Forward-Looking Statements
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report and in some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements.
You should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements. Unless the context requires otherwise, references to “DSC,” “we,” “us,” “our,” and “Company,” refer to Data Storage Corporation and its subsidiaries.
Summary Risk Factors
Risks Related to the Company’s Business
| ● | We have not generated a significant amount of net income and we may not be able to sustain profitability in the future. |
| ● | We may need to raise additional capital to acquire companies in complementary and high-growth technology sectors and there can be no assurance that we will be successful in doing so. |
| ● | Our strategic pivot following the sale of the CloudFirst business, including our plan to deploy a substantial portion of the remaining sale proceeds toward acquiring companies in high-growth sectors such as artificial intelligence and cybersecurity, exposes us to substantial execution, integration, and regulatory and tax-related risks that could adversely affect our business, financial condition, and results of operations. |
| ● | We have identified a material weakness in our internal control over financial reporting, which could adversely affect our ability to report our financial results accurately and in a timely manner. |
| ● | A shutdown of the U.S. federal government may adversely affect our business. |
| ● | There is uncertainty regarding our future business strategy, which could affect our financial condition and prospects. |
| ● | Our growth may be impacted by acquisitions. We may not be able to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully. |
| ● | Completing an acquisition in a new industry or market could impair our ability to successfully manage the acquired business. |
| ● | Upon exercise of our outstanding options or warrants, we will be obligated to issue a substantial number of additional shares of Common Stock which will dilute our present shareholders. |
| ● | We may be the target of securities class action and derivative lawsuits which could result in substantial costs. |
| ● | If Nexxis is unable to attract new customers on a cost-effective basis, its revenue and operating results would be adversely affected. |
| ● | We expect to continue to acquire or invest in other companies, which may divert our management’s attention, result in additional dilution to our stockholders, and consume resources that are necessary to sustain our business. |
| ● | Integration of an acquired company’s operations may present challenges. |
| ● | To date, a substantial portion of Nexxis’ revenues have come from a limited number of customers, making it dependent on those few customers. |
Risks Related to the Company’s Industry
| ● | Nexxis’ business is subject to an evolving regulatory framework, and changes in the laws and regulations applicable to its interconnected nomadic VoIP, internet access, and data transport services could materially adversely affect its business, financial condition, and results of operations. |
| ● | If a cyberattack was able to breach Nexxis’ security protocols and disrupt its data protection platform and solutions, such disruption could increase its expenses, damage its reputation, harm its business and adversely affect our stock price. |
| ● | Nexxis’ ability to provide services to its customers depends on its customers’ continued high-speed access to the internet and the continued reliability of the internet infrastructure. |
| ● | If Nexxis is unable to retain its existing customers, its business, financial condition, and operating results will be adversely affected. |
| ● | Our shift in focus makes it difficult for investors to evaluate our future business prospects. If we are unable to execute our business plan, our future growth and operating results could be adversely affected. |
| ● | If Nexxis is unable to sustain market recognition of and loyalty to its brand, or if its reputation were to be harmed, it could lose customers or fail to increase the number of its customers, which could harm its business, financial condition, and operating results. |
| ● | Nexxis is subject to governmental regulation and other legal obligations related to privacy, and any actual or perceived failure to comply with such obligations would harm its business. |
| ● | Errors, failures, bugs in or unavailability of Nexxis’ solutions released by it could result in negative publicity, damage to its brand, returns, loss of or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others. |
| ● | The loss of our key personnel, or our failure to attract, integrate, and retain other highly qualified personnel, could harm our business and growth prospects. |
| ● | Declining general economic or business conditions and changes to trade policy, including tariffs and customs regulations, may have a negative impact on our business. |
Risks Related to Intellectual Property
| ● | Assertions by a third party that Nexxis’ solutions infringe its intellectual property, whether or not correct, could subject Nexxis, and us, to costly and time-consuming litigation or expensive licenses. |
| ● | Nexxis relies on third-party software to develop and provide its solutions, including server software and licenses from third parties to use patented intellectual property. |
| ● | If we and our subsidiaries are unable to protect our and their domain names, reputation, and brand, our business and operating results, as well as that of our subsidiaries, could be adversely affected. |
Risks Related to the Company’s Common Stock and Securities
| ● | Our stock price has fluctuated in the past and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses. |
| ● | We cannot be assured that we will be able to maintain our listing on the Nasdaq Capital Market. |
| ● | Upon exercising our outstanding options or warrants, we will be obligated to issue a substantial number of additional shares of our Common Stock which will dilute our present shareholders. |
| ● | Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to decline. |
| ● | We do not expect to declare any Common Stock cash dividends in the foreseeable future. |
| ● | Because we may issue preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price. |
| ● | Provisions of Nevada law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders and could make it more difficult for stockholders to change our management. |
