What changed in this filing

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Item 1. Business

2022-03-31 compared with 2021-03-31 · 373 added, 445 removed, 18 unchanged (98% of the section changed)

The Company is a 25-year veteran

in Business Continuity services, providing Disaster Recovery as a Service (“DRaaS”), Infrastructure as a Service (“IaaS”),

Cyber Security as a Service (“CSaaS”) and Data Analytics as a Service.

We provide our clients subscription based, long term

agreements for Disaster Recovery as a Service solutions, Infrastructure as a Service products, telecommunications solutions, and high

processing on site computing power and software solutions.

While a significant portion of our revenue has been subscription based, we

also generate revenue from the sale of equipment and software for cybersecurity, data storage, IBM Power systems equipment and managed

service solutions.

Headquartered in Melville, NY,

we provide solutions and services to a broad range of customers in several industries, including healthcare, banking and finance, distribution

services, manufacturing, construction, education, and government.

We maintain an internal business development team as well as a contracted

independent distribution channel.

DSC’s contracted distributors have the ability to provide disaster recovery and hybrid cloud solutions

and IBM and Intel Infrastructure as a Service cloud-based solutions, without having to invest in infrastructure, data centers or telecommunication

services or, in specialized technical staff, which substantially lowers the barrier of entry for the distributor to provide our solutions

to their client base.

During 2020, we added new distributors,

hired additional management focused on building our sales and marketing distribution, and expanded our technology assets in Dallas, TX.

We also recently expanded our offering of cybersecurity solutions for remote tele-computing with ezSecurity™, a new 2020 product.

Our target marketplace for Infrastructure

as a Service and Disaster Recovery as a Service globally is estimated at over one million Virtual IBM Power servers in the finance, retail,

healthcare, government, and distribution industries and sectors according to the most recent information received from IBM.

While Infrastructure

as a Service and Disaster Recovery as a Service solutions are our core products, we also continue to provide ancillary solutions in this

For the past two decades, our

mission has been to protect our clients’

data twenty-four hours a day, ensuring business continuity, and assisting in their compliance

requirements, while providing better management and control over the clients’

digital information.

Our October 2016 acquisition

of the assets of ABC Services, Inc.

and ABC Services II, Inc.

(collectively, “ABC”), including the remaining 50% of the assets

of Secure Infrastructure & Services LLC, accelerated our strategy into cloud based managed services, expanded cybersecurity solutions

and our hybrid cloud solutions with the ability to provide equipment and expanded technical support.

We intend to continue our strategy

of growth through synergistic acquisitions.

Our offices in New York include

a technology center and lab, which are adapted to meet technology needs of the Company’s clients.

In addition to office staffing,

we employ additional remote staff.

DSC maintains its infrastructure, storage and networking equipment required to provide our subscription

solutions in four geographically diverse data centers located in New York, Massachusetts, Texas and North Carolina.

Our Continuing Strategy

DSC derives its revenues from

long-term subscriptions, and professional services contracts related to the implementation of solutions that provide protection of mission

critical data and equipment.

In 2009, DSC’s revenues consisted primarily of data vaulting, de-duplication, continuous data protection

and cloud disaster recovery solutions, and protecting information for our clients.

In 2010, we expanded our solutions

based on the asset acquisition of SafeData, a provider of disaster recovery and business continuity for the powerful IBM servers, Power

i AS400 / AIX.

The Safe Data acquisition provided the ability to provide a solution to a specialized IBM community with limited competition,

a higher average revenue per client and a global marketplace.

In August 2012, DSC entered into

a Joint Venture Partnership with an IBM partner, ABC Services, Inc.

to provide an IBM Infrastructure as a Service (IaaS) offering, marketed

under the name Secure Infrastructure & Services LLC (“SIAS”), a New York limited liability company.

In October 2016, DSC

purchased the assets of ABC, which included the remaining 50% of the assets of SIAS, launching the Company into managed services, Cyber

Security, Equipment and Software.

Building on the requirement of

our clients for access to cloud services, and with the growing requirement of Voice over Internet Protocol (“VOIP”), on October

19, 2017, we formed a new division, Nexxis, to provide VOIP and carrier services.

Our Differentiation

on delivering strategic outcomes :

Clients see value with our focus on solving strategic business problems.

Our services are intended

to allow clients to maintain business operations in a time of disaster, scale to meet their demands and focus on growing their business.

that support multicloud :

Clients are able to run applications or DRaaS services requiring IBM Power systems in the Data Storage Cloud

with seamless connectivity to other cloud partners and providers for their specialized services providing a true multicloud experience.

The expertise and commitment to client support provide by our support and service experts in IBM Power Systems, Storage,

Networking, Backup and Recovery, High Availability System replication and Business Continuity.

This allows us to maintain a competitive

advantage in our industry.

client relationships :

Beginning early on in the relationship, we work with our clients identifying and solving critical business problems.

We carry that through with careful planning and management of the migration and configuration process, continuing the relationship and

advising our clients long after the services have been implemented.

For the year ended December 31, 2020, we had a Value-Added Reseller

with multiple clients accounting for 15% of our revenue and 94% of client subscriptions renewed their solutions with the Company after

their initial contract term expired.

relationships :

We increase revenue and drive growth for our partners by developing and managing collaborative solutions as

well as joint marketing initiatives.

We have a diverse community of partners, ranging from IBM Business Partners, Software Vendors,

application support providers, consultants, and other cloud providers.

Growth Strategies

order to continue to drive growth and capture our large market opportunity, key elements of our growth strategies include:

offerings and service expertise.

We have developed several service offerings that solve a wide spectrum of critical business

Services including, Disaster Recovery, Infrastructure as a Service, Managed Cyber Security, Managed System

Services and Monitoring and Migration Services for Microsoft Windows, Linux, IBM I, and AIX environments with a specialization

on IBM i and AIX on Power Systems.

Build out and support a robust

partner channel;

Effectuate standardized,

repeatable offerings;

Conduct inbound marketing

through search engine optimization (SEO), white papers, blogs, case studies;

Focus on client experience,

client retention and referrals.

sales execution :

We plan to continue executing on several sales initiatives that are designed to drive continued growth in

our business.

geographic reach :

We believe there is significant need for our solutions on a global basis and, accordingly, opportunity for

us to grow our business through international expansion as these markets increase their use of multicloud solutions.

and expand our partner ecosystem :

We benefit from close relationships with our cloud partners, allowing us to provide comprehensive

services to our customers, and providing us with a source of new business opportunities and inputs for future product roadmaps.

strategic acquisitions :

We intend to continue to explore potential transactions that could enhance our capabilities, increase

the scope of our technology footprint or expand our geographic reach.

and the Industry

believe businesses are increasingly under pressure to improve the proficiency of their information and storage systems accelerating

the migration from self-managed IT solutions to fully managed multicloud technologies in order to reduce cost and compete effectively.

These trends create an opportunity for cloud technology service providers.

DSCs market opportunity is derived from the

demand for fully managed cloud services across all major operating systems.

According to the Gartner Forecast:

IT Services, Worldwide,

2018-2024, 2Q20 Update, the managed services and cloud infrastructure services market worldwide is estimated to be $410 billion

in 2020 and is expected to grow 7% annually to $502 billion in 2023.

Services with on-demand availability of computer storage and network resources have revolutionized how companies manage their

information technology systems and applications, providing businesses with greater flexibility and lower costs.

Over the past

several years, businesses have increasingly adopted cloud solutions to drive cost, scale, reliability benefits, increasingly turning

to the use of more than one cloud solution at a time (which is referred to as multicloud) to enhance performance, ensure redundancy

and resilience and provide for increased security, compliance and governance.

believe that both modern and legacy technologies require specialized expertise.

Many companies lack the in-house resources

to navigate the complexity of all this technology or manage multiple cloud instances.

We believe this creates an opportunity for

a cloud services provider that enables businesses to fully embrace the power of multicloud technologies and, together, deliver

incredible customer experiences.

Our Mission :

clients to Infrastructure as a Service, to update clients’

Disaster Recovery as a Service and cyber security, and to provide clients

data analytics.

We also aim to assist our clients in the migration and continued day to day management, and in leveraging multicloud information

technology, while meeting expectations for cyber security support, price and value.

Core Services :

We provide an array of multicloud information technology solutions in highly secure, enterprise level cloud

services for companies using IBM Power systems, Microsoft Windows and Linux.

Specifically, our support services cover:

The Industry and Opportunity

Data Storage Corporation provides Cloud Managed Services and technologies

across multiple platforms.

The Company’s technical assets are located in geographically diverse Tier 3 compliant data centers throughout

the USA and Canada.

Hybrid and Multi-Cloud have

become mainstream technological offerings of the Cloud Managed Services industry as companies have moved away from legacy, on-premise

technology solutions.

This approach is growing more complex, as companies utilize disparate technical environments, including on-premises

equipment and software, multi-clouds interfacing with Software as a Service providers, Amazon AWS and others while focusing on the remote

employee or contractor for higher levels of security is driving growth in managed cloud services.

Cloud Managed Service Providers

assist businesses in achieving their desired security levels, technical cloud infrastructure and financial objectives while optimizing

the value of these technologies and cloud resources through multi-cloud management, ensuring business continuity, governance, and operational

efficiencies.

This is a five hundred-billion-dollar

One subset, a highly-focused segment of the Company, is IBM Power cloud infrastructure and disaster recovery.

Globally estimated

at over one million virtual IBM Power servers.

According to the most recent information received from IBM typical industries utilizing

IBM Power servers are finance, retail, healthcare, government, and distribution organizations.

The Company is a leader in providing IBM Power cloud

infrastructure, disaster recovery and the creation of unique offerings for over 15 years.

The opportunity, for the Company, in the IBM Power

server portfolio segment is to capture a share of this annual recurring revenue marketplace that is currently under migration to cloud

infrastructure.

Recovery as a Service

Security as a Service

Analytics as a Service

Recovery Solutions:

We offer a variety of data protection and disaster recovery solutions services designed to meet our

clients requirements and budgets.

Backup and Data Vaulting :

Our ezVault™

business-to-business data backup and date vaulting

solution consists of high-speed cloud enterprise storage, de-duplication, and compression, backup and restore services which automatically

scale in size with data growth.

Our ezVault solution is typically accompanied by a service level agreement (SLA),

such as our ezRecovery™

Disaster Recovery as a Service solution.

Server Services :

Our ezRecovery™

The Company believes businesses

are increasingly under pressure to improve the proficiency of their information and storage systems accelerating the migration from self-managed

technical equipment and solutions to fully managed multi-cloud technologies to reduce cost and compete effectively.

These trends create

an opportunity for cloud technology service providers.

The Company’s market

opportunity is derived from the demand for fully managed cloud and cybersecurity services across all major operating systems.

The Company’s target

is the $46.7 billion marketplace in the United States and Canada of this overall, projected $1 trillion global marketplace.

According to Fortune Business

Insights, the Cloud Managed Services industry in North America was $16.3 billion in 2019 and has been growing at a rate of 13.8% CAGR

bringing us to $24 billion by the end of 2022.

Disaster Recovery is projected to be a $3.6 billion in the US by the end of 2022 which

is 35% of the $10.3 billion globally based on Grandview Research Disaster Recovery Solutions Market Size report.

Cyber Security, specifically

the MDR segment, is an established market recognized by buyers .

Gartner observed a 35% growth in end users’ inquiries

on the topic in the last year.

Gartner estimates that by 2025, the MDR market will reach $2.15 billion in revenue, up from $1.03 billion

in 2021, for a compound annual growth rate (CAGR) of 20.2%.

The Company’s VOIP solutions fit well into this steadily growing

segment which is expected to reach $90 billion worldwide in 2022 with a CAGR of 3.1% with $17 billion in the US according to Globe Newswire

Market Analysis and Insights:

Global VoIP Market.

Data and Analytics is another market that is growing rapidly and the Company

is breaking into, according to Globe Newswire this market was valued at $198 billion in 2020 and with a projected 13.5% CAGR we see this

hitting $263 billion by the end of 2022 and based on the Big Data Business Analytics market share report posted on statista.com the US

has 51% of that growth.

Company is positioned to support this growth, in the IBM Power multi-cloud marketplace as businesses continue to migrate towards this

Company has designed and built its solutions and services to support the demanding IBM Power System workload, manage hybrid cloud deployments

and continue to provide solutions that keep data and workloads protected from disasters and security attacks.

Company Overview

Data Storage Corporation, headquartered in Melville,

New York, with its three subsidiaries, DSC, Flagship Solutions LLC and Nexxis, Inc., provides 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 companies.

As an example, the

Company’s distribution channel of companies provides long-term subscription-based disaster recovery and cloud infrastructure without

investing in the infrastructure, data centers, telecommunications or specialized technical staff, which substantially lowers their barrier

of entry in providing these solutions to their client base.

The distribution company has typically provided equipment and software.

a client’s awareness in 2021 of the ability to migrate to an IBM Power cloud infrastructure and disaster recovery affords the distributor

the ability to maintain the client and create an annuity year after year.

To further support that awareness, over 55,000 visitors arrived

at the Company’s website in 2021.

During 2021, based on the May capital raise and the

up list to Nasdaq, the Company added distribution, business development representatives, marketing, and technical personnel.

continues to be focused on building the Company’s sales and marketing strategy and expanding its technology assets throughout its

data center network.

The Company’s business offices are located in

New York and Florida.

The offices include a technology center and lab, adapted to meet the technical requirements of the Company’s

The Company maintains its own infrastructure, storage, and networking equipment required to provide subscription solutions in

seven geographically diverse data centers located in New York, Massachusetts, Texas, Florida and North Carolina, and in Canada, Toronto,

and Barrie, serving clients in the United States and Canada.

The Company’s business continuity solutions

allow clients to quickly recover from system outages, human and natural disasters, and cyber security attacks, such as Ransomware.

Company’s managed cloud services begin with migration to the cloud and provide ongoing system support and management that enables

its clients to run their software applications and technical workloads in a multi-cloud environment.

The Company’s cyber security

offerings include comprehensive consultation and a suite of data security, disaster recovery, and remote monitoring services and technologies

that can be incorporated into the Company’s cloud solutions or be delivered as a standalone managed security offering covering the

client site endpoint devices, users, servers, and equipment.

Solution architects and the Company’s business

development teams work with organizations identifying and solving critical business problems.

The Company carefully plans and manages

the migration and configuration process, continuing the relationship and advising its clients long after the services have been implemented.

As of this filing, the Company has proposals outstanding of approximately $20 million in total contract value;

and, total proposals outstanding

for subscriptions solutions of approximately $14 million in total contract value.

Reflecting on client satisfaction, the Company’s

renewal rate on client subscription solutions is approximately 94% after their initial contract term expired.

The Company provides its clients subscription-based, long-term agreements

for cloud disaster recovery, cloud infrastructure, telecommunications solutions, and high processing on-site computing power and software

While a significant portion of the Company’s revenue has been subscription-based, it also generates revenue from the

sale of equipment and software for cybersecurity, data storage, IBM Power systems equipment and managed service solutions.

filing the Company has a backlog of over $500,000 in Annual Recurring Revenue (ARR) and equipment and software backlog of approximately

The Company will continue to drive revenues by expanding

distribution channels.

The Company will continue to build upon its social and digital lead generation programs.

Further, the Company will

continue to seek synergetic acquisitions that expand distribution, leading a technology trend, add to its existing technical staff and

create economies of scale improving gross profit margins.

The Company increases revenue

and drives growth by developing and managing collaborative solutions as well as joint marketing initiatives.

The Company has a diverse

community of distribution partners, ranging from IBM Business Partners, Software Vendors, application support providers, consultants,

and other cloud infrastructure providers.

The Company believes there

is a significant need for its solutions on a global basis and, accordingly, the opportunity for it to grow its business through international

expansion as these markets increase their use of multi-cloud solutions.

The Company’s Core

The Company provides an array of multi-cloud information technology solutions in highly secure, enterprise-level cloud services

for companies using IBM Power Systems, Microsoft Windows, and Linux.

Specifically, the Company’s support services cover:

Cloud Infrastructure

Disaster Recovery as a Service

solution offers organizations that require a faster recovery timeframe data vaults combined with our standby server computing,

storage, and network infrastructure resources to help ensure a faster recovery time.

High Availability Services :

ezAvailability™

solution offers reliable, high availability and business continuity for mission critical applications with Recovery

Time Objective under fifteen minutes and near zero Recovery Point Objective, with optional, fully managed real-time replication services.

Our ezAvailability service consists of a full-time enterprise system, storage, and network resources, allowing quick and easily switched

production workloads to our cloud when needed.

Our ezAvailability services are backed by a Service-Level Agreement (“SLA”)

to help assure performance, availability, and access.

Data Mirroring Services:

Our ezMirror™

solution provides replication services that mirror the clients’

storage systems and allows for recovery in our

I-a-a-S –

Full Cloud Infrastructure Production

Our ezHost™

solution offers full cloud-based production systems from our data center

facilities and a selection of disaster recovery solutions to meet the client’s expectations on their compute power and recovery

ezHost provides full-time, scalable compute, storage, and network infrastructure resources to run clients’

on our enterprise class infrastructure.

ezHost replaces the cost of support, maintenance, system administration, space, power and cooling

of the typical hardware on-premises systems with a predictable monthly expense.

Our ezHost services are backed by a SLA governing performance,

Cyber Security as a Service

Data Analytics as a Service

Solutions and Services

Cyber Security Solutions:

The Company’s

ezSecurity™ solution offers a suite of comprehensive cyber security products that can be utilized on systems at the client’s

location or on systems hosted in the Company’s cloud.

These offerings include fully managed endpoint (PCs and other user devices)

security with active threat mitigation, system security assessments, risk analysis, and applications to ensure continuous security.

contains a specialized offering for protecting and auditing IBM systems including a package designed to protect IBM systems against Ransomware

Data Protection and Recovery Solutions:

The Company offers a variety of data protection and disaster recovery solutions services designed to meet its clients’ requirements

solution is at the core of the Company’s data protection services and allows its

clients to have their data protected offsite with unlimited data retention in a secure location

that uses encrypted, enterprise-grade storage which allows for remote recovery from system

outages, human and natural disasters, and cyber security attacks like Ransomware and virus

allowing restoration of data from a known good point in time prior to an attack.

● ezRecovery™

provides standby systems, networking, and storage in the Company’s cloud infrastructure

that allows for faster recovery from client backups stored using ezVault™ at the same

hosted location.

● ezAvailability™

solution offers reliable real-time data replication for mission-critical applications

with Recovery Time Objective under fifteen minutes and near-zero Recovery Point Objective,

with optional, fully managed replication services.

The Company’s ezAvailability™

service consists of a full-time enterprise system, storage, and network resources, allowing

quick and easily switched production workloads to the Company’s cloud when needed.

The Company’s ezAvailability™ services are backed by a Service-Level Agreement

(“SLA”) to help assure performance, availability, and access.

solution provides replication services that mirror the clients’ data at the storage

level and allows for similar near-zero Recovery Point Objective as ezAvailability with less

application management and Recovery Time Objective under 1 hour.

Cloud Hosted Production Systems:

Company’s ezHost™ solution offers managed cloud services that removes the burden off system management from its clients

and ensures that their software applications and IT workloads are running smoothly.

ezHost™ provides full-time, scalable compute,

storage, and network infrastructure resources to run clients’ workloads on the Company’s enterprise-class infrastructure.

ezHost™ replaces the cost of support, maintenance, system administration, space, electrical power, and cooling of the typical hardware

on-premises systems with a predictable monthly expense.

The Company’s ezHost services are backed by an SLA governing performance,

availability, and access.

Cybersecurity Solutions:

Our ezSecurity™

solution offers a suite of comprehensive cybersecurity products that can be utilized on systems at the client’s location or on systems

hosted in the DSC cloud.

These offerings include fully managed endpoint security with active threat mitigation, system security assessments,

risk analysis and applications to ensure continuous security and auditing for IBM systems.

Voice & Data Solutions:

our voice and data division, offers VoIP and data services over fiber optic networks to help keep businesses fully connected from any

Nexxis provides, among other things, top of the line Polycom VVX color phone systems and the performance of download speeds

of up to 40 GB.

our voice and data division, specializes in fully-managed VoIP, Internet Access, and Data Transport solutions that satisfy the requirements

of corporate and remote workforce.

Services are delivered over fiber optic, coaxial, and wireless networks to assist businesses fully

connected from any location.

Nexxis provides dedicated internet access with speeds of up to 10 Gbps, FailSAFE, a Cloud-first SD-WAN solution,

that delivers industry-leading connectivity to cloud services, cloud-based Hosted VoIP and Unified Communications that provide business

continuity and integration with Microsoft Teams.

Data Analytics:

Company’s trademarked Infralytics™ offering was developed to empower IT organizations to respond quickly and intelligently

to business-impact issues as they arise.

With Infralytics custom dashboards, a client can monitor physical servers,

virtual machines, network devices, applications, and services across multiple platforms – whether on-premises, virtual, or in the

It also allows the Company’s clients to gain enhanced visibility and control over their physical, virtual, and cloud IT infrastructure

via customized, interactive dashboards.

In addition, utilizing IBM’s Watson the Company is taking disparate data sources and

developing algorithms to provide greater insight into the aggregation of that data.

All of this is provided as a service with the

primary deliverable a real-time dashboard.

Corporate History

On October 20, 2008, DSC consummated

a share exchange transaction with Data Storage Corporation, a Delaware corporation, and DSC subsequently changed its name from Euro Trend

On October 20, 2008, the Company consummated a share

exchange transaction with Euro Trend Inc.

The Company subsequently changed its name from Euro Trend Inc.

to Data Storage Corporation.

DSC acquired the assets of SafeData,

LLC in June 2010, and the assets of Message Logic LLC, (“Message Logic”) in October 2012.

In November 2012, DSC entered

into a Joint Venture Partnership with an IBM partner, ABC Services, Inc.

to provide an IBM Infrastructure as a Service (IaaS) offering,

marketed under the name Secure Infrastructure & Services LLC (“SIAS”), a New York limited liability company.

In December 2012, DSC was accepted

as an IBM Service Provider for cloud solutions.

In October 2016, DSC purchased

the assets of ABC which included the remaining 50% of the SIAS.

The result of these acquisitions

and strategic alliances, combined with DSC’s legacy disaster recovery and business continuity solutions, positions DSC as a potential

leader in business-to-business disaster recovery as a service, infrastructure as a service on the IBM Power servers, email compliance

with software as a service (“SaaS”).

DSC will continue to provide our solutions and our planned industry consolidations.

Data Storage Corporation acquired the assets of SafeData,

LLC in June 2010, and the assets of Message Logic LLC, (“Message Logic”) in October 2012.

In November 2012, the Company entered into an agreement

with an IBM partner, ABC Services, Inc.

to provide an IBM Power cloud infrastructure offering, marketed under the name Secure Infrastructure

& Services LLC (“SIAS”), a New York limited liability company.

In October 2016, the Company purchased the assets

of ABC Services, Inc., which included the remaining 50% of the SIAS company.

On June 1, 2021, the Company merged its Florida company

with Flagship Solutions, LLC.

This transaction with an IBM Gold Business Partner was synergetic to the Company’s services and added

new solutions such as IP with their Renewalytics managed maintenance/software and data analytics practice.

The result of these acquisitions, combined with the

Company’s legacy business continuity disaster recovery and IBM Power cloud infrastructure solutions, positions Data Storage Corporation

Competitive Landscape

markets for the Company’s products and services are competitive and the Company is confronted by competition.

Competitors in the

United States include IBM, Connectria Corporation, iTech Solutions Group, Skytap Inc., Abacus Group LLC and Source Data Products.

These markets are characterized

by frequent product introductions and rapid technological advances.

The Company’s financial condition and operating results can

be adversely affected by these and other industry-wide downward pressures on gross margins.

Principal competitive factors important to

the Company include price, product features, relative price and performance, product quality and reliability, a strong third-party software,

marketing and distribution capability, service and support and corporate reputation.

The Company is focused on expanding

its market opportunities globally related to disaster recovery and infrastructure as a service and platform as a service, primarily focused

on the IBM community.

These markets are highly competitive and include several large, well-funded and experienced participants.

The Company’s future financial

condition and operating results depend on the Company’s ability to continue to provide a high-quality solution as well as increase

distribution of the solutions in each of the markets in which it competes.

Recent Developments

The markets for the Company’s products and services

are competitive.

However, competition is limited in the Company’s $46.7 billion marketplace, compared to the limitless competitors,

competing against Amazon Web Services (AWS), Google, and Microsoft today which hold an estimated 51% of the marketplace for X86 cloud

infrastructure and X86 disaster recovery platforms.

Today, the IBM Power community, based on a recent IBM user survey, only 15% of the

IBM Power server community utilizes the cloud.

Other Company services and solutions, outside of the IBM Power user community face many

competitors for cyber security and data analytics, however, these solutions and services are typically provided by the Company to their

existing clients and distribution companies.

These markets are characterized by frequent product

introductions and rapid technological advances.

The Company’s financial condition and operating results can be adversely affected

by these and other industry-wide downward pressures on gross margins.

Principal competitive factors important to the Company include price,

product features, relative price and performance, product quality and reliability, strong third-party software, marketing and distribution

capability, service and support and corporate reputation.

The Company is focused on expanding its market opportunities

globally related to disaster recovery and cloud infrastructure, primarily focused on the IBM community.

These markets are highly competitive

and include several large, well-funded and experienced participants.

The Company’s future financial condition and operating results depend

on the Company’s ability to continue to provide a high-quality solution as well as increase distribution of the solutions in each

of the markets in which it competes.

Flagship Solutions, LLC.

On February 4, 2021, we entered

into an Agreement and Plan of Merger (the “Merger Agreement”) with Data Storage FL, LLC, a Florida limited liability company

and our wholly-owned subsidiary (the “Merger Sub”), Flagship Solutions, LLC (“Flagship”), a Florida limited liability

company, and the owners (collectively, the “Equityholders”) of all of the issued and outstanding limited liability company

membership interests in Flagship (collectively, the “Equity Interests”), pursuant to which, upon the Closing (as defined below),

we will acquire Flagship through the merger of Merger Sub with and into Flagship (the “Merger”), with Flagship being the surviving

company in the Merger and becoming as a result our wholly-owned subsidiary.

The closing of the Merger (the “Closing”) is expected

to take place on or before May 31, 2021 (the “Outside Closing Date”).

Flagship is a provider of IBM Equipment and solutions,

managed services and cloud solutions globally that include cloud-based server monitoring and management, 24×7 help desk support,

and data center infrastructure management.

Pursuant to the Merger, all of

the Equity Interests that are issued and outstanding immediately prior to the effectiveness of the filing of the Articles of Merger by

Flagship and Merger Sub with the Secretary of State of the State of Florida, will be converted into the right to receive an aggregate

amount equal to up to $10,500,000, consisting of $5,550,000, payable in cash, subject to reduction by the amount of any excluded liabilities

assumed by us at Closing and subject to adjustment as set forth below in connection with a net working capital adjustment, and up to $4,950,000,

payable in shares of our common stock, subject to reduction by the amount by which the valuation of Flagship (the “Flagship Valuation”),

as calculated based on Flagship’s unaudited pro forma 2018 financial statements and audited 2019 and 2020 financial statements (the

“2020 Audit”), is less than $10,500,000.

In the event that the Flagship Valuation, as calculated based on the 2020 Audit,

is less than $10,500,000, then, within fifteen (15) days after completion of the audit of Flagship’s financial statements for its

2019, 2020 and 2021 fiscal years (the “2021 Audit”), we have agreed to pay the Equityholders in shares of our common stock

the number of shares to be determined based on the amount by which the Flagship Valuation, as calculated based on the 2021 Audit, exceeds

the sum of $5,550,000 and the value of the shares merger consideration paid by us to the Equityholders at Closing.

In addition, the cash

merger consideration paid by us to the Equityholders at Closing shall be adjusted, on a dollar-for-dollar basis, by the amount by which

Flagship’s estimated net working capital at Closing is more or is less than the target working capital amount specified in the Merger

The parties have agreed to indemnify

each other for any losses that may be incurred by them as a result of their breach of any of their representations, warranties and covenants

contained in the Merger Agreement.

Our indemnification obligations are capped at 20% of the aggregate merger consideration paid to the

Equityholders for any breach of our representations and warranties contained in the Merger Agreement, other than the representations and

warranties set forth under Section 4.1 (Existence;

Good Standing;

Enforceability), Section 4.2 (No Conflict) and Section 4.4

(Brokers) (herein, “Fundamental Representations”).

Our indemnification obligations in respect of any breach by us of the Fundamental

Representations or in the event of our willful or intentional breach of the Merger Agreement (or acts of fraud), are not capped.

Concurrently with the Closing,

Flagship and Mark Wyllie, Flagship’s Chief Executive Officer, will enter into an Employment Agreement (the “Wyllie Employment

Agreement”), which will become effective upon consummation of the Closing, pursuant to which Mr.

Wyllie will continue to serve as

Chief Executive Officer of Flagship following the Closing on the terms and conditions set forth therein.

Flagship’s obligations

under the Wyllie Employment Agreement will also be guaranteed by us.

The Wyllie Employment Agreement will contain customary salary, bonus,

employee benefits, severance and restrictive covenant provisions.

On February 4, 2021, we entered into an Agreement

and Plan of Merger (the “Merger Agreement”) with Data Storage FL, LLC, a Florida limited liability company and our wholly-owned

subsidiary (the “Merger Sub”), Flagship Solutions, LLC (“Flagship”), a Florida limited liability company, and

the owners (collectively, the “Equityholders”) of all of the issued and outstanding limited liability company membership interests

in Flagship (collectively, the “Equity Interests”), pursuant to which, upon the Closing (as defined below), we acquired Flagship

through the merger of Merger Sub with and into Flagship (the “Merger”), with Flagship being the surviving company in the Merger

and becoming, as a result, our wholly-owned subsidiary.

The closing of the Merger (the “Closing”) Flagship was completed on

June 1, 2021.

Flagship is a provider of IBM equipment and solutions, managed services and cloud solutions that include cloud-based server

monitoring and management, 24×7 help desk support, and data center infrastructure management.

Concurrently with the Closing, Flagship and Mark Wyllie,

Flagship’s Chief Executive Officer, entered into an Employment Agreement (the “Wyllie Employment Agreement”), which

became effective upon consummation of the Closing, pursuant to which Mr.

Wyllie will continue to serve as Chief Executive Officer of Flagship

following the Closing on the terms and conditions set forth therein.

Flagship’s obligations under the Wyllie Employment Agreement

will also be guaranteed by the Company.

The Wyllie Employment Agreement contains customary salary, bonus, employee benefits, severance

and restrictive covenant provisions.

In addition, pursuant to the Wyllie Employment Agreement, Mr.

will be appointed to serve as a member of the Board during the term of his employment thereunder.

Merger Agreement further provides that it may be terminated by Flagship and the Equityholders (a “Flagship Termination”) in

the event we have not consummated an underwritten public offering of our securities or listed our shares of common stock on national securities

exchange such as the Nasdaq, by the Outside Closing Date as long as such failure was not due to the breach of, or non-compliance with,

this Agreement by the Company or any of the Equityholders.

In the event of a Flagship Termination, we will be required to pay Flagship

and the Equityholders an amount equal to two (2) times their reasonable, documented, out-of-pocket attorneys’

and accountants’

transaction fees and expenses incurred prior to such Flagship Termination in connection with the Merger, up to a maximum aggregate amount

On February 12, 2021, we filed a registration statement on Form S-1 in connection with a proposed offering of our securities.

We have also applied to list our common stock on the Nasdaq.

There can be no assurance that our public offering will be consummated or

our uplisting to Nasdaq will be achieved.

The foregoing information is

a summary of each of the agreements involved in the transactions described above, is not complete, and is qualified in its entirety by

reference to the full text of those agreements, each of which has been filed as an exhibit to this Annual Report.

Readers should review

those agreements for a complete understanding of the terms and conditions associated with this transaction.

the event the Closing is consummated on or before the Outside Closing Date, the shares of common stock to be issued as part of the Merger

will be issued pursuant to exemptions from registration provided by Section 4(a)(2) and/or Regulation D of the 1933 Securities Act,

In December 2019, a novel strain

of coronavirus, COVID-19, was reported in Wuhan, China.

The World Health Organization determined that the outbreak constituted a “Public

Health Emergency of International Concern”

and declared a pandemic.

The COVID-19 pandemic is disrupting businesses and affecting

production and sales across a range of industries, as well as causing volatility in the financial markets.

The extent of the impact of

the COVID-19 pandemic on our customer demand, sales and financial performance will depend on certain developments, including, among other

things, the duration and spread of the outbreak and the impact on our customers and employees, all of which are uncertain and cannot be

See “Risk Factors”

for information regarding certain risks associated with the pandemic.

The COVID-19 pandemic has accelerated

cloud transformation efforts for new and existing customers and underscored the importance and mission-critical nature of multicloud strategies.

Over the last several months, customers have increasingly turned to cloud solutions to pivot to new business models, improved their disaster

recovery of mission critical data, migrated to cloud-based solutions and reduced their capital expenditure requirements.

In response to the COVID-19 pandemic,

we implemented a number of initiatives to ensure the safety of our employees.

Since March 9, 2020, over 90% of our employees work remotely.

All of our employees have had the ability to work remotely utilizing solutions the Company provides to their clients and distribution

Additionally, our remote, technology-enabled model has enabled minimal disruption to our go-to-market efforts and service delivery

organizations.

The effects of the COVID-19 pandemic

are rapidly evolving, and the full impact and duration of the virus are unknown.

Currently, the COVID-19 pandemic has not had a significant

impact on our operations or financial performance;

however, the ultimate extent of the impact of the COVID-19 pandemic on our operational

and financial performance will depend on certain developments, including the duration and spread of the outbreak and its impact on our

customers, vendors and employees and its impact on our sales cycles as well as industry events, all of which are uncertain and cannot

be predicted.

April 30, 2020, the Company was granted a loan from a banking institution, in the principal amount of $481,977 (the “Loan”),

pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic

Security Act (the “CARES Act”), which was enacted on March 27, 2020.

The Loan, which was in the form of a Note dated April

30, 2020, matures on April 30, 2022 and bears interest at a fixed rate of 1.00% per annum, payable monthly to Signature Bank, as lender,

commencing on November 5, 2020.

Funds from the loan may only be used to retain workers and maintain payroll or make mortgage payments,

lease payments and utility payments.

Management intends to use the entire Loan amount for qualifying expenses.

Under the terms of the

PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

The Company intends

to apply for forgiveness for the full amount.

The extent of the impact, if

any, will depend on future developments, including actions taken to contain COVID-19.

What changed 10-K

Item 1. Business