What changed in this filing

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Item 1A. Risk Factors

2025-03-31 compared with 2024-03-28 · 488 added, 417 removed, 489 unchanged (65% of the section changed)

Investing in the Company’s common stock involves

a high degree of risk.

You should carefully consider the following risks together with the other information in this Annual Report.

Risks Related to Data

Storage’s Business

Investing in the Company’s common stock involves a high degree of

Investors should carefully consider the risks described below before deciding whether to invest in our securities.

the following risks actually occur, our business, financial condition or results of operations could be adversely affected.

In such case,

the trading price of our Common Stock could decline and you could lose all or part of your investment.

Our actual results could differ

materially from those anticipated in the forward-looking statements made throughout this Annual Report as result of different factors,

including the risks we face described below.

Risks Related to the Company’s

The Company has not

generated a significant amount of net income and it may not be able to sustain profitability in the future.

As reflected in the

consolidated financial statements, the Company had net income attributable to common shareholders of $381,575 for the year ended

December 31, 2023 and a net loss attributable to common shareholders of $4,356,802 for the year ended December 31, 2022.

As reflected in the consolidated financial statements, the Company had net

income attributable to common shareholders of $523,214 and $381,575 for the years ended December 31, 2024, and 2023, respectively As of

December 31, 2024, the Company had cash of $1,070,097, marketable securities of $11,261,006, and working capital of $11,869,914.

There can be no assurance that the Company will continue to generate income in the future.

If the Company

is unable to attract new customers to its infrastructure and disaster recovery/cloud subscription services on a cost-effective

basis, its revenue and operating results would be adversely affected.

The Company generates the

majority of its revenue from the sale of subscriptions to its infrastructure and disaster recovery/cloud solutions as well as contracted

managed services and software and hardware renewals.

In order to grow, the Company must continue to reach the many businesses in need

of our unique services, many of whom may have not previously used infrastructure as a service and cloud disaster recovery backup solutions.

The Company uses and periodically adjusts a diverse mix of advertising and marketing programs to promote its solutions.

Significant increases

in the pricing of one or more of the Company’s advertising channels would increase its advertising costs or cause it to choose less

expensive and perhaps fewer effective channels.

As the Company adds to or changes the mix of its advertising and marketing strategies,

it may expand into channels with significantly higher costs than its current programs, which could adversely affect its operating results.

The Company may incur advertising and marketing expenses significantly in advance of the time it anticipates recognizing any revenue generated

by such expenses, and it may only at a later date, or never, experience an increase in revenue or brand awareness as a result of such

expenditures.

Additionally, because the Company recognizes revenue from customers over the terms of their subscriptions, a large portion

of its revenue for each quarter reflects deferred revenue from subscriptions entered into during previous quarters, and downturns or upturns

in subscription sales or renewals may not be reflected in the Company’s operating results until later periods.

It has made in the

past, and may make in the future, significant investments to test new advertising, and there can be no assurance that any such investments

will lead to the cost-effective acquisition of additional customers.

If the Company is unable to maintain effective advertising programs,

its ability to attract new customers could be adversely affected, its advertising and marketing expenses could increase substantially,

and its operating results may suffer.

can be no assurance that the Company will continue to generate income in the future or that the income will be significant.

If the Company is unable

to attract new customers to its infrastructure and disaster recovery/cloud subscription services on a cost-effective basis, its revenue

and operating results would be adversely affected.

The Company generates the majority of its revenue from the sale of subscriptions

to its infrastructure and disaster recovery/cloud solutions as well as contracted managed services and software and hardware renewals.

In order to grow, the Company must continue to reach the many businesses in need of its unique services, many of whom may have not previously

used infrastructure as a service and cloud disaster recovery backup solutions.

The Company uses and periodically adjusts a diverse mix

of advertising and marketing programs to promote its solutions.

Significant increases in the pricing of one or more of the Company’s

advertising channels would increase its advertising costs or cause it to choose less expensive and perhaps fewer effective channels.

the Company adds to or changes the mix of its advertising and marketing strategies, it may expand into channels with significantly higher

costs than its current programs, which could adversely affect its operating results.

The Company may incur advertising and marketing expenses

significantly in advance of the time it anticipates recognizing any revenue generated by such expenses, and it may only at a later date,

or never, experience an increase in revenue or brand awareness as a result of such expenditures.

Additionally, because the Company recognizes

revenue from customers over the terms of their subscriptions, a sizeable portion of its revenue for each quarter reflects deferred revenue

from subscriptions entered into during previous quarters, and downturns or upturns in subscription sales or renewals may not be reflected

in the Company’s operating results until later periods.

It has made in the past, and may make, in the future, significant investments

to test new advertising, and there can be no assurance that any such investments will lead to the cost-effective acquisition of additional

If the Company is unable to maintain effective advertising programs, its ability to attract new customers could be adversely

affected, its advertising and marketing expenses could increase substantially, and its operating results may suffer.

A portion of the Company’s

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to its stockholders, and consume resources that are necessary to sustain its business.

Having completed the

merger with Flagship, the Company expects to continue to acquire complementary solutions, services, technologies, or businesses

in the future.

The Company may also enter into relationships with other businesses to expand its portfolio of solutions or its

ability to provide its solutions in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels

of distribution, discount pricing, or investments in other companies.

Negotiating these transactions can be time-consuming, difficult,

and expensive, and its ability to complete these transactions may often be subject to conditions or approvals that are beyond its

Consequently, these transactions, even if a definitive purchase agreement is executed and announced, may not close.

The Company expects to continue

to acquire complementary solutions, services, technologies, or businesses in the future.

The Company may also enter into relationships

with other businesses to expand its portfolio of solutions or its ability to provide its solutions in foreign jurisdictions, which could

involve preferred or exclusive licenses, additional channels of distribution, discount pricing, or investments in other companies.

these transactions can be time-consuming, difficult, and expensive, and its ability to complete these transactions may often be subject

to conditions or approvals that are beyond its control.

Consequently, these transactions, even if a definitive purchase agreement is executed

and announced, may not close.

Acquisitions may also disrupt

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use cash that the Company may need in the future to operate its business;

incur debt on terms unfavorable to the Company, that it may be unable to repay,

or that may place burdensome restrictions on its operations;

incur debt on terms unfavorable to the Company, that it may be unable to repay, or that may place burdensome restrictions on its operations;

incur large charges or substantial liabilities;

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there can be no assurance that the Company’s operating performance after an acquisition will be successful or will fulfill management’s

We may not realize the anticipated

benefits of the merger with Flagship or successfully integrate our businesses

On May 31, 2021, the Company completed the Merger.

The Company expects that

Flagship’s business will be synergistic with its existing IBM business and anticipates meaningful operation efficiency and that

the Merger will provide a comprehensive one-stop provider to cross-sell solutions across each organization’s respective enterprise,

as well as middle-market customers.

Key offerings for the combined companies are expected to include a wide array of multi-cloud information

technology solutions in highly secure, reliable enterprise level cloud services for companies using IBM Power systems, Microsoft Windows,

and Linux, including Infrastructure as a Service (IaaS), Disaster Recovery of digital information as a Service (DRaaS), and Cyber Security

as a Service (CSaaS).

Since having completed the

merger, however, the Company still faces risks and unknowns associated with the Merger.

Ultimately, the Company may not realize the anticipated

benefits of the merger with Flagship and integrating and operating Data Storage’s and Flagship’s business may be more difficult,

time-consuming, or costly than expected.

Additionally, integrating and operating the Flagship business could result in higher capital

expenditures than anticipated, which could result in the Company’s need to raise additional capital for its operations.

may fail to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial

statements or cause it to fail to meet its periodic reporting obligations.

As a public company,

we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.

Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting.

rules governing the standards that must be met for management to assess our internal control over financial reporting are complex

and require significant documentation, testing, and possible remediation.

Company previously identified material weaknesses in its internal control over financial reporting, concluding that its disclosure

controls were not effective, based on material weaknesses which ultimately contributed to the Company not designing and maintaining

formal controls to analyze, account for, and disclose complex transactions, including the accounting for certain consideration

received from a vendor.

These material weaknesses resulted in the restatement of the Company’s previously filed quarterly

condensed consolidated financial information for the period ended June 30, 2022, related to accrued expenses, cost of goods sold,

gross profit, loss from operations, net loss, earnings per share and the related disclosures.

As of March 31, 2023, the material

weaknesses has been remediated.

In response to such material

weaknesses, management has expended and will continue to expand a substantial amount of effort and resources for the remediation of material

weaknesses in internal control over financial reporting.

In November of 2022, management and its advisors began evaluating and documenting

the design and operating effectiveness of our internal control over financial reporting, and their work is ongoing.

The Company may fail

to maintain an effective system of internal controls, which may result in material misstatements of its consolidated financial statements

or cause it to fail to meet its periodic reporting obligations.

As a public company, The

Company is required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls.

Section 404 requires an annual management assessment of the effectiveness of the Company’s internal control over financial reporting.

The rules governing the standards that must be met for management to assess the Company’s internal control over financial reporting

are complex and require significant documentation, testing, and possible remediation.

The Company can give no assurance

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The Company’s failure to implement and maintain effective

internal control over financial reporting could result in errors in its consolidated financial statements that could result in a restatement

internal controls over financial reporting could result in errors in its consolidated financial statements that could result in a restatement

of its financial statements and could cause it to fail to meet its reporting obligations, any of which could diminish investor confidence

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the election of all its directors and the approval of a reverse stock split.

Risks Related

to the Company’s Industry

To date, a substantial

portion of the Company’s revenues have come from a limited number of customers, making it dependent on those few customers.

Though the Company continues to expand its customer base, the Company remains

dependent on a limited number of customers for a substantial portion of its revenues.

For the year ended December 31, 2024, the Company

had two customers that each, individually, accounted for 12% of revenue.

For the year ended December 31, 2023, the Company had two

customers that accounted for 12% and 10% of revenue.

The loss of, or a significant reduction of business from, any of the Company’s

primary customers could have a material adverse effect on its business, financial condition, and results of operations unless it is able

to replace such customers with other primary customers.

Risks Related to the

Company’s Industry

The market for cloud

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colocation solutions providers, such as Equinix, Rackspace and TierPoint.

Many of these competitors benefit from significant competitive advantages over

the Company, given their desire to enter this niche marketplace, such as greater name recognition, longer operating histories, more varied

services, and larger marketing budgets, as well as greater financial, technical, and other resources.

In addition, many of these competitors

have established marketing relationships and major distribution agreements with computer manufacturers, internet service providers, and

resellers, giving them access to larger customer bases.

Some of these competitors may make acquisitions or enter strategic relationships

to offer a more comprehensive service than the Company does.

As a result, some of these competitors may be able to:

Many of these competitors

benefit from significant competitive advantages over the Company, given their desire to enter this niche marketplace, such as greater

name recognition, longer operating histories, more varied services, and larger marketing budgets, as well as greater financial, technical,

and other resources.

In addition, many of these competitors have established marketing relationships and major distribution agreements

with computer manufacturers, internet service providers, and resellers, giving them access to larger customer bases.

Some of these competitors

may make acquisitions or enter strategic relationships to offer a more comprehensive service than the Company does.

As a result, some

of these competitors may be able to:

develop superior products or services, gain greater market acceptance, and expand their service offerings more efficiently or more rapidly;

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Additionally, consolidation

activity through strategic mergers, acquisitions and joint ventures may result in new competitors that can offer a broader range

of products and services, may have a greater scale or a lower cost structure.

To the extent such consolidation results in the ability

of vertically integrated companies to offer more integrated services to customers than the Company can, customers may prefer the

single-source approach and direct more business to such competitors, thereby impairing the Company’s competitive position.

Furthermore, new entrants not currently considered to be competitors may enter the market through acquisitions, partnerships, or

strategic relationships.

As the Company looks to market and sell its services to potential customers, the Company must convince

its internal stakeholders that the Company’s services are superior to their current solutions.

If the Company is unable to

anticipate or react to these competitive challenges, its competitive position would weaken, which could adversely affect its business,

financial condition, and results of operations.

These combinations may make it more difficult for the Company to compete effectively

and its inability to compete effectively would negatively impact its operating results.

In addition, there can be no assurance

that the Company will not be forced to engage in price-cutting initiatives, or to increase its advertising and other expenses to

attract and retain customers in response to competitive pressures, either of which could have a material adverse effect on the

Company’s revenue and operating results.

If a cyberattack was able to breach the Company’s security protocols

and disrupt its data protection platform and solutions, any such disruption could increase its expenses, damage its reputation, harm its

business and adversely affect its stock price.

activity through strategic mergers, acquisitions and joint ventures may result in new competitors that can offer a broader range of products

and services that, may have a greater scale or a lower cost structure.

To the extent such consolidation results in the ability of vertically

integrated companies to offer more integrated services to customers than the Company can, customers may prefer the single-source approach

and direct more business to such competitors, thereby impairing the Company’s competitive position.

Furthermore, new entrants not

currently considered to be competitors may enter the market through acquisitions, partnerships, or strategic relationships.

As the Company

looks to market and sell its services to potential customers, the Company must convince its internal stakeholders that the Company’s

services are superior to their current solutions.

If the Company is unable to anticipate or react to these competitive challenges, its

competitive position would weaken, which could adversely affect its business, financial condition, and results of operations.

These combinations

may make it more difficult for the Company to compete effectively and its inability to compete effectively would negatively impact its

operating results.

In addition, there can be no assurance that the Company will not be forced to engage in price-cutting initiatives,

or to increase its advertising and other expenses to attract and retain customers in response to competitive pressures, either of which

could have a material adverse effect on the Company’s revenue and operating results.

If a cyberattack was

able to breach the Company’s security protocols and disrupt its data protection platform and solutions, any such disruption could

increase its expenses, damage its reputation, harm its business and adversely affect its stock price.

The Company has implemented

various protocols and regularly monitors its systems via security software to reduce any security vulnerabilities.

also relies on third-party providers for several critical aspects of its infrastructure cloud and disaster recovery business continuity

services, and consequently, it does not maintain direct control over the security or stability of those associated systems.

the firmware, software, and/or open-source software that its data protection solutions may utilize could be susceptible to hacking

In the event of the discovery of a significant security vulnerability, the Company would incur additional substantial

expenses and its business would be harmed.

The Company also relies

on third-party providers for several critical aspects of its infrastructure cloud and disaster recovery business continuity services,

and consequently, it does not maintain direct control over the security or stability of those associated systems.

Furthermore, the firmware,

software, and/or open-source software that its data protection solutions may utilize could be susceptible to hacking or misuse.

event of the discovery of a significant security vulnerability, the Company would incur additional substantial expenses and its business

would be harmed.

The process of developing

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or harm to the Company’s business and reputation.

Any significant disruption in service in the Company’s computer systems,

or caused by its third-party storage and system providers, could damage its reputation and result in a loss of customers, which would

harm its business, financial condition, and operating results.

The Company’s reputation,

and ability to attract, retain and serve its customers is dependent upon the reliable performance of its network infrastructure and payment

systems, and its customers’ ability to readily access their stored files.

The Company has experienced interruptions in these systems

in the past, including server failures that temporarily slowed down its customers’ ability to access their stored files, or made

the Company’s infrastructure inaccessible, and it may experience interruptions or outages in the future.

Any significant disruption

in service in the Company’s computer systems, or caused by its third-party storage and system providers, could damage its reputation

and result in a loss of customers, which would harm its business, financial condition, and operating results.

The Company’s reputation, and ability to attract, retain and serve its

customers is dependent upon the reliable performance of its network infrastructure and payment systems, and its customers’ ability

to readily access their stored files.

The Company has experienced interruptions in these systems in the past, including server failures

that temporarily slowed down its customers’ ability to access their stored files, or made the Company’s infrastructure inaccessible

and it may experience interruptions or outages in the future.

In addition, while the Company both operates and maintains elements of network

infrastructure, some elements of this complex system are operated by third parties that the Company does not control and that would require

significant time to replace.

considerable time to replace.

The Company expects this dependence on third parties to increase.

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adversely impact the Company’s ability to service its customers.

The Company’s data center leases expire at various times

The Company’s data center agreements expire at various times

between 2027 and 2029 with rights of extension.

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were affected.

Any financial difficulties,

such as bankruptcy, faced by the Company’s third-party data center operators, its third-party colocation providers, or any of the

service providers with whom the Company or they contract, may have negative effects on its business, the nature and extent of which are

difficult to predict.

Moreover, if its third-party data center providers or its third-party colocation providers are unable to keep up

with the Company’s growing needs for capacity, this could have an adverse effect on the Company’s business.

Interruptions

in the Company’s services might reduce its revenue, cause it to issue credits or refunds to customers, subject it to potential liability,

or harm its renewal rates.

In addition, prolonged delays or unforeseen difficulties in connection with adding storage capacity or upgrading

its network architecture when required may cause the Company’s service quality to suffer.

Problems with the reliability or security

of the Company’s systems could harm its reputation, and the cost of remedying these problems could negatively affect the Company’s

business, financial condition, and operating results.

Any financial difficulties, such as bankruptcy, faced by the Company’s

third-party data center operators, its third-party colocation providers, or any of the service providers with whom the Company or they

contract, may have negative effects on its business, the nature and extent of which are difficult to predict.

Moreover, if its third-party

data center providers or its third-party colocation providers are unable to keep up with the Company’s growing capacity needs, this

could have an adverse effect on the Company’s business.

Interruptions in the Company’s services might reduce its revenue,

cause it to issue credits or refunds to customers, subject it to potential liability, or harm its renewal rates.

In addition, prolonged

delays or unforeseen difficulties in connection with adding storage capacity or upgrading its network architecture when required may cause

the Company’s service quality to suffer.

Problems with the reliability or security of the Company’s systems could harm its

reputation, and the cost of remedying these problems could negatively affect the Company’s business, financial condition, and operating

Security vulnerabilities,

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could increase its expenses, damage its reputation, harm its business, and adversely affect its stock price.

The Company relies

on third-party providers for several critical aspects of its infrastructure cloud and disaster recovery business continuity services,

and consequently, it does not maintain direct control over the security or stability of the associated systems.

Furthermore, the

firmware, software and/or open-source software that its data protection solutions may utilize could be susceptible to hacking or

In the event of the discovery of a significant security vulnerability, the Company would incur additional substantial expenses

and its business would be harmed.

The Company relies on third-party

providers for several critical aspects of its infrastructure cloud and disaster recovery business continuity services, and consequently,

it does not maintain direct control over the security or stability of the associated systems.

Furthermore, the firmware, software and/or

open-source software that its data protection solutions may utilize could be susceptible to hacking or misuse.

In the event of the discovery

of a significant security vulnerability, the Company would incur additional substantial expenses and its business would be harmed.

The Company’s customers

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compete with the Company’s own offerings, which could potentially give them a competitive advantage.

If the Company

is unable to retain its existing customers, its business, financial condition, and operating results would be adversely affected.

If the Company’s

efforts to satisfy its existing customers are not successful, it may not be able to retain them, and as a result, its revenue and

ability to grow would be adversely affected.

If the Company is unable

to retain its existing customers, its business, financial condition, and operating results would be adversely affected.

If the Company’s efforts

to satisfy its existing customers are not successful, it may not be able to retain them, and as a result, its revenue and ability to grow

would be adversely affected.

The Company may not be able to accurately predict future trends in customer renewals.

Customers choose not to renew their subscriptions for many reasons, including if customer service issues are not satisfactorily

resolved, a desire to reduce discretionary spending, or a perception that they do not use the service sufficiently, that the solution

is a poor value, or that competitive services provide a better value or experience.

If the Company’s approximate 94% retention

rate significantly decreases, it may need to increase the rate at which it adds new customers in order to maintain and grow its

revenue, which may require it to incur significantly higher advertising and marketing expenses than it currently anticipates, or

its revenue may decline.

A significant decrease in the Company’s retention rate would therefore have an adverse effect on

its business, financial condition, and operating results.

The Company’s estimates of the number of employees it retains,

and advertising costs are based to a large extent upon its subscription contracts, which may be terminated by customers typically

upon 90 days’ notice prior to the ending term of their contract for services.

demand for the Company’s cyber security, disaster recovery, and/or infrastructure solutions, in general, would cause its

revenue to decline.

Customers choose not

to renew their subscriptions for many reasons, including if customer service issues are not satisfactorily resolved, a desire to reduce

discretionary spending, or a perception that they do not use the service sufficiently, that the solution is a poor value, or that competitive

services provide a better value or experience.

If the Company’s retention rate significantly decreases, it may need

to increase the rate at which it adds new customers in order to maintain and grow its revenue, which may require it to incur significantly

higher advertising and marketing expenses than it currently anticipates, or its revenue may decline.

A significant decrease in the Company’s

retention rate would therefore have an adverse effect on its business, financial condition, and operating results.

The Company’s

estimates of the number of employees it retains, and advertising costs are based to a large extent upon its subscription contracts, which

may be terminated by customers typically upon 90 days’ notice prior to the ending term of their contract for services.

A decline in demand

for the Company’s cyber security, disaster recovery, and/or infrastructure solutions, in general, would cause its revenue to decline.

The Company derives, and

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increase the number of its customers, which could harm its business, financial condition, and operating results.

Given the Company’s market focus, maintaining and enhancing its brand is

critical to its success.

The Company believes that the importance of brand recognition and loyalty will increase in light of the increasing

competition in its markets.

The Company plans to continue investing substantial resources to promote its brand, both domestically and

internationally, but there is no guarantee that its brand development strategies will enhance the recognition of its brand.

Company’s existing and potential competitors have well-established brands with greater recognition than it has.

If the Company’s

efforts to promote and maintain the Company’s brand are not successful, the Company’s operating results and its ability to

attract and retain customers may be adversely affected.

In addition, even if the Company’s brand recognition and loyalty increase,

it may not result in increased use of its solutions or higher revenue.

Given the Company’s

market focus, maintaining and enhancing its brand is critical to its success.

The Company believes that the importance of brand recognition

and loyalty will increase in light of the increasing competition in its markets.

The Company plans to continue investing substantial resources

to promote its brand, both domestically and internationally, but there is no guarantee that its brand development strategies will enhance

the recognition of its brand.

Some of the Company’s existing and potential competitors have well-established brands with greater

recognition than it has.

If the Company’s efforts to promote and maintain the Company’s brand are not successful, the Company’s

operating results and its ability to attract and retain customers may be adversely affected.

In addition, even if the Company’s

brand recognition and loyalty increase, it may not result in increased use of its solutions or higher revenue.

The Company’s solutions,

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or transfer of personally identifiable information or other customer data, may result in governmental enforcement actions, litigation,

or public statements against the Company by consumer advocacy groups or others and could cause its customers to lose trust in the Company, which

could have an adverse effect on the Company’s reputation and business.

or public statements against the Company by consumer advocacy groups or others and could cause its customers to lose trust in the Company,

which could have an adverse effect on the Company’s reputation and business.

The Company’s customers

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a prohibition against the Company’s use or disclosure of that information if a similar use or disclosure by its customers would violate the HIPAA standards;

the ability of the Company’s customers to terminate their subscription

to its solution if the Company breaches a material term of the business associate agreement and are unable to cure the breach;

the ability of the Company’s customers to terminate their subscription to its solution if the Company breaches a material term of the business associate agreement and are unable to cure the breach;

the requirement to return or destroy all individually identifiable health information at the end of the customer’s subscription;

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as it grows, its business, financial condition, and operating results could be harmed.

The Company has office

locations in New York, Florida, and Texas, and data centers in New York, Massachusetts, North Carolina, Texas, and Canada.

Company is unable to effectively manage a large and geographically dispersed group of employees and contractors or to anticipate

its future growth and personnel needs, its business may be adversely affected.

As the Company expands its business, it adds complexity

to its organization and must expand and adapt its operational infrastructure and effectively coordinate throughout its organization.

The Company has office locations

in New York, Florida, Texas and the United Kingdom, and data centers in New York, Massachusetts, North Carolina, Texas, Canada and the

United Kingdom.

If the Company is unable to effectively manage a large and geographically dispersed group of employees and contractors

or to anticipate its future growth and personnel needs, its business may be adversely affected.

As the Company expands its business, it

adds complexity to its organization and must expand and adapt its operational infrastructure and effectively coordinate throughout its

organization.

As a result, the Company has incurred and expects to continue to incur additional expenses related to its continued growth.

The Company also anticipates

that its efforts to expand internationally will entail the marketing and advertising of its services and brand and the development of

localized websites.

The Company does not have substantial experience in selling its solutions in international markets or in conforming

to the local cultures, standards, or policies necessary to successfully compete in those markets, and it must invest significant resources

in order to do so.

that its ongoing efforts to continue to expand internationally will entail the marketing and advertising of its services and brand and

the development of localized websites.

The Company does not have substantial experience in selling its solutions in international markets

or in conforming to the local cultures, standards, or policies necessary to successfully compete in those markets, and it must invest

significant resources in order to do so.

The Company may not succeed in these efforts or achieve its customer acquisition or other goals.

For some international

markets, customer preferences and buying behaviors may be different, and the Company may use business or pricing models that are different

from its traditional subscription model to provide cloud backup and related services to customers.

The Company’s revenue from new

foreign markets may not exceed the costs of establishing, marketing, and maintaining its international solutions, and therefore may not

be profitable on a sustained basis, if at all.

For some international markets, customer preferences and buying behaviors may be different, and the Company may use business or pricing

models that are different from its traditional subscription model to provide cloud backup and related services to customers.

The Company’s

intended international expansion will subject it to risks typically encountered when operating internationally .

The Company intends to expand

internationally which subjects it to new risks that it has not generally faced in the United States.

These risks in clude:

of the Company’s solutions, including translation into foreign languages and adaptation for local practices and regulatory

requirements;

of experience in other geographic markets;

local competitors;

and burden of complying with, lack of familiarity with, and unexpected changes in foreign legal and regulatory requirements, including

consumer and data privacy laws;

in managing and staffing international operations;

adverse tax consequences, including the complexities of transfer pricing, foreign value added or other tax systems, double taxation,

and restrictions, and/or taxes on the repatriation of earnings;

on third parties, including channel partners with whom we do not have extensive experience;

with the Foreign Corrupt Practices Act, economic sanction laws and regulations, export controls, and other U.S.

laws and regulations

regarding international business operations;

financial accounting and reporting burdens and complexities;

social, and economic instability abroad, terrorist attacks, and security concerns in general;

or varied protection for intellectual property rights in some countries.

Operating in international

markets also requires significant management attention and financial resources.

The investment and additional resources required to establish

operations and manage growth in other countries may not produce desired levels of revenue or profitability.

revenue from new foreign markets may not exceed the costs of establishing, marketing, and maintaining its international solutions, and

therefore may not be profitable on a sustained basis, if at all.

Company’s international expansion will subject it to risks typically encountered when operating internationally including economic

and political instability, fluctuations in currency exchange rates, differing legal and regulatory environments, challenges in managing

a geographically dispersed workforce, and cultural differences.

International

operations are subject to numerous political and economic factors, including changes in foreign national priorities, foreign government

budgets, global economic conditions, and fluctuations in foreign currency exchange rates, the possibility of trade sanctions and other

government actions, regulatory requirements, significant competition, taxation, and other risks associated with doing business outside

the United States.

Competition for international sales is intense.

a result of the Company’s international expansion into Europe, it will be exposed to risks inherent in foreign operations.

risks, which can vary substantially by market, include:

costs and difficulties inherent in managing cross-border business operations and complying

with different commercial and legal requirements of overseas markets;

instability, corruption, and social and ethnic unrest;

in economic conditions (including wage and commodity inflation, consumer spending and unemployment

regulatory environment;

with tax, trade, environmental and other foreign laws and regulations, including legal limitations

on ownership in some foreign countries and inadequate or inconsistent enforcement of regulations;

by local regulatory bodies, including setting rates and tariffs that may be earned by or

charged to our businesses;

rulings by foreign courts or tribunals;

challenges obtaining, maintaining and complying with

permits or approvals;

difficulty enforcing contractual and property rights;

and differing

legal standards;

preferences ;

in the laws and policies that govern foreign investment in countries where our business is

strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;

deterioration

of political relations with the United States;

appropriations of assets.

addition, the Company may experience gains and losses resulting from fluctuations in foreign currency exchange rates.

To date, the majority

of the Company’s revenues and costs are denominated in U.S.

however, the majority of revenues and costs in its international

operations [are/will be] denominated in foreign currencies.

Where the Company’s prices are denominated in U.S.

dollars, its sales

could be adversely affected by declines in foreign currencies relative to the U.S.

dollar, thereby making its products and services more

expensive in local currencies.

The Company is also exposed to risks resulting from fluctuations in foreign currency exchange rates in

connection with its international expansion.

To the extent the Company pay contractors in foreign currencies, international expansions

could cost more than anticipated as a result of declines in the U.S dollar relative to foreign currencies.

In addition, fluctuating foreign

currency exchange rates have a direct impact on how the Company’s international results of operations translate into U.S.

which may adversely affect reported earnings.

if the Company may decide in the future to undertake foreign exchange hedging transactions to reduce foreign currency transaction exposure,

it does not currently intend to eliminate all foreign currency transaction exposure.

Therefore, any weakness of the U.S.

dollar may have

a positive impact on the Company’s consolidated results of operations because the currencies in the foreign countries in which it

operates may translate into more U.S.

However, if the U.S.

dollar strengthens relative to the currencies of the foreign countries

in which the Company operates its consolidated financial position and results of operations may be negatively impacted as amounts in foreign

currencies will generally translate into fewer U.S.

There can be no assurance as to the future effect of any such changes on

our results of operations, financial condition or cash flows.

Company’s international business involves sales directly to international customers which are subject to U.S.

and foreign laws and

regulations, technology transfer restrictions, investments, taxation, repatriation of earnings, exchange controls, the Foreign Corrupt

Practices Act and other anti-corruption laws and regulations, and the anti-boycott provisions of the U.S.

Export Control Reform Act of

While the Company has policies in place to comply with such laws and regulations, failure by the Company, its employees or others

working on its behalf to comply with these laws and regulations could result in administrative, civil, or criminal liabilities, which

could have a material adverse effect on the Company.

Additionally,

international procurement and local country rules and regulations, contract laws and judicial systems differ from those in the U.S.

in some cases, may be less predictable than those in the U.S., which could impair our ability to enforce contracts and increase the risk

of adverse or unpredictable outcomes, including the possibility that certain matters that would be considered civil matters in the U.S.

are treated as criminal matters in other countries.

may not be able to adequately address these additional risks.

If we were unable to do so, our operations might suffer, which may adversely

impact our results of operations and financial condition.

The Company’s software

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integrate these key employees into its business could adversely affect its business.

To execute the Company’s growth plan, it must attract and retain highly

qualified personnel.

Competition for these employees is intense, and the Company may not be successful in attracting and retaining qualified

The Company, from time to time in the past, experienced, and it expects to continue to experience, difficulty in hiring and

retaining highly-skilled employees with appropriate qualifications.

New hires require significant training and, in most cases, take significant

time before they achieve full productivity.

The Company’s recent hires and planned hires may not become as productive as it expects,

and it may be unable to hire or retain sufficient numbers of qualified individuals.

Many of the companies with which it competes for experienced

personnel have greater resources than it has.

In addition, in making employment decisions, particularly in the internet and high-technology

industries, job candidates often consider the value of the equity that they are to receive in connection with their employment.

employees may be more likely to voluntarily exit the Company if the shares underlying their vested and unvested options, as well as unvested

restricted stock units, have significantly depreciated in value resulting in the options they are holding potentially being significantly

above the market price of the Company’s common stock and the value of the restricted stock units decreasing.

If the Company fails

to attract new personnel, or fails to retain and motivate its current personnel, its business and growth prospects could be severely harmed.

To execute the Company’s

growth plan, it must attract and retain highly qualified personnel.

Competition for these employees is intense, and the Company may not

be successful in attracting and retaining qualified personnel.

The Company, from time to time in the past, experienced, and expects

to continue to experience, difficulty in hiring and retaining highly-skilled employees with appropriate qualifications.

New hires require

significant training and, in most cases, take significant time before they achieve full productivity.

The Company’s recent hires

and planned hires may not become as productive as it expects, and it may be unable to hire or retain sufficient numbers of qualified individuals.

Many of the companies with which it competes for experienced personnel have greater resources than it has.

In addition, in making employment

decisions, particularly in the internet and high-technology industries, job candidates often consider the value of the equity that they

are to receive in connection with their employment.

In addition, employees may be more likely to voluntarily exit the Company if the shares

underlying their vested and unvested options, as well as unvested restricted stock units, have significantly depreciated in value resulting

in the options they are holding potentially being significantly above the market price of the Company’s common stock and the value

of the restricted stock units decreasing.

If the Company fails to attract new personnel, or fails to retain and motivate its current personnel,

its business and growth prospects could be severely harmed.

Declining general economic

or business conditions and changes to trade policy, including tariff and customs regulations, may have a negative impact on the Company’s

Continuing concerns over U.S.

health care reform legislation

and energy costs, geopolitical issues, including those in Eastern Europe, the availability and cost of credit and government stimulus

programs in the United States and other countries have contributed to increased volatility and diminished expectations for the global

These factors, combined with low business and consumer confidence and high unemployment, precipitated an economic slowdown and

recession and stagnant economy for more than a decade.

Additionally, political changes in the U.S.

and elsewhere in the world have created

a level of uncertainty in the markets.

If the economic climate does not improve or deteriorate, our business, as well as the financial

condition of our suppliers and our third-party payors, could be adversely affected, resulting in a negative impact on our business, financial

condition and results of operations.

Changes in U.S.

or international social, political,

regulatory and economic conditions or in laws and policies governing trade, manufacturing, development and investment in the countries

where the Company currently conduct its business could adversely affect its business, reputation, financial condition and results of operations.

Changes or proposed changes in U.S.

or other countries’ trade policies may result in restrictions and economic disincentives on

international trade.

government has recently imposed, or is currently considering imposing, tariffs on certain trade partners.

Tariffs, economic sanctions and other changes in U.S.

trade policy have in the past and could in the future trigger retaliatory actions

by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S.

Further, any emerging protectionist or nationalist trends (whether regulatory- or consumer-driven) either in the United States

or in other countries could affect the trade environment.

Our business, like many other corporations, would be impacted by changes to

the trade policies of the United States and foreign countries (including governmental action related to tariffs, international trade agreements,

or economic sanctions).

Such changes have the potential to adversely impact the U.S.

economy or certain sectors thereof, the global economy,

and the Company’s industry, and as a result, could have a material adverse effect on its business, financial condition and results

of operations.

In addition, the global macroeconomic

environment could be negatively affected by, among other things, COVID-19 or other pandemics or epidemics, instability in global economic

markets, instability in the global credit markets, supply chain weaknesses, instability in the geopolitical environment as a result of

the withdrawal of the United Kingdom from the European Union, the Russian invasion of Ukraine, the war in the Middle East and other political

tensions, and foreign governmental debt concerns.

Such challenges have caused, and may continue to cause, uncertainty and instability

in local economies and in global financial markets.

Risks Related to Intellectual

Assertions by a third

party that the Company’s solutions infringe its intellectual property, whether correct, could subject the Company to costly and

time-consuming litigation or expensive licenses.

party that the Company’s solutions infringe its intellectual property, whether or not correct, could subject the Company to costly

and time-consuming litigation or expensive licenses.

There is frequent litigation

29 unchanged sentences

acceptable terms, or at all.

Any loss of the right to use any software required for the development and maintenance of the Company’s solutions

could result in delays in the provision of its solutions until equivalent technology is either developed by the Company, or, if available

from others, is identified, obtained, and integrated, which delay could harm its business.

Any errors or defects in third-party software

could result in errors or a failure of its solutions, which could harm its business.

Any loss of the right to use any software required for the development and maintenance of the Company’s

solutions could result in delays in the provision of its solutions until equivalent technology is either developed by the Company, or,

if available from others, is identified, obtained, and integrated, which delay could harm its business.

Any errors or defects in third-party

software could result in errors or a failure of its solutions, which could harm its business.

If the Company is unable

to protect its domain names, its reputation, brand, customer base, and revenue, as well as its business and operating results, could be

to protect its domain names, its reputation, brand, customer base, and revenue, as well as its business and operating results, it could be

adversely affected.

The Company has registered domain names for websites (“URLs”) that

it uses in its business, such as www.datastoragecorp.com.

If the Company is unable to maintain its rights in these domain names, its competitors

or other third parties could capitalize on the Company’s brand recognition by using these domain names for their own benefit.

addition, although the Company owns the Company’s domain name under various global top-level domains such as .com and .net, as well

as under various country-specific domains, it might not be able to, or may choose not to, acquire or maintain other country-specific versions

of the Company’s domain name or other potentially similar URLs.

Domain names similar to the Company have already been registered

and elsewhere, and its competitors or other third parties could capitalize on its brand recognition by using domain names

similar to the Company’s.

The Company has registered

domain names for websites (“URLs”) that it uses in its business, such as www.datastoragecorp.com.

If the Company is unable

to maintain its rights in these domain names, its competitors or other third parties could capitalize on the Company’s brand recognition

by using these domain names for their own benefit.

In addition, although the Company owns the Company’s domain name under various

global top-level domains such as .com and .net, as well as under various country-specific domains, it might not be able to, or may choose

not to, acquire or maintain other country-specific versions of the Company’s domain name or other potentially similar URLs.

names similar to the Company have already been registered in the U.S.

and elsewhere, and its competitors or other third parties could

capitalize on its brand recognition by using domain names similar to the Company’s.

The regulation of domain names in the U.S.

and elsewhere is generally conducted by internet regulatory

bodies and is subject to change.

If the Company loses the ability to use a domain name in a particular country, it may be forced to either

incur significant additional expenses to market its solutions within that country, including the development of a new brand and the creation

of new promotional materials, or elect not to sell its solutions in that country.

Either result could substantially harm its business

and operating results.

Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars, or modify

the requirements for holding domain names.

As a result, the Company may not be able to acquire or maintain the domain names that utilize

the Company’s name in all of the countries in which it currently conducts or intends to conduct business.

Further, the relationship

between regulations governing domain names and laws protecting trademarks and similar proprietary rights varies among jurisdictions and

is unclear in some jurisdictions.

The Company may be unable to prevent third parties from acquiring and using domain names that infringe,

are similar to, or otherwise decrease the value of, its brand or its trademarks.

Protecting and enforcing the Company’s rights in

its domain names and determining the rights of others may require litigation, which could result in substantial costs, divert management

attention, and not be decided favorably to the Company.

Related to the Company’s Common Stock and Securities

The Company’s

stock price has fluctuated in the past and may be volatile in the future, and as a result, investors in its common stock could incur

substantial losses.

The Company’s

stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future.

By way of example, on

September 1, 2023, the reported low sale price of the Company’s common stock was $3.21, and the reported high sales price was

For comparison purposes, on January 12, 2023, the price of the Company’s common stock closed at $1.61 per share, on

October 17, 2023, its stock price closed at $3.49 per share, and on August 11, 2023, its stock price closed at $2.59 per share with

no discernable announcements or developments by the Company or third parties (other than the filing of the Quarterly Report on Form

Company may incur rapid and substantial decreases in its stock price in the foreseeable future that are unrelated to its operating

performance or prospects.

The stock market has experienced extreme volatility that has often been unrelated to the operating

performance of particular companies.

As a result of this volatility, investors may experience losses on their investment in the

Company’s common stock.

The market price for the Company’s common stock may be influenced by many factors, including the

reaction to the Company’s business strategy;

of competitive products or technologies;

or legal developments in the United States and other countries, especially changes in laws or regulations applicable to the Company’s

in the Company’s financial results or those of companies that are perceived to be similar to the Company;

elsewhere is generally conducted by internet regulatory bodies and is subject to change.

If the Company loses the ability to use a domain

name in a particular country, it may be forced to either incur significant additional expenses to market its solutions within that country,

including the development of a new brand and the creation of new promotional materials, or elect not to sell its solutions in that country.

Either result could substantially harm its business and operating results.

Regulatory bodies could establish additional top-level domains,

appoint additional domain name registrars, or modify the requirements for holding domain names.

As a result, the Company may not be able

to acquire or maintain the domain names that utilize the Company’s name in all of the countries in which it currently conducts or

intends to conduct business.

Further, the relationship between regulations governing domain names and laws protecting trademarks and similar

proprietary rights varies among jurisdictions and is unclear in some jurisdictions.

The Company may be unable to prevent third parties

from acquiring and using domain names that infringe, are similar to, or otherwise decrease the value of, its brand or its trademarks.

Protecting and enforcing the Company’s rights in its domain names and determining the rights of others may require litigation, which

could result in substantial costs, divert management attention, and not be decided favorably to the Company.

Risks Related to the Company’s

Common Stock and Securities

The Company’s

ability or inability to raise additional capital and the terms on which it raises it;

in the market prices of stocks generally;

Company’s public disclosure of the terms of any financing which it consummates in the future;

announcement that the Company has effected a reverse split of the Company’s common stock and treasury stock;

Company’s failure to be profitable;

Company’s failure to raise working capital;

acquisitions we may consummate, including, but not limited to, the Merger;

announcements

by the Company or its competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures

or capital commitments;

of key contracts;

Company’s failure to meet financial forecasts it publicly discloses;

trading volume

of the Company’s common stock;

Company’s common stock by it or its stockholders;

general economic,

industry and market conditions;

events or factors, including those resulting from such events, or the prospect

of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics,

such as the COVID-19 pandemic, and natural disasters such as hurricanes, floods, fires, earthquakes, tornadoes or other adverse weather

and climate conditions, whether occurring in the United States or elsewhere, could disrupt the Company’s operations, disrupt the

operations of its suppliers or result in political or economic instability.

These broad market

and industry factors may seriously harm the market price of the Company’s common stock, regardless of its operating performance.

Since the stock price of its common stock has fluctuated in the past, has been volatile recently and may be volatile in the future,

investors in its common stock could incur substantial losses.

In the past, following periods of volatility in the market, securities

class-action litigation has often been instituted against companies.

Such litigation, if instituted against the Company, could

result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect

its business, financial condition, results of operations and growth prospects.

There can be no guarantee that the Company’s

stock price will remain at current prices or that future sales of its common stock will not be at prices lower than those sold

to investors.

stock price has fluctuated in the past and may be volatile in the future, and as a result, investors in its common stock could incur substantial

Company’s stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future.

By way of example,

on March 28, 2024, the reported low sale price of the Company’s common stock was $5.52, and the reported high sales price was $7.02.

For comparison purposes, on May 29, 2024, the last closing price of the Company’s common stock was $7.81 while the last closing

price on September 6, 2024, was $3.32.

The Company may incur rapid and substantial decreases in its stock price in the foreseeable future

that are unrelated to its operating performance or prospects.

The stock market has experienced extreme volatility that has often been

unrelated to the operating performance of particular companies.

As a result of this volatility, investors may experience losses on their

investment in the Company’s common stock.

The market price for the Company’s common stock may be influenced by many factors,

including the following:

investor reaction to the Company’s business strategy;

the success of competitive products or technologies;

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to the Company’s products;

variations in the Company’s financial results or those of companies that are perceived to be similar to the Company;

the Company’s ability or inability to raise additional capital and the terms on which it raises it;

declines in the market prices of stocks generally;

the Company’s public disclosure of the terms of any financing which it consummates in the future;

an announcement that the Company has effected a reverse split of the Company’s common stock and treasury stock;

the Company’s failure to be profitable;

the Company’s failure to raise working capital;

any acquisitions we may consummate;

announcements by the Company or its competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments;

cancellation of key contracts;

the Company’s failure to meet financial forecasts it publicly discloses;

trading volume of the Company’s common stock;

sales of the Company’s common stock by it or its stockholders;

general economic, industry and market conditions;

other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic, and natural disasters such as hurricanes, floods, fires, earthquakes, tornadoes or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt the Company’s operations, disrupt the operations of its suppliers or result in political or economic instability.

These broad market and industry

factors may seriously harm the market price of the Company’s common stock, regardless of its operating performance.

Since the stock

price of its common stock has fluctuated in the past, has been volatile recently and may be volatile in the future, investors in its common

stock could incur substantial losses.

In the past, following periods of volatility in the market, securities class-action litigation has

often been instituted against companies.

Such litigation, if instituted against the Company, could result in substantial costs and diversion

of management’s attention and resources, which could materially and adversely affect its business, financial condition, results

of operations and growth prospects.

There can be no guarantee that the Company’s stock price will remain at current prices or that

future sales of its common stock will not be at prices lower than those sold to investors.

Additionally, recently, securities

7 unchanged sentences

has no reason to believe its shares would be the target of a short squeeze, there can be no assurance that it won’t be in the future,

and you may lose a significant portion or all of your investment if you purchase the Company’s shares at a rate that is significantly

disconnected from its underlying value.

assured that we will be able to maintain our listing on the Nasdaq Capital Market.

Our securities are

listed on The Nasdaq Capital Market, a national securities exchange.

We cannot be assured that we will continue to comply with

the rules, regulations or requirements governing the listing of our common stock on Nasdaq Capital Market or that our securities

will continue to be listed on Nasdaq Capital Market in the future.

If Nasdaq should determine at any time that we fail to meet

Nasdaq requirements, we may be subject to a delisting action by Nasdaq.

On January 18, 2024,

and investors may lose a significant portion or all of their investment if they purchase the Company’s shares at a rate that is

significantly disconnected from its underlying value.

Company cannot be assured that it will be able to maintain its listing on the Nasdaq Capital Market.

The Company’s

securities are listed on The Nasdaq Capital Market, a national securities exchange.

The Company cannot be assured that it will continue

to comply with the rules, regulations or requirements governing the listing of its common stock on The Nasdaq Capital Market or that its

securities will continue to be listed on Nasdaq Capital Market in the future.

If Nasdaq should determine at any time that the Company

failed to meet Nasdaq requirements, it may be subject to a delisting action by Nasdaq.

18, 2024, Nasdaq notified the Company that due to the passing of Mr.

Hoffman, the Company no longer complies with Nasdaq’s audit committee

requirements as set forth in Rule 5605(c)(2)(A) of the Nasdaq listing standards.

Nasdaq further notified the Company that, consistent

with Rule 5605(c)(4) of the Nasdaq listing standards, Nasdaq provided the Company a cure period in order to regain compliance until

the earlier of the Company’s next annual meeting of shareholders or December 30, 2024 or, if the next annual meeting of shareholders

is held before June 27, 2024, then the Company must provide evidence of compliance no later than June 27, 2024.

As of March 8,

2024, the Company believes that it has regained compliance with Rule 5605(c)(2)(A) of the Nasdaq listing standards although as

of the date of this Annual Report we did not receive notification from Nasdaq that we regained compliance.

If Nasdaq delists

our securities from trading on its exchange at some future date, we could face significant material adverse consequences, including:

limited availability of market quotations for our securities;

liquidity with respect to our securities;

determination that our common stock is a “penny stock” which will require brokers trading in our common stock

to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market

for our common stock;

limited amount of news and analyst coverage for our company;

decreased ability to issue additional securities or obtain additional financing in the future.

Upon exercise of the

Hoffman, a member of the Company’s Board of Directors and member

of the Audit Committee, the Company was no longer compliant with Nasdaq’s audit committee requirements as set forth in Rule 5605(c)(2)(A)

of the Nasdaq listing standards.

2, 2024, the Company received a letter (the “Notification Letter”) from Nasdaq stating that, based on the information regarding

the appointment of Nancy M.

Stallone, CPA to the Company’s Board of Directors and Audit Committee, Nasdaq has determined that the

Company complies with the Audit Committee requirement for continued listing on The Nasdaq Capital Market set forth in Listing Rules 5605(c)(2),

which requires that the Company maintain an audit committee of at least three members, each of whom must meet specified criteria, including

certain independence criteria.

Accordingly, the Nasdaq staff has determined that the Company has regained compliance with Nasdaq Listing

Rule 5605(c)(2) and has indicated that the matter is now closed.

delists the Company’s securities from trading on its exchange at some future date, the Company could face significant material adverse

consequences, including:

● a limited availability of market quotations for its securities;

● reduced liquidity with respect to its securities;

● a determination that the Company’s common stock is

a “penny stock” which will require brokers trading in the Company’s common stock to adhere to more stringent rules,

possibly resulting in a reduced level of trading activity in the secondary trading market for the Company’s common stock;

● a limited amount of news and analyst coverage for the Company;

● a decreased ability to issue additional securities or obtain additional financing in the future.

Upon exercising the

Company’s outstanding options or warrants, it will be obligated to issue a substantial number of additional shares of common stock

which will dilute its present shareholders .

The Company is obligated to issue additional shares of its common stock in

connection with any exercise or conversion, as applicable, of its outstanding options, warrants, and shares of its convertible preferred

As of December 31, 2023, there were options and warrants outstanding convertible into an aggregate of 3,011,207 shares of common

The exercise of warrants or options will cause the Company to issue additional shares of its common stock and will dilute the percentage

ownership of its shareholders.

In addition, the Company has in the past, and may in the future, exchange outstanding securities for other

securities on terms that are dilutive to the securities held by other shareholders not participating in such an exchange.

The Company is obligated

to issue additional shares of its common stock in connection with any exercise or conversion, as applicable, of its outstanding options,

warrants, and shares of its convertible preferred stock.

As of December 31, 2024, there were options and warrants outstanding convertible

into an aggregate of 3,174,162 shares of common stock.

The exercise of warrants or options will cause the Company

to issue additional shares of its common stock and will dilute the percentage ownership of its shareholders.

In addition, the Company

has in the past, and may in the future, exchange outstanding securities for other securities on terms that are dilutive to the securities

held by other shareholders not participating in such an exchange.

Offers or availability

for sale of a substantial number of shares of the Company’s common stock may cause the price of its common stock to decline .

Sales of large blocks of the Company’s common stock could depress the price

of its common stock.

The existence of these shares and shares of common stock that may be issuable upon conversion or exercise, as applicable,

of outstanding shares of convertible preferred stock, warrants and options create a circumstance commonly referred to as an “overhang”

which can act as a depressant to the Company’s common stock price.

The existence of an overhang, whether or not sales have occurred

or are occurring, also could make the Company’s ability to raise additional financing through the sale of equity or equity-linked

securities more difficult in the future at a time and price that the Company deems reasonable or appropriate.

If the Company’s existing

shareholders and investors seek to convert or exercise such securities or sell a substantial number of shares of its common stock, such

selling efforts may cause significant declines in the market price of its common stock.

In addition, the shares of the Company’s

common stock included in the Units and underlying warrants sold in the offering will be freely tradable without restriction or further

registration under the Securities Act.

As a result, a substantial number of shares of the Company’s common stock may be sold in

the public market following this offering.

If there are significantly more shares of common stock offered for sale than buyers are willing

to purchase, then the market price of the Company’s common stock may decline to a market price at which buyers are willing to purchase

the offered common stock and sellers remain willing to sell its common stock.

Sales of large blocks of

the Company’s common stock could depress the price of its common stock.

The existence of these shares and shares of common stock

that may be issuable upon conversion or exercise, as applicable, of outstanding shares of convertible preferred stock, warrants and options

create a circumstance commonly referred to as an “overhang” which can act as a depressant to the Company’s common stock

The existence of an overhang, whether or not sales have occurred or are occurring, also could make the Company’s ability

to raise additional financing through the sale of equity or equity-linked securities more difficult in the future at a time and price

that the Company deems reasonable or appropriate.

If the Company’s existing shareholders and investors seek to convert or exercise

such securities or sell a substantial number of shares of its common stock, such selling efforts may cause significant declines in the

market price of its common stock.

In addition, the shares of the Company’s common stock included in the Units and underlying warrants

sold in the offering will be freely tradable without restriction or further registration under the Securities Act.

As a result, a substantial

number of shares of the Company’s common stock may be sold in the public market following this offering.

If there are significantly

more shares of common stock offered for sale than buyers are willing to purchase, then the market price of the Company’s common

stock may decline to a market price at which buyers are willing to purchase the offered common stock and sellers remain willing to sell

its common stock.

The Company does not

1 unchanged sentence

The Company does not anticipate

declaring any cash dividends to holders of Data Storage common stock in the foreseeable future.

Consequently, common stockholders may

need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on

their investment.

declaring any cash dividends to holders of its common stock in the foreseeable future.

Consequently, common stockholders may need to rely

on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Because the Company

12 unchanged sentences

Provisions of Nevada

law could delay or prevent an acquisition of Data Storage, even if the acquisition would be beneficial to its stockholders and could make

it more difficult for stockholders to change Data Storage’s management.

Storage Corporation is subject to anti-takeover provisions under Nevada law, which could delay or prevent a change of control.

these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment

of a premium over prevailing market prices for the Company’s securities.

law could delay or prevent an acquisition of DSC, even if the acquisition would be beneficial to its stockholders and could make it more

difficult for stockholders to change DSC’s management.

DSC is subject to anti-takeover

provisions under Nevada law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the

removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices

for the Company’s securities.

These provisions include:

limitations on the ability to

engage in any “combination” with an “interested stockholder” (each, as defined in the Nevada Revised Statutes

(“NRS”)) for two years from the date the person first becomes an “interested stockholder”;

being subject to Sections

78.378 to 78.3793 of the NRS and allowing an “acquiring person” to obtain voting rights in “control shares” without

shareholder approval;

the ability of the Board to issue shares of currently undesignated and unissued preferred stock without prior stockholder

limitations on the ability of stockholders to call special meetings;

and the ability of the Board to amend its amended Bylaws

without stockholder approval.

limitations on the ability to engage in any “combination” with

an “interested stockholder” (each, as defined in the Nevada Revised Statutes (“NRS”)) for two years from the date

the person first becomes an “interested stockholder”;

being subject to Sections 78.378 to 78.3793 of the NRS and allowing

an “acquiring person” to obtain voting rights in “control shares” without shareholder approval;

the ability of

the Board to issue shares of currently undesignated and unissued preferred stock without prior stockholder approval;

limitations on the

ability of stockholders to call special meetings;

and the ability of the Board to amend its amended Bylaws without stockholder approval.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors