| Restatement of Quarterly Financial Information (Unaudited) |
Note 12 – Restatement of Quarterly Financial Information
(Unaudited)
Description of Restatement Adjustments
In connection with the preparation of the Company’s
consolidated financial statements for the year ended December 31, 2025, management identified an error in the prior period's accounting
for the reclassification of the July 2021 Warrants. On September 11, 2025, the triggering of a cash-settlement provision required these
warrants to be reclassified from equity to a liability at fair value. Management determined that the initial recognition of the $2,461,663
warrant liability was incorrectly recorded as a component of Gain on sale of discontinued operations, net of tax, rather than as a reduction
to Additional Paid-in Capital. Accordingly, the Company has corrected the prior period financial statements to reflect the initial recognition
as a debit to equity, with subsequent changes in the fair value of the liability recognized in the consolidated statements of operations.
The following tables reflect
the impact of the restatement to the specific line items presented in the Company’s previously reported condensed consolidated financial
statements for the periods ended September 30, 2025.
The amounts in the “As
previously reported” columns are amounts derived from the Company’s previously filed Quarterly Report on Form 10-Q for the
period ended September 30, 2025. The amounts in the “Adjustments” columns present the reclassification of warrant to liability
impact and related tax effect of the adjustment. The amounts in the “As restated” columns are the updated amounts including
the impacts from the restatement.
Unaudited Financial Statements
The following table presents
the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Balance Sheet as of
September 30, 2025:
CONDENSED CONSOLIDATED BALANCE
SHEET
| Schedule of financial statement adjustments | |
| | | |
| | | |
| | |
| | |
September 30, 2025 |
| | |
As previously reported | |
Adjustments | |
As restated |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | | |
| | |
| Warrant liability | |
$ | 1,224,838 | | |
$ | (182,488 | ) | |
$ | 1,042,350 | |
| Income taxes payable | |
| 5,976,589 | | |
| 13,182 | | |
| 5,989,771 | |
| Total current liabilities | |
| 8,414,058 | | |
| (183,244 | ) | |
| 8,230,814 | |
| Total liabilities | |
| 8,414,058 | | |
| (183,244 | ) | |
| 8,230,814 | |
| | |
| | | |
| | | |
| | |
| Stockholders’ equity: | |
| | | |
| | | |
| | |
| Additional paid-in capital | |
| 42,427,313 | | |
| (2,461,663 | ) | |
| 39,965,650 | |
| Accumulated deficit | |
| (2,912,547 | ) | |
| 2,644,907 | | |
| (267,640 | ) |
| Total Data Storage Corporation stockholders’ equity | |
| 39,507,997 | | |
| 183,244 | | |
| 39,691,241 | |
| Total stockholders’ equity | |
$ | 39,263,632 | | |
$ | 183,244 | | |
$ | 39,446,876 | |
The following tables present the impact of the financial statement adjustments
on the Company’s previously reported Condensed Consolidated Statements of Operations for the three and nine months ended September
30, 2025:
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
| | |
| | | |
| | | |
| | |
| | |
Three Months Ended September 30, 2025 |
| | |
As previously reported | |
Adjustment | |
As restated |
| | |
| |
| |
|
| Provision (benefit) for income taxes | |
$ | (1,034,683 | ) | |
$ | 15,006 | | |
$ | (1,019,677 | ) |
| Loss from continuing operations, net of tax | |
| 129,555 | | |
| (15,006 | ) | |
| 114,549 | |
| Gain on sale of discontinued operation, net of tax | |
| 17,471,290 | | |
| 2,659,913 | | |
| 20,131,203 | |
| Net income of discontinued operations | |
| 16,648,787 | | |
| 2,659,913 | | |
| 19,308,700 | |
| Net income | |
| 16,778,342 | | |
| 2,644,907 | | |
| 19,423,249 | |
| Income (loss) in non-controlling interest of consolidated subsidiary, net of tax | |
| (66 | ) | |
| 737 | | |
| 671 | |
| Net income attributable to common stockholders | |
$ | 16,778,276 | | |
$ | 2,645,644 | | |
$ | 19,423,920 | |
| | |
| | | |
| | | |
| | |
| Earnings per share from discontinued operations – basic | |
$ | 2.28 | | |
$ | 0.37 | | |
$ | 2.65 | |
| Earnings per share from discontinued operations – diluted | |
$ | 2.19 | | |
$ | 0.35 | | |
$ | 2.54 | |
| Earnings per share attributable to common stockholders – basic | |
$ | 2.30 | | |
$ | 0.36 | | |
$ | 2.66 | |
| Earnings per share attributable to common stockholders – diluted | |
$ | 2.20 | | |
$ | 0.35 | | |
$ | 2.55 | |
| | |
| | | |
| | | |
| | |
| | |
Nine Months Ended September 30, 2025 |
| | |
As previously reported | |
Adjustment | |
As restated |
| | |
| |
| |
|
| Provision (benefit) for income taxes | |
$ | (1,034,683 | ) | |
$ | 15,006 | | |
$ | (1,019,677 | ) |
| Loss from continuing operations, net of tax | |
| (1,313,172 | ) | |
| (15,006 | ) | |
| (1,328,178 | ) |
| Gain on sale of discontinued operation, net of tax | |
| 17,471,290 | | |
| 2,659,913 | | |
| 20,131,203 | |
| Net income of discontinued operations | |
| 17,385,939 | | |
| 2,659,913 | | |
| 20,045,852 | |
| Net income | |
| 16,072,767 | | |
| 2,644,907 | | |
| 18,717,674 | |
| Income (loss) in non-controlling interest of consolidated subsidiary, net of tax | |
| (3,462 | ) | |
| 737 | | |
| (2,725 | ) |
| Net income attributable to common stockholders | |
$ | 16,069,305 | | |
$ | 2,645,644 | | |
$ | 18,714,949 | |
| | |
| | | |
| | | |
| | |
| Earnings per share from discontinued operations – basic | |
$ | 2.42 | | |
$ | 0.37 | | |
$ | 2.79 | |
| Earnings per share from discontinued operations – diluted | |
$ | 2.32 | | |
$ | 0.36 | | |
$ | 2.68 | |
| Earnings per share attributable to common stockholders – basic | |
$ | 2.24 | | |
$ | 0.37 | | |
$ | 2.61 | |
| Earnings per share attributable to common stockholders – diluted | |
$ | 2.15 | | |
$ | 0.35 | | |
$ | 2.50 | |
CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY
The following tables present the impact of the financial statement adjustments
on the Company’s previously reported Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and
nine months ended September 30, 2025:
| | |
| | | |
| | | |
| | |
| | |
For the Three Months Ended September 30, 2025 |
| | |
As previously reported | |
Adjustment | |
As restated |
| Additional Paid-in Capital | |
| | | |
| | | |
| | |
| Reclassification of warrant to liability | |
| — | | |
| (2,461,663 | ) | |
| (2,461,663 | ) |
| Balance, September 30, 2025 | |
$ | 42,427,313 | | |
$ | (2,461,663 | ) | |
$ | 39,965,650 | |
| Accumulated Deficit | |
| | | |
| | | |
| | |
| Net income | |
| 16,070,042 | | |
| 3,353,878 | | |
| 19,423,920 | |
| Balance, September 30, 2025 | |
$ | (2,912,547 | ) | |
$ | 2,644,907 | | |
$ | (267,640 | ) |
| Total Stockholders’ Equity | |
| | | |
| | | |
| | |
| Reclassification of warrant to liability | |
| — | | |
| (2,461,663 | ) | |
| (2,461,663 | ) |
| Net income | |
| 16,072,767 | | |
| 3,350,482 | | |
| 19,423,249 | |
| Balance, September 30, 2025 | |
$ | 39,263,632 | | |
$ | 183,244 | | |
$ | 39,446,876 | |
| | |
| | | |
| | | |
| | |
| | |
For the Nine Months Ended September 30, 2025 |
| | |
As previously reported | |
Adjustment | |
As restated |
| Additional Paid-in Capital | |
| | | |
| | | |
| | |
| Reclassification of warrant to liability | |
| — | | |
| (2,461,663 | ) | |
| (2,461,663 | ) |
| Balance, September 30, 2025 | |
$ | 42,427,313 | | |
$ | (2,461,663 | ) | |
$ | 39,965,650 | |
| Accumulated Deficit | |
| | | |
| | | |
| | |
| Net income | |
| 16,779,013 | | |
| 1,935,936 | | |
| 18,714,949 | |
| Balance, September 30, 2025 | |
$ | (2,912,547 | ) | |
$ | 2,644,907 | | |
$ | (267,640 | ) |
| Total Stockholders’ Equity | |
| | | |
| | | |
| | |
| Reclassification of warrant to liability | |
| — | | |
| (2,461,663 | ) | |
| (2,461,663 | ) |
| Net income | |
| 16,778,342 | | |
| 1,939,332 | | |
| 18,717,674 | |
| Balance, September 30, 2025 | |
$ | 39,263,632 | | |
$ | 183,244 | | |
$ | 39,446,876 | |
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
The following table presents the impact of the financial statement adjustments
on the Company’s previously reported Condensed Consolidated Statement of Cash Flows for the nine-month period ended September 30,
2025:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended September 30, 2025 |
| |
|
As previously reported |
|
Adjustment |
|
As restated |
| |
|
|
|
|
|
|
| Net income from discontinued operations |
|
$ |
17,385,939 |
|
|
$ |
2,659,913 |
|
|
$ |
20,045,852 |
|
| Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on sale of discontinued operations |
|
|
(17,471,290 |
) |
|
|
(2,659,913 |
) |
|
|
(20,131,203 |
) |
|