Data Storage Corp
For the period ended Mar 31, 2026. Filed May 15, 2026.
View on SEC.govAbout this filing
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.
Mar 31, 2026 · Filed May 15, 2026
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 2025-09-30; filed 2025-11-19.
0001731122-25-001568
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001731122-26-000732
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 51 previous paragraphs and 69 current paragraphs.
11 unchanged; 15 reworded; 42 added; 24 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 8 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 (42)
Current report
Overview
Current report
We recently announced our plan to target AI continuity infrastructure through the establishment of a new wholly owned subsidiary, Sovereign AI Solutions (“SaiS”). SaiS is being developed as a purpose-built AI Continuity Control Plane for regulated industries designed to support recovery, validation, and compliance for sovereign AI and AI Factory environments across sectors such as healthcare, financial services, and insurance.
Current report
Nexxis is a provider of fully managed business voice, internet, data transport, and SD-WAN communication solutions engineered for enterprise-grade reliability, cloud performance, and simplified operations. It delivers integrated technology services designed to support modern, cloud-centric work environments with continuous uptime, superior quality of service, and a single point of management for complex connectivity needs. Nexxis operates nationwide, serving businesses across multiple verticals including healthcare, professional services, financial services, manufacturing, and distributed enterprise environments. Nexxis positions itself as a cloud-first communications provider delivering high-availability voice and data services with a simplified operational model. Nexxis differentiates itself through integrated voice and internet architecture, proactive monitoring, enterprise-grade performance, and a white-glove customer experience. The solutions offered by Nexxis are particularly well-suited for distributed enterprises, hybrid workforces, cloud-dependent organizations, and businesses requiring high uptime and performance guarantees.
Current report
The unified service agreement offered by Nexxis to its customers provides fully managed, integrated connectivity services that combine advanced voice communications with high-performance internet and WAN infrastructure. Nexxis’ business model emphasizes operational simplicity, performance optimization, and vendor consolidation. Key value drivers include:
Current report
● Fully Managed 24×7 monitoring and support;
Current report
● Multi-carrier redundancy and intelligent SD-WAN routing;
Current report
● Single invoice and unified service management;
Current report
● Reduced downtime and improved business continuity; and
Current report
● Lower total cost of ownership compared to legacy multi-vendor environments.
Current report
Sale of CloudFirst Business
Current report
Recent Developments
Current report
Tender Offer
Current report
On December 8, 2025, we commenced the Tender Offer to purchase up to 6,192,990 shares of Common Stock, representing approximately 83% of our issued and outstanding shares as of December 1, 2025, at the maximum aggregate purchase price for shares purchased in the Tender Offer of $32,203,548. The Tender Offer expired on January 12, 2026.
Current report
In accordance with the terms and conditions of the Tender Offer, based on the final count, on January 15, 2026, we accepted for purchase 5,625,129 shares of Common Stock at a purchase price of $5.20 per share, for an aggregate cost of $29,250,671, excluding fees, excise taxes, and expenses relating to the Tender Offer. The shares accepted for purchase represent approximately 72.0% of the total number of shares of Common Stock outstanding as of December 8, 2025. Following payment for the tendered shares, we had 2,167,138 shares of Common Stock outstanding. After completing the Tender Offer and related payments, we retained over $10.0 million in cash. Included in the tendered shares were an aggregate of 895,876 shares of Common Stock tendered by our directors and officers.
Current report
Sales from continuing operations were $346,707 for the three months ended March 31, 2026, an increase of $33,963, or 10.9%, compared to $312,744 in the prior year period. The increase was primarily attributable to continued growth in our Nexxis voice and data solutions business, driven by the addition of new customers and increased spending from existing customers. Revenue growth during the period reflects continued demand for our voice and data connectivity solutions and expansion of services within our existing customer base.
Current report
In addition, revenue generated from existing customers increased year over year, reflecting higher utilization of our services and incremental service adoption. The Company also continued to diversify its customer base during the year.
Current report
For the three months ended March 31, 2026, selling, general and administrative expenses increased $615,198, or 71.8%, to $1,472,113 from $856,915 for the three months ended March 31, 2025. The increase was primarily driven by a $424,808, or 311.0%, increase in non-cash stock-based compensation as a result of grants to certain employees during the three months ended March 31, 2026. Professional fees increased $134,733, or 73.6%, attributable to higher fees paid relating to legal and consulting services during the period.
Current report
Other Income. Other income was $119,215 for the three months ended March 31, 2026, which represents the non-cash adjustments related to the change in fair value of the warrant liability offset by the change in fair value of equity investment during the period.
Current report
Income from discontinued operations, net of tax. For the three months ended March 31, 2026, the gain on sale of discontinued operations was $148,991, primarily related to the final post-closing adjustment of $225,937, partially offset by taxes and fees directly related to the sale. For the three months ended March 31, 2025, pre-tax income from the operations of the CloudFirst business was $621,620.
Current report
The Company’s working capital (excluding the amounts payable to the purchaser of the CloudFirst business included as discontinued operations and income taxes payable) in the Company’s continuing operations was $11,052,387 on March 31, 2026, decreasing by $30,732,066 from $41,784,453 at December 31, 2025. The decrease was primarily driven by the sale of marketable securities during the period of $29,560,400, which was largely used for the purchase of shares and payment of costs totaling $29,528,957 in connection with the Tender Offer. The marketable securities utilized for the Tender Offer were originally purchased using net proceeds from the sale of the CloudFirst business in the second half of the year ended December 31, 2025.
Current report
Tender Offer and Resulting Cash Position
Current report
On December 8, 2025, we commenced a fixed price tender offer to purchase up to 6,192,990 shares of our Common Stock at a maximum aggregate purchase price of $32.2 million. The Tender Offer expired on January 12, 2026, and on January 15, 2026, we accepted for purchase 5,625,129 shares of Common Stock at $5.20 per share, for an aggregate purchase price of $29,250,671, excluding fees, excise taxes, and expenses relating to the Tender Offer. Following payment for the tendered shares, we had 2,167,138 shares outstanding and retained over $10.0 million in cash.
Current report
On May 7, 2026, the Company and the buyer of the Cloud Solutions Business (the “Buyer”) finalized closing date debt and working capital adjustments, and as a result, the Company recorded $225,937 in consideration due from the Buyer, which is included as a component of Gain on sale of discontinued operations, net of tax for the three months ended March 31, 2026. Additionally, in connection with the settlement, $500,000 will be released to the Company from escrow in the second quarter of 2026.
Current report
Impact on Liquidity, Capital Allocation, and Future Obligations
Current report
The Tender Offer significantly reduced our outstanding share count and utilized a substantial portion of our cash resources. However:
Current report
We believe our current cash position and expected cash flows from operations will be sufficient to fund working capital needs, capital expenditures, and operating commitments for at least the next 12 months from the date of the filing of this Quarterly Report on Form 10-Q.
Current report
Working Capital and Cash Flow Considerations
Current report
Our liquidity profile is primarily driven by cash on hand remaining after the Tender Offer, and careful management of operating and capital expenditures. We are actively managing expenses and have reduced corporate spending to align with our smaller portfolio and strategic transition.
Current report
Outlook
Current report
We expect that our current liquidity, together with anticipated cash flows, will support operational needs. We expect that we may also pursue additional sources of liquidity, including:
Current report
We will continue to monitor macroeconomic conditions and capital market trends, including impacts on financing availability.
Current report
Operating Activities
Current report
Cash used in operating activities of continuing operations was $1,778,062 for the three months ended March 31, 2026, compared to $137,528 for the prior year period. The cash used in 2026 was primarily driven by the loss from continuing operations, net of tax, of $768,258 and cash paid for income taxes of $1,024,137 related to the sale of the CloudFirst business during the year ended December 31, 2025.
Current report
Investing Activities
Current report
Financing Activities
Current report
Cash used in financing activities of continuing operations was $29,528,957 for the three months ended March 31, 2026, compared to $0 for the prior year period. The significant cash use in 2026 represents our purchase, on January 15, 2026, of 5,625,129 shares of Common Stock in the Tender Offer, at a purchase price of $5.20 per share, for an aggregate cost of $29,250,671, excluding fees, excise taxes, and expenses relating to the Tender Offer, using funds from sales of marketable securities. The repurchased shares are now held as treasury stock, as reflected in our unaudited financial statements attached to this Quarterly Report on Form 10-Q.
Current report
Cash Flows from Discontinued Operations
Current report
Non-GAAP Financial Measures
Current report
Adjusted EBITDA
Current report
To supplement the Company’s 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 loss from continuing operations, net of tax. The Company defines Adjusted EBITDA as loss from continuing operations, net of tax adjusted for income taxes, interest and financing fees, depreciation, amortization, stock-based compensation, and other non-cash income and expenses. 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.
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Removed paragraphs (24)
Previous report
Company Overview
Previous 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.
Previous 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:
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
Sales and Gross Profit
Previous 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.
Previous report
Selling, general and administrative expenses
Previous 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.
Previous 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.
Previous 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.
Previous report
Sale of CloudFirst Businesses
Previous 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.
Previous 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.
Previous 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.
Previous report
Overview of Liquidity and Cash Flows
Previous report
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 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.
Previous report
Cash Flows for nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024
Previous 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.
Previous 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.
Reworded paragraphs (15)
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, 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.
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, 2025, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 14, 2026 (the “2025 Annual Report”). 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
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.
Current wording
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, except as required by law.
Previous wording
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 wording
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. 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 currently focused on managing, building, expanding or acquiring synergistic technology companies that provide leading edge solutions that assist businesses and institutions improve their business processes. We are pursuing acquisitions of companies in complementary and high-growth technology sectors.
Previous wording
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 wording
On September 11, 2025, we closed the sale of the CloudFirst business, for which 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. After taking into account selling expenses, estimated taxes on the sale, and other transaction costs, our net proceeds from the sale were $31,600,873.
Previous wording
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 wording
As part of our strategy to return value to our shareholders following the sale of the CloudFirst business, our Board of Directors (the “Board”) determined to engage in a tender offer (the “Tender Offer”) to repurchase from our shareholders up to 85% of our outstanding shares of common stock, par value $0.001 per share (“Common Stock”), using 85% of our cash on hand on the date of commencement of the Tender Offer, inclusive of the net sale proceeds received in connection with the sale of the CloudFirst business, net of certain expenses and taxes.
Previous wording
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 wording
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., our continuing operations consist solely of our Nexxis subsidiary. The historical operations of the divested business have been reclassified and are presented as “Income from discontinued operations, net of tax” in our Condensed Consolidated Statements of Operations.
Previous wording
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 wording
Gross profit for the three months ended March 31, 2026 was $186,019, an increase of $45,242, or 32.1%, compared to $140,777 in the prior period. Our gross profit margin improved to 53.7% from 45.0% in the prior period, driven by favorable sales mix and operating leverage.
Previous wording
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 wording
Loss from continuing operations, net of tax. Loss from continuing operations, net of tax was $768,258 for the three months ended March 31, 2026, compared to a loss of $595,232 in the prior year period. The higher loss was primarily driven by an increase in non-cash stock-based compensation expense.
Previous wording
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 wording
Interest Income. Interest income for the three months ended March 31, 2026, was $118,385, compared to $120,906 for the three months ended March 31, 2025.
Previous 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.
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 we may engage in to finance such acquisition costs.
Previous 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.
Current wording
Cash Flows for the three months ended March 31, 2026, as compared to March 31, 2025
Previous wording
The following table summarizes our cash flows:
Current wording
The following table summarizes the Company’s cash flows:
Previous wording
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 wording
Cash provided by investing activities of continuing operations was $29,432,287 for the three months ended March 31, 2026, compared to $852,938 for the prior year period. The cash provided in 2026 was driven by marketable securities, as reflected in purchases of $128,113 and sales of $29,560,400 during the period.
Previous wording
**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.
Current wording
Cash used in discontinued operations was $1,080,162 for the three months ended March 31, 2025, which represents the net cash flows from the CloudFirst business.
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 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.
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. The Company believes 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 the Company believes are significant to the presentation of its 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 2025 Annual Report.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Nine months ended September 30, 2025, as compared to September 30, 2024