What changed in this filing

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Item 1A. Risk Factors

2026-04-14 compared with 2025-03-31 · 741 added, 840 removed, 137 unchanged (92% of the section changed)

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

Investing in our Common Stock involves a high degree

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

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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.

References to past events are provided

by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred

in the past or their likelihood of occurring in the future.

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 $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.

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

We have not generated

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

As reflected in the consolidated financial statements, we had net income attributable

to common shareholders of $19,204,700 and $523,214 for the years ended December 31, 2025, and 2024, respectively.

As of December 31, 2025,

we had cash of $3,489,354 (including restricted cash), marketable securities of $39,004,124, and working capital of $41,784,453 (excluding

the amounts payable to the purchaser of discontinued operations and income taxes payable), of which $32,203,548 was paid to the stockholders

who tendered their shares in the Tender Offer.

There can be no assurance that we will continue to generate income in the future or that

the income will be significant.

We may need to raise

additional capital to acquire companies in complementary and high-growth technology sectors and there can be no assurance that we will

be successful in doing so.

We expect our expenses to

increase in connection with our anticipated acquisition activities.

For the foreseeable future we will have to fund all of our operations

and capital expenditures from revenue generated from operations and equity and debt offerings and cash on hand.

We may need to raise additional

capital to fund our acquisitions, and we cannot be certain that funding will be available on acceptable terms on a timely basis, or at

To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution.

Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business and also have

a dilutive effect on our stockholders.

We currently do not have any commitment for funding.

Our ability to raise capital through the sale

of securities may be limited by the rules of the SEC and Nasdaq that place limits on the number and dollar amount of securities that may

There can be no assurances that we will be able to raise the funds needed, especially in light of the fact that our ability to

sell securities registered on our registration statement on Form S-3 will be limited until such time the market value of our voting securities

held by non-affiliates is $75 million or more.

Our strategic pivot

following the sale of the CloudFirst business, including our plan to deploy a substantial portion of the remaining sale proceeds toward

acquiring companies in high-growth sectors such as artificial intelligence and cybersecurity, exposes us to substantial execution, integration,

and regulatory and tax-related risks that could adversely affect our business, financial condition, and results of operations.

We have recently completed

the sale of our CloudFirst business and intend to use a portion of the remaining sale proceeds to pursue acquisitions in high-growth sectors,

including artificial intelligence and cybersecurity.

This strategic shift represents a significant change in our operating focus and risk

profile and subjects us to a number of uncertainties that could materially adversely affect our business.

Our ability to successfully

execute this strategy depends on identifying suitable acquisition targets, completing transactions on acceptable terms, and effectively

integrating acquired businesses.

Companies operating in artificial intelligence and cybersecurity are often characterized by rapid technological

change, intense competition, significant research and development expenditures, evolving regulatory frameworks, and reliance on highly

skilled personnel.

We may face challenges integrating acquired operations, technologies, and personnel, realizing anticipated synergies,

retaining key employees, and aligning differing business models, compliance practices, or corporate cultures.

Failure to address these

challenges could result in higher-than-expected costs, operational disruptions, or an inability to achieve anticipated strategic or financial

In addition, our acquisition

strategy may expose us to greater sensitivity to changes in U.S.

tax laws and regulations, including the One, Big, Beautiful Bill Act

and future legislative, regulatory, or interpretive developments.

Many artificial intelligence and cybersecurity companies incur significant

research and development expenses and may rely on tax attributes, deductions, or incentives in their operating and financial planning.

Changes in the timing, availability, or interpretation of tax benefits, as well as uncertainty regarding their application to acquired

businesses, could adversely affect the valuation of potential acquisition targets, the accounting treatment of completed acquisitions,

our effective tax rate, cash flows, or the expected returns on invested capital.

Assumptions about tax treatment that prove incorrect

or change over time could result in earnings volatility, the remeasurement or impairment of deferred tax assets, or reduced operating

Further, the redeployment

of divestiture proceeds into acquisitions reduces our financial flexibility and increases our exposure to risks associated with capital

allocation decisions.

If we are unable to complete acquisitions that perform as expected, or if market, regulatory, economic, or tax conditions

change, we may be unable to fully replace the revenues, cash flows, or profitability associated with the divested business.

stock price could be adversely affected if investors perceive that our post-divestiture strategy, including our focus on acquisitions

in high-growth and technology-driven sectors, entails greater risk or uncertainty than our prior business model.

We have identified

a material weakness in our internal control over financial reporting, which could adversely affect our ability to report our financial

results accurately and in a timely manner.

In connection with the preparation of our Quarterly Report on Form 10-Q for

the quarter ended September 30, 2025, we identified a material weakness in our internal control over financial reporting.

weakness relates to the design and execution of controls over the accounting and disclosure of significant and unusual transactions, arising

from the divestiture of a material portion of our business.

Specifically, the deficient controls related to the analysis used in the financial

reporting process and related income tax implications of the divestiture.

In addition, in connection with the preparation of our consolidated

financial statements for the year ended December 31, 2025, management identified an error in the Quarterly Report on Form 10-Q for the

quarter ended September 30, 2025 that also related to the accounting and disclosure of the same significant and unusual transactions (the

divestiture of a material portion of our business), specifically the accounting for the reclassification of the July 2021 Warrants from

equity to a liability.

Accordingly, we have corrected the prior period financial statements in a restatement to reflect the initial recognition

of the warrant as a debit to equity, with subsequent changes in the fair value of the liability recognized in the consolidated statements

of operations.

This weakness was identified in connection with the divestiture of a material portion of our business that occurred late

in the third quarter of fiscal 2025.

The weakness has not yet been remediated.

A material weakness is a

deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility

that a material misstatement of our financial statements would not be prevented or detected on a timely basis.

Although we are actively

implementing a remediation plan, including enhancing internal review procedures and engaging appropriate internal and external resources,

the material weakness has not yet been fully remediated.

If our internal control over

financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial

results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported

financial information and may lead to a decline in our stock price.

Our management is responsible for establishing and maintaining adequate internal

control over our financial reporting, as defined in Rule 13a- 15(f) under the Exchange Act.

Management plans to fully remediate the identified

material weakness in internal controls, however, there can be no assurance that the internal control over financial reporting, as modified,

will enable us to identify or avoid material weaknesses in the future.

In addition, the material weakness will not be considered remediated

until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls

are designed and operating effectively.

We can give no assurance

that additional material weaknesses will not be identified in the future.

Our failure to implement and maintain effective internal controls

over financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our financial

statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in the Company

and cause a decline in the price of our Common Stock.

A shutdown of the U.S.

federal government may adversely affect our business.

The current partial shutdown,

or a recurring shutdown, of the U.S.

federal government may adversely affect our business operations and regulatory compliance.

February 14, 2026, the U.S.

federal government has been operating under a partial shutdown resulting from a lapse in appropriations for

the Department of Homeland Security (“DHS”), while other federal agencies remain funded.

As a result, certain DHS-related

services and activities have been disrupted or delayed, including staffing and operations at agencies such as the Transportation Security

Administration and the Federal Emergency Management Agency, and related third-party functions on which we may indirectly rely.

More broadly,

the shutdown has contributed to market volatility, operational inefficiencies and economic uncertainty, including disruptions to travel

and commerce.

If the shutdown continues or expands, or if future funding lapses occur, additional federal agency operations or regulatory

activities could be suspended or delayed, which could adversely affect our operations, access to capital, business plans and the market

price and liquidity of our securities.

The duration and ultimate impact of the current shutdown are uncertain and beyond our control.

During shutdowns of the U.S.

federal government, while the SEC’s EDGAR system remains operational, the potential unavailability of SEC staff to review filings,

issue comments, or declare registration statements effective may delay our ability to complete public offerings, respond to comment letters,

or obtain timely regulatory approvals.

These delays could impact our access to capital markets, hinder strategic transactions, and create

uncertainty around our disclosure obligations.

Additionally, the lack of interpretive guidance or exemptive relief during a shutdown may

increase legal and compliance risks.

There can be no assurance that future shutdowns will not materially affect our operations or financial

There is uncertainty

regarding our future business strategy, which could affect our financial condition and prospects.

Following the sale of the CloudFirst business, we have not yet determined our future

strategic direction.

We may pursue acquisitions, joint ventures, minority investments, or alternative business opportunities, but there

is no assurance that any such opportunities will be identified, evaluated, or completed on favorable terms—or at all.

our ability to locate suitable acquisitions is limited to businesses complementary to our current business.

Until a new strategy is established,

investors have limited visibility regarding our future operations, business model, and long-term prospects.

We will rely on our cash on

hand of approximately $9.6 million as of April 14, 2026, together with revenue generated by Nexxis, to fund our ongoing corporate functions,

evaluate strategic alternatives, and seek acquisition opportunities.

These funds may not be sufficient to cover our expenses over an extended

period, particularly if the search for a suitable acquisition or strategic alternative is prolonged.

We may need to raise additional capital,

which may not be available on acceptable terms—or at all—and could result in significant dilution to existing stockholders.

Additionally, if management

or significant stockholders have interests in businesses that may be considered as potential acquisition targets, conflicts of interest

could arise in evaluating opportunities.

These conflicts may lead to acquisitions that are not in the best interests of all stockholders

or may expose us to litigation or regulatory scrutiny.

Further, any future acquisition

or merger may require stockholder approval, regulatory filings, antitrust review, or other governmental consents.

Obtaining these approvals

could be costly, time-consuming, and uncertain.

Stockholders may not approve a proposed transaction, or regulatory agencies could impose

conditions that diminish the value or feasibility of a combination.

Failure to complete a strategic transaction could adversely affect

our financial condition and prospects.

Our growth may be impacted

by acquisitions.

We may not be able to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully.

Our future growth may depend

in part on our ability to acquire and successfully integrate new businesses.

Our Board is actively evaluating multiple strategic alternatives

for the use of the remaining sale proceeds, which as stated above, include targeted acquisitions in high growth sectors, a reverse merger

or a hybrid of the foregoing.

We may not be able to identify suitable acquisition candidates, complete acquisitions, or integrate acquisitions

successfully.

In addition, our ability to locate suitable acquisitions is limited to businesses complementary to our current business.

Acquisitions involve significant risks, including difficulties conducting due diligence, negotiating acceptable terms, integrating acquired

operations, retaining key employees, and realizing expected synergies.

Once acquired, operations may not achieve anticipated levels of

revenues or profitability, we may not experience the anticipated strategic benefits thereof and we may experience difficulties in the

integration of the operations, technologies, services, and products of the acquired companies and the diversion of management’s

attention from other business concerns, which could have a material adverse effect on our business, financial condition, and results of

Although our management will endeavor to evaluate the risks inherent in any particular transaction, there are no assurances

that we will properly ascertain all such risks.

Failure to complete an acquisition could also result in continued operating losses, diminished

liquidity, or an inability to resume meaningful business operations.

Completing an acquisition

in a new industry or market could impair our ability to successfully manage the acquired business.

If we complete an acquisition

in an industry or market in which we have limited or no prior operating experience, we may encounter significant challenges that could

adversely affect our ability to operate the acquired business successfully.

Entering a new industry may require us to navigate unfamiliar

regulatory frameworks, licensing requirements, and compliance obligations.

Failure to understand or properly implement industry-specific

compliance programs could result in fines, penalties, operational delays, or restrictions on our ability to conduct business.

We may also lack the subject-matter

expertise necessary to effectively evaluate competitive dynamics, customer behavior, technological standards, and economic drivers within

a new market.

Assumptions that management makes during its evaluation of a potential acquisition may ultimately prove inaccurate, resulting

in unanticipated operating costs, lower-than-expected revenue, or the failure of the acquired business to achieve projected performance.

In addition, we may face difficulties identifying, recruiting, and retaining personnel with the specialized skills needed to operate in

a new sector.

Competition for experienced executives and technical professionals can be intense, and we may be required to offer compensation

packages that significantly increase our cost structure.

Operational risks may also

arise if we implement systems, controls, or processes that are poorly suited to the requirements of the new industry.

We may need to invest

substantial resources to upgrade its internal infrastructure, enhance information technology systems, or implement new operational procedures,

all of which may be costly and time-consuming.

Integration risks—including cultural differences, incompatible processes, and differing

risk management frameworks—may be heightened when combining our legacy corporate structure with a business that operates in a regulated

or technically complex environment.

Because investors may value

us based on expectations about its ability to successfully transition into a new business line, any delay in executing a new business

plan or any underperformance of an acquired business may result in significant volatility or a decline in the trading price of our securities.

There can be no assurance that we will be able to successfully enter or operate in a new industry or achieve the expected benefits of

any acquisition.

Upon exercise of our

outstanding options or warrants, we will be obligated to issue a substantial number of additional shares of Common Stock which will dilute

its present shareholders.

We are obligated to issue

additional shares of Common Stock in connection with any exercise or conversion, as applicable, of our outstanding options, warrants,

and shares of our convertible preferred stock.

The exercise of warrants or options will cause us to issue additional shares of Common

Stock and will dilute the percentage ownership of our shareholders.

In addition, we have 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.

We may be the target

of securities class action and derivative lawsuits which could result in substantial costs.

Securities class action lawsuits

and derivative lawsuits are often brought against companies that have entered into agreements similar to the sale of our CloudFirst business

involving a sale of a line of business or other business combinations.

In addition, we may be subject to private actions, collective actions,

investigations, and various other legal proceedings by shareholders, customers, employees, competitors, government agencies, or others.

Even if the lawsuits are without merit, defending against these claims can result in substantial costs, damage to our reputation, and

divert significant amounts of management time and resources.

If any of these legal proceedings were to be determined adversely to us,

or we were to enter into a settlement arrangement, we could be exposed to monetary damages or limits on our ability to operate our business,

which could have an adverse effect on our business, liquidity financial condition, and operating results.

As of the date of this

Annual Report, we are not aware of any securities class action lawsuits or derivative lawsuits having been filed in connection with the

sale of our CloudFirst business.

If Nexxis is unable

to attract new customers on a cost-effective basis, its revenue and operating results would be adversely affected.

We have historically generated the majority of our revenue from the sale of

subscriptions to our infrastructure and disaster recovery/cloud solutions as well as contracted managed services and software and hardware

Following the sale of the CloudFirst business and prior to consummating planned acquisitions and/or entering into other strategic

initiatives, all of our revenue has been generated from Nexxis’ customers.

If Nexxis is unable to attract new customers on a cost-effective

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

Nexxis 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 Nexxis’ advertising channels would increase its advertising costs or cause it to choose less expensive and perhaps

fewer effective channels.

As Nexxis 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.

Nexxis 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 Nexxis 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 our operating results until later periods.

Nexxis 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 Nexxis 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 Nexxis’

potential customers locate its website through search engines, such as Google, Bing, and Yahoo!.

The Company’s ability to maintain

the number of visitors directed to its website is not entirely within its control.

Nexxis’ ability to maintain the

number of visitors directed to its website is not entirely within its control.

If search engine companies modify their search algorithms

in a manner that reduces the prominence of the Company’s listing, or if its competitors’ search engine optimization efforts

are more successful than the Company’s, fewer potential customers may click through to its website.

In addition, the cost of purchased

listings has increased in the past and may increase in the future.

A decrease in website traffic or an increase in search costs could

adversely affect the Company’s customer acquisition efforts and its operating results.

The Company expects

to continue to acquire or invest in other companies, which may divert its management’s attention, result in additional dilution

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

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.

in a manner that reduces the prominence of Nexxis’ listing, or if its competitors’ search engine optimization efforts are

more successful than Nexxis’, fewer potential customers may click through to its website.

In addition, the cost of purchased listings

has increased in the past and may increase in the future.

A decrease in website traffic or an increase in search costs could adversely

affect Nexxis’ customer acquisition efforts and its operating results.

We expect to continue

to acquire or invest in other companies, which may divert our management’s attention, result in additional dilution to our stockholders,

and consume resources that are necessary to sustain our business.

We expect to continue to

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

We may also enter into relationships with other

businesses to expand our portfolio of solutions or our ability to provide our 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 our ability to complete these transactions may often be subject

to conditions or approvals that are beyond our control.

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

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Acquisitions may also disrupt

the Company’s business, divert its resources, and require significant management attention that would otherwise be available for

the development of its business.

Moreover, the anticipated benefits of any acquisition, investment, or business relationship may not be

realized on a timely basis or at all or the Company may be exposed to known or unknown liabilities, including litigation against the companies

that it may acquire.

In connection with any such transaction, the Company may:

issue additional equity securities that would dilute its stockholders;

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;

our business, divert our resources, and require significant management attention that would otherwise be available for the development

of our business.

Moreover, the anticipated benefits of any acquisition, investment, or business relationship may not be realized on a

timely basis or at all or we may be exposed to known or unknown liabilities, including litigation against the companies that we may acquire.

In connection with any such transaction, we may:

issue additional equity securities that would dilute our stockholders;

use cash that we may need in the future to operate our business;

incur debt on terms unfavorable to us, that we may be unable to repay, or that may place burdensome restrictions on our operations;

incur large charges or substantial liabilities;

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Any of these risks could

harm the Company’s business and operating results.

harm our business and operating results.

Integration of an acquired

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organizations and integrating personnel with disparate business backgrounds and accustomed to different corporate cultures.

may not be able to retain key employees of an acquired company.

Additionally, the process of integrating a new solution or service may

require a disproportionate amount of time and attention of the Company’s management and financial and other resources.

Any difficulties

or problems encountered in the integration of a new solution or service could have a material adverse effect on the Company’s business.

The Company intends to continue

to acquire businesses that it believes will help achieve its business objectives.

As a result, the Company’s operating costs will

likely continue to grow.

The integration of an acquired company may cost more than the Company anticipates, and it is possible that the

Company will incur significant additional unforeseen costs in connection with such integration, which may negatively impact its earnings.

In addition, the Company

may only be able to conduct limited due diligence on an acquired company’s operations.

Following an acquisition, the Company may

be subject to liabilities arising from an acquired company’s past or present operations, including liabilities related to data security,

encryption and privacy of customer data, and these liabilities may be greater than the warranty and indemnity limitations that the Company

Any liability that is greater than these warranty and indemnity limitations could have a negative impact on the Company’s

financial condition.

be able to retain key employees of an acquired company.

Additionally, the process of integrating a new solution or service may require

a disproportionate amount of time and attention of our management and financial and other resources.

Any difficulties or problems encountered

in the integration of a new solution or service could have a material adverse effect on our business.

We intend to continue to

acquire businesses that we believe will help achieve our business objectives.

As a result, our operating costs will likely continue to

The integration of an acquired company may cost more than we anticipate, and it is possible that we will incur significant additional

unforeseen costs in connection with such integration, which may negatively impact our earnings.

In addition, we may only

be able to conduct limited due diligence on an acquired company’s operations.

Our due diligence may not reveal all material issues

with a potential target, and we may be unable to adequately evaluate the risks associated with an acquisition or business combination.

Although we intend to conduct due diligence that we deem reasonable, we cannot assure investors that our review will uncover all material

issues related to a target business.

Following an acquisition, we may be subject to liabilities arising from an acquired company’s

past or present operations, including liabilities related to data security, encryption and privacy of customer data, and these liabilities

may be greater than the warranty and indemnity limitations that we negotiate.

Any liability that is greater than these warranty and indemnity

limitations could have a negative impact on our financial condition.

Undiscovered liabilities, compliance gaps, internal control weaknesses,

or adverse business developments may result in the business combination being less successful than expected.

Even if successfully integrated,

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

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

that additional material weaknesses will not be identified in the future.

The Company’s failure to implement and maintain effective

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

in the Company and cause a decline in the price of its common stock.

The Company is controlled

by three principal stockholders who serve as its executive officers and directors.

As of March 27, 2025, through their aggregate voting power, Messrs.

Schwartz and Kempster control approximately 36% of the Company’s outstanding common stock, giving them the ability to control a

significant portion of the votes for the Company’s directors and all other matters requiring the approval of its stockholders, including

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

there can be no assurance that our operating performance after an acquisition will be successful or will fulfill management’s objectives.

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

solutions is highly competitive, and if the Company does not compete effectively, its operating results will be harmed.

The market for the Company’s

services is highly competitive, quickly evolving and subject to rapid changes in technology.

The Company expects to continue to face intense

competition from its existing competitors as well as additional competition from new market entrants in the future as the market for its

services continues to grow.

The Company competes with

cloud backup and infrastructure providers and providers of traditional hardware-based systems and IBM Power Systems.

Its current and potential

competitors vary by size, service offerings, and geographic region.

These competitors may elect to partner with each other or with focused

companies to grow their businesses.

They include:

in-house IT departments of its customers and potential customers;

traditional global infrastructure providers, including, but not limited to, large multi-national providers, such as IBM, Microsoft, Google, and Amazon Web Services (AWS);

cloud and software service providers and digital systems integrators;

regional managed services providers;

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:

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

adapt to new or emerging technologies and changes in customer requirements more quickly;

bundle their offerings, including hosting services with other services they provide at reduced prices;

streamline their operational structure, obtain better pricing, or secure more favorable contractual terms, allowing them to deliver services and products at a lower cost;

take advantage of acquisition, joint ventures, and other opportunities more readily;

adopt more aggressive pricing policies and devote greater resources to the promotion, marketing, and sales of their services, which could cause us to have to lower prices for certain services to remain competitive in the market;

devote greater resources to the research and development of their products and services.

In addition, demand for the

Company’s cloud solutions is sensitive to price.

Many factors, including the Company’s customer acquisition, advertising and

technology costs, and its current and future competitors’ pricing and marketing strategies, can significantly affect its pricing

Certain of the Company’s competitors offer, or may in the future offer, lower-priced or free solutions that compete

with its solutions.

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 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.

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

Though Nexxis continues to expand its customer base,

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

No customer accounted for more than

10% of sales for the year ended December 31, 2025.

One customer accounted for 16% of sales for the year ended December 31, 2024.

of, or a significant reduction of business from, any of Nexxis’ 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

Nexxis’ business

is subject to an evolving regulatory framework, and changes in the laws and regulations applicable to its interconnected nomadic VoIP,

internet access, and data transport services could materially adversely affect its business, financial condition, and results of operations.

Nexxis provides interconnected

nomadic VoIP, internet access, and data transport services that are generally classified as information services under the Communications

While information services are not subject to the full range of regulations applicable to traditional telecommunications common carriers,

Nexxis’ services are nevertheless subject to significant and evolving regulation at the federal, state, and local levels.

classification decisions, rulemakings, enforcement actions, and judicial developments could result in new or expanded regulatory obligations,

increased compliance costs, or operational restrictions that could materially adversely affect its business.

The FCC regulates certain

aspects of interconnected nomadic VoIP and broadband internet access services, including requirements related to E911 emergency calling,

lawful intercept capabilities under CALEA, number portability, customer disclosures, disability access, and contributions to the USF.

Compliance with these requirements requires ongoing investments in systems, processes, and personnel, and failure to comply could result

in fines, enforcement actions, or limitations on Nexxis’ ability to offer services.

In addition, the FCC has

periodically reconsidered the regulatory classification of broadband internet access services, and future reclassification or the imposition

of common-carrier-like obligations could subject Nexxis to additional requirements, such as enhanced consumer protection, service quality,

or pricing-related rules.

Any such changes could increase Nexxis’ operating costs, reduce its flexibility in managing its network

or pricing, or require material changes to Nexxis’ business model.

Nexxis is also subject to

USF contribution requirements and FCC regulatory fees, the methodologies and rates of which are subject to change.

Any increase in contribution

factors, expansion of the contribution base, or changes in reporting or payment requirements could significantly increase Nexxis’

Nexxis’ ability to recover such costs from customers may be limited by competitive pressures, contractual arrangements, or

regulatory restrictions.

At the state and local level,

public utility commissions and other authorities may impose requirements relating to consumer protection, emergency services, taxation,

privacy, and data security.

While federal law generally preempts states from regulating information services as telecommunications services,

the scope of permissible state regulation continues to evolve, and states may adopt inconsistent or overlapping requirements.

with a patchwork of state and local regulations could increase administrative burdens and compliance costs and divert management attention.

Nexxis’ operations

also involve the collection, transmission, and processing of customer and network data, subjecting it to privacy, data protection, and

cybersecurity laws at the federal and state levels, which are becoming increasingly comprehensive and stringent.

Changes in these laws,

or Nexxis’ failure to comply with them, could result in enforcement actions, litigation, reputational harm, and increased costs

associated with compliance and remediation.

Finally, the communications

regulatory environment is subject to political, technological, and policy-driven change, often with limited transition periods.

regulatory, or judicial actions that expand regulatory oversight of information services, narrow federal preemption, or increase enforcement

activity could materially adversely affect Nexxis’ revenues, operating margins, and ability to compete effectively.

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.

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.

able to breach Nexxis’ 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 our stock price.

Nexxis has implemented various

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

However, there can be no assurance

that such protocols will prevent security breaches.

In the event of the discovery of a significant security vulnerability, Nexxis would

incur additional substantial expenses and its business would be harmed.

The process of developing

new technologies is complex and uncertain, and if the Company fails to accurately predict customers’ changing needs and emerging

technological trends or if the Company fails to achieve the benefits expected from its investments, its business could be harmed.

Company believes that it must continue to dedicate a significant amount of resources to its research and development efforts to maintain

its competitive position and it must commit significant resources to develop new solutions before knowing whether its investments will

result in solutions the market will accept.

The Company’s new solutions or solution enhancements could fail to attain sufficient

market acceptance or harm its business for many reasons, including:

new technologies is complex and uncertain, and if Nexxis fails to accurately predict customers’ changing needs and emerging technological

trends or if Nexxis fails to achieve the benefits expected from its investments, its business could be harmed.

Nexxis believes that it

must continue to dedicate a significant amount of resources to its research and development efforts to maintain its competitive position

and it must commit significant resources to develop new solutions before knowing whether its investments will result in solutions the

market will accept.

Nexxis’ new solutions or solution enhancements could fail to attain sufficient market acceptance or harm its

business for many reasons, including:

delays in releasing its new solutions or enhancements to the market;

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have the risk of defects that may not be discovered until after the product launches, resulting in adverse publicity, loss of revenue

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.

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

considerable time to replace.

The Company expects this dependence on third parties to increase.

In particular, the Company utilizes IBM

and Intel to provide equipment and support.

All of these third-party systems are located in data center facilities operated by third parties.

While these data centers are of the highest level, Tier 3, there can be no assurance that they will not experience disruptions that will

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

The Company’s data center agreements expire at various times

between 2027 and 2029 with rights of extension.

If the Company were unable to renew these agreements on commercially reasonable terms,

it may be required to transfer that portion of its computing and storage capacity to new data center facilities, and it may incur significant

costs and possible service interruption in connection with doing so.

The Company also relies upon

third-party colocation providers to host its main servers.

If these providers are unable to handle current or higher volumes of use, experience

any interruption in operations or cease operations for any reason or if the Company is unable to agree on satisfactory terms for continued

hosting relationships, the Company would be forced to enter into a relationship with other service providers or assume hosting responsibilities

If the Company is forced to switch data center facilities, which in itself is a competitive industry, it may not be successful

in finding an alternative service provider on acceptable terms or in hosting the computer servers itself.

The Company may also be limited

in its remedies against these providers in the event of a failure of service.

Interruptions, outages and/or

failures in the Company’s own systems, the third-party systems and facilities on which we rely, or the use of its data center facilities,

whether due to system failures, computer viruses, cybersecurity attacks, physical or electronic break-ins, damage or interruption from

human error, power losses, natural disasters or terrorist attacks, hardware failures, systems failures, telecommunications failures or

other factors, could affect the security or availability of infrastructure, prevent the Company from being able to continuously back up

its customers’ data or its customers from accessing their stored data, and may damage or delete its customers’ stored files.

If this were to occur, the Company’s reputation could be compromised, and it could be subject to liability to the customers that

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 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,

data protection breaches and cyberattacks could disrupt the Company’s data protection platform and solutions, and any such disruption

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 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

rely on its solutions for production, replication, and storage of digital copies of their files, including financial records, business

information, photos, and other personally meaningful content.

The Company also stores credit card information and other personal information

about its customers.

An actual or perceived breach of the Company’s network security and systems or other cybersecurity related

events that cause the loss or public disclosure of, or access by third parties to, its customers’ stored files could have serious

negative consequences for its business, including possible fines, penalties and damages, reduced demand for its solutions, an unwillingness

of customers to provide the Company with their credit card or payment information, an unwillingness of its customers to use its solutions,

harm to its reputation and brand, loss of its ability to accept and process customer credit card orders, and time-consuming and expensive

If this occurs, the Company’s business and operating results could be adversely affected.

Third parties may be able

to circumvent the Company’s security by deploying viruses, worms, and other malicious software programs that are designed to attack

or attempt to infiltrate its systems and networks and it may not immediately discover these attacks or attempted infiltrations.

outside parties may attempt to fraudulently induce the Company’s employees, consultants, or affiliates to disclose sensitive information

in order to gain access to its information or its customers’ information.

The techniques used to obtain unauthorized access, disable

or degrade service, or sabotage systems change frequently, often are not recognized until launched against a target, and may originate

from less regulated or remote areas around the world.

As a result, the Company may be unable to proactively address these techniques or

to implement adequate preventative or reactionary measures.

In addition, employee or consultant error, malfeasance, or other errors in

the storage, use, or transmission of personal information could result in a breach of customer or employee privacy.

The Company maintains

insurance coverage to mitigate the potential financial impact of these risks;

however, its insurance may not cover all such events or

may be insufficient to compensate it for the potentially significant losses, including the potential damage to the future growth of its

business, that may result from the breach of customer or employee privacy.

If the Company or its third-party providers are unable to successfully

prevent breaches of security relating to its solutions or customer private information, it could result in litigation and potential liability

for the Company, cause damage to its brand and reputation, or otherwise harm its business and its stock price.

Many states have enacted

laws requiring companies to notify consumers of data security breaches involving their personal data.

In addition, the SEC now also requires

disclosure of material data security breaches.

These mandatory disclosures regarding a security breach often lead to widespread negative

publicity, which may cause the Company’s customers to lose confidence in the effectiveness of its data security measures.

breach, whether successful or not, would harm the Company’s reputation and could cause the loss of customers.

Similarly, if a publicized

breach of data security at any other cloud backup service provider or other major consumer website were to occur, there could be a general

public loss of confidence in the use of the internet for cloud backup services or commercial transactions generally.

Any of these events

could have material adverse effects on the Company’s business, financial condition, and operating results.

The Company’s

ability to provide services to its customers depends on its customers’ continued high-speed access to the internet and the continued

reliability of the internet infrastructure.

The Company’s business

depends on its customers’ continued high-speed access to the internet, as well as the continued maintenance and development of the

internet infrastructure.

While the Company also provides broadband internet services, many of its clients depend on third-party internet

service providers to expand high-speed internet access, to maintain a reliable network with the necessary speed, data capacity, and security,

and to develop complementary solutions and services, including high-speed solutions, for providing reliable and timely internet access

and services.

All of these factors are out of the Company’s control.

To the extent that the internet continues to experience an

increased number of users, frequency of use, or bandwidth requirements, the internet may become congested and be unable to support the

demands placed on it, and its performance or reliability may decline.

Any internet outages or delays could adversely affect the Company’s

ability to provide services to its customers.

or harm to Nexxis’ business and reputation.

Any damage to Nexxis’ reputation or harm to its business could adversely affect

our stock price.

Nexxis’ ability

to provide services to its customers depends on its customers’ continued high-speed access to the internet and the continued reliability

of the internet infrastructure.

Nexxis’ business depends

on its customers’ continued high-speed access to the internet, as well as the continued maintenance and development of the internet

infrastructure.

While Nexxis also provides broadband internet services, many of its clients depend on third-party internet service providers

to expand high-speed internet access, to maintain a reliable network with the necessary speed, data capacity, and security, and to develop

complementary solutions and services, including high-speed solutions, for providing reliable and timely internet access and services.

All of these factors are out of Nexxis’ control.

To the extent that the internet continues to experience an increased number of

users, frequency of use, or bandwidth requirements, the internet may become congested and be unable to support the demands placed on it,

and its performance or reliability may decline.

Any internet outages or delays could adversely affect Nexxis’ ability to provide

services to its customers.

Currently, internet access

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In the absence of government regulation, these providers could take measures that affect

their customers’ ability to use the Company’s products and services, such as attempting to charge their customers more for

using the Company’s products and services.

To the extent that internet service providers implement usage-based pricing, including

meaningful bandwidth caps, or otherwise try to monetize access to their networks, the Company could incur greater operating expenses and

customer acquisition and retention could be negatively impacted.

Furthermore, to the extent network operators were to create tiers of

internet access service and either charge the Company for or prohibit the Company’s services from being available to its customers

through these tiers, its business could be negatively impacted.

Some of these providers also offer products and services that directly

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

If the Company is unable

their customers’ ability to use Nexxis’ products and services, such as attempting to charge their customers more for using

Nexxis’ products and services.

To the extent that internet service providers implement usage-based pricing, including meaningful

bandwidth caps, or otherwise try to monetize access to their networks, Nexxis could incur greater operating expenses and customer acquisition

and retention could be negatively impacted.

Furthermore, to the extent network operators were to create tiers of internet access service

and either charge Nexxis for or prohibit Nexxis’ services from being available to its customers through these tiers, its business

could be negatively impacted.

Some of these providers also offer products and services that directly compete with Nexxis’ own offerings,

which could potentially give them a competitive advantage.

If Nexxis is unable

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

If the Company’s efforts

If Nexxis’ 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 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

expects to continue to derive, a significant portion of its revenue from subscription services for business continuity, such as data protection

solutions including its disaster recovery backup, replication, archive, and infrastructure as a service offering.

Some of the potential

factors that could affect interest in and demand for cloud solutions include:

awareness of the Company’s brand and the cloud solutions category generally;

the appeal and reliability of the Company’s solutions;

the price, performance, features, and availability of competing solutions and services;

public concern regarding privacy and data security;

the Company’s ability to maintain high levels of customer satisfaction;

the rate of growth in cloud solutions generally.

In addition, substantially

all of the Company’s revenue is currently derived from customers in the U.S.

Consequently, a decrease of interest in and demand

for the Company’s solutions in the U.S.

could have a disproportionately greater impact on it than if its geographic mix of revenue

was less concentrated.

The Company primarily

depends upon third-party distribution companies to generate new customers.

The Company’s relationships with its partners and distributors

may be terminated or may not continue to be beneficial in generating new customers, which could adversely affect its ability to increase

its customer base.

The Company maintains a network

of distributors, which refer customers to it through links on their websites or promotion to their customers.

The number of customers

that the Company can add through these relationships is dependent on the marketing efforts of distributors, over which it has little control.

If the Company is unable to maintain its relationships, or renew contracts on favorable terms, with existing partners and distributors

or establish new contractual relationships with potential partners and distributors, it may experience delays and increased costs in adding

customers, which could have a material adverse effect on the Company.

The Company’s distributors also provide services to other

third parties and therefore may not devote their full time and attention to promoting the Company’s products and services.

If the Company is unable

to expand its base of business customers, its future growth and operating results could be adversely affected.

The Company has committed

and continues to commit substantial resources to the expansion and increased marketing of its business solutions.

If the Company is unable

to market and sell its solutions to businesses with competitive pricing and in a cost-effective manner its ability to grow its revenue

and achieve profitability may be harmed.

If the Company is unable

Nexxis 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 Nexxis’ 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 Nexxis’ retention rate would therefore

have an adverse effect on its business, financial condition, and operating results.

Nexxis’ 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.

Our shift in focus

makes it difficult for investors to evaluate our future business prospects.

If we are unable to execute our business plan, our future

growth and operating results could be adversely affected.

Until the sale of the CloudFirst

business, our primary business focus was on providing multi-cloud hosting, fully managed cloud services, disaster recovery, cybersecurity,

IT automation, and voice & data solutions.

Currently, our focus is the business of Nexxis, which is a telecommunications and data

access company.

We are seeking to acquire synergetic technology companies that provide leading edge solutions that assist businesses and

institutions improve our business processes.

We have committed and continue to commit substantial resources to acquisitions and other

strategic initiatives.

There can be no assurance that we will be able to acquire complementary businesses or generate sufficient revenue

from operations to pay our operating expenses.

If we are unable to successfully complete acquisitions and/or enter into strategic opportunities

our ability to grow our revenue and achieve profitability may be harmed.

Investors have no meaningful basis to evaluate our ability to

consummate an acquisition.

If Nexxis is unable

to sustain market recognition of and loyalty to its brand, or if its reputation were to be harmed, it could lose customers or fail to

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

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

Given Nexxis’ market

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

We and Nexxis believe 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,

as well as those of its competitors, are regularly reviewed in computer and business publications.

Negative reviews, or reviews in which

the Company’s competitors’ solutions and services are rated more highly than its solutions, could negatively affect its brand

and reputation.

From time to time, the Company’s customers express dissatisfaction with its solutions, including, among other things,

dissatisfaction with its customer support, its billing policies, and the way its solutions operate.

If the Company does not handle customer

complaints effectively, its brand and reputation may suffer, it may lose its customers’ confidence, and they may choose not to renew

their subscriptions.

In addition, many of the Company’s customers participate in online blogs about computers and internet services,

including the Company’s solutions, and its success depends in part on its ability to generate positive customer feedback through

such online channels where consumers seek and share information.

If actions that the Company takes or changes that it makes to its solutions

upset these customers, their blogging could negatively affect its brand and reputation.

Complaints or negative publicity about the Company’s

solutions or billing practices could adversely impact its ability to attract and retain customers and its business, financial condition,

and operating results.

The Company is subject

to governmental regulation and other legal obligations related to privacy, and any actual or perceived failure to comply with such obligations

Nexxis plans to continue investing substantial resources

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

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

efforts to promote and maintain its brand are not successful, Nexxis’ operating results (and ours) and its ability to attract and

retain customers may be adversely affected.

In addition, even if Nexxis’ brand recognition and loyalty increase, it may not result

in increased use of its solutions or higher revenue.

Negative reviews, or reviews

in which Nexxis’ competitors’ solutions and services are rated more highly than Nexxis’ solutions, could negatively

affect Nexxis’ brand and reputation.

From time to time, Nexxis’ customers may express dissatisfaction with its solutions,

including, among other things, dissatisfaction with its customer support, its billing policies, and the way its solutions operate.

Nexxis does not handle customer complaints effectively, its brand and reputation may suffer, it may lose its customers’ confidence,

and they may choose not to renew their subscriptions.

In addition, many of Nexxis’ customers participate in online blogs about computers

and internet services, including Nexxis’ solutions, and its success depends in part on its ability to generate positive customer

feedback through such online channels where consumers seek and share information.

If actions that Nexxis takes or changes that it makes

to its solutions upset these customers, their blogging could negatively affect its brand and reputation.

Complaints or negative publicity

about Nexxis’ solutions or billing practices could adversely impact its ability to attract and retain customers and its business,

financial condition, and operating results.

Nexxis is subject to

governmental regulation and other legal obligations related to privacy, and any actual or perceived failure to comply with such obligations

would harm its business.

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and may limit its ability to develop new services and features that make use of the data that its customers voluntarily share with the

The Company’s

solutions are used by customers in the health care industry, and it must comply with numerous federal and state laws related to patient

privacy in connection with providing its solutions to these customers.

The Company’s solutions

are used by customers in the health care industry, and it must comply with numerous federal and state laws related to patient privacy

in connection with providing its solutions to these customers.

In particular, the Health Insurance Portability and Accountability Act

of 1996 (“HIPAA”), and the Health Information Technology for Economic and Clinical Health Act (“HITECH”) include

privacy standards that protect individual privacy by limiting the uses and disclosures of individually identifiable health information

and implementing data security standards.

Because the Company’s solutions may backup individually identifiable health information

for its customers, its customers are mandated by HIPAA to enter into written agreements with us known as business associate agreements

that require the Company to safeguard individually identifiable health information.

Business associate agreements typically include:

a description of the Company’s permitted uses of individually identifiable health information;

a covenant not to disclose that information except as permitted under the agreement and to make the Company’s subcontractors, if any, subject to the same restrictions;

assurances that appropriate administrative, physical, and technical safeguards are in place to prevent misuse of that information;

an obligation to report to the Company’s customers any use or disclosure of that information other than as provided for in the agreement;

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

access by the Department of Health and Human Services to the Company’s internal practices, books, and records to validate that we are safeguarding individually identifiable health information.

The Company may not be able

to adequately address the business risks created by HIPAA or HITECH implementation or comply with its obligations under its business associate

Furthermore, the Company is unable to predict what changes to HIPAA, HITECH or other laws or regulations might be made in

the future or how those changes could affect its business or the costs of compliance.

Failure by the Company to comply with any of the

federal and state standards regarding patient privacy may subject the Company to penalties, including civil monetary penalties and, in

some circumstances, criminal penalties, which could have an adverse effect on its business, financial condition, and operating results.

Errors, failures, bugs

in or unavailability of the Company’s solutions released by it could result in negative publicity, damage to its brand, returns,

loss of or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others.

The Company offers solutions

that operate in a wide variety of environments, systems, applications, and configurations, that are often installed and used in large-scale

in or unavailability of Nexxis’ solutions released by it could result in negative publicity, damage to its brand, returns, loss

of or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others.

Nexxis offers solutions that

operate in a wide variety of environments, systems, applications, and configurations, that are often installed and used in large-scale

computing environments with different operating systems, system management software, and equipment and networking configurations.

Company’s customers’ computing environments are often characterized by a wide variety of standard and non-standard configurations

that can make pre-release testing for programming or compatibility errors very difficult and time-consuming.

In addition, despite testing

by the Company and others, errors, failures, or bugs may not be found in new solutions or releases until after distribution.

when the Company has discovered any software errors, failures or bugs in certain of its solution offerings after their introduction or

when new versions are released, it, in some cases, has experienced delayed or lost revenues as a result of these errors.

the Company relies on hardware purchased or leased and software licensed from third parties to offer its solutions, and any defects in,

or unavailability of, its third-party software or hardware could cause interruptions to the availability of its solutions.

customers’ computing environments are often characterized by a wide variety of standard and non-standard configurations that can

make pre-release testing for programming or compatibility errors very difficult and time-consuming.

In addition, despite testing by Nexxis

and others, errors, failures, or bugs may not be found in new solutions or releases until after distribution.

In the event Nexxis discovers

any software errors, failures or bugs in certain of its solution offerings after their introduction or when new versions are released,

it, in some cases, it is possible they could experience delayed or lost revenues as a result of these errors.

In addition, Nexxis relies

on hardware purchased or leased and software licensed from third parties to offer its solutions, and any defects in, or unavailability

of, its third-party software or hardware could cause interruptions to the availability of its solutions.

Errors, failures, bugs in

or unavailability of the Company’s solutions released by it could result in negative publicity, damage to its brand, returns, loss

of or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others.

Many of the Company’s

or unavailability of Nexxis’ solutions released by it could result in negative publicity, damage to its brand, returns, loss of

or delay in market acceptance of its solutions, loss of competitive position, or claims by customers or others.

Many of Nexxis’

end-user customers use its solutions in applications that are critical to their business and may have a greater sensitivity to defects

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Alleviating any of these problems could require

significant expenditures of the Company’s capital and other resources and could cause interruptions, delays, or cessation of its

solution licensing, which could cause it to lose existing or potential customers and could adversely affect its operating results.

The Company faces many

risks associated with its growth and plans to expand, which could harm its business, financial condition, and operating results.

The Company continues to

experience sales growth in its business.

This growth has placed, and may continue to place, significant demands on its management and

its operational and financial infrastructure.

As the Company’s operations grow in size, scope, and complexity, it will need to improve

and upgrade its systems and infrastructure to attract, service, and retain an increasing number of customers.

The expansion of its systems

and infrastructure will require the Company to commit substantial financial, operational, and technical resources in advance of an increase

in the volume of business, with no assurance that the volume of business will increase.

Any such additional capital investments will increase

the Company’s cost base.

Continued growth could also strain the Company’s ability to maintain reliable service levels for

its customers, develop and improve its operational, financial, and management controls, enhance its reporting systems and procedures,

and recruit, train, and retain highly skilled personnel.

If the Company fails to achieve the necessary level of efficiency in its organization

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

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 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.

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

contains encryption technologies, certain types of which are subject to U.S.

and foreign export control regulations and, in some foreign

countries, restrictions on importation and/or use.

Any failure on the Company’s part to comply with encryption or other applicable

export control requirements could result in financial penalties or other sanctions under the U.S.

export regulations, including restrictions

on future export activities, which could harm its business and operating results.

Regulatory restrictions could impair the Company’s

access to technologies that it seeks for improving its solutions and may also limit or reduce the demand for its solutions outside of

The loss of the Company’s

key personnel, or its failure to attract, integrate, and retain other highly qualified personnel, could harm its business and growth prospects.

The Company depends on the

continued service and performance of its key personnel.

In addition, many of the Company’s key technologies and systems are custom-made

for its business by its personnel.

The loss of key personnel, including key members of the Company’s management team, as well as

certain of its key marketing, sales, product development, or technology personnel, could disrupt its operations and have an adverse effect

on its ability to grow its business.

In addition, several of the Company’s key personnel have only recently been employed by it,

and the Company is still in the process of integrating these personnel into its operations.

The Company’s failure to successfully

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 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

significant expenditures of Nexxis’ capital and other resources and could cause interruptions, delays, or cessation of its solution

licensing, which could cause it to lose existing or potential customers and could adversely affect its operating results.

The loss of our key

personnel, or our failure to attract, integrate, and retain other highly qualified personnel, could harm our business and growth prospects.

We depend on the continued

service and performance of our key personnel.

Our ability to identify and evaluate acquisition opportunities depends heavily on our management

Following the sale of the CloudFirst business, we may face challenges retaining key personnel who may seek other employment opportunities

due to the absence of ongoing operations or uncertainty regarding our future.

Loss of critical personnel could hinder our capacity to

execute strategic initiatives or complete an acquisition.

The loss of key personnel, including key members of our management team, could

disrupt our operations and have an adverse effect on our ability to grow our business.

To execute our growth plan,

we must attract and retain highly qualified personnel.

Competition for these employees is intense, and we may not be successful in attracting

and retaining qualified personnel.

We, from time to time in the past, experienced, and expect 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.

Our failure to successfully integrate these new employees into our company

could adversely affect our business.

Our planned hires may not become as productive as we expect, and we may be unable to hire or retain

sufficient numbers of qualified individuals.

Many of the companies with which we compete for experienced personnel have greater resources

than we have.

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 resign 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

our Common Stock and the value of the restricted stock units decreasing.

If we fail to attract new personnel, or fail to retain and motivate

our current personnel, our business and growth prospects could be severely harmed.

Declining general economic or business conditions

and changes to trade policy, including tariffs and customs regulations, may have a negative impact on our business.

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.

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 economy.

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.

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.

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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.

where we currently conduct our business could adversely affect our business, reputation, financial condition and results of operations.

Changes or proposed changes in U.S.

12 unchanged sentences

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.

and our 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 or not correct, could subject the Company to costly

party that Nexxis’ solutions infringe its intellectual property, whether or not correct, could subject Nexxis, and us, to costly

and time-consuming litigation or expensive licenses.

1 unchanged sentence

in the software and technology industries based on allegations of infringement or other violations of intellectual property rights.

such claims or litigation may be time-consuming and costly, divert management resources, require the Company to change its services, require

such claims or litigation may be time-consuming and costly, divert management resources, require Nexxis to change its services, require

it to credit or refund subscription fees, or have other adverse effects on its business.

Many companies are devoting significant resources

to obtaining patents that could affect many aspects of the Company’s business.

Third parties may claim that the Company’s

technologies or solutions infringe or otherwise violate their patents or other intellectual property rights.

If the Company is forced

to defend itself against intellectual property infringement claims, whether they have merit or are determined in its favor, it may face

costly litigation, diversion of technical and management personnel, limitations on its ability to use its current websites and technologies,

and an inability to market or provide its solutions.

As a result of any such claim, the Company may have to develop or acquire non-infringing

technologies, pay damages, enter into royalty or licensing agreements, cease providing certain services, adjust its marketing and advertising

activities, or take other actions to resolve the claims.

These actions, if required, may be costly or unavailable on terms acceptable

to the Company, or at all.

Furthermore, the Company

has licensed proprietary technologies from third parties that it uses in its technologies and business, and it cannot be certain that

the owners’ rights in their technologies will not be challenged, invalidated, or circumvented.

In addition to the general risks

described above associated with intellectual property and other proprietary rights, the Company is subject to the additional risk that

the seller of such technologies may not have appropriately created, maintained, or enforced their rights in such technology.

The Company relies

on third-party software to develop and provide its solutions, including server software and licenses from third parties to use patented

intellectual property.

The Company relies on software

to obtaining patents that could affect many aspects of Nexxis’ business.

Third parties may claim that Nexxis’ technologies

or solutions infringe or otherwise violate their patents or other intellectual property rights.

If Nexxis is forced to defend

itself against intellectual property infringement claims, whether they have merit or are determined in its favor, it may face costly litigation,

diversion of technical and management personnel, limitations on its ability to use its current websites and technologies, and an inability

to market or provide its solutions.

As a result of any such claim, Nexxis may have to develop or acquire non-infringing technologies,

pay damages, enter into royalty or licensing agreements, cease providing certain services, adjust its marketing and advertising activities,

or take other actions to resolve the claims.

These actions, if required, may be costly or unavailable on terms acceptable to Nexxis, or

Furthermore, Nexxis has licensed

proprietary technologies from third parties that it uses in its technologies and business, and it cannot be certain that the owners’

rights in their technologies will not be challenged, invalidated, or circumvented.

In addition to the general risks described above associated

with intellectual property and other proprietary rights, Nexxis is subject to the additional risk that the seller of such technologies

may not have appropriately created, maintained, or enforced their rights in such technology.

Nexxis relies on third-party

software to develop and provide its solutions, including server software and licenses from third parties to use patented intellectual

Nexxis relies on software

licensed from third parties to develop and offer its solutions.

In addition, the Company may need to obtain future licenses from third

parties to use intellectual property associated with the development of its solutions, which might not be available to the Company on

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.

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, 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.

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.

In addition, Nexxis may need to obtain future licenses from third parties

to use intellectual property associated with the development of its solutions, which might not be available to Nexxis on acceptable terms,

Any loss of the right to use any software required for the development and maintenance of Nexxis’ solutions could result

in delays in the provision of its solutions until equivalent technology is either developed by Nexxis, 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 we and our subsidiaries

are unable to protect our and their domain names, reputation, and brand, our business and operating results, as well as that of our subsidiaries

could be adversely affected.

We and our subsidiaries have

registered domain names for websites (“URLs”) that are used in connection with our business and theirs, such as www.dtst.com

and mynexxis.com.

If we and our subsidiaries are unable to maintain our and their rights in these domain names, competitors or other third

parties could capitalize on the brand recognition of us and our subsidiaries by using these domain names for their own benefit.

although we and our subsidiaries own these domain names under various global top-level domains such as .com and .net, as well as under

various country-specific domains, we and our subsidiaries might not be able to, or may choose not to, acquire or maintain other country-specific

versions of these domain names or other potentially similar URLs.

Domain names similar to ours and our subsidiaries have already been

registered in the U.S.

and elsewhere, and competitors or other third parties could capitalize on our and our subsidiaries’ brand

recognition by using similar domain names.

The regulation of domain names in the U.S.

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

and elsewhere is generally conducted by internet

regulatory bodies and is subject to change.

If we or our subsidiaries lose the ability to use a domain name in a particular country, we

or they 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 the business and operating results of us and our subsidiaries.

Regulatory bodies could establish additional top-level

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

As a result, we or our subsidiaries

may not be able to acquire or maintain the domain names that utilize our or their 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.

We and our subsidiaries may be unable to prevent

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

of us and our subsidiaries.

Protecting and enforcing the rights of us and our subsidiaries in these 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

Risks Related to Our

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

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;

Our stock price has

fluctuated in the past and may be volatile in the future, and as a result, investors in our Common Stock could incur substantial losses.

Our stock price has fluctuated

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

By way of example, on July 16, 2025, the reported low sale

price of our Common Stock was $4.23, and the reported high sales price was $5.44.

For comparison purposes, on April 8, 2025, the last

closing price of our Common Stock was $2.98, while the last closing price on July 16, 2025, was $5.30.

We may incur rapid and substantial

decreases in our stock price in the foreseeable future that are unrelated to its operating performance or prospects.

Following the sale

of the CloudFirst business, it may be difficult for investors to assess our value or prospects.

Our stock may trade primarily based on

speculation about potential acquisitions and may decline significantly if we do not complete a transaction within expected timeframes.

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 our Common Stock.

The market price for our Common Stock may be influenced by many

factors, including the following:

investor reaction to our 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;

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our business;

variations in our financial results or those of companies that are perceived to be similar to us;

our ability or inability to raise additional capital and the terms on which we raise 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;

our public disclosure of the terms of any financing which we consummate in the future;

an announcement that we have effected a reverse split of our Common Stock;

our failure to be profitable;

our 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;

announcements by us or our 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;

our failure to meet financial forecasts we publicly disclose;

trading volume of our Common Stock;

sales of our Common Stock by us or our 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.

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 our 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.

factors may seriously harm the market price of our Common Stock, regardless of its operating performance.

Since the stock price of our

Common Stock has fluctuated in the past, has been volatile recently and may be volatile in the future, investors in our 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 us, could result in substantial costs and diversion of management’s

attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth

There can be no guarantee that our stock price will remain at current prices or that future sales of our Common Stock will

not be at prices lower than those sold to investors.

Additionally, recently, securities

5 unchanged sentences

portion of their original investment as the price per share has declined steadily as interest in those stocks has abated.

While the Company

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 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, 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;

While we have

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

and investors may lose a significant portion or all of their investment if they purchase our shares at a rate that is significantly disconnected

from its underlying value.

We cannot be 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.

The sale of the CloudFirst business has significantly reduced our operational

activities, which may impair our ability to satisfy ongoing listing standards of the Nasdaq Capital Market.

We may face delisting risks,

reduced liquidity in our securities, and diminished access to capital markets.

Additionally, maintaining public company compliance obligations

with lower revenue-generating operations could strain our financial resources.

We cannot be assured that we will continue to comply with

the rules, regulations or requirements governing the listing of our Common Stock on The 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 failed to meet Nasdaq requirements,

we may be subject to a delisting action by Nasdaq.

If Nasdaq delists our securities

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

a limited availability of market quotations for our securities;

reduced liquidity with respect to our securities;

a 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;

a limited amount of news and analyst coverage for us;

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 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.

Upon exercising our

outstanding options or warrants, we will be obligated to issue a substantial number of additional shares of Common Stock which will dilute

our present shareholders .

We are obligated to issue

additional shares of Common Stock in connection with any exercise or conversion, as applicable, of our outstanding options and warrants.

As of December 31, 2025, there were options and warrants outstanding convertible into an aggregate of 1,860,766 shares of Common Stock.

The exercise of warrants or options will cause us to issue additional shares of Common Stock and will dilute the percentage ownership

of our shareholders.

In addition, we have 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 .

for sale of a substantial number of shares of our Common Stock may cause the price of our 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

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

expect to declare any common stock cash dividends in the foreseeable future.

The Company does not anticipate

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

may issue preferred stock without the approval of its shareholders and have other anti-takeover defenses, it may be more difficult for

a third party to acquire the Company and could depress its stock price.

In general, the Company’s

Board may issue, without a vote of its shareholders, one or more additional series of preferred stock that has more than one vote per

Without these restrictions, the Company’s Board could issue preferred stock to investors who support it and its management

and give effective control of its business to its management.

Additionally, the issuance of preferred stock could block an acquisition

resulting in both a drop in the Company’s stock price and a decline in interest of its common stock.

This could make it more difficult

for shareholders to sell their common stock.

This could also cause the market price of the Company’s common stock shares to drop

significantly, even if its business is performing well.

our Common Stock could depress the price of our 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 our Common Stock price.

The existence of an overhang,

whether or not sales have occurred or are occurring, also could make our 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 we deem reasonable or appropriate.

If our 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 our Common Stock.

We do not expect to

declare any Common Stock cash dividends in the foreseeable future.

We do not anticipate declaring

any cash dividends to holders of our 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 we may issue

preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party

to acquire us and could depress our stock price.

In general, our Board may

issue, without a vote of our shareholders, one or more additional series of preferred stock that has more than one vote per share.

these restrictions, our Board could issue preferred stock to investors who support us and our management and give effective control of

our business to our management.

Additionally, the issuance of preferred stock could block an acquisition resulting in both a drop in our

stock price and reduced interest in our Common Stock.

This could make it more difficult for shareholders to sell their Common Stock.

could also cause the market price of our Common Stock shares to drop significantly, even if our business is performing well.

Provisions of Nevada

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

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

difficult for stockholders to change our management.

We are subject to anti-takeover

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

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

for the Company’s securities.

for our 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 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.

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 our 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