Data Storage Corp
For the period ended Sep 30, 2025. Filed Nov 19, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 19, 2025
DTST$2.63+9.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001731122-25-001132
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-19.
0001731122-25-001568
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 55 previous paragraphs and 51 current paragraphs.
14 unchanged; 7 reworded; 30 added; 34 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
Company Overview
Current report
Data Storage Corporation (“Data Storage,” “we,” “us,” “our” and the “Company”) has been a leading provider of multi-cloud hosting, fully managed cloud services, disaster recovery, cybersecurity, IT automation, and voice & data solutions for more than twenty years. However, following the sale of our cloud solutions business on September 11, 2025, which consisted of the operations of our subsidiaries, CloudFirst Technologies Corporation and CloudFirst Europe Ltd., there has been a strategic shift in our operations. We continue to operate our subsidiary, Nexxis Inc. (“Nexxis”), a telecommunications and data solutions access company. We are focused on managing, building, expanding or acquiring synergetic technology companies that provide leading edge solutions that assist businesses and institutions improve our business processes. We intend to pursue acquisitions of companies in complementary and high-growth technology sectors.
Current report
At the closing of the sale of the CloudFirst business on September 11, 2025, we received $38,068,463 in cash. This amount was based on a contractual base purchase price of $40,000,000, adjusted at closing for a $1,500,000 escrow deposit and $431,537 in net adjustments for estimated closing date debt and working capital.
Current report
The net proceeds, after accounting for all transaction costs and estimated taxes, are reflected in the Gain on sale of discontinued operation on the Condensed Consolidated Statements of Operations.
Current report
Our Board of Directors (the “Board”) has determined that we will engage in a tender offer to repurchase from our shareholders up to 85% of our outstanding shares of Common Stock at the time the tender offer is made, which our Board currently expects will be commenced in the fourth quarter of 2025. We intend to use 85% of our cash on hand on the date the tender offer is made, inclusive of the net sale proceeds received in connection with the sale of the CloudFirst business, net of certain expenses and taxes, to offer to repurchase up to 85% of our outstanding shares of Common Stock in compliance with all relevant statutory requirements.
Current report
Our Board is actively evaluating multiple strategic alternatives for the use of the remaining sale proceeds, with the goal of maxim izing long-term shareholder value. Some of the uses for such remaining cash include, without limitation:
Current report
The Board has not made a final determination regarding the use of proceeds received from consummation of the sale of the CloudFirst business in excess of those intended to be used for the tender offer, the terms of which have not been finalized. Any such actions will be subject to further review, market conditions, and, where required, shareholder approval. We are committed to maximizing shareholder value while maintaining flexibility to pursue the most advantageous path forward.
Current report
Following the sale of our cloud solutions business on September 11, 2025, our continuing operations consist solely of our Nexxis subsidiary. The historical operations of the divested business have been reclassified and are presented as “Income (loss) from discontinued operations, net of tax” in our Condensed Consolidated Statements of Operations.
Current report
Accordingly, the following discussion and analysis of our results of operations focuses on our continuing operations (Nexxis) for the periods presented.
Current report
Sales from our continuing operations, which consist of our Nexxis subsidiary, were $416,956 for the three months ended September 30, 2025, an increase of $91,657, or 28.2%, from $325,299 in the same period last year due to an expanding customer base. The increase was primarily driven by the continued expansion of our voice and data telecommunications solutions to new and existing customers.
Current report
Gross profit for the third quarter of 2025 was $198,499, an increase of $54,032, or 37.4%, compared to $144,467 in the third quarter of 2024. Our gross profit margin improved to 47.6% from 44.4% in the prior-year period. The increase in gross margin was primarily due to successful cost management and scaling efficiencies as our subscription revenue base grows.
Current report
Selling, general and administrative expenses. For the three months ended September 30, 2025, selling, general and administrative expenses increased $312,875, or 31.8%, to $1,296,974 from $984,099 for the three months ended September 30, 2024. The increase was primarily driven by a $429,483, or 396.4%, increase in non-cash stock-based compensation primarily related to the accelerated vesting of equity awards in connection with the Divestiture, which triggered a fundamental transaction clause in equity award agreements with employees. Salaries and director fees also increased by $40,202, or 10.7%, due to annual merit-based adjustments. These increases were partially offset by a $119,243, or 30.1%, decrease in professional fees as certain legal and consulting projects from the prior year were completed.
Current report
Income from continuing operations, net of tax. income from continuing operations was $129,555 for the three months ended September 30, 2025, compared to a loss of $678,862 in the prior year period. The change compared to the prior period was primarily due to an income tax benefit recorded in the 2025 period, offset by an increase in non-cash stock-based compensation.
Current report
Interest Income. Interest income for the three months ended September 30, 2025, was $193,347, compared to $160,770 for the three months ended September 30, 2024. The 20.3% increase in other income was primarily due to higher interest income earned on our portfolio of marketable securities, which was significantly expanded using the net proceeds from the sale of our cloud solutions business (the “Divestiture”).
Current report
Nine months ended September 30, 2025, as compared to September 30, 2024
Current report
Sales from our continuing operations were $1,057,651 for the nine months ended September 30, 2025, an increase of $158,516, or 17.6%, from $899,135 in the same period last year. The increase was primarily driven by an expanding customer base in our Nexxis voice and data solutions business.
Current report
Gross profit for the nine months ended September 30, 2025 was $477,458, an increase of $83,007, or 21.0%, compared to $394,451 in the prior-year period. Our gross profit margin improved to 45.1% from 43.9% in the prior-year period, driven by favorable sales mix and operating leverage.
Current report
Selling, general and administrative expenses. For the nine months ended September 30, 2025, selling, general and administrative expenses increased $375,693, or 13.1%, to $3,242,833 from $2,867,140 for the nine months ended September 30, 2024. The increase was primarily driven by a $662,772, or 193.2%, increase in non-cash stock-based compensation primarily related to the accelerated vesting of equity awards in connection with the Divestiture, which triggered a fundamental transaction clause in equity award agreements with employees. Salaries and director fees increased $176,663, or 15.0%, attributable to annual merit-based salary adjustments. These increases were significantly offset by a $404,000, or 37.2%, decrease in professional fees, primarily related to lower legal and consulting expenses in the current year.
Current report
Loss from continuing operations, net of tax. Loss from continuing operations, net of tax was $1,313,172 for the nine months ended September 30, 2025, compared to a loss of $2,016,109 in the prior year period. The decreased loss was primarily due to a tax benefit recorded in the 2025 period, partially offset by an increase in non-cash stock-based compensation expense.
Current report
**Interest Income.**Interest income for the nine months ended September 30, 2025, was $417,520, compared to $456,580 for the nine months ended September 30, 2024. The 8.6% decrease was primarily due to lower average balances of marketable securities held during the first eight months of 2025 as compared to the prior year. This was partially offset by an increase in interest income generated in the last 19 days of the third quarter from the investment of the net proceeds from the Divestiture.
Current report
Income from discontinued operations, net of tax. For the nine months ended September 30, 2025, we recognized a gain on the sale of discontinued operations of $17,846,470. This gain is net of transaction costs and the reclassification of the warrant liability. This gain was partially offset by a loss from the operations of the CloudFirst business of $116,975 for the period of January 1, 2025, through the sale date of September 11, 2025.
Current report
On September 11, 2025, we completed the Divestiture, which consisted of our CloudFirst and CloudFirst UK segments, for gross proceeds of $40.0 million. The sale was approved by shareholders on September 10, 2025.
Current report
We received net cash proceeds of approximately $38.1 million, which is net of $1.5 million placed in escrow and a working capital adjustment. As of September 30, 2025, we paid transaction costs of $3.7 million (including $1.2 million of contractual warrant repurchases and $2.4 million of direct transaction costs). Additionally, we have accrued $4.4 million in estimated income taxes payable related to the Divestiture and in October 2025, paid $0.8 million of contractual warrant repurchases. Furthermore, these proceeds are subject to final post-closing adjustments for net working capital and closing date debt, which are expected to be paid by amounts held in escrow.
Current report
This significant influx of cash has fundamentally altered our liquidity and capital resources. Management’s new strategy is to use the proceeds remaining after the tender offer for strategic investments and acquisitions in high-growth technology sectors, including GPU Infrastructure-as-a-Service (IaaS), AI-driven software, and cybersecurity. We also intend to use a substantial portion of the net proceeds to return capital to shareholders. We believe that our current cash and marketable securities resulting from the sale are sufficient to fund our continuing operations and new strategic initiatives at least the next twelve months from the date of the filing of this Quarterly Report on Form 10-Q future.
Current report
The Company’s working capital in the company’s continuing operations was $46,749,512 on September 30, 2025, increasing by $34,829,443 from $11,920,069 at, December 31, 2024. The increase is primarily attributable to the disposition of the CloudFirst business. The working capital at, December 31, 2024, included the assets and liabilities of the business that was subsequently sold, while the working capital at, September 30, 2025, reflects only our continuing operations (Nexxis Inc.) and the net proceeds from the Divestiture.
Current report
Cash Flows for nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024
Current report
Operating Activities: Cash used in operating activities of continuing operations was $1.1 million for the nine months ended September 30, 2025, compared to $1.6 million used in the prior-year period. The cash used in 2025 was primarily driven by the loss from continuing operations of $2.3 million, which was largely offset by non-cash stock-based compensation of $1.0 million and other non-cash charges.
Current report
Investing Activities: Cash provided by investing activities of continuing operations was $1.4 million for the nine months ended September 30, 2025, compared to cash used of $58,722 in the same period of the prior year. The cash provided in 2025 was primarily driven by the $35,634,291 in net cash received from the sale of the CloudFirst business. These proceeds were almost entirely deployed into marketable securities, as reflected in the $38.5 million in purchases and $4.3 million in sales of marketable securities during the period.
Current report
Financing Activities: Cash used in financing activities of continuing operations was $824,051 for the nine months ended September 30, 2025, compared to cash provided of $88,732 in the same period of the prior year. The significant cash use in 2025 was the $1,236,825 cash settlement of warrants issued in a private placement offering consummated in July 2021 (the “July 2021 Warrants”) following the trigger of the Fundamental Transaction provision in the July 2021 Warrants. This was partially offset by $412,774 in proceeds from stock option exercises.
Current report
**Cash Flows from Discontinued Operations:**Cash used in discontinued operations was $248,633 for the nine months ended September 30, 2025, compared to cash provided of $692,356 in the prior-year period. This represents the net cash flows from the CloudFirst business for the period of January 1, 2025, through the sale date of September 11, 2025.
Removed paragraphs (34)
Previous report
COMPANY OVERVIEW SUMMARY
Previous report
Data Storage Corporation (“DSC,” the “Company,” “we,” “us” or “our”) is a leading provider of enterprise cloud and business continuity solutions, specializing in fully managed cloud hosting, disaster recovery, cybersecurity, and IT automation services. DSC leverages its expertise through its three subsidiaries: CloudFirst Technologies Corporation (“CloudFirst”), CloudFirst Europe Ltd. (“CloudFirst Europe”) and Nexxis Inc. (“Nexxis”). Through its CloudFirst platform – built on IBM Power Systems infrastructure – DSC delivers high-performance cloud solutions tailored for IBM i and AIX workloads This niche focus on IBM Power environments distinguishes CloudFirst in the market: none of the major public cloud providers (AWS, Microsoft Azure, or Google Cloud) natively support IBM i/AIX workload, giving DSC a distinct competitive edge in serving clients with these mission-critical systems. The Company leverages long-term subscription contracts for its cloud and disaster-recovery services, yielding a highly recurring revenue base and strong customer retention (historically over 90% annual subscription renewal rates) DSC’s client base exceeds 425 organizations across diverse sectors – including government, healthcare, education, manufacturing, and Fortune 500 enterprises – reflecting broad market demand for its multi-cloud hosting and business continuity solutions. In recent years, DSC has undertaken strategic expansions (organically and via acquisitions) to reinforce its position as an emerging growth leader in the multi-billion-dollar cloud hosting and business continuity market. Notably, the integration of Flagship Solutions, LLC (“Flagship”) (our wholly-owned subsidiary that was originally acquired in 2021) into CloudFirst was completed in January 2024, unlocking operational synergies and enabling cross-selling of the full CloudFirst suite to Flagship’s established customer base. This integration, combined with enhanced distribution and marketing capabilities post-2021 Nasdaq uplisting, has bolstered DSC’s growth trajectory and technical expertise.
Previous report
DSC, through its subsidiary CloudFirst, expanded into the UK and European markets in October 2024 as part of DSC’s international growth strategy. This investment included consulting, accounting, and legal expenses to establish operations, as well as the strategic hiring of a regional director and sales personnel. Additionally, the Company initiated partner recruitment and invested in partner enablement through targeted training and sales support programs, laying the foundation for sustainable growth and expanded market presence in the region.
Previous report
Recent Developments
Previous report
On July 11, 2025, the Company entered into a unit purchase agreement (the “Purchase Agreement”) pursuant to which it agreed to sell its cloud solutions business (the “Business”), which consists of the operations of its CloudFirst Technologies Corporation and CloudFirst Europe Ltd. subsidiaries (the “Divestiture”). The Divestiture represents a strategic shift in the Company’s operations, assuming the Company’s shareholders approve the Divestiture at the Company’s annual meeting of shareholders currently scheduled for September 10, 2025 (the “2025 Annual Meeting”), and thereafter that the Divestiture is consummated.
Previous report
Pursuant to the Purchase Agreement, the assets of the Business will be contributed to a new wholly-owned subsidiary, DTST Sub, LLC (“NewCo”), and the purchaser will acquire all of the outstanding units of NewCo for a purchase price of approximately $40 million in cash, subject to certain adjustments. The closing of the Divestiture is subject to customary closing conditions, including that the Company’s shareholders approve the Divestiture at the 2025 Annual Meeting (the “Shareholder Approval”).
Previous report
As of June 30, 2025, the Divestiture did not meet all the criteria for held-for-sale classification under ASC 360, primarily because the required Shareholder Approval had not yet been obtained. Accordingly, the assets and liabilities of the Business remain classified as held and used within their respective line items on the Condensed Consolidated Financial Statements for all periods presented.
Previous report
In light of a negotiated non-compete provision in the Purchase Agreement, if the transactions contemplated by the Purchase Agreement are consummated, DSC will not pursue opportunities that overlap with the cloud infrastructure or managed services sectors involving the Business. Following the planned sale of our cloud solutions business, assuming Shareholder Approval is obtained and the Divestiture is consummated, our continuing operations will consist of our Nexxis subsidiary, which provides VoIP, telecommunications and data access. The Business to be divested has historically constituted the significant majority of the Company’s consolidated operations. For the six months ended June 30, 2025, the Business represented approximately 95% of the Company’s total revenue and was the primary driver of its gross profit and operating cash flow. Following consummation of the Divestiture, the Company’s continuing operations will be substantially smaller. As a result, management will be required to evaluate and implement a revised strategic plan and potentially rationalize ongoing corporate costs to align its expense structure with the size and scope of the remaining business. Following the Divestiture, DSC intends to pursue acquisitions of companies in complementary and high-growth technology sectors, in addition to the growth of Nexxis.
Previous report
Total Sales. For the three months ended June 30, 2025, total sales increased by $236,430, or 4.8%, compared to the three months ended June 30, 2024. The increase was primarily driven by continued growth in our subscription-based services. Cloud Infrastructure & disaster recovery revenue increased by $193,225 or 6.1%, due to the addition of new subscription clients and expanded services for existing clients. Nexxis VoIP services also contributed significantly, with an increase of $47,790 or 17.3%, reflecting successful sales initiatives. This growth was partially offset by a decrease in equipment and software sales of $94,982, or 12.1%, which is primarily attributable to, non-recurring equipment sales in the prior year period and a strategic shift towards subscription services.
Previous report
Cost of Sales and Gross Profit. Cost of sales for the three months ended June 30, 2025, increased by $107,569, or 4.3%, from the prior year period. This increase was consistent with the overall growth in sales and also reflects our investment in the newly established U.K. entity, which is contributing to higher cost of sales as operations ramp up. Gross profit margin remained stable at 49.3% for the three months ended June 30, 2025, compared to 49.0% in the prior year period. The slight margin improvement was due to a favorable revenue mix, with a higher proportion of sales coming from higher-margin cloud infrastructure services.
Previous report
Selling, general and administrative expenses. For the three months ended June 30, 2025, selling, general and administrative expenses increased $535,742, or 19.2%, as compared to the three months ended June 30, 2024. The increase was primarily driven by a $257,065, or 23.1%, increase in salaries and director fees and a $204,733, or 98.5%, increase in non-cash stock-based compensation. The increase in salaries is attributable to an increase in headcount to support our growth initiatives in the UK and in the US, and annual merit-based salary adjustments. The increase in stock-based compensation reflects new equity awards granted to the Board and to key employees and directors in the current period. Also contributing was an increase in commissions associated with increased revenues. These increases were partially offset by lower professional fees and occupancy costs compared to the prior period when we were in the process of transitioning our principal office location.
Previous report
Loss from operations. Loss from operations was $795,667 for the three months ended June 30, 2025, compared to a loss of $388,786 in the prior year period. The increased loss was primarily due to the growth in selling, general and administrative expenses, including costs related to our investment in the newly established U.K. entity, which is incurring expenses as operations ramp up..
Previous report
Other Income (Expense) and Net Loss. Total other income was $63,704 for the three months ended June 30, 2025, compared to $142,181 in the prior year period. The decrease was primarily due to lower interest income, which resulted from lower average balances of marketable securities during the period. As a result of the increased loss from operations and lower other income, net loss attributable to common stockholders was $733,049 for the three months ended June 30, 2025, compared to a net loss of $244,240 for the same period in 2024.
Previous report
Six months ended June 30, 2025, as compared to June 30, 2024
Previous report
Total Sales. For the six months ended June 30, 2025, total sales increased $84,439, or 0.6%, compared to the six months ended June 30, 2024. The relative stability in total sales was the result of a significant shift in our revenue mix. Growth was primarily driven by a $599,408, or 9.8%, increase in our core cloud infrastructure and disaster recovery services and $79,139, or 14.3%, increase in Nexxis VoIP services. This growth was largely offset by a $614,710, or 12.6%, decrease in equipment and software sales, which is primarily attributable to large, non-recurring equipment sales in the prior year period.
Previous report
Cost of Sales and Gross Profit. Cost of sales for the six months ended June 30, 2025, increased by $62,154, or 0.8%, from the prior year period. Gross profit margin remained consistent at 40.8% for both periods. The favorable impact from a revenue mix shift towards our higher margin cloud and VoIP services was offset by lower gross margins on equipment and software sales during the current period compared to the prior year.
Previous report
Selling, general and administrative expenses. For the six months ended June 30, 2025, selling, general and administrative expenses increased $735,470, or 13.3%, as compared to the six months ended June 30, 2024. The increase was primarily driven by a $519,934, or 22.6%, increase in salaries and director fees and a $259,672, or 68.5%, increase in non-cash stock-based compensation. The rise in salaries is attributable to an increase in headcount to support our growth initiatives in the UK and in the US, and annual merit-based salary adjustments. The increase in stock-based compensation reflects new equity awards granted in 2025, many of which have shorter vesting periods than prior year grants, resulting in accelerated expense recognition. and the full period effect of awards granted in 2024. These increases were partially offset by a $75,684, or 52.4%, decrease in rent and occupancy expense compared to the prior period when we were in the process of transitioning our principal office location.
Previous report
Loss from operations. Loss from operations was $888,176 for the six months ended June 30, 2025, compared to a loss of $174,991 in the prior year period. The increased loss was primarily due to the increase in selling, general and administrative expenses, including costs related to our investment in the newly established U.K. entity, which is incurring expenses as operations ramp up.
Previous report
Other Income (Expense) and Net Loss. Total other income was $182,601 for the six months ended June 30, 2025, compared to $274,290 in the prior year period. The decrease was primarily due to lower interest income, which resulted from lower average balances of marketable securities during the current period. As a result of the significant increase in loss from operations, net loss attributable to common stockholders was $708,971 for the six months ended June 30, 2025, compared to net income of $112,862 for the same period in 2024.
Previous report
Subsequent to the end of the quarter ended June 30, 2025, on July 11, 2025, the Company entered into a definitive agreement to sell its cloud solutions business (the “Divestiture”), which consists of its CloudFirst and CloudFirst UK segments, for a purchase price of $40 million. The closing of the Divestiture is subject to Shareholder Approval, for which a vote is expected to be held in the third quarter of 2025 at the 2025 Annual Meeting, as well as other customary conditions.
Previous report
If the Shareholder Approval is obtained and the Divestiture is consummated, the Company expects to receive net cash proceeds of approximately $24 million, which includes transaction costs, and estimated taxes, but will be adjusted pursuant to closing adjustments, including working capital adjustment. This significant influx of cash would fundamentally alter the Company’s liquidity and capital resources. Management intends to use a substantial portion of the net proceeds to return capital to shareholders, with the remainder available for strategic investments in our continuing operations and other corporate purposes. We believe that our current cash and marketable securities, combined with the anticipated proceeds from the sale, will be more than sufficient to fund our operations and strategic initiatives for the foreseeable future.
Previous report
The Company has long-term contracts to supply its subscription-based solutions that are invoiced to clients monthly. The Company believes its total contract value of its subscription contracts with clients based on the actual contracts that it has to date exceeds $10 million. Further, the Company continues to see an uptick in client interest in distribution channel expansion and in sales proposals. In 2025, the Company intends to continue to work to increase its presence in the IBM “Power I” infrastructure cloud and business continuity marketplace in the niche of IBM “Power” and in the disaster recovery global marketplace utilizing its technical expertise, data centers utilization, assets deployed in the data centers, 24 x 365 monitoring and software.
Previous report
The Company’s working capital was $11,240,402 on June 30, 2025, decreasing by $629,512 from $11,869,914 at December 31, 2024. The decrease is primarily attributable to a decrease in the Company’s cash, marketable securities and accounts receivable, which was offset, in part, by an increase in prepaid expenses and other current assets and lower accounts payable and accrued expenses.
Previous report
Operating activities
Previous report
The change in cash used in operating activities for the six months ended June 30, 2025, compared to the same period in 2024 was primarily driven by the net loss for the 2025 period of $705,575, compared to net income of $99,299 in the prior year period. Although the net loss was offset by $1.4 million of non-cash items, such as depreciation and amortization ($0.7) million and stock-based compensation ($0.6) million, an increase in working capital negatively impacted the company’s cash flows from operations. The increase in working capital was primarily related to expenses totaling $838,252 for deferred transaction fees related to the Divestiture.
Previous report
Investing activities
Previous report
The change in cash flows from investing activities was primarily due to net sales of marketable securities of $750,827 during the current period to fund operations, compared to net purchases in the prior year. This was partially offset by capital expenditures of $478,811 in the six months ended June 30, 2025, compared to $902,574 for the six-month ended June 30, 2024. The decrease in year over year capital spending reflects a higher pace of building-out cloud infrastructure in the prior year.
Previous report
Financing activities
Previous report
Cash used in financing activities for the six months ended June 30, 2025, represents $51,000 of payments made under finance lease agreements, primarily for leased capital equipment. For the six months ended June 30, 2025, finance lease payments were offset by $38,249 of proceeds from stock option exercises. Cash used in financing activities was lower than the same period in the prior year due to lower repayments of finance lease obligations, as all finance leases were paid in full during the first quarter of 2025.
Previous report
Non-GAAP Financial Measures
Previous report
Adjusted EBITDA
Previous report
To supplement the Company’s condensed consolidated financial statements presented in accordance with GAAP and to provide investors with additional information regarding the Company’s financial results, the Company considers and is including herein Adjusted EBITDA, a Non-GAAP financial measure. The Company views Adjusted EBITDA as an operating performance measure and, as such, the Company believes that the GAAP financial measure most directly comparable to it is net income (loss). The Company defines Adjusted EBITDA as net income adjusted for interest, depreciation, amortization, and stock-based compensation. The Company believes that Adjusted EBITDA provides an important measure of operating performance because it allows management, investors, debt holders and others to evaluate and compare ongoing operating results from period to period by removing the impact of the Company’s asset base, any asset disposals or impairments, stock-based compensation and other non-cash income and expense items associated with its reliance on issuing equity-linked debt securities to fund its working capital.
Previous report
The Company’s 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 its results as reported under GAAP, as the excluded items may have significant effects on its operating results and financial condition. Additionally, the Company’s measure of Adjusted EBITDA may differ from other companies’ measure of Adjusted EBITDA. When evaluating the Company’s 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, the Company may disclose different non-GAAP financial measures in order to help its investors and others more meaningfully evaluate and compare the Company’s future results of operations to its previously reported results of operations.
Previous report
The following tables show our reconciliation of income (loss) before income taxes to adjusted EBITDA for the three and six months ended June 30, 2025, and 2024:
Reworded paragraphs (7)
Previous wording
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, 2024, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on March 31, 2025 (the “2024 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 SEC.
Current wording
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, 2024, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on March 31, 2025, as amended on April 30, 2025 (the “2024 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 SEC.
Previous wording
Cash Flows for the six months ended June 30, 2025, as compared to June 30, 2024
Current wording
From this amount, we paid $2,434,172 for selling expenses and other transaction costs. As a result, our Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2025, reflects net cash proceeds of $35,634,291 from the sale, net of cash selling expenses.
Previous wording
To the extent the Company is successful in growing its business, identifying potential acquisition targets, and negotiating the terms of such acquisitions, and where the purchase price may include a cash component, the Company expects to use its working capital and the proceeds of any financing to finance such acquisition costs.
Current wording
To the extent we are successful in identifying potential acquisition targets and negotiating the terms of such acquisitions, and where the purchase price may include a cash component, we expect to use our working capital and the proceeds of any financing it may engage in to finance such acquisition costs.
Previous wording
The Company’s conclusion concerning its liquidity is based on current information. If this information proves to be inaccurate, or if circumstances change, the Company may not be able to meet its liquidity needs, which will require a renegotiation of related party capital equipment leases, a reduction in advertising and marketing programs, and/or a reduction in salaries for officers that are major shareholders.
Current wording
Our conclusion 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 may require a reduction in selling general and administrative expenses, including salaries for officers that are major shareholders.
Previous wording
On July 18, 2024, the Company entered into the Agreement with Maxim, discussed in Note 8 to the condensed consolidated financial statements, 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. There can be no guarantee that the Company will be able to raise capital from sales under the Agreement. To date, the Company has not made any sales under the Agreement.
Current wording
On July 18, 2024, we entered into an Equity Distribution Agreement (the “Agreement”) with Maxim, discussed in Note 8 to the condensed consolidated financial statements, pursuant to which we may offer and sell, from time to time, through Maxim, as sales agent or principal, shares of our common stock. There can be no guarantee that we will be able to raise capital from sales under the Agreement. To date, we have not made any sales under the Agreement.
Previous wording
The following table summarizes the Company’s cash flows:
Current wording
The following table summarizes our cash flows:
Previous wording
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 condensed consolidated financial statements. The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of the 2024 Annual Report.
Current wording
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 2024 Annual Report.