expense for the three months ended June 30, 2024, and 2023 was $270,952 and $231,415, respectively. Depreciation expense for the six months ended June 30, 2024, and 2023 was $497,003 and $450,394, 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		June 30, 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		5-15		2,614,099		1,567,790		1,046,309
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		33,002		—
Total intangible assets subject to amortization				3,889,248		2,842,939		1,046,309
Total Goodwill and Intangible Assets			$	8,642,187	$	2,842,939	$	5,799,248

Scheduled amortization over the next five years are as follows:


Twelve months ending June 30,
	2024	$	133,571
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,046,309

Amortization expense for the three months ended June 30, 2024, and 2023 was $68,360 and $69,535, respectively. Amortization expense for the six months ended June 30, 2024, and 2023 was $137,507 and $139,266, respectively.

Note 6-Leases

Operating Leases

The Company currently maintains three leases for office space located in Melville, NY, one lease for office space in Boca Raton, FL and one lease for office space in Austin, TX.

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. The lease expires on July 31, 2024.

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 $3,209 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 commenced on April 1, 2024, and has a term of sixty-seven months. The lease requires monthly payments of $11,931 and 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 lease agreement with a finance company for technical equipment. 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.

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 expired on March 1, 2024. The lease carried 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. 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 June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	127,411
Interest on lease liabilities, included in interest expense		5,449
Operating lease:
Amortization of assets, included in total operating expense		64,175
Interest on lease liabilities, included in total operating expense		258
Total net lease cost	$	197,293

	Six Months Ended June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	323,480
Interest on lease liabilities, included in interest expense		14,303
Operating lease:
Amortization of assets, included in total operating expense		91,425
Interest on lease liabilities, included in total operating expense		773
Total net lease cost	$	429,981

Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	632,733

Current operating lease liabilities	$	65,983
Noncurrent operating lease liabilities		574,182
Total operating lease liabilities	$	640,165

	As of June 30, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,816,684	)
Property and equipment, net	$	705,032

Current obligations of finance leases	$	261,236
Finance leases, net of current obligations		—
Total finance lease liabilities	$	261,236

Supplemental cash flow and other information related to leases were as follows and included both related and non-related party finance leases combined:


	Six Months Ended June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	71,776
Financing cash flows related to finance leases	$	276,247

Weighted average remaining lease term (in years):
Operating leases		5.62
Finance leases		0.29

Weighted average discount rate:
Operating leases		8	%
Finance leases		7	%

Long-term obligations under the operating and finance leases at June 30, 2024, mature as follows and included both related party and non-related finance leases combined:


For the Twelve Months Ended June 30,		Operating Leases			Finance Leases
	2024		117,857			267,459
	2025		149,481			—
	2026		154,712			—
	2027		160,127			—
	2028		165,732			—
	Thereafter		56,682			—
	Total lease payments		804,591			267,459
	Less: Amounts representing interest		(164,426	)		(6,223	)
	Total lease obligations		640,165			261,236
	Less: long-term obligations		(574,182	)
	Total current	$	65,983		$	261,236

As of June 30, 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 June 30, 2024, and 2023 was $116,944 and $74,695, respectively. Rent expense under all operating leases for the six months ended June 30, 2024, and 2023 was $190,247 and $135,267, respectively.

Note 7 - Commitments and Contingencies

On May 7, 2024, the Company entered into a master service agreement with a vendor. The lease obligation is payable in monthly installments of $51,680. The master service agreement ends June 1, 2029.

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 $0.4 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 received further communication on July 31, 2024. 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 matter. 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 six months ended June 30, 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 January 1, 2024		595,347		$	2.48		6.87
Options Granted		153,755			3.68		5.15
Exercised		(39,702	)		2.30
Expired/Cancelled		(8,054	)		4.77
Options Outstanding at June 30, 2024		701,346		$	2.76		6.71

Options Exercisable at June 30, 2024		270,905		$	2.93		5.70

Share-based compensation expense for options totaling $110,195 and $75,270 was recognized in the Company’s results for the three months ended June 30, 2024, and 2023, respectively. Share-based compensation expense for options totaling $214,357 and $129,704 was recognized in the Company’s results for the six months ended June 30, 2024, and 2023, respectively.

The intrinsic value of outstanding options as of June 30, 2024, and December 31, 2023, was $2,746,249 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 June 30, 2024, there was $739,559 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 1.46 years.

The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the six months ended June 30, 2024, and 2023, are set forth in the table below.


	2024			2023
Weighted average fair value of options granted	$	3.22		$	1.69
Risk-free interest rate		3.94%-4.21	%		3.41%-4.01	%
Volatility		126%-159	%		195%-199	%
Expected life (years)		3.5-6.00 years			10 years
Dividend yield	$	—	%	$	—	%

Share-based awards, Restricted Stock Units (‘RSUs’)

On January 2, 2024, the Company granted certain employees an aggregate of 70,393 RSU’s. Compensation as a group amounted 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 RSUs. Compensation as a group amounted to $81,030. The shares vest one year after issuance.

On April 1, 2024, the Company granted certain employees an aggregate of 2,660 RSU’s. Compensation as a group amounted to $15,002. The shares vest on grant.

On June 30, 2024, the Board resolved that the Company shall issue to Board members an aggregate of 17,500 RSUs. Compensation as a group amounts to $114,800. The shares vest one year after issuance.

A summary of the activity related to RSUs for the six months ended June 30, 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		104,719			2.88
RSUs vested		(78,816	)		1.96
RSUs forfeited		—			—
RSUs non-vested at June 30, 2024		234,375			2.32

Stock-based compensation for RSU’s has been recorded in the consolidated statements of operations and totaled $97,530 and $47,624 for the three months ended June 30, 2024, and 2023, respectively. Stock-based compensation for RSU’s has been recorded in the consolidated statements of operations and totaled $164,692 and $8,005 for the six months ended June 30, 2024, and 2023, respectively.

As of June 30, 2024, there was $423,268 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 1.33 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 received from Nexxis Capital $77,348 for the three and six months ended June 30, 2024, and $15,681 for the six months ended June 30, 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 $7,783 and $2,985 for accounting and consulting services for the three months ended June 30, 2024, and 2023, respectively. The Company paid Mr. Maglione’s firm $9,767 and $3,920 for accounting and consulting services during the six months ended June 30, 2024, and 2023, respectively.

Note 12 – Segment Information

The Company operates in two reportable segments: Cloud First 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 Flagship 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 Flagship the Company decided, based on the services and product set, as well as the talented team at Flagship, to bring together both CloudFirst and Flagship. This unification on January 1, 2024 has strengthened the Company’s 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 seven 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 June 30, 2024

	CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable	$	1,854,471	$	50,288	$	—	$	1,904,759
Prepaid expenses and other current assets		614,989		25,037		119,953		759,979
Net property and equipment		3,133,601		2,484		2,257		3,138,342
Intangible assets, net		1,560,577		—		—		1,560,577
Goodwill		4,238,671		—		—		4,238,671
Operating lease right-of-use assets		632,733		—		—		632,733
All other assets		—		—		12,103,835		12,103,835
Total assets	$	12,035,042	$	77,809	$	12,226,045	$	24,338,896

Accounts payable and accrued expenses	$	2,411,858	$	68,905	$	443,809	$	2,924,572
Deferred revenue		208,944		—		—		208,944
Finance leases payable		147,769		—		—		147,769
Finance leases payable related party		113,467		—		—		113,467
Operating lease liabilities		640,165		—		—		640,165
Total liabilities	$	3,522,203	$	68,905	$	443,809	$	4,034,917


	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 June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	4,617,445		$	293,047		$	—		$	4,910,492
Cost of sales		2,345,385			157,214			—			2,502,599
Gross Profit		2,272,060			135,833			—			2,407,893

Selling, general and administrative		1,400,718			160,044			896,606			2,457,368
Depreciation and amortization		338,908			211			192			339,311
Total operating expenses		1,739,626			160,255			896,798			2,796,679

Income (Loss) from Operations		532,434			(24,422	)		(896,798	)		(388,786	)

Interest expense, net		—			—			152,441			152,441
Other expense		(10,260	)		—			—			(10,260	)
Total Other Income (Expense)		(10,260	)		—			152,441			142,181
Income (Loss) before provision for income taxes	$	522,174		$	(24,422	)	$	(744,357	)	$	(246,605	)


For the Three Months Ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	5,639,310		$	265,081		$	—		$	5,904,391
Cost of sales		3,168,984			156,653			—			3,325,637
Gross Profit		2,470,326			108,428			—			2,578,754

Selling, general and administrative		1,388,712			169,328			613,020			2,171,060
Depreciation and amortization		300,575			208			167			300,950
Total operating expenses		1,689,287			169,536			613,187			2,472,010

Income (Loss) from Operations		781,039			(61,108	)		(613,187	)		106,744

Interest expense, net		(16,570	)		—			115,864			99,294
Other expense		—			—			—			—
Total Other Income (Expense)		(16,570	)		—			115,864			99,294

Income (Loss) before provision for income taxes	$	764,469		$	(61,108	)	$	(497,323	)	$	206,038

For the Six Months Ended June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,572,403		$	573,836		$	—		$	13,146,239
Cost of sales		7,448,020			323,854			—			7,771,874
Gross Profit		5,124,383			249,982			—			5,374,365

Selling, general and administrative		3,021,616			336,923			1,545,310			4,903,849
Depreciation and amortization		644,701			422			385			645,508
Total operating expenses		3,666,317			337,345			1,545,695			5,549,357

Income (Loss) from Operations		1,458,066			(87,363	)		(1,545,695	)		(174,992	)

Interest expense, net		—			—			295,810			295,810
Other expense		(21,520	)		—			—			(21,520	)
Total Other Income (Expense)		—			—			—			—

Income (Loss) before provision for income taxes	$	1,436,546		$	(87,363	)	$	(1,249,885	)	$	99,298


	For the six months ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,254,237		$	529,877		$	—		$	12,784,114
Cost of sales		7,780,841			334,774			—			8,115,615
Gross profit		4,473,396			195,103			—			4,668,499

Selling, general and administrative		2,535,491			294,078			1,183,540			4,013,109
Depreciation and amortization		589,100			279			281			589,660
Total operating expenses		3,124,591			294,357			1,183,821			4,602,769

Income (loss) from operations		1,348,805			(99,254	)		(1,183,821	)		65,730

Interest income		—			—			—			—
Interest expense		(43,916	)		—			219,287			175,371
Total Other Income (Expense)		43,916	)		—			219,287			175,371

Income (loss) before provision for income taxes	$	1,304,889		$	(99,254	)	$	(964,534	)	$	241,101

Note 13 - Subsequent Events

The Company has evaluated events that occurred through August 14, 2024, the date that the financial statements were issued, and determined that there have been no events that have occurred that would require adjustments to the Company’s disclosures in the financial statements other than as follows.

On July 18, 2024, the Company entered into an Equity Distribution Agreement (the “ED Agreement”), with Maxim Group LLC (“Maxim”), pursuant to which the Company may offer and sell, from time to time, through Maxim, as sales agent or principal, shares of its common stock with certain limitations on the amount of common stock that may be offered and sold by the Company as set forth in the ED Agreement. The aggregate market value of the shares of Common Stock eligible for sale under the ATM Prospectus Supplement is $10,600,000 which is based on the limitations of such offerings under SEC regulations. The ED Agreement provides that the Company will pay Maxim a commission of 2.5% of the aggregate gross proceeds from each sale of shares under the ED Agreement. The ED Agreement will terminate upon the earlier of (i) the sale of all shares under the ED Agreement, (ii) twelve (12) months from the date of the ED Agreement, or (iii) as provided therein. As of June 30, 2024, the Company has recorded $15,635 as deferred issuance costs relating to this ED Agreement.

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. Our common stock trades on the Nasdaq under the ticker symbol 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.

2024 Business Update Summary

The first half of 2024 has laid the foundation for our ongoing growth. Capital has been allocated for professional fees, business development, and account management. Our efforts, combined with the January 1st merger of CloudFirst Technologies and Flagship Solutions LLC into a single subsidiary of DSC position the company for our strategic initiatives.

We are currently planning our expansion into Europe, commencing with the United Kingdom, early in 2025. We will be deploying our unique infrastructure platform in two data centers, increasing our addressable market. Management believes the UK marketplace consist with of over 50,000 plus companies that conduct business between the USA and the UK, with over 1.6 million Americans working in the UK. We believe the business opportunities and relationships of these closely tied countries will benefit our marketing efforts to penetrate the United Kingdom’s addressable marketplace.

Our first step several years ago outside of the USA was establishing a footprint in Canada. CloudFirst has two IBM Power platforms in Canada. The UK and Canada are large trading partners. We consider the addressable markets of the USA, UK, and Canada to be a significant opportunity for our company. Our Cloud Infrastructure offerings of cloud hosting, disaster recovery and cyber security solutions will establish Data Storage, we believe, as one of the few, single source multi-country providers, providing cloud based infrastructure solutions such as Infrastructure-as-a- Service (IaaS) and Disaster Recovery on the IBM Power platform.

Additionally, evidence indicates that the IBM Power server migration to the cloud is underway, and accelerating, as reflected by the increase in visitors to our website of the past five years. Our web site white paper of ‘Migrating your IBM Power Systems to the Cloud’ has been a popular download. Web searching on IBM Cloud leads the corporate researcher to visit our web sites, and our solutions. IBM Corporation has stated that they expect, based on their trends and research, that ten percent of the addressable marketplace will migrate to the cloud each year. Further indications, based on a well-known survey reflect that only 15% of this addressable marketplace has moved to cloud based solutions.

Our CXO (Client Experience Officer) program, which was announced in a recent press release, is yielding positive results, fostering client relationships, boosting cross-selling activities, and striving to exceed client expectations.

We remain focused and stable. Although the future is always uncertain, we are currently in a strong cash position and expect positive EBITDA performance from our subsidiaries as DSC continues to invest in our growth.

Operational Footprint:

Data Storage Corporation operates from offices in New York, Florida, and Texas, equipped with data 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 May 3, 2024, the Board signed a resolution to amend the Company’s 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.

On June 20, 2024, we held our 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). At the 2024 Annual Meeting, our stockholders approved an amendment to our 2021 Stock Incentive Plan, as amended and restated (the “Incentive Plan”) to increase the number of shares of common stock that we will have authority to grant under the Incentive Plan by an additional 1,000,000 shares of the common stock to 2,075,000.

RESULTS OF OPERATIONS

Three months ended June 30, 2024 as compared to June 30, 2023

Total Sales. For the three months ended June 30, 2024, total sales were $4,910,492, a decrease of $993,899 or (17)%, compared to $5,904,391 for the three months ended June 30, 2023. The decrease is primarily attributed to lower one-time equipment and software sales during the current period and a decrease in managed services partially offset by increases in all other revenue sources.

Sales	For the Three Months
	Ended June 30,
	2024		2023		$ Change			% Change
Infrastructure & Disaster Recovery/Cloud Service	$	3,165,716	$	2,418,185	$	747,531			31	%
Equipment and Software		782,303		2,379,822		(1,597,519	)		(67	)%
Managed Services		642,518		826,743		(184,225	)		(22	)%
Nexxis VoIP Services		275,830		240,712		35,118			15	%
Other		44,125		38,929		5,196			13	%
Total Sales	$	4,910,492	$	5,904,391	$	(993,899	)		(17	)%

Cost of Sales. For the three months ended June 30, 2024, cost of sales was $2,502,599, a decrease of $823,038 or 25% compared to $3,325,637 for the three months ended June 30, 2023. The decrease of 25% was mostly related to the decrease in one-time equipment related cost of sales.

Selling, general and administrative expenses. For the three months ended June 30, 2024, selling, general and administrative expenses were $2,796,679, an increase of $324,669 or 13%, as compared to $2,472,010 for the three months ended June 30, 2023. The net increase is reflected in the chart below.

Selling, general and administrative expenses	For the Three Months
	Ended June 30,
	2024		2023		$ Change			% Change
Increase in Salaries	$	1,319,261	$	1,240,822	$	78,439			6	%
Increase in Professional Fees		493,986		287,079		206,907			72	%
Increase in Software as a Service Expense		60,409		46,459		13,950			30	%
Increase in Advertising Expenses		249,147		226,142		23,005			10	%
Decrease in Commissions Expense		298,970		379,795		(80,825	)		(21	)%
Decrease in Amortization and Depreciation Expense		71,367		74,167		(2,800	)		(4	)%
Increase in Travel and Entertainment		130,436		38,539		91,897			238	%
Increase in Rent and Occupancy		84,835		49,029		35,806			73	%
Increase in Insurance		32,070		30,934		1,136			4	%
Decrease in all other Expenses		56,198		99,044		(42,846	)		(43	)%
Total Expenses	$	2,796,679	$	2,472,010	$	324,669			13	%

Salaries. Salaries increased as a result of an increase in headcount in addition to an increase in salaries due to annual employee performance reviews.

Professional Fees. Professional fees increased primarily due to business development consulting fees and an increase in legal and accounting fees related to the filing of certain registration statements.

Software as a Service Expense (SaaS). SaaS increased due to a new customer relationship management platform at one of the company’s divisions.

Advertising Expenses. Advertising Expenses increased due to an increase in new marketing campaigns and in person customer events.

Commissions Expense. Commissions expense decreased due to the decrease in one-time equipment sales.

Travel and Entertainment. Travel and Entertainment expenses increased due to international expansion efforts in addition to travel related to domestic customer expansion efforts.

Rent and Occupancy. Rent and Occupancy expenses increased due to the addition of new office space in Melville, NY.

Other Income (Expense). Other income for the three months ended June 30, 2024 increased $42,887 to $142,181 from $99,294 for the three months ended June 30, 2023. The increase in other income is primarily attributable to the increase in interest income from investment in marketable securities.

Income (loss) before provision for income taxes. Loss before provision for income taxes for the three months ended June 30, 2024 was $(246,605), as compared to income of $206,038 for the three months ended June 30, 2023.

Six months ended June 30, 2024 as compared to June 30, 2023

Total Sales. For the six months ended June 30, 2024, total sales were $13,146,239, an increase of $362,125 or 3%, compared to $12,784,114 for the six months ended June 30, 2023. The increase is primarily attributed to the increase of 29% in Infrastructure & Disaster Recovery/Cloud Services offset partially by a decrease in one-time equipment sales and Managed Services during the current period.

Sales	For the Six Months
	Ended June 30,
	2024		2023		$ Change			% Change
Infrastructure & Disaster Recovery/Cloud Service	$	6,118,611	$	4,724,964	$	1,393,647			29	%
Equipment and Software		4,866,950		5,902,381		(1,035,431	)		(18	)%
Managed Services		1,485,925		1,603,372		(117,447	)		(7	)%
Nexxis VoIP Services		552,297		472,484		79,813			17	%
Other		122,456		80,913		41,543			51	%
Total Sales	$	13,146,239	$	12,784,114	$	362,125			3	%

Cost of Sales. For the six months ended June 30, 2024, cost of sales was $7,771,874, a decrease of $343,741 or 4% compared to $8,115,615 for the six months ended June 30, 2023. The decrease of 4% was mostly related to a decrease in one-time equipment sales.

Selling, general and administrative expenses. For the six months ended June 30, 2024, selling, general and administrative expenses were $5,549,356, an increase of $946,587 or 21%, as compared to $4,602,769 for the six months ended June 30, 2023. The net decrease is reflected in the chart below.

Selling, general and administrative expenses	For the Six Months
	Ended June 30,
	2024		2023		$ Change			% Change
Increase in Salaries	$	2,675,649	$	2,397,316	$	278,333			12	%
Increase in Professional Fees		750,569		507,906		242,663			48	%
Increase in Software as a Service Expense		121,305		86,434		34,871			40	%
Increase in Advertising Expenses		481,387		416,020		65,367			16	%
Increase in Commissions Expense		713,553		651,762		61,791			9	%
Decrease in Amortization and Depreciation Expense		143,495		147,939		(4,444	)		(3	)%
Increase in Travel and Entertainment		204,005		89,786		114,219			127	%
Increase in Rent and Occupancy		144,523		110,837		33,686			30	%
Increase in Insurance		63,866		57,424		6,442			11	%
Increase in all other Expenses		251,004		137,345		113,659			83	%
Total Expenses	$	5,549,356	$	4,602,769	$	946,587			21	%

Salaries. Salaries increased as a result of an increase in stock based compensation, and increase in headcount in addition to an increase in salaries due to annual employee performance reviews.

Professional fees. Professional fees increased primarily due to business development consulting fees and an increase in legal and accounting fees related to the filing of certain registration statements.

Software as a Service Expense (SaaS). SaaS increased due to a new customer relationship management platform at one of the company’s divisions.

Advertising Expenses. Advertising Expenses increased due to an increase in new marketing campaigns and in person events.

Commissions Expense. Commissions expense increased due to the timing of payments relating to certain sales streams.

Travel and Entertainment. Travel and Entertainment expenses increased due to international expansion in efforts in addition to travel related to domestic customer expansion efforts.

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

Other Income (Expense). Other income for the six months ended June 30, 2024, increased $98,919 to $274,290 from $175,371 for the six months ended June 30, 2023. The increase in other income is primarily attributable to the increase in interest income from investment in marketable securities.

Income before provision for income taxes. Income before provision for income taxes for the six months ended June 30, 2024, was $99,299, as compared to $241,101 for the six months ended June 30, 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 we will realize our assets and discharge our liabilities in the ordinary course of business.

To the extent we are successful in growing our business, identifying potential acquisition targets, and negotiating the terms of such acquisition, and in the event the purchase price includes a cash component, we plan to use our working capital and the proceeds of any financing to finance such acquisition and related costs.

Our opinion concerning our liquidity is based on current information. If this information proves to be inaccurate, or if circumstances change, we may not be able to meet our liquidity needs, which will likely 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.

We have long-term contracts to supply our subscription-based solutions that are invoiced to clients monthly. We continue to see an uptick in client interest distribution channel expansion and in sales proposals. In 2024, we have and intend to continue to work to increase our 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 six months ended June 30, 2024, our cash decreased by $648,744 to $779,986 from $1,428,730 on December 31, 2023. Net cash of $354,791 was provided by our operating activities resulting primarily from the changes in assets and liabilities. Net cash of $798,381 was used in investing activities principally related to the purchase of equipment. Net cash of $205,154 was used in financing activities primarily related to repayments of finance lease obligations, partially offset by proceeds received from the exercise of stock options.

The Company’s working capital was $11,197,995 on June 30, 2024, increasing by $186,588 from $11,011,407 at December 31, 2023. The increase is primarily attributable to an increase in accounts receivable and other current assets a decrease in deferred revenue and finance leases. This was offset by a decrease in cash and an increase in accounts payable.

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 June 30, 2024, and 2023, respectively:

For the Three Months Ended June 30, 2024

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income (loss)	$	522,174	$	(24,422	)	$	(744,357	)	$	(246,605	)

Non-GAAP adjustments:
Depreciation and amortization		338,908		422			192			339,522
Interest income		—		—			(152,441	)		(152,441	)
Interest expense		10,260					—			10,260
Stock based compensation		89,819		13,387			109,651			212,857

Adjusted EBITDA	$	961,161	$	(10,613	)	$	(786,955	)	$	163,593

For the Three Months Ended June 30, 2023

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income (loss)	$	764,469	$	(61,108	)	$	(497,323	)	$	206,038

Non-GAAP adjustments:
Depreciation and amortization		298,273		279			167			298,719
Interest and letter of credit fees		16,570		—			(115,863	)		(99,293	)
Stock based compensation		48,681		4,400			71,814			124,895

Adjusted EBITDA	$	1,127,993	$	(56,429	)	$	(541,205	)	$	530,359

The following table shows our reconciliation of net income to adjusted EBITDA for the six months ended June 30, 2024 and 2023, respectively:

For the Six Months Ended June 30, 2024

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income (loss)	$	1,436,546	$	(87,363	)	$	(1,249,884	)	$	99,299

Non-GAAP adjustments:
Depreciation and amortization		633,701		422			386			634,509
Interest income		—		—			(295,810	)		(295,810	)
Interest expense		21,520		—			—			21,520
Stock based compensation		142,788		13,387			221,336			377,511

Adjusted EBITDA	$	2,234,555	$	(73,554	)	$	(1,323,972	)	$	837,029

For the Six Months Ended June 30, 2023

	CloudFirst Technologies		Nexxis Inc.			Corporate			Total

Net income (loss)	$	1,304,889	$	(99,254	)	$	(964,534	)	$	241,101

Non-GAAP adjustments:
Depreciation and amortization		589,100		279			281			589,660
Interest and letter of credit fees		43,916		—			(219,287	)		(175,371	)
Stock based compensation		87,677		4,400			117,105			209,182

Adjusted EBITDA		2,025,582	$	(94,575	)	$	(1,066,435	)	$	864,572

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 Quarterly Report on Form 10-Q, under the supervision and with the participation of DSC’s management, including its principal executive officer and principal financial officer, DSC conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15I and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Rule 13a-15(e) under the Exchange Act defines “disclosure controls and procedures” as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to a company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level at June 30, 2024.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Due to 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. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. As set forth above, our Chief Executive Officer and Chief Financial Officer have concluded, based on the evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.

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 June 30, 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 materialize, 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 $112,862 for the six months ended June 30, 2024, and $381,575 for the year ended December 31, 2023. As of June 30, 2024, the Company had cash of $779,986, marketable securities of $11,214,006, and working capital of $11,197,995. 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, a member of our Board of Directors and member of our Audit Committee, the Company was 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 June 30, 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 June 30, 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 June 30, 2024.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

During the three months ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non Rule 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#		Amendment No. 1 to the Data Storage Corporation 2021 Stock Incentive Plan, as amended and restated (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 June 24, 2024).
10.2		Equity Distribution Agreement, dated July 18, 2024, by and between Data Storage Corporation and Maxim Group LLC (Incorporated by reference to Exhibit 1.1 to Registration Statement on Form S-3 (File No. 333-280881) filed July 18, 2024)
10.3		Employment Agreement Amendment between Data Storage Corporation and Chris H. Panagiotakos (incorporated by reference to Exhibit 10.21 to Annual Report on Form 10-K (File No. 001-35384) filed on April 1, 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: August 14, 2024
	By:	/s/ Charles M. Piluso
		Charles M. Piluso
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 14, 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: August 14, 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: August 14, 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 June 30, 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 June 30, 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 June 30, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 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 June 30, 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 June 30, 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 June 30, 2024, fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2024	By:	/s/ Chris H. Panagiotakos
		Chris H. Panagiotakos
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 14, 2024
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-35384
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		6,995,822
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

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current Assets:
Cash and cash equivalents	$ 779,986	$ 1,428,730
Accounts receivable (less provision for credit losses of $22,596 and $7,915 in 2024 and 2023, respectively)	1,904,759	1,259,972
Marketable securities	11,214,006	11,318,196
Prepaid expenses and other current assets	759,979	513,175
Total Current Assets	14,658,730	14,520,073
Property and Equipment:
Property and equipment	8,740,796	7,838,225
Less—Accumulated depreciation	(5,602,454)	(5,105,451)
Net Property and Equipment	3,138,342	2,732,774
Other Assets:
Goodwill	4,238,671	4,238,671
Operating lease right-of-use assets	632,733	62,981
Other assets	109,843	48,436
Intangible assets, net	1,560,577	1,698,084
Total Other Assets	6,541,824	6,048,172
Total Assets	24,338,896	23,301,019
Current Liabilities:
Accounts payable and accrued expenses	2,924,572	2,608,938
Deferred revenue	208,944	336,201
Finance leases payable	147,769	263,600
Finance leases payable related party	113,467	235,944
Operating lease liabilities short term	65,983	63,983
Total Current Liabilities	3,460,735	3,508,666
Operating lease liabilities	574,182	0
Finance leases payable	0	17,641
Finance leases payable related party	0	20,297
Total Long-Term Liabilities	574,182	37,938
Total Liabilities	4,034,917	3,546,604
Commitments and contingencies (Note 7)
Stockholders’ Equity:
Preferred stock, Series A par value $0.001; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	0	0
Common stock, par value $0.001; 250,000,000 shares authorized; 6,995,822 and 6,880,460 shares issued and outstanding as of June 30, 2024, and December 31, 2023, respectively	6,995	6,881
Additional paid in capital	39,940,436	39,490,285
Accumulated deficit	(19,392,941)	(19,505,803)
Total Data Storage Corporation Stockholders’ Equity	20,554,490	19,991,363
Non-controlling interest in consolidated subsidiary	(250,511)	(236,948)
Total Stockholder’s Equity	20,303,979	19,754,415
Total Liabilities and Stockholders’ Equity	$ 24,338,896	$ 23,301,019

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Less provision for credit losses	$ 22,596	$ 7,915
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	6,995,822	6,880,460
Common stock, shares outstanding	6,995,822	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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Sales	$ 4,910,492	$ 5,904,391	$ 13,146,239	$ 12,784,114
Cost of sales	2,502,599	3,325,637	7,771,874	8,115,615
Gross Profit	2,407,893	2,578,754	5,374,365	4,668,499
Selling, general and administrative	2,796,679	2,472,010	5,549,356	4,602,769
Income (Loss) from Operations	(388,786)	106,744	(174,991)	65,730
Other Income (Expense)
Interest income	152,441	120,058	295,810	223,482
Interest expense	(10,260)	(20,764)	(21,520)	(48,111)
Total Other Income (Expense)	142,181	99,294	274,290	175,371
(Loss) Income before provision for income taxes	(246,605)	206,038	99,299	241,101
Provision for income taxes	0	0	0	0
Net (Loss) Income	(246,605)	206,038	99,299	241,101
Income in Non-controlling interest of consolidated subsidiary	2,365	20,785	13,563	36,388
Net (Loss) Income attributable to Common Stockholders	$ (244,240)	$ 226,823	$ 112,862	$ 277,489
Net (Loss) Income per Share – Basic	$ (0.04)	$ 0.03	$ 0.02	$ 0.04
Net (Loss) Income per Share – Diluted	$ (0.04)	$ 0.03	$ 0.02	$ 0.04
Weighted Average Number of Shares - Basic	6,973,068	6,834,627	6,902,138	6,828,446
Weighted Average Number of Shares - Diluted	6,973,068	7,022,275	7,499,839	7,016,094

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 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	$ 25	209,158			209,183
Stock-based compensation, shares	25,000
Net Income (Loss)			277,489	(36,388)	241,101
Ending balance, value at Jun. 30, 2023	$ 6,847	39,191,598	(19,609,889)	(191,077)	19,397,479
Ending balance, shares at Jun. 30, 2023	6,847,127
Beginning balance, value at Mar. 31, 2023	$ 6,835	39,068,896	(19,836,712)	(170,292)	19,068,727
Beginning balance, shares at Mar. 31, 2023	6,834,627
Stock-based compensation	$ 12	122,702			122,714
Stock-based compensation, shares	12,500
Net Income (Loss)			226,823	(20,785)	206,038
Ending balance, value at Jun. 30, 2023	$ 6,847	39,191,598	(19,609,889)	(191,077)	19,397,479
Ending balance, shares at Jun. 30, 2023	6,847,127
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 Options exercise	$ 36	71,057			71,093
Stock Options exercise, shares	36,546
Stock-based compensation	$ 78	379,094			379,172
Stock-based compensation, shares	78,816
Net Income (Loss)			112,862	(13,563)	99,299
Ending balance, value at Jun. 30, 2024	$ 6,995	39,940,436	(19,392,941)	(250,511)	20,303,979
Ending balance, shares at Jun. 30, 2024	6,995,822
Beginning balance, value at Mar. 31, 2024	$ 6,930	39,661,561	(19,148,701)	(248,146)	20,271,644
Beginning balance, shares at Mar. 31, 2024	6,929,950
Stock Options exercise	$ 36	71,057			71,093
Stock Options exercise, shares	36,546
Stock-based compensation	$ 29	207,818			207,847
Stock-based compensation, shares	29,326
Net Income (Loss)			(244,240)	(2,365)	(246,605)
Ending balance, value at Jun. 30, 2024	$ 6,995	$ 39,940,436	$ (19,392,941)	$ (250,511)	$ 20,303,979
Ending balance, shares at Jun. 30, 2024	6,995,822

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows from Operating Activities:
Net Income	$ 99,299	$ 241,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	634,509	589,660
Stock based compensation	379,172	209,183
Provision for credit losses	21,816	0
Changes in Assets and Liabilities:
Accounts receivable	(666,603)	1,281,234
Other assets	(61,407)	0
Prepaid expenses and other current assets	(246,804)	(151,720)
Right of use asset	78,206	102,026
Accounts payable and accrued expenses	315,636	(1,119,100)
Deferred revenue	(127,257)	33,006
Operating lease liability	(71,776)	(105,576)
Net Cash Provided by Operating Activities	354,791	1,079,814
Cash Flows from Investing Activities:
Capital expenditures	(902,571)	(1,165,724)
Purchase of marketable securities	(295,810)	(219,286)
Sale of marketable securities	400,000	0
Net Cash Used in Investing Activities	(798,381)	(1,385,010)
Cash Flows from Financing Activities:
Repayments of finance lease obligations related party	(142,774)	(308,005)
Repayments of finance lease obligations	(133,473)	(236,482)
Proceeds from exercise of stock options	71,093	0
Net Cash Used in Financing Activities	(205,154)	(544,487)
Decrease in Cash and Cash Equivalents	(648,744)	(849,683)
Cash and Cash Equivalents, Beginning of Period	1,428,730	2,286,722
Cash and Cash Equivalents, End of Period	779,986	1,437,039
Supplemental Disclosures:
Cash paid for interest	14,303	41,062
Cash paid for income taxes	0	0
Non-cash investing and financing activities:
Assets acquired by operating lease	$ 647,958	$ 0

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (244,240)	$ 226,823	$ 112,862	$ 277,489

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 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

6 Months Ended

Jun. 30, 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

6 Months Ended

Jun. 30, 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 six months ended June 30, 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
As of December 31, 2023	$	11,318,196

	For the six months ended June 30, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		295,810
Sale of equity investments		(400,000	)
As of June 30, 2024	$	11,214,006

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 June 30, 2024


	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	3,037,184	$	128,532	$	3,165,716
Equipment and Software		782,303		—		782,303
Managed Services		642,518		—		642,518
Nexxis VoIP Services		275,830		—		275,830
Other		44,125		—		44,125
Total Sales	$	4,781,960	$	128,532	$	4,910,492

For the Three Months

Ended June 30, 2023

	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,366,601	$	51,584	$	2,418,185
Equipment and Software		2,379,822		—		2,379,822
Managed Services		791,816		34,927		826,743
Nexxis VoIP Services		240,712		—		240,712
Other		38,929		—		38,929
Total Sales	$	5,817,880	$	86,511	$	5,904,391

For the Three Months

Ended June 30,

Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	826,427	$	2,418,750
Products and services transferred over time		4,084,065		3,485,641
Total Sales	$	4,910,492	$	5,904,391

For the Six Months
Ended June 30, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	5,890,433	$	228,178	$	6,118,611
Equipment and Software		4,866,950		—		4,866,950
Managed Services		1,485,925		—		1,485,925
Nexxis VoIP Services		552,297		—		552,297
Other		112,018		10,438		122,456
Total Sales	$	12,907,623	$	238,616	$	13,146,239

For the Six Months
Ended June 30, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	4,621,056	$	103,908	$	4,724,964
Equipment and Software		5,902,381		—		5,902,381
Managed Services		1,533,338		70,034		1,603,372
Nexxis VoIP Services		472,484		—		472,484
Other		80,913		—		80,913
Total Sales	$	12,610,172	$	173,942	$	12,784,114

For the Six Months
Ended June 30,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	4,989,406	$	5,983,294
Products and services transferred over time		8,156,833		6,800,820
Total Sales	$	13,146,239	$	12,784,114

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 and six months ended June 30, 2024, and 2023:


	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2024			2023		2024		2023
Net Income (Loss) Available to Common Shareholders	$	(244,240	)	$	226,823	$	112,862	$	277,489

Weighted average number of common shares - basic		6,973,068			6,834,627		6,902,138		6,828,446
Dilutive securities
Options		—			185,981		363,326		185,981
Warrants		—			1,667		—		1,667
Restricted stock awards		—			—		234,375		—
Weighted average number of common shares - diluted		6,973,068			7,022,275		7,499,839		7,016,094
Earnings (Loss) per share, basic	$	(0.04	)	$	0.03	$	0.02	$	0.04
Earnings (Loss) per share, diluted	$	(0.04	)	$	0.03	$	0.02	$	0.04

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

Schedule of anti-dilutive shares
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Options		701,346		393,540		338,020		393,540
Warrants		2,495,860		2,415,860		2,495,860		2,415,860
Restricted stock awards		234,375		—		—		—
		3,431,581		2,809,400		2,833,880		2,809,400

Prepaids and other current assets

6 Months Ended

Jun. 30, 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:


	June 30,		December 31,
	2024		2023
Prepaid marketing & promotion	$	173,815	$	13,525
Prepaid subscriptions and license		347,477		362,760
Prepaid maintenance		144,490		31,311
Prepaid insurance		61,744		63,247
Other		32,453		42,332
Total prepaids and other current assets	$	759,979	$	513,175

Property and Equipment

6 Months Ended

Jun. 30, 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
	June 30,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		32,356			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		126,232			117,379
Data center equipment		8,500,937			7,617,950
Gross Property and equipment		8,740,796			7,838,225
Less: Accumulated depreciation		(5,602,454	)		(5,105,451	)
Net property and equipment	$	3,138,342		$	2,732,774

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 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		June 30, 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		5-15		2,614,099		1,567,790		1,046,309
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		33,002		—
Total intangible assets subject to amortization				3,889,248		2,842,939		1,046,309
Total Goodwill and Intangible Assets			$	8,642,187	$	2,842,939	$	5,799,248

Scheduled amortization over the next five years are as follows:


Twelve months ending June 30,
	2024	$	133,571
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,046,309

Leases

6 Months Ended

Jun. 30, 2024

Leases

Leases

Note 6-Leases

Operating Leases

The Company currently maintains three leases for office space located in Melville, NY, one lease for office space in Boca Raton, FL and one lease for office space in Austin, TX.

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 June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	127,411
Interest on lease liabilities, included in interest expense		5,449
Operating lease:
Amortization of assets, included in total operating expense		64,175
Interest on lease liabilities, included in total operating expense		258
Total net lease cost	$	197,293

	Six Months Ended June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	323,480
Interest on lease liabilities, included in interest expense		14,303
Operating lease:
Amortization of assets, included in total operating expense		91,425
Interest on lease liabilities, included in total operating expense		773
Total net lease cost	$	429,981

Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	632,733

Current operating lease liabilities	$	65,983
Noncurrent operating lease liabilities		574,182
Total operating lease liabilities	$	640,165

	As of June 30, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,816,684	)
Property and equipment, net	$	705,032

Current obligations of finance leases	$	261,236
Finance leases, net of current obligations		—
Total finance lease liabilities	$	261,236

Supplemental cash flow and other information related to leases were as follows and included both related and non-related party finance leases combined:


	Six Months Ended June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	71,776
Financing cash flows related to finance leases	$	276,247

Weighted average remaining lease term (in years):
Operating leases		5.62
Finance leases		0.29

Weighted average discount rate:
Operating leases		8	%
Finance leases		7	%

Long-term obligations under the operating and finance leases at June 30, 2024, mature as follows and included both related party and non-related finance leases combined:


For the Twelve Months Ended June 30,		Operating Leases			Finance Leases
	2024		117,857			267,459
	2025		149,481			—
	2026		154,712			—
	2027		160,127			—
	2028		165,732			—
	Thereafter		56,682			—
	Total lease payments		804,591			267,459
	Less: Amounts representing interest		(164,426	)		(6,223	)
	Total lease obligations		640,165			261,236
	Less: long-term obligations		(574,182	)
	Total current	$	65,983		$	261,236

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 7 - Commitments and Contingencies

On May 7, 2024, the Company entered into a master service agreement with a vendor. The lease obligation is payable in monthly installments of $51,680. The master service agreement ends June 1, 2029.

Stockholders’ Equity

6 Months Ended

Jun. 30, 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 January 1, 2024		595,347		$	2.48		6.87
Options Granted		153,755			3.68		5.15
Exercised		(39,702	)		2.30
Expired/Cancelled		(8,054	)		4.77
Options Outstanding at June 30, 2024		701,346		$	2.76		6.71

Options Exercisable at June 30, 2024		270,905		$	2.93		5.70

The intrinsic value of outstanding options as of June 30, 2024, and December 31, 2023, was $2,746,249 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 six months ended June 30, 2024, and 2023, are set forth in the table below.


	2024			2023
Weighted average fair value of options granted	$	3.22		$	1.69
Risk-free interest rate		3.94%-4.21	%		3.41%-4.01	%
Volatility		126%-159	%		195%-199	%
Expected life (years)		3.5-6.00 years			10 years
Dividend yield	$	—	%	$	—	%

Share-based awards, Restricted Stock Units (‘RSUs’)

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

On April 1, 2024, the Company granted certain employees an aggregate of 2,660 RSU’s. Compensation as a group amounted to $15,002. The shares vest on grant.

On June 30, 2024, the Board resolved that the Company shall issue to Board members an aggregate of 17,500 RSUs. Compensation as a group amounts to $114,800. The shares vest one year after issuance.

A summary of the activity related to RSUs for the six months ended June 30, 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		104,719			2.88
RSUs vested		(78,816	)		1.96
RSUs forfeited		—			—
RSUs non-vested at June 30, 2024		234,375			2.32

Litigation

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Litigation

Note 9 – Litigation

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions

Note 10 – Related Party Transactions

Nexxis Capital LLC

Eisner & Maglione CPA’s LLC

Segment Information

6 Months Ended

Jun. 30, 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 seven 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 June 30, 2024

	CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable	$	1,854,471	$	50,288	$	—	$	1,904,759
Prepaid expenses and other current assets		614,989		25,037		119,953		759,979
Net property and equipment		3,133,601		2,484		2,257		3,138,342
Intangible assets, net		1,560,577		—		—		1,560,577
Goodwill		4,238,671		—		—		4,238,671
Operating lease right-of-use assets		632,733		—		—		632,733
All other assets		—		—		12,103,835		12,103,835
Total assets	$	12,035,042	$	77,809	$	12,226,045	$	24,338,896

Accounts payable and accrued expenses	$	2,411,858	$	68,905	$	443,809	$	2,924,572
Deferred revenue		208,944		—		—		208,944
Finance leases payable		147,769		—		—		147,769
Finance leases payable related party		113,467		—		—		113,467
Operating lease liabilities		640,165		—		—		640,165
Total liabilities	$	3,522,203	$	68,905	$	443,809	$	4,034,917


	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 June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	4,617,445		$	293,047		$	—		$	4,910,492
Cost of sales		2,345,385			157,214			—			2,502,599
Gross Profit		2,272,060			135,833			—			2,407,893

Selling, general and administrative		1,400,718			160,044			896,606			2,457,368
Depreciation and amortization		338,908			211			192			339,311
Total operating expenses		1,739,626			160,255			896,798			2,796,679

Income (Loss) from Operations		532,434			(24,422	)		(896,798	)		(388,786	)

Interest expense, net		—			—			152,441			152,441
Other expense		(10,260	)		—			—			(10,260	)
Total Other Income (Expense)		(10,260	)		—			152,441			142,181
Income (Loss) before provision for income taxes	$	522,174		$	(24,422	)	$	(744,357	)	$	(246,605	)


For the Three Months Ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	5,639,310		$	265,081		$	—		$	5,904,391
Cost of sales		3,168,984			156,653			—			3,325,637
Gross Profit		2,470,326			108,428			—			2,578,754

Selling, general and administrative		1,388,712			169,328			613,020			2,171,060
Depreciation and amortization		300,575			208			167			300,950
Total operating expenses		1,689,287			169,536			613,187			2,472,010

Income (Loss) from Operations		781,039			(61,108	)		(613,187	)		106,744

Interest expense, net		(16,570	)		—			115,864			99,294
Other expense		—			—			—			—
Total Other Income (Expense)		(16,570	)		—			115,864			99,294

Income (Loss) before provision for income taxes	$	764,469		$	(61,108	)	$	(497,323	)	$	206,038

For the Six Months Ended June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,572,403		$	573,836		$	—		$	13,146,239
Cost of sales		7,448,020			323,854			—			7,771,874
Gross Profit		5,124,383			249,982			—			5,374,365

Selling, general and administrative		3,021,616			336,923			1,545,310			4,903,849
Depreciation and amortization		644,701			422			385			645,508
Total operating expenses		3,666,317			337,345			1,545,695			5,549,357

Income (Loss) from Operations		1,458,066			(87,363	)		(1,545,695	)		(174,992	)

Interest expense, net		—			—			295,810			295,810
Other expense		(21,520	)		—			—			(21,520	)
Total Other Income (Expense)		—			—			—			—

Income (Loss) before provision for income taxes	$	1,436,546		$	(87,363	)	$	(1,249,885	)	$	99,298


	For the six months ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,254,237		$	529,877		$	—		$	12,784,114
Cost of sales		7,780,841			334,774			—			8,115,615
Gross profit		4,473,396			195,103			—			4,668,499

Selling, general and administrative		2,535,491			294,078			1,183,540			4,013,109
Depreciation and amortization		589,100			279			281			589,660
Total operating expenses		3,124,591			294,357			1,183,821			4,602,769

Income (loss) from operations		1,348,805			(99,254	)		(1,183,821	)		65,730

Interest income		—			—			—			—
Interest expense		(43,916	)		—			219,287			175,371
Total Other Income (Expense)		43,916	)		—			219,287			175,371

Income (loss) before provision for income taxes	$	1,304,889		$	(99,254	)	$	(964,534	)	$	241,101

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Note 13 - Subsequent Events

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 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 six months ended June 30, 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
As of December 31, 2023	$	11,318,196

	For the six months ended June 30, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		295,810
Sale of equity investments		(400,000	)
As of June 30, 2024	$	11,214,006

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 June 30, 2024


	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	3,037,184	$	128,532	$	3,165,716
Equipment and Software		782,303		—		782,303
Managed Services		642,518		—		642,518
Nexxis VoIP Services		275,830		—		275,830
Other		44,125		—		44,125
Total Sales	$	4,781,960	$	128,532	$	4,910,492

For the Three Months

Ended June 30, 2023

	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,366,601	$	51,584	$	2,418,185
Equipment and Software		2,379,822		—		2,379,822
Managed Services		791,816		34,927		826,743
Nexxis VoIP Services		240,712		—		240,712
Other		38,929		—		38,929
Total Sales	$	5,817,880	$	86,511	$	5,904,391

For the Three Months

Ended June 30,

Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	826,427	$	2,418,750
Products and services transferred over time		4,084,065		3,485,641
Total Sales	$	4,910,492	$	5,904,391

For the Six Months
Ended June 30, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	5,890,433	$	228,178	$	6,118,611
Equipment and Software		4,866,950		—		4,866,950
Managed Services		1,485,925		—		1,485,925
Nexxis VoIP Services		552,297		—		552,297
Other		112,018		10,438		122,456
Total Sales	$	12,907,623	$	238,616	$	13,146,239

For the Six Months
Ended June 30, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	4,621,056	$	103,908	$	4,724,964
Equipment and Software		5,902,381		—		5,902,381
Managed Services		1,533,338		70,034		1,603,372
Nexxis VoIP Services		472,484		—		472,484
Other		80,913		—		80,913
Total Sales	$	12,610,172	$	173,942	$	12,784,114

For the Six Months
Ended June 30,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	4,989,406	$	5,983,294
Products and services transferred over time		8,156,833		6,800,820
Total Sales	$	13,146,239	$	12,784,114

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 and six months ended June 30, 2024, and 2023:


	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2024			2023		2024		2023
Net Income (Loss) Available to Common Shareholders	$	(244,240	)	$	226,823	$	112,862	$	277,489

Weighted average number of common shares - basic		6,973,068			6,834,627		6,902,138		6,828,446
Dilutive securities
Options		—			185,981		363,326		185,981
Warrants		—			1,667		—		1,667
Restricted stock awards		—			—		234,375		—
Weighted average number of common shares - diluted		6,973,068			7,022,275		7,499,839		7,016,094
Earnings (Loss) per share, basic	$	(0.04	)	$	0.03	$	0.02	$	0.04
Earnings (Loss) per share, diluted	$	(0.04	)	$	0.03	$	0.02	$	0.04

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

Schedule of anti-dilutive shares
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Options		701,346		393,540		338,020		393,540
Warrants		2,495,860		2,415,860		2,495,860		2,415,860
Restricted stock awards		234,375		—		—		—
		3,431,581		2,809,400		2,833,880		2,809,400

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 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
As of December 31, 2023	$	11,318,196

	For the six months ended June 30, 2024
	Total
As of December 31, 2023	$	11,318,196
Purchase of equity investments		295,810
Sale of equity investments		(400,000	)
As of June 30, 2024	$	11,214,006

Schedule of revenue is disaggregated by major product


	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	3,037,184	$	128,532	$	3,165,716
Equipment and Software		782,303		—		782,303
Managed Services		642,518		—		642,518
Nexxis VoIP Services		275,830		—		275,830
Other		44,125		—		44,125
Total Sales	$	4,781,960	$	128,532	$	4,910,492

For the Three Months

Ended June 30, 2023

	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	2,366,601	$	51,584	$	2,418,185
Equipment and Software		2,379,822		—		2,379,822
Managed Services		791,816		34,927		826,743
Nexxis VoIP Services		240,712		—		240,712
Other		38,929		—		38,929
Total Sales	$	5,817,880	$	86,511	$	5,904,391

For the Three Months

Ended June 30,

Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	826,427	$	2,418,750
Products and services transferred over time		4,084,065		3,485,641
Total Sales	$	4,910,492	$	5,904,391

For the Six Months
Ended June 30, 2024
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	5,890,433	$	228,178	$	6,118,611
Equipment and Software		4,866,950		—		4,866,950
Managed Services		1,485,925		—		1,485,925
Nexxis VoIP Services		552,297		—		552,297
Other		112,018		10,438		122,456
Total Sales	$	12,907,623	$	238,616	$	13,146,239

For the Six Months
Ended June 30, 2023
	United States		International		Total
Infrastructure & Disaster Recovery/Cloud Service	$	4,621,056	$	103,908	$	4,724,964
Equipment and Software		5,902,381		—		5,902,381
Managed Services		1,533,338		70,034		1,603,372
Nexxis VoIP Services		472,484		—		472,484
Other		80,913		—		80,913
Total Sales	$	12,610,172	$	173,942	$	12,784,114

For the Six Months
Ended June 30,
Timing of revenue recognition	2024		2023
Products transferred at a point in time	$	4,989,406	$	5,983,294
Products and services transferred over time		8,156,833		6,800,820
Total Sales	$	13,146,239	$	12,784,114

Schedule of earning per share basic and diluted


	For the Three Months Ended					For the Six Months Ended
	June 30,					June 30,
	2024			2023		2024		2023
Net Income (Loss) Available to Common Shareholders	$	(244,240	)	$	226,823	$	112,862	$	277,489

Weighted average number of common shares - basic		6,973,068			6,834,627		6,902,138		6,828,446
Dilutive securities
Options		—			185,981		363,326		185,981
Warrants		—			1,667		—		1,667
Restricted stock awards		—			—		234,375		—
Weighted average number of common shares - diluted		6,973,068			7,022,275		7,499,839		7,016,094
Earnings (Loss) per share, basic	$	(0.04	)	$	0.03	$	0.02	$	0.04
Earnings (Loss) per share, diluted	$	(0.04	)	$	0.03	$	0.02	$	0.04

Schedule of anti-dilutive shares

Schedule of anti-dilutive shares
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Options		701,346		393,540		338,020		393,540
Warrants		2,495,860		2,415,860		2,495,860		2,415,860
Restricted stock awards		234,375		—		—		—
		3,431,581		2,809,400		2,833,880		2,809,400

Prepaids and other current assets (Tables)

6 Months Ended

Jun. 30, 2024

Prepaids And Other Current Assets

Schedule of prepaids and other current assets


	June 30,		December 31,
	2024		2023
Prepaid marketing & promotion	$	173,815	$	13,525
Prepaid subscriptions and license		347,477		362,760
Prepaid maintenance		144,490		31,311
Prepaid insurance		61,744		63,247
Other		32,453		42,332
Total prepaids and other current assets	$	759,979	$	513,175

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

Schedule of property and equipment
	June 30,			December 31,
	2024			2023
Storage equipment	$	60,288		$	60,288
Furniture and fixtures		32,356			21,625
Leasehold improvements		20,983			20,983
Computer hardware and software		126,232			117,379
Data center equipment		8,500,937			7,617,950
Gross Property and equipment		8,740,796			7,838,225
Less: Accumulated depreciation		(5,602,454	)		(5,105,451	)
Net property and equipment	$	3,138,342		$	2,732,774

Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 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		June 30, 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		5-15		2,614,099		1,567,790		1,046,309
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		33,002		—
Total intangible assets subject to amortization				3,889,248		2,842,939		1,046,309
Total Goodwill and Intangible Assets			$	8,642,187	$	2,842,939	$	5,799,248

Schedule of amortization over the next five years


Twelve months ending June 30,
	2024	$	133,571
	2025		267,143
	2026		267,143
	2027		267,143
	2028		111,309
	Thereafter		—
	Total	$	1,046,309

Leases (Tables)

6 Months Ended

Jun. 30, 2024

Leases

Schedule of components of lease expense

Schedule of components of lease expense
	Three Months Ended June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	127,411
Interest on lease liabilities, included in interest expense		5,449
Operating lease:
Amortization of assets, included in total operating expense		64,175
Interest on lease liabilities, included in total operating expense		258
Total net lease cost	$	197,293

	Six Months Ended June 30, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense	$	323,480
Interest on lease liabilities, included in interest expense		14,303
Operating lease:
Amortization of assets, included in total operating expense		91,425
Interest on lease liabilities, included in total operating expense		773
Total net lease cost	$	429,981

Supplemental balance sheet information related to leases was as follows:

Operating Leases:

Operating lease right-of-use asset	$	632,733

Current operating lease liabilities	$	65,983
Noncurrent operating lease liabilities		574,182
Total operating lease liabilities	$	640,165

	As of June 30, 2024
Finance leases:
Property and equipment, at cost	$	5,521,716
Accumulated amortization		(4,816,684	)
Property and equipment, net	$	705,032

Current obligations of finance leases	$	261,236
Finance leases, net of current obligations		—
Total finance lease liabilities	$	261,236

Schedule of supplemental cash flow and other information related to leases


	Six Months Ended June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	71,776
Financing cash flows related to finance leases	$	276,247

Weighted average remaining lease term (in years):
Operating leases		5.62
Finance leases		0.29

Weighted average discount rate:
Operating leases		8	%
Finance leases		7	%

Schedule of long term obligations operating and finance leases


For the Twelve Months Ended June 30,		Operating Leases			Finance Leases
	2024		117,857			267,459
	2025		149,481			—
	2026		154,712			—
	2027		160,127			—
	2028		165,732			—
	Thereafter		56,682			—
	Total lease payments		804,591			267,459
	Less: Amounts representing interest		(164,426	)		(6,223	)
	Total lease obligations		640,165			261,236
	Less: long-term obligations		(574,182	)
	Total current	$	65,983		$	261,236

Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 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 January 1, 2024		595,347		$	2.48		6.87
Options Granted		153,755			3.68		5.15
Exercised		(39,702	)		2.30
Expired/Cancelled		(8,054	)		4.77
Options Outstanding at June 30, 2024		701,346		$	2.76		6.71

Options Exercisable at June 30, 2024		270,905		$	2.93		5.70

Schedule of weighted average fair value of options granted


	2024			2023
Weighted average fair value of options granted	$	3.22		$	1.69
Risk-free interest rate		3.94%-4.21	%		3.41%-4.01	%
Volatility		126%-159	%		195%-199	%
Expected life (years)		3.5-6.00 years			10 years
Dividend yield	$	—	%	$	—	%

Schedule of activity related to RSUs


Restricted Stock Units (RSUs)	Shares			Weighted Average Fair Value $
RSUs non-vested at January 1, 2024		208,472			1.90
RSUs granted		104,719			2.88
RSUs vested		(78,816	)		1.96
RSUs forfeited		—			—
RSUs non-vested at June 30, 2024		234,375			2.32

Segment Information (Tables)

6 Months Ended

Jun. 30, 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 seven 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 June 30, 2024

	CloudFirst Technologies		Nexxis Inc.		Corporate		Total

Accounts receivable	$	1,854,471	$	50,288	$	—	$	1,904,759
Prepaid expenses and other current assets		614,989		25,037		119,953		759,979
Net property and equipment		3,133,601		2,484		2,257		3,138,342
Intangible assets, net		1,560,577		—		—		1,560,577
Goodwill		4,238,671		—		—		4,238,671
Operating lease right-of-use assets		632,733		—		—		632,733
All other assets		—		—		12,103,835		12,103,835
Total assets	$	12,035,042	$	77,809	$	12,226,045	$	24,338,896

Accounts payable and accrued expenses	$	2,411,858	$	68,905	$	443,809	$	2,924,572
Deferred revenue		208,944		—		—		208,944
Finance leases payable		147,769		—		—		147,769
Finance leases payable related party		113,467		—		—		113,467
Operating lease liabilities		640,165		—		—		640,165
Total liabilities	$	3,522,203	$	68,905	$	443,809	$	4,034,917


	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 June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	4,617,445		$	293,047		$	—		$	4,910,492
Cost of sales		2,345,385			157,214			—			2,502,599
Gross Profit		2,272,060			135,833			—			2,407,893

Selling, general and administrative		1,400,718			160,044			896,606			2,457,368
Depreciation and amortization		338,908			211			192			339,311
Total operating expenses		1,739,626			160,255			896,798			2,796,679

Income (Loss) from Operations		532,434			(24,422	)		(896,798	)		(388,786	)

Interest expense, net		—			—			152,441			152,441
Other expense		(10,260	)		—			—			(10,260	)
Total Other Income (Expense)		(10,260	)		—			152,441			142,181
Income (Loss) before provision for income taxes	$	522,174		$	(24,422	)	$	(744,357	)	$	(246,605	)


For the Three Months Ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	5,639,310		$	265,081		$	—		$	5,904,391
Cost of sales		3,168,984			156,653			—			3,325,637
Gross Profit		2,470,326			108,428			—			2,578,754

Selling, general and administrative		1,388,712			169,328			613,020			2,171,060
Depreciation and amortization		300,575			208			167			300,950
Total operating expenses		1,689,287			169,536			613,187			2,472,010

Income (Loss) from Operations		781,039			(61,108	)		(613,187	)		106,744

Interest expense, net		(16,570	)		—			115,864			99,294
Other expense		—			—			—			—
Total Other Income (Expense)		(16,570	)		—			115,864			99,294

Income (Loss) before provision for income taxes	$	764,469		$	(61,108	)	$	(497,323	)	$	206,038

For the Six Months Ended June 30, 2024


	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,572,403		$	573,836		$	—		$	13,146,239
Cost of sales		7,448,020			323,854			—			7,771,874
Gross Profit		5,124,383			249,982			—			5,374,365

Selling, general and administrative		3,021,616			336,923			1,545,310			4,903,849
Depreciation and amortization		644,701			422			385			645,508
Total operating expenses		3,666,317			337,345			1,545,695			5,549,357

Income (Loss) from Operations		1,458,066			(87,363	)		(1,545,695	)		(174,992	)

Interest expense, net		—			—			295,810			295,810
Other expense		(21,520	)		—			—			(21,520	)
Total Other Income (Expense)		—			—			—			—

Income (Loss) before provision for income taxes	$	1,436,546		$	(87,363	)	$	(1,249,885	)	$	99,298


	For the six months ended June 30, 2023

	CloudFirst Technologies			Nexxis Inc.			Corporate			Total
Sales	$	12,254,237		$	529,877		$	—		$	12,784,114
Cost of sales		7,780,841			334,774			—			8,115,615
Gross profit		4,473,396			195,103			—			4,668,499

Selling, general and administrative		2,535,491			294,078			1,183,540			4,013,109
Depreciation and amortization		589,100			279			281			589,660
Total operating expenses		3,124,591			294,357			1,183,821			4,602,769

Income (loss) from operations		1,348,805			(99,254	)		(1,183,821	)		65,730

Interest income		—			—			—			—
Interest expense		(43,916	)		—			219,287			175,371
Total Other Income (Expense)		43,916	)		—			219,287			175,371

Income (loss) before provision for income taxes	$	1,304,889		$	(99,254	)	$	(964,534	)	$	241,101

Summary of Significant Accounting Policies (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Fair value of investments, beginning balance	$ 11,318,196	$ 9,010,968
Purchase of equity investments	295,810	2,307,228
Fair value of investments, ending balance	11,214,006	$ 11,318,196
Sale of equity investments	$ (400,000)

Summary of Significant Accounting Policies (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Product Information [Line Items]
Disaggregation of revenue	$ 4,910,492	$ 5,904,391	$ 13,146,239	$ 12,784,114
Transferred at Point in Time [Member]
Product Information [Line Items]
Disaggregation of revenue	826,427	2,418,750	4,989,406	5,983,294
Transferred over Time [Member]
Product Information [Line Items]
Disaggregation of revenue	4,084,065	3,485,641	8,156,833	6,800,820
UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	4,781,960	5,817,880	12,907,623	12,610,172
International [Member]
Product Information [Line Items]
Disaggregation of revenue	128,532	86,511	238,616	173,942
Service [Member]
Product Information [Line Items]
Disaggregation of revenue	3,165,716	2,418,185	6,118,611	4,724,964
Service [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	3,037,184	2,366,601	5,890,433	4,621,056
Service [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	128,532	51,584	228,178	103,908
Equipment and Software [Member]
Product Information [Line Items]
Disaggregation of revenue	782,303	2,379,822	4,866,950	5,902,381
Equipment and Software [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	782,303	2,379,822	4,866,950	5,902,381
Equipment and Software [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	0	0	0
Managed Services [Member]
Product Information [Line Items]
Disaggregation of revenue	642,518	826,743	1,485,925	1,603,372
Managed Services [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	642,518	791,816	1,485,925	1,533,338
Managed Services [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	34,927	0	70,034
Nexxis Voip Services [Member]
Product Information [Line Items]
Disaggregation of revenue	275,830	240,712	552,297	472,484
Nexxis Voip Services [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	275,830	240,712	552,297	472,484
Nexxis Voip Services [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	0	0	0	0
Other [Member]
Product Information [Line Items]
Disaggregation of revenue	44,125	38,929	122,456	80,913
Other [Member] \| UNITED STATES
Product Information [Line Items]
Disaggregation of revenue	44,125	38,929	112,018	80,913
Other [Member] \| International [Member]
Product Information [Line Items]
Disaggregation of revenue	$ 0	$ 0	$ 10,438	$ 0

Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Accounting Policies [Abstract]
Net Income (Loss) Available to Common Shareholders	$ (244,240)	$ 226,823	$ 112,862	$ 277,489
Weighted average number of common shares - basic	6,973,068	6,834,627	6,902,138	6,828,446
Dilutive securities
Options	0	185,981	363,326	185,981
Warrants	0	1,667	0	1,667
Restricted stock awards	0	0	234,375	0
Weighted average number of common shares - diluted	6,973,068	7,022,275	7,499,839	7,016,094
Earnings (Loss) per share, basic	$ (0.04)	$ 0.03	$ 0.02	$ 0.04
Earnings (Loss) per share, diluted	$ (0.04)	$ 0.03	$ 0.02	$ 0.04

Summary of Significant Accounting Policies (Details 3) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	3,431,581	2,809,400	2,833,880	2,809,400
Restricted Stock [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	234,375	0	0	0
Warrant [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	2,495,860	2,415,860	2,495,860	2,415,860
Options Held [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Anti-dilutive shares	701,346	393,540	338,020	393,540

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Product Information [Line Items]
Cash and cash equivalents	$ 779,986		$ 779,986		$ 1,428,730
Bad debt expense	(39,455)		21,816	$ 0
Advertising Expense	$ 249,147	$ 226,142	$ 481,387	$ 416,020
One Customer [Member] \| Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage			14.00%		20.00%
One Customer [Member] \| Revenue Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage	14.00%	19.00%	22.00%	18.00%
Two Customer [Member] \| Revenue Benchmark [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Concentration risk, percentage		10.00%	11.00%

Prepaids and other current assets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Prepaids And Other Current Assets
Prepaid marketing & promotion	$ 173,815	$ 13,525
Prepaid subscriptions and license	347,477	362,760
Prepaid maintenance	144,490	31,311
Prepaid insurance	61,744	63,247
Other	32,453	42,332
Total prepaids and other current assets	$ 759,979	$ 513,175

Property and Equipment (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 8,740,796	$ 7,838,225
Less: Accumulated depreciation	(5,602,454)	(5,105,451)
Net property and equipment	3,138,342	2,732,774
Storage 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	32,356	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	126,232	117,379
Data Center Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 8,500,937	$ 7,617,950

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
Property and Equipment (Details Narrative) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 270,952	$ 231,415	$ 497,003	$ 450,394

Goodwill and Intangible Assets (Details) - USD ($)	6 Months Ended	12 Months Ended
Goodwill and Intangible Assets (Details) - USD ($)	Jun. 30, 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	2,842,939	2,705,432
Total intangible assets subject to amortization, net	1,046,309	1,183,816
Total goodwill and intangible assets, gross amount	8,642,187	8,642,187
Total goodwill and intangible assets, accumulated amortization	2,842,939	2,705,432
Total goodwill and intangible assets, net	$ 5,799,248	$ 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
Total intangible assets subject to amortization, gross amount	2,614,099	$ 2,614,099
Total intangible assets subject to amortization, accumulated amortization	1,567,790	1,434,218
Total intangible assets subject to amortization, net	$ 1,046,309	$ 1,179,881
Customer Lists [Member] \| Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	5 years
Customer Lists [Member] \| Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization, estimated life in years	15 years
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	33,002	29,067
Total intangible assets subject to amortization, net	$ 0	$ 3,935

Goodwill and Intangible Assets (Details 1)	Jun. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 133,571
2025	267,143
2026	267,143
2027	267,143
2028	111,309
Thereafter	0
Total	$ 1,046,309

Goodwill and Intangible Assets (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 68,360	$ 69,535	$ 137,507	$ 139,266

Leases (Details) - USD ($)	3 Months Ended	6 Months Ended
Leases (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2024	Dec. 31, 2023
Leases
Amortization of assets, included in depreciation and amortization expense	$ 127,411	$ 323,480
Interest on lease liabilities, included in interest expense	5,449	14,303
Amortization of assets, included in total operating expense	64,175	91,425
Interest on lease liabilities, included in total operating expense	258	773
Total net lease cost	197,293	429,981
Operating lease right-of-use asset	632,733	632,733	$ 62,981
Operating lease right-of-use asset	65,983	65,983	63,983
Operating lease right-of-use asset	574,182	574,182	0
Operating lease right-of-use asset	640,165	640,165	$ 63,983
Property and equipment, at cost	5,521,716	5,521,716
Accumulated amortization	(4,816,684)	(4,816,684)
Property and equipment, net	705,032	705,032
Current obligations of finance leases	261,236	261,236
Finance leases, net of current obligations	0	0
Total finance lease liabilities	$ 261,236	$ 261,236

Leases (Details 1)	6 Months Ended
Leases (Details 1)	Jun. 30, 2024 USD ($)
Leases
Operating cash flows related to operating leases	$ 71,776
Financing cash flows related to finance leases	$ 276,247
Weighted average remaining lease term (in years): Operating leases	5 years 7 months 13 days
Weighted average remaining lease term (in years): Finance leases	3 months 14 days
Weighted average discount rate: Operating leases	8.00%
Weighted average discount rate: Finance leases	7.00%

Leases (Details 2) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Leases
Operating leases - 2024	$ 117,857
Finance leases - 2024	267,459
Operating leases - 2025	149,481
Finance leases - 2025	0
Operating leases - 2026	154,712
Finance leases - 2026	0
Operating leases - 2027	160,127
Finance leases - 2027	0
Operating leases - 2028	165,732
Finance leases - 2028	0
Operating leases - Thereafter	56,682
Finance leases - Thereafter	0
Operating leases, Total lease payments	804,591
Finance leases, Total lease payments	267,459
Operating leases, Less: amounts representing interest	(164,426)
Finance leases, Less: amounts representing interest	(6,223)
Operating leases, Total lease obligations	640,165	$ 63,983
Finance leases, Total lease obligations	261,236
Operating leases, Less: long-term obligations	(574,182)
Operating leases, Total current	65,983
Finance leases, Total current	$ 261,236

Leases (Details Narrative) - USD ($)							3 Months Ended		6 Months Ended
Leases (Details Narrative) - USD ($)	Jan. 17, 2024	Apr. 01, 2022	Jan. 02, 2022	Nov. 01, 2021	Jul. 31, 2021	Mar. 04, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Jul. 01, 2022
Defined Benefit Plan Disclosure [Line Items]
Annual rent									$ 11,856
Operating leases contingent monthly rental payments									$ 988
Monthly lease rent	$ 11,931		$ 1,470		$ 4,965
Lease expiration date	Oct. 30, 2029		Jun. 30, 2022
Month to month lease payment											$ 3,209
Discount rate							5.00%		5.00%
Rent expense under operating leases							$ 116,944	$ 74,695	$ 190,247	$ 135,267
Systems Trading [Member]
Defined Benefit Plan Disclosure [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]
Defined Benefit Plan Disclosure [Line Items]
Lease expiration date			Feb. 01, 2025	Nov. 01, 2024
Finance leases contingent monthly rental payments			$ 17,718	$ 3,152
Interest rate			5.00%	6.00%
Technical Equipment 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Lease expiration date			Jan. 01, 2025
Finance leases contingent monthly rental payments			$ 2,037
Interest rate			6.00%

Commitments and Contingencies (Details Narrative) - USD ($)		6 Months Ended
	May 07, 2024	Jun. 30, 2024
Loss Contingencies [Line Items]
Lease payments	$ 51,680
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		$ 400,000
Business acquisition period		3 years

Stockholders' Equity (Details) - Share-Based Payment Arrangement, Option [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares under options outstanding, beginning \| shares	595,347
Weighted average exercise price outstanding, beginning \| $ / shares	$ 2.48
Weighted average contractual life	6 years 8 months 15 days	6 years 10 months 13 days
Number of shares under options, granted \| shares	153,755
Weighted average exercise price, granted \| $ / shares	$ 3.68
Weighted average contractual life, granted	5 years 1 month 24 days
Number of shares under options, exercised \| shares	(39,702)
Weighted average exercise price, exercised \| $ / shares	$ 2.30
Number of shares under options, expired/cancelled \| shares	(8,054)
Weighted average exercise price, expired/cancelled \| $ / shares	$ 4.77
Number of shares under options outstanding, ending \| shares	701,346	595,347
Weighted average exercise price outstanding, ending \| $ / shares	$ 2.76	$ 2.48
Number of shares under options, exercisable \| shares	270,905
Weighted average exercise price, exercisable \| $ / shares	$ 2.93
Weighted average contractual life, exercisable	5 years 8 months 12 days

Stockholders' Equity (Details 1) - $ / shares	6 Months Ended
Stockholders' Equity (Details 1) - $ / shares	Jun. 30, 2024	Jun. 30, 2023
Weighted average fair value of options granted	$ 3.22	$ 1.69
Expected life (years)		10 years
Dividend yield	0.00%	0.00%
Minimum [Member]
Risk-free interest rate	3.94%	3.41%
Volatility	126.00%	195.00%
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)	6 Months Ended
Stockholders' Equity (Details 2)	Jun. 30, 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	104,719
Weighted average fair value, granted \| $ / shares	$ 2.88
RSUs vested shares \| shares	(78,816)
Weighted average fair value, vested \| $ / shares	$ 1.96
RSUs forfeited shares \| shares	0
Weighted average fair value, forfeited \| $ / shares	$ 0
RSUs non-vested shares, ending \| shares	234,375
Weighted average fair value, ending \| $ / shares	$ 2.32

Stockholders’ Equity (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
Stockholders’ Equity (Details Narrative) - USD ($)	Apr. 02, 2024	Mar. 31, 2024	Jan. 02, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Class of Stock [Line Items]
Capital stock authorized				260,000,000		260,000,000
Common stock, authorized				250,000,000		250,000,000		250,000,000
Common stock, par value				$ 0.001		$ 0.001		$ 0.001
Share-based compensation expense for options				$ 110,195	$ 75,270	$ 214,357	$ 129,704
Intrinsic value of stock options outstanding				2,746,249		2,746,249		$ 391,283
Total unrecognized compensation expense				739,559		$ 739,559
Weighted average period expected to recognized compensation expense (in years)						1 year 5 months 15 days
Restricted Stock Units (RSUs) [Member]
Class of Stock [Line Items]
Share-based compensation expense for options				97,530	$ 47,624	$ 164,692	$ 8,005
Total unrecognized compensation expense				$ 423,268		$ 423,268
Weighted average period expected to recognized compensation expense (in years)						1 year 3 months 29 days
Shares granted	2,660	14,166	70,393			17,500
Restricted stock expense	$ 15,002	$ 81,030	$ 156,251			$ 114,800
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized				10,000,000		10,000,000		10,000,000
Preferred stock, par value				$ 0.001		$ 0.001		$ 0.001

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Proceeds from related party debt	$ 77,348	$ 15,681	$ 77,348	$ 15,681
Eisner Maglione CPAs LLC [Member]
Repayment of related party	$ 7,783	$ 2,985	$ 9,767	$ 3,920

Segment Information (Details)	6 Months Ended
Segment Information (Details)	Jun. 30, 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 seven 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 ($)	3 Months Ended		6 Months Ended
Segment Information (Details 1) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Segment Reporting Information [Line Items]
Accounts receivable	$ 1,904,759		$ 1,904,759		$ 1,259,972
Prepaid expenses and other current assets	759,979		759,979		513,175
Net property and equipment	3,138,342		3,138,342		2,732,774
Intangible assets, net	1,560,577		1,560,577		1,698,084
Goodwill	4,238,671		4,238,671		4,238,671
Operating lease right-of-use assets	632,733		632,733		62,981
All other assets	12,103,835		12,103,835		12,795,362
Total assets	24,338,896		24,338,896		23,301,019
Accounts payable and accrued expenses	2,924,572		2,924,572		2,608,938
Deferred revenue	208,944		208,944		336,201
Finance leases payable	147,769		147,769		281,241
Finance leases payable related party	113,467		113,467		256,241
Operating lease liabilities	640,165		640,165		63,983
Total liabilities	4,034,917		4,034,917		3,546,604
Sales	4,910,492	$ 5,904,391	13,146,239	$ 12,784,114
Cost of sales	2,502,599	3,325,637	7,771,874	8,115,615
Gross profit	2,407,893	2,578,754	5,374,365	4,668,499
Selling, general and administrative	2,457,368	2,171,060	4,903,849	4,013,109
Depreciation and amortization	339,311	300,950	645,508	589,660
Total operating expenses	2,796,679	2,472,010	5,549,357	4,602,769
Income (loss) from operations	(388,786)	106,744	(174,992)	65,730
Interest income				0
Interest expense	152,441	99,294	295,810	175,371
Other expense	(10,260)	0	(21,520)
Total Other Income (Expense)	142,181	99,294	0	175,371
Income (loss) before provision for income taxes	(246,605)	206,038	99,298	241,101
Cloud First Technologies [Member]
Segment Reporting Information [Line Items]
Accounts receivable	1,854,471		1,854,471		1,229,820
Prepaid expenses and other current assets	614,989		614,989		419,254
Net property and equipment	3,133,601		3,133,601		2,727,225
Intangible assets, net	1,560,577		1,560,577		1,698,084
Goodwill	4,238,671		4,238,671		4,238,671
Operating lease right-of-use assets	632,733		632,733		62,981
All other assets	0		0		0
Total assets	12,035,042		12,035,042		10,376,035
Accounts payable and accrued expenses	2,411,858		2,411,858		2,020,963
Deferred revenue	208,944		208,944		336,201
Finance leases payable	147,769		147,769		281,241
Finance leases payable related party	113,467		113,467		256,241
Operating lease liabilities	640,165		640,165		63,983
Total liabilities	3,522,203		3,522,203		2,958,629
Sales	4,617,445	5,639,310	12,572,403	12,254,237
Cost of sales	2,345,385	3,168,984	7,448,020	7,780,841
Gross profit	2,272,060	2,470,326	5,124,383	4,473,396
Selling, general and administrative	1,400,718	1,388,712	3,021,616	2,535,491
Depreciation and amortization	338,908	300,575	644,701	589,100
Total operating expenses	1,739,626	1,689,287	3,666,317	3,124,591
Income (loss) from operations	532,434	781,039	1,458,066	1,348,805
Interest income				0
Interest expense	0	(16,570)	0	(43,916)
Other expense	(10,260)	0	(21,520)
Total Other Income (Expense)	(10,260)	(16,570)	0	43,916
Income (loss) before provision for income taxes	522,174	764,469	1,436,546	1,304,889
Nexxis Inc [Member]
Segment Reporting Information [Line Items]
Accounts receivable	50,288		50,288		30,152
Prepaid expenses and other current assets	25,037		25,037		18,157
Net property and equipment	2,484		2,484		2,905
Intangible assets, net	0		0		0
Goodwill	0		0		0
Operating lease right-of-use assets	0		0		0
All other assets	0		0		0
Total assets	77,809		77,809		51,214
Accounts payable and accrued expenses	68,905		68,905		65,161
Deferred revenue	0		0		0
Finance leases payable	0		0		0
Finance leases payable related party	0		0		0
Operating lease liabilities	0		0		0
Total liabilities	68,905		68,905		65,161
Sales	293,047	265,081	573,836	529,877
Cost of sales	157,214	156,653	323,854	334,774
Gross profit	135,833	108,428	249,982	195,103
Selling, general and administrative	160,044	169,328	336,923	294,078
Depreciation and amortization	211	208	422	279
Total operating expenses	160,255	169,536	337,345	294,357
Income (loss) from operations	(24,422)	(61,108)	(87,363)	(99,254)
Interest income				0
Interest expense	0	0	0	0
Other expense	0	0	0
Total Other Income (Expense)	0	0	0	0
Income (loss) before provision for income taxes	(24,422)	(61,108)	(87,363)	(99,254)
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Accounts receivable	0		0		0
Prepaid expenses and other current assets	119,953		119,953		75,764
Net property and equipment	2,257		2,257		2,644
Intangible assets, net	0		0		0
Goodwill	0		0		0
Operating lease right-of-use assets	0		0		0
All other assets	12,103,835		12,103,835		12,795,362
Total assets	12,226,045		12,226,045		12,873,770
Accounts payable and accrued expenses	443,809		443,809		522,814
Deferred revenue	0		0		0
Finance leases payable	0		0		0
Finance leases payable related party	0		0		0
Operating lease liabilities	0		0		0
Total liabilities	443,809		443,809		$ 522,814
Sales	0	0	0	0
Cost of sales	0	0	0	0
Gross profit	0	0	0	0
Selling, general and administrative	896,606	613,020	1,545,310	1,183,540
Depreciation and amortization	192	167	385	281
Total operating expenses	896,798	613,187	1,545,695	1,183,821
Income (loss) from operations	(896,798)	(613,187)	(1,545,695)	(1,183,821)
Interest income				0
Interest expense	152,441	115,864	295,810	219,287
Other expense	0	0	0
Total Other Income (Expense)	152,441	115,864	0	219,287
Income (loss) before provision for income taxes	$ (744,357)	$ (497,323)	$ (1,249,885)	$ (964,534)

Subsequent Events (Details Narrative) - Equity Distribution Agreement [Member] - USD ($)		6 Months Ended
	Jul. 18, 2024	Jun. 30, 2024
Subsequent Event [Line Items]
Deferred issuance costs		$ 15,635
Subsequent Event [Member]
Subsequent Event [Line Items]
Aggregate market value of shares	$ 10,600,000
Percentage of commission paid	250.00%