PROSPECTUS |
Filed Pursuant to Rule 424(b)(5) |
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Reg. No. 333-280881 |
Up to $10,600,000 of Shares
of Common Stock
We have entered into an Equity Distribution Agreement,
dated July 18, 2024 (the “Equity Distribution Agreement”), with Maxim Group LLC (“Maxim” or the “Sales Agent”),
pursuant to which we may, issue and sell shares of our common stock, par value $0.001 per share, from time to time through or to the Sales
Agent, acting as our agent or principal, of which up to $10,600,000 of shares of our common stock are covered by this prospectus.
Sales of shares of our common stock, if any, under
this prospectus will be made in sales deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated
under the Securities Act of 1933, as amended (the “Securities Act”). The Sales Agent is not required to sell any specific
amount, but will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices,
on mutually agreed terms between the Sales Agent and us. There is no arrangement for funds to be received in any escrow, trust or similar
arrangement.
As Sales Agent, Maxim is entitled to compensation
at a fixed commission rate up to 2.5% of the gross proceeds of each sale of shares of our common stock made pursuant to the Equity Distribution
Agreement. In connection with the sale of shares of our common stock on our behalf, the Sales
Agent will be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of the Sales Agent
will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to the Sales
Agent with respect to certain liabilities, including liabilities under the Securities Act. We will pay all of the expenses incident to
the registration, offering and sale of the shares of our common stock under this prospectus.
Our common stock is listed on the Nasdaq Capital Market
under the symbol “DTST.” On July 9, 2024, the last reported sale price of our common stock on the Nasdaq Capital Market was
$6.44 per share.
As of the date of this prospectus, the aggregate market
value of our outstanding common stock held by non-affiliates is approximately $32,092,110, which is calculated based on 4,109,105 shares
of our outstanding common stock held by non-affiliates and a price of $7.81 per share, the closing price of our common stock on May 29,
2024, which is the highest closing sale price of our common stock on the Nasdaq Capital Market within the prior 60 days of this prospectus.
During the prior twelve calendar month period that ends on and includes the date hereof, we have not offered and sold any of our securities
pursuant to General Instruction I.B.6 to Form S-3.
Investing in our common stock involves a high degree
of risk. Before making an investment decision, please read the information under the heading “Risk Factors” beginning on page S-6
of this prospectus, page 7 of the base prospectus and in the documents incorporated by reference into this prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
Maxim Group LLC
The date of this prospectus is July 26, 2024
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PROSPECTUS
ABOUT THIS PROSPECTUS
This prospectus relates to part of a registration
statement on Form S-3 that we have filed with the Securities and Exchange Commission (the “SEC”) utilizing a “shelf”
registration process. Under this shelf registration process, we may sell any combination of the securities described in our base prospectus
included in the shelf registration statement in one or more offerings up to a total aggregate offering price of $50,000,000. The $10,600,000
of shares of common stock that may be offered, issued and sold under this prospectus is included in the $50,000,000 of securities that
may be offered, issued and sold by us pursuant to our shelf registration statement. In connection with such offers and when accompanied
by the base prospectus included in the registration statement of which this prospectus is a part, this prospectus will be deemed a prospectus
supplement to such base prospectus.
This prospectus relates to the offering of our shares
of common stock. Before buying any of our shares of common stock that we are offering, we urge you to carefully read this prospectus,
together with the information incorporated by reference as described under the headings “Where You Can Find More Information”
and “Incorporation of Certain Information by Reference” in this prospectus. These documents contain important information
that you should consider when making your investment decision.
This prospectus describes the terms of this offering
of our shares of common stock and also adds to and updates information contained in the documents incorporated by reference into this
prospectus. To the extent there is a conflict between the information contained in this prospectus, on the one hand, and the information
contained in any document incorporated by reference into this prospectus that was filed with the SEC before the date of this prospectus,
on the other hand, you should rely on the information in this prospectus. If any statement in one of these documents is inconsistent with
a statement in another document having a later date (for example, a document incorporated by reference into this prospectus) the statement
in the document having the later date modifies or supersedes the earlier statement.
You should rely only on the information contained
in or incorporated by reference in this prospectus and in any free writing prospectus that we have authorized for use in connection with
this offering. We have not, and the Sales Agent has not, authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We are not, and the Sales Agent is not, making an offer to
sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in
this prospectus, the documents incorporated by reference in this prospectus, and in any free writing prospectus that we have authorized
for use in connection with this offering, is accurate only as of the date of those respective documents. Our business, financial condition,
results of operations and prospects may have changed since those dates. You should carefully read this prospectus, the documents incorporated
by reference in this prospectus, and any free writing prospectus that we have authorized for use in connection with this offering, in
their entirety before making an investment decision.
We further note that the representations, warranties
and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in this prospectus
were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among
the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should
not be relied on as accurately representing the current state of our affairs.
This prospectus contains and incorporates by reference
market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information.
Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have
not independently verified this information. Although we are not aware of any misstatements regarding the market and industry data presented
in this prospectus and the documents incorporated herein by reference, these estimates involve risks and uncertainties and are subject
to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus and under
similar headings in the other documents that are incorporated by reference into this prospectus. Accordingly, investors should not place
undue reliance on this information.
Except as otherwise indicated herein or as the context
otherwise requires, references in this prospectus to “Data Storage,” the “Company,” “we,” “us,”
“our” and similar references refer to Data Storage Corporation, an entity
incorporated under the laws of the State of Nevada, and where appropriate our consolidated subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate
by reference herein, may contain, forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), including statements regarding our future financial
condition, business strategy and plans and objectives of management for future operations. Forward-looking statements include all statements
that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “believe,”
“will,” “may,” “estimate,” “continue,” “anticipate,” “intend,”
“should,” “plan,” “might,” “approximately,” “expect,” “predict,”
“could,” “potentially” or the negative of these terms or other similar expressions. Forward-looking statements
include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations.
Discussions containing these forward-looking statements
may be found, among other places, in the sections entitled “Business,” “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” contained in the documents incorporated by reference in
this prospectus, including our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, as well as any
amendments thereto.
These statements relate to future events or our future
financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels
of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. We discuss
in greater detail, and incorporate by reference into this prospectus in their entirety, many of these risks and uncertainties under the
section entitled “Risk Factors” included in our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q,
as well as any amendments thereto, filed with the SEC, which are incorporated by reference into this prospectus. Additional factors are
discussed under the section entitled “Risk Factors” in this prospectus and any free writing prospectus and under similar headings
in the other documents that are incorporated by reference into this prospectus. These statements reflect our current views with respect
to future events and are based on assumptions and subject to risks and uncertainties. New risks and uncertainties arise from time to time,
and it is impossible for us to predict these events or how they may affect us. We undertake no obligation to revise or publicly release
the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers
are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are qualified in their entirety
by this cautionary statement.
PROSPECTUS SUMMARY
The following summary highlights information contained
elsewhere in this prospectus or incorporated by reference herein and does not contain all the information that may be important to purchasers
of our securities. This summary is not intended to be complete and does not contain all of the information that you should consider before
deciding to invest in our securities. You should read this entire prospectus carefully, especially the “Risk Factors” section
beginning on page S-6 and other documents or information included or incorporated by reference in this prospectus before making an
investment decision.
Overview
Data Storage Corporation, a Nevada corporation (“Data
Storage,” “the Company,” “we,” “us,” and “our”), is headquartered in Melville, New
York. We leverage our expertise through our two subsidiaries: CloudFirst Technologies Corporation, a Delaware corporation (“CloudFirst
Technologies”), and Nexxis Inc., a Nevada corporation (“Nexxis”). Through these subsidiaries, we provide solutions and
services to a broad range of clients in various industries, including healthcare, banking and finance, distribution services, manufacturing,
construction, education, and government. Our subsidiaries maintain robust business development teams and independent distribution channels.
Strategic Growth and Infrastructure
In response to a capital raise and Nasdaq uplisting
in 2021, we expanded our distribution networks and bolstered our team, focusing on enhancing our sales, marketing, and technological capabilities.
We operate in six geographically diverse data centers across the U.S. and Canada, supporting our commitment to providing secure and reliable
subscription-based services.
Market Opportunity and Strategic Focus
Recognizing the urgent need for reliable and efficient
IT solutions, we aim to tap into the growing demand for managed cloud and cybersecurity services. CloudFirst Technologies is positioned
to capture a significant share of management’s estimate of the $36 billion annual recurring revenue market in the U.S. and Canada.
Our IBM platform, with assets deployed in six data centers, aligns with IBM’s estimate that 10% of workloads will migrate to cloud-based
solutions annually.
Our offerings are designed to support a spectrum of
needs, from cloud-based IBM Power System deployments for critical workloads to comprehensive disaster recovery and cybersecurity protections.
Our focus on hybrid cloud deployments ensures that data and workloads remain secure against various threats.
Operational Footprint
We operate from key locations in New York, Florida,
and Texas, with technology centers and labs designed to meet sophisticated client requirements. Our network includes seven geographically
diverse data centers across the U.S. and Canada, providing secure, resilient, and scalable IT solutions.
Solutions and Services
The Company provides fully integrated cloud hosting,
disaster recovery, cybersecurity, IT automation, and voice & data solutions. With strategic technical investments in multiple regions,
DTST serves a diverse clientele, including Fortune 500 companies, in sectors such as government, manufacturing, education, and healthcare.
Focused on the fast-growing, multi-billion-dollar business continuity market and cloud infrastructure solutions, DTST is recognized as
a stable and emerging growth leader. Our seven regional data centers across North America enable us to deliver sustainable services through
recurring subscription agreements.
Growth and Innovation
Driven by a steadfast commitment to innovation and
client satisfaction, we continuously refine our service offerings and expand our market reach. Our strategic growth is bolstered by a
team of solution architects and business development professionals dedicated to addressing complex business challenges and nurturing long-term
client relationships. By integrating organic growth strategies with targeted expansion efforts, we are well-positioned to seize opportunities
in the dynamic IT landscape and deliver exceptional value to our clients.
Growth Strategies
We aim to enhance revenue streams and market presence by:
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Expanding Our Service
Offerings: We will continuously innovate and expand our service offerings to meet the evolving needs of our clients, ensuring
that we remain at the forefront of industry trends and technological advancements. |
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Investing in Research
and Development: By investing in R&D, we will drive innovation, develop cutting-edge solutions, and maintain our competitive
edge in the market. |
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Enhancing Customer Experience:
We will focus on improving customer satisfaction through personalized services, robust support systems, and continuous feedback
mechanisms to ensure we meet and exceed client expectations. |
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Strengthening Strategic
Alliances: We will forge and strengthen strategic alliances with key industry players to enhance our service portfolio and market
reach. |
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Implementing Sustainable
Practices: By adopting sustainable business practices, we will contribute to environmental conservation and appeal to the growing
market segment that values corporate responsibility. |
Core Services
We provide a comprehensive suite of multi-cloud IT solutions, ensuring
high security and enterprise-level services for clients using IBM Power Systems, Microsoft Windows, and Linux. Our key service areas include:
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ezManage™: Comprehensive
IT management solutions, including system monitoring, maintenance, and support to ensure optimal performance and uptime. |
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ezCompliance™:
Compliance management services to help clients adhere to industry regulations and standards. |
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Advanced Analytics and
Reporting: |
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ezAnalytics™:
Advanced analytics services that provide actionable insights, helping clients make informed decisions. |
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ezReporting™:
Customizable reporting solutions that offer real-time visibility into system performance and business metrics. |
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Application Development
and Integration: |
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ezDevelop™: Custom
application development services to meet specific business needs. |
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ezIntegrate™:
Seamless integration services that ensure smooth interoperability between different systems and applications. |
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Training and Consulting
Services: |
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ezTrain™: Comprehensive
training programs to empower clients with the knowledge and skills needed to effectively utilize our solutions. |
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ezConsult™: Expert
consulting services to provide strategic guidance and support for IT projects and initiatives. |
These strategies and services position us for sustained growth by meeting
the evolving needs of our clients and capitalizing on market opportunities.
Corporate Information
Data Storage Corporation, a Delaware corporation founded
in 2001, became a subsidiary of Data Storage Corporation, a Nevada corporation (“Data Storage Corporation Nevada”), in 2008.
Initially known as Euro Trend Inc., Data Storage Corporation Nevada was founded on October 20, 2008, and commenced its operations with
a share exchange transaction. Following this acquisition, we adopted our current corporate identity.
Our principal executive offices are located at 225
Broadhollow Road, Suite 307, Melville, New York 11747. You can reach us by phone at (212) 564-4922. For more information, please visit
our website at www.dtst.com. Please note that information on our website is provided for informational purposes only and is not incorporated
by reference into this prospectus. It should not be considered part of this prospectus or the registration statement to which it pertains.
The SEC maintains a website that contains reports, proxy and information statements, and other documents filed electronically with the
SEC by issuers like us. You can access these documents at www.sec.gov.
THE OFFERING |
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Issuer |
Data Storage Corporation |
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Common stock to be offered by us
pursuant to this prospectus |
Up to 1,645,962 shares of our common stock having an aggregate offering price of up to approximately $10,600,000 at an assumed offering price of $6.44 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on July 9, 2024. |
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Common stock to be outstanding
after the offering |
Up to 8,641,784 shares of our common stock (as more fully described in the notes following this table), assuming sales of approximately $10,600,000 shares of our common stock, or 1,645,962 shares of our common stock in this offering at an assumed offering price of $6.44 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on July 9, 2024. The actual number of shares issued will vary depending on the sales price under this offering.(1) |
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Manner of offering |
“At the market offering” as defined in Rule 415(a)(4) pursuant to which we may, issue and sell shares of our common stock, from time to time through or to the Sales Agent, acting as our agent or principal, of which up to $10,600,000 of shares of our common stock (or 1,645,962 shares of our common stock in this offering at an assumed offering price of $6.44 per share, which was the last reported sale price of our common stock on the Nasdaq Capital Market on July 9, 2024) are covered by this prospectus. See the section of this prospectus entitled “Plan of Distribution.” |
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Use of proceeds |
We currently intend to use the net proceeds from this offering for working capital and general corporate purposes, business development and potential acquisitions. See the section of this prospectus entitled “Use of Proceeds.” |
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Risk factors |
You should read the “Risk Factors” section of this prospectus and in the documents incorporated by reference in this prospectus for a discussion of factors to consider before deciding to purchase shares of our common stock. |
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Nasdaq Capital Market
Trading Symbol |
DTST |
Unless we indicate otherwise, all information in this
prospectus is based on 6,995,822 shares of our common stock outstanding as of July 9, 2024.
The number of shares outstanding as used throughout this prospectus, unless otherwise indicated, excludes, as of July 9, 2024:
● 701,346 shares of our common stock issuable
upon the exercise of outstanding stock options, with a weighted-average exercise price of $2.77 per share;
● 2,495,860 shares of our common stock issuable
upon exercise of outstanding warrants, with a weighted average exercise price of $6.90 per share;
● 234,375 shares of our common stock issuable
upon vesting of restricted stock units (“RSUs”); and
● 961,782 additional shares of our common stock
reserved for future issuance under our equity incentive plans as of July 9, 2024.
RISK FACTORS
Investing in our common stock involves a high degree
of risk, and you should be able to bear the complete loss of your investment. You should consider carefully the risks described below
and those described under the section captioned “Risk Factors” contained in our Annual Report on Form 10-K for the year
ended December 31, 2023 filed with the SEC on March 28, 2024, any subsequent Annual Reports on Form 10-K, any subsequent Quarterly
Reports on Form 10-Q or Current Reports on Form 8-K, and all other information contained or incorporated by reference into this
prospectus and documents incorporated by reference into this prospectus before deciding whether to purchase any of the common stock being
offered under this prospectus. If any of the risks actually occur, our business, consolidated financial condition or results of operations
could be adversely affected. In such case, the trading price of our common stock could decline and you could lose all or part of your
investment. Our actual results could differ materially from those anticipated in the forward-looking statements made throughout this prospectus
as a result of different factors, including the risks we face described below.
Risks Related to this Offering
Our management will have broad discretion over
the use of proceeds from this offering and may not use the proceeds effectively.
Our management will have broad discretion over the
use of proceeds from this offering. We intend to use the net proceeds from this offering, if any, for working capital and general corporate
purposes, business development and potential acquisitions. Our management will have considerable discretion in the application of the
net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used
appropriately. The net proceeds, if any, may be used for corporate purposes that do not improve our operating results or enhance the value
of our common stock. The failure of our management to use these funds effectively could have a material adverse effect on our business
and cause the market price of our common stock to decline. Pending their use, we may invest the net proceeds from this offering in short-term,
investment-grade, interest-bearing instruments and U.S. government securities. These investments may not yield a favorable return to our
stockholders.
The Company’s
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 September 1, 2023, the reported low
sale price of our common stock on the Nasdaq Capital Market was $3.21, and the reported high sales price was $3.75. For comparison purposes,
on January 12, 2023, the price of our common stock closed on the Nasdaq Capital Market at $1.61 per share, on October 17, 2023, our stock
price closed at $3.49 per share, and on May 29, 2024, its stock price closed at $7.81 per share with no discernable announcements or developments
by us or third parties (other than the filing of our Quarterly Reports on Form 10-Q). More recently, from
January 1, 2024 through May 29, 2024, the reported closing price of our common stock on the Nasdaq Capital Market has
fluctuated between $2.78 and $7.81 per share. Such volatility can be attributable to a number of factors. For example,
we may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our 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 our common stock. The market price for
our common stock may be influenced by many factors, including the following:
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investor reaction
to our business strategy; |
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the success
of competitive products or technologies; |
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regulatory
or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products; |
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variations
in our financial results or those of companies that are perceived to be similar to us; |
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our ability or inability to raise
additional capital and the terms on which we raise it; |
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declines
in the market prices of stocks generally; |
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our
public disclosure of the terms of any financing which we consummate in the future; |
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an
announcement that we have effected a reverse split of our common stock and treasury stock; |
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our
failure to be profitable; |
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our
failure to raise working capital; |
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any
acquisitions we may consummate; |
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announcements
by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital
commitments; |
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cancellation
of key contracts; |
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our
failure to meet financial forecasts it publicly discloses; |
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trading volume
of our common stock; |
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sales of our
common stock by us or our stockholders; |
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general economic,
industry and market conditions; and |
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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, 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 our common stock, regardless of our 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 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 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
of certain companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock,
known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have
led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value
of the company. Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant
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 you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly disconnected
from its underlying value.
If you purchase shares of our common stock sold
in this offering, you will experience immediate and substantial dilution in the net tangible book value of your shares. In addition, we
may in the future issue additional equity securities or securities convertible into or exchangeable for equity securities, which may result
in additional dilution to investors.
The price per share of our common stock being offered
may be higher than the net tangible book value per share of our outstanding common stock prior to this offering. Assuming that an aggregate
of 1,645,962 shares of our common stock are sold at a price of $6.44 per share, the last reported sale price of our common stock on the
Nasdaq Capital Market on July 9, 2024, new investors in this offering will incur immediate dilution of $3.60 per share, representing the
difference between our as adjusted net tangible book value per share as of March 31, 2024 after giving effect to this offering and the
assumed price. For a more detailed discussion of the foregoing, see the section entitled “Dilution” elsewhere in this prospectus.
To the extent that our outstanding stock options or warrants are exercised, there will be further dilution to new investors.
Our need for future financing may result in
the issuance of additional securities which will cause investors to experience dilution.
Our cash requirements may vary from those now planned
depending upon numerous factors. There are no commitments by any person for future financing. Our securities may be offered to other investors
at a price lower than the price per share offered to current stockholders, or upon terms which may be deemed more favorable than those
offered to current stockholders. In addition, the issuance of securities in any future financing may dilute an investor’s equity
ownership and have the effect of depressing the market price for our securities. Moreover, we may issue derivative securities, including
options and/or warrants, from time to time, to procure qualified personnel or for other business reasons. The issuance of any such derivative
securities, which is at the discretion of our Board of Directors, may further dilute the equity ownership of our stockholders.
We may sell shares or other securities in any other
offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares
or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional
shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower
than the price per share paid by investors in this offering. No assurance can be given as to our ability to procure additional financing,
if required, and on terms deemed favorable to us. To the extent additional capital is required and cannot be raised successfully, we may
then have to limit our then current operations and/or may have to curtail certain, if not all, of our business objectives and plans.
Upon exercise of our
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.
We are obligated to issue
additional shares of our 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 March 31, 2024, there were options and warrants outstanding convertible into
an aggregate of 2,495,860 shares of our common stock. The exercise of warrants or options will cause us to issue additional shares of
our common stock and will dilute the percentage ownership of its 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 have additional securities available for issuance, which, if issued,
could adversely affect the rights of the holders of our common stock.
Our Articles of Incorporation, as amended (the “Articles
of Incorporation”), authorizes the issuance of 250,000,000 shares of our common stock and 10,000,000 shares of preferred stock.
In certain circumstances, shares of our common stock, as well as the awards available for issuance under our equity incentive plans, can
be issued by our Board of Directors, without stockholder approval. Any future issuances of such stock would further dilute the percentage
ownership of us held by holders of our common stock and preferred stock. In addition, the issuance of certain securities, including pursuant
to the terms of our stockholder rights plan, may be used as an “anti-takeover” device without further action on the part of
our stockholders, and may adversely affect the holders of the common stock.
Because we do not intend to declare cash dividends
on our shares of common stock in the foreseeable future, stockholders must rely on appreciation of the value of our common stock for any
return on their investment.
We have never declared or paid cash dividends on our
common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business
and do not anticipate declaring or paying any cash dividends in the foreseeable future. As a result, we expect that only appreciation
of the price of our common stock, if any, will provide a return to investors in this offering for the foreseeable future.
Resales of our common stock in the public market
during this offering by our stockholders may cause the market price of our common stock to fall.
We may issue shares of our common stock from time
to time in connection with this offering. This issuance from time to time of these new shares of our common stock, or our ability to issue
these shares of our common stock in this offering, could result in resales of our common stock by our current stockholders concerned about
the potential dilution of their holdings. In turn, these resales could have the effect of depressing the market price for our common stock.
The actual number of shares we will issue under
the Equity Distribution Agreement, at any one time or in total, is uncertain.
Subject to certain limitations in the Equity Distribution
Agreement with the Sales Agent and compliance with applicable law, we have the discretion to deliver placement notices to the Sales Agent
at any time throughout the term of the Equity Distribution Agreement. The number of shares that are sold by the Sales Agent after delivering
a placement notice will fluctuate based on the market price of the common stock during the sales period and limits we set with the Sales
Agent.
The shares of common stock offered under this
prospectus and documents incorporated by reference into this prospectus may be sold in an “at the market offering,” and investors
who buy shares at different times will likely pay different prices.
Investors who purchase shares under this prospectus
and documents incorporated by reference into this prospectus at different times will likely pay different prices, and so may experience
different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and numbers
of shares sold, and there is no minimum or maximum sales price. Investors may experience declines in the value of their shares as a result
of share sales made at prices lower than the prices they paid.
Sales of a significant number of shares of our
common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.
Sales of a significant number of shares of our common
stock in the public markets, or the perception that such sales could occur as a result of our utilization of our shelf registration statement,
our Equity Distribution Agreement with Maxim or otherwise could depress the market price of our common stock and impair our ability to
raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or
the market perception that we are permitted to sell a significant number of our securities would have on the market price of our common
stock.
USE OF PROCEEDS
We may issue and sell shares of our common stock having
aggregate gross sales proceeds of up to $10,600,000, from time to time. Because there is no minimum offering amount required as a condition
to close this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this
time. The amount of proceeds from this offering will depend upon the number of shares of our common stock sold and the market price at
which they are sold. There can be no assurance that we will be able to sell any shares under or fully utilize the Equity Distribution
Agreement as a source of financing.
We currently intend to use the net proceeds, if any,
from the sales of shares of our common stock offered by this prospectus for working and general corporate purposes, business development
and potential acquisitions. We have broad discretion in determining how the proceeds of this offering will be used, and our discretion
is not limited by the aforementioned possible uses. Our Board of Directors believes the flexibility in application of the net proceeds
is prudent.
As of the date of this prospectus, we cannot specify
with certainty all of the particular uses for the net proceeds to be received from this offering. The amounts and timing of our actual
expenditures will depend on numerous factors including our operating costs and the amount of funding, if any, received by us. Accordingly,
our management will have broad discretion in the application of the net proceeds, and investors will be relying on the judgment of management
regarding the application of the net proceeds from the offering. We may find it necessary or advisable to reallocate the net proceeds
of this offering; however, any such reallocation would be substantially limited to the categories set forth above as we do not intend
to use the net proceeds for other purposes. Pending such uses set forth above, we plan to invest the net proceeds in government securities
and other short-term investment grade, marketable securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends
on our capital stock and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. We expect
to retain all available funds and future earnings, if any, to fund the development and growth of our business. Any future determination
to pay dividends, if any, on our common stock will be at the discretion of our Board of Directors and will depend on, among other factors,
our results of operations, financial condition, capital requirements and contractual restrictions.
DILUTION
Our net tangible book value
as of March 31, 2024 was approximately $14.4 million, or $2.08 per share. Net tangible book value per share is determined by dividing
our total tangible assets, less total liabilities, by the number of shares of our common stock outstanding as of March 31, 2024 (or 6,929,950
shares). Dilution with respect to net tangible book value per share represents the difference between the amount per share paid by purchasers
of shares of common stock in this offering and the net tangible book value per share of our common stock immediately after this offering.
After giving effect to the
issuance of 65,872 shares of our common stock subsequent to March 31, 2024 upon the vesting of restricted stock units, our pro forma net
tangible book value as of March 31, 2024 would have been approximately $14.4 million, or $2.06 per share.
After giving effect to the
pro forma adjustment above and the sale of 1,645,962 shares of our common stock in this offering at an assumed offering price of
$6.44 per share, which was the closing price of our common stock on the Nasdaq Capital Market on July 9, 2024, and after deducting the
Sales Agent fees and estimated offering expenses payable by us, our pro forma, as adjusted net tangible book value as of March 31, 2024
would have been approximately $24.6 million, or $2.84 per share. This represents an immediate increase in as adjusted net tangible
book value of $0.78 per share to existing stockholders and an immediate dilution of $3.60 per share to new investors purchasing shares
of common stock in this offering. The following table illustrates this per share dilution:
Assumed public offering price per share | |
| | | |
$ | 6.44 | |
Pro Forma net tangible book value per share as of March 31, 2024 | |
$ | 2.06 | | |
| | |
Increase in pro forma net tangible book value per share attributable to this offering | |
$ | 0.78 | | |
| | |
Pro Forma as adjusted net tangible book value per share as of March 31, 2024, after giving effect to this offering | |
| | | |
$ | 2.84 | |
Dilution per share to new investors purchasing shares of our common stock in this offering | |
| | | |
$ | 3.60 | |
The above discussion and table is
based on 6,929,950 shares of our common stock outstanding as of March 31, 2024, as adjusted for the adjustments set forth above and excludes,
as of March 31, 2024:
|
● |
701,346 shares of our common
stock issuable upon the exercise of outstanding stock options, with a weighted average exercise price of $2.76 per share; |
|
● |
2,495,860 shares of our
common stock issuable upon exercise of outstanding warrants, with a weighted average exercise price of $6.90 per share; |
|
● |
242,541 shares of our common
stock issuable upon vesting of restricted stock units (“RSUs”); and |
|
● |
0 additional shares of
our common stock reserved for future issuance under our equity incentive plans. |
The above illustration of dilution per share to investors
participating in this offering assumes no exercise of outstanding options to purchase our common stock or outstanding warrants to purchase
shares of our common stock. To the extent that any of these outstanding options or warrants are exercised or we issue additional shares
under our equity incentive plans, there will be further dilution to new investors. In addition, we may choose to raise additional capital
due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities
could result in further dilution to our stockholders.
PLAN
OF DISTRIBUTION
We entered into the Equity Distribution Agreement
with Maxim on July 18, 2024 pursuant to which we may, issue and sell shares of our common stock, from time to time through or to Maxim,
acting as our agent or principal, of which up to $10,600,000 of shares of our common stock are covered by this prospectus. The sales of
shares of our common stock, if any, under this prospectus will be made at market prices by any method deemed to be an “at the market
offering” as defined in Rule 415(a)(4) under the Securities Act.
Each time that we wish to issue and sell shares of
our common stock under the Equity Distribution Agreement, we will provide the Sales Agent with a placement notice describing the amount
of shares to be sold, the time period during which sales are requested to be made, any limitation on the amount of shares of our common
stock that may be sold in any single day, any minimum price below which sales may not be made or any minimum price requested for sales
in a given time period and any other instructions relevant to such requested sales. Upon receipt of a placement notice, Maxim, acting
as our sales agent, will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state
and federal laws, rules and regulations and the rules of the Nasdaq Capital Market, to sell shares of our common stock under
the terms and subject to the conditions of the placement notice and the Equity Distribution Agreement. We or the Sales Agent may suspend
the offering of shares of our common stock pursuant to a placement notice upon notice.
Settlement for sales of shares of common stock, unless
the parties agree otherwise, will occur on the first trading day following the date on which any sales are made in return for payment
of the net proceeds to us. There are no arrangements to place any of the proceeds of this offering in an escrow, trust or similar account.
Sales of shares of our common stock as contemplated in this prospectus will be settled through the facilities of The Depository Trust
Company or by such other means as we and the Sales Agent may agree upon.
The Sales Agent will be entitled to compensation at
a fixed commission rate of up to 2.5% of the gross proceeds from the sale of shares of our common stock on our behalf pursuant to the
Equity Distribution Agreement. Pursuant to the terms of the Equity Distribution Agreement, we agreed to reimburse the Sales Agent for
the documented fees and costs of its legal counsel reasonably incurred in connection with entering into the transactions contemplated
by the Equity Distribution Agreement in an amount not to exceed $25,000 in the aggregate, in addition to up to $5,000 quarterly for the
Sales Agent’s counsel’s fees and any incidental expenses to be reimbursed by us. We will report at least quarterly the number
of shares of common stock sold through the Sales Agent under the Equity Distribution Agreement, the net proceeds to us and the compensation
paid by us to the Sales Agent in connection with the sales of common stock.
We estimate that the total expenses for this offering,
excluding the fixed commission rate payable as compensation to the Sales Agent, will be approximately $165,000. The remaining sales proceeds,
after deducting any expenses payable by us and any transaction fees imposed by any governmental, regulatory, or self-regulatory organization
in connection with the sales, will equal our net proceeds for the sale of such shares of common stock.
Because there are no minimum sale requirements as
a condition to this offering, the actual total public offering price, commissions and net proceeds to us, if any, are not determinable
at this time. The actual dollar amount and number of shares of common stock we sell through this prospectus will be dependent, among other
things, on market conditions and our capital raising requirements.
In connection with the sale of shares of common stock
on our behalf, the Sales Agent will be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation
of the Sales Agent will be deemed to be underwriting commissions or discounts. We have agreed to provide indemnification and contribution
to the Sales Agent against certain civil liabilities, including liabilities under the Securities Act.
The Sales Agent will not engage in any market making
activities involving shares of our common stock while the offering is ongoing under this prospectus if such activity would be prohibited
under Regulation M or other anti-manipulation rules under the Securities Act. As our sales agent, the Sales Agent will not engage
in any transactions that stabilizes shares of our common stock.
The offering pursuant to the Equity Distribution Agreement
will terminate upon the earlier of (i) the sale of all shares of common stock subject to the Equity Distribution Agreement; (ii)
twelve (12) months from the date of the Equity Distribution Agreement; and (iii) termination of the Equity Distribution Agreement
as permitted therein. We may terminate the Equity Distribution Agreement in our sole discretion at any time by giving five (5) business
days’ prior written notice to the Sales Agent. The Sales Agent may terminate the Equity Distribution Agreement if the Sales Agent
is not full satisfied, in its sole discretion, with the results of its and its representatives’ review of our company and our business,
at any time by giving five (5) business days’ prior notice to us.
Electronic Distribution
This prospectus may be made available in electronic
format on a website maintained by the Sales Agent, and the Sales Agent may distribute this prospectus electronically.
Other Relationships
The Maxim Group LLC and/or its affiliates have provided,
and may in the future provide, various investment banking and other financial services for us, for which services they have received and
may in the future receive customary fees. In addition, from time to time, Maxim and its affiliates may effect transactions for their own
account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity
securities or loans, and may do so in the future. However, except as disclosed in this prospectus, we have no present arrangements with
Maxim for any further services.
May 2021 Underwritten Offering
As stated above, Maxim and its affiliates has provided
us with certain investment banking services in the ordinary course of their business, for which they received customary fees and commissions.
For example, on May 13, 2021, we entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC,
as representative of the several underwriters (the “Representative”), for an underwritten public offering (the “May
2021 Offering”) of an aggregate of 1,600,000 units (the “Units”), each consisting of one share of our common stock,
together with one May 2021 Warrant to purchase one share of common stock at an exercise price equal to $7.425 per share of common stock.
The public offering price was $6.75 per Unit and the
underwriters agreed to purchase 1,600,000 Units at a 7.5% discount to the public offering price. We granted the Representative a 45-day
option to purchase an additional 240,000 shares of our common stock and/or an additional 240,000 May 2021 Warrants, in any combination
thereof, to cover over-allotments, if any. On May 15, 2021, the Representative partially exercised the over-allotment option to purchase
an additional 240,000 May 2021 Warrants to purchase 240,000 shares of common stock. The May 2021 Offering closed on May 18, 2021.The gross
proceeds from the May 2021 Offering were approximately $10.8 million, or approximately $12.4 million if the Representative elected to
exercise in full its over-allotment option, before deducting underwriting discounts and commissions and other expenses of the May 2021
Offering.
Pursuant to the Underwriting Agreement, we agreed
to issue to the Representative, as a portion of the underwriting compensation payable to the Representative, warrants to purchase up to
a total of 80,000 shares of our common stock (the “Representative’s Warrants”). The Representative’s Warrants
are exercisable at $7.425 per share, were initially exercisable 180 days from the commencement of sales of the securities issued in connection
with the May 2021 Offering, or November 14, 2021, and have a term of five years from their initial issuance date, or May 18, 2026. Pursuant
to FINRA rules, the Representative’s Warrants were subject to a lock-up agreement pursuant to which the Representative was not able
to sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will it engage in any
hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the
underlying securities for a period of 180 days from the beginning on the date of commencement of sales of the securities issued in connection
with this offering.
July 2021 Registered Direct Offering and Concurrent
Private Placement
On July 19, 2021, we entered into a securities purchase
agreement (the “Purchase Agreement”) with certain accredited institutional investors resulting in the raise of $8,305,000
in gross proceeds. Pursuant to the terms of the Purchase Agreement, we agreed to sell, (i) in a registered direct offering priced at-the-market
under Nasdaq rules, an aggregate of 1,375,000 shares of our common stock, and (ii) in a concurrent private placement, warrants to purchase
an aggregate of 1,031,250 shares of our common stock (the “July 2021 Warrants”) at a combined price of $6.04 per share of
common stock and 0.75 of one July 2021 Warrant (collectively, the “July 2021 Offering”). The July 2021 Offering closed on
July 21, 2021.
Maxim Group LLC acted as the sole placement agent
(the “Placement Agent”) for us in connection with the July 2021 Offering. Pursuant to that certain Placement Agency Agreement,
dated as of July 19, 2021, between us and the Placement Agent (the “Placement Agency Agreement”), the Placement Agent received
a cash fee of 6.5% of the gross proceeds of the July 2021 Offering and the reimbursement for certain out-of-pocket expenses up to $50,000.
Listing of the Common Stock on the Nasdaq Capital
Market
Our common stock is listed on the Nasdaq Capital Market
under the symbol “DTST.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock
is VStock Transfer, LLC with an address at 18 Lafayette Place, Woodmere, New York 11598, telephone: (212) 828-843.
LEGAL MATTER
The validity
of the shares of common stock being offered by this prospectus is being passed upon by Parsons Behle & Latimer, Reno,
Nevada. Blank Rome LLP, New York, New York is representing us in connection with the offering. Pryor Cashman, New York, New York is acting
as counsel for the Sales Agent in connection with this offering.
EXPERTS
The consolidated financial statements of Data Storage
Corporation as of December 31, 2023 and 2022 and for each of the two years in the period ended December 31, 2023 incorporated
by reference in this prospectus and in the registration statement of which this prospectus forms a part have been so incorporated in reliance
on the report of Rosenberg Rich Baker Berman, P.A., an independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement
we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the exhibits
to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we
refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Neither we nor any
agent, underwriter or dealer has authorized any person to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as
of any date other than the date on the front page of this prospectus, regardless of the time of delivery of this prospectus or any
sale of the securities offered by this prospectus.
We file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov.
Our SEC filings are also available on our website, www.dtst.com/sec-filings under the heading “SEC Filings.” The reference
to our website is an inactive textual reference only, the information contained in, and that can be accessed through our website, is not
incorporated into and is not a part of this prospectus. We make available on our website our SEC filings as soon as reasonably practicable
after those reports are filed with the SEC.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
information from other documents that we file with it, which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to be part of this prospectus. Information in this prospectus
supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus.
We incorporate by reference into this prospectus and
the registration statement of which this prospectus is a part the information or documents listed below that we have filed with the SEC
(Commission File No. 001-35384):
|
● |
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 28, 2024; |
|
|
|
|
● |
Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 filed with the SEC on May 15, 2024; |
|
|
|
|
● |
Our Current Reports on Form 8-K filed with the SEC on January 5, 2024, January 18, 2024, January 19, 2024, March 11, 2024, March 27, 2024, April 2, 2024, May 6, 2024 and June 24, 2024; |
|
|
|
|
● |
The description of our common stock and May 2021 Warrants set forth in (i) our registration statement on Form 8-A12B, filed with the SEC on May 10, 2021 (File No. 001-35384) and (ii) Exhibit 4.10—Description of Securities to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 28, 2024. |
We also incorporate by reference any future filings
(other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to
such items unless such Form 8-K expressly provides to the contrary) made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, including those made (i) on or after the date of the initial filing of the registration statement of which this
prospectus forms a part and prior to effectiveness of such registration statement, and (ii) on or after the date of this prospectus
but prior to the termination of the offering (i.e., until the earlier of the date on which all of the securities registered hereunder
have been sold or the registration statement of which this prospectus forms a part has been withdrawn). Information in such future filings
updates and supplements the information provided in this prospectus. Any statements in any such future filings will automatically be deemed
to modify and supersede any information in any document we previously filed with the SEC that is incorporated or deemed to be incorporated
herein by reference to the extent that statements in the later filed document modify or replace such earlier statements.
We will furnish without charge to each person, including
any beneficial owner, to whom a prospectus is delivered, upon written or oral request, a copy of any or all of the documents incorporated
by reference into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference
into such documents. You should direct any requests for documents to:
Data Storage Corporation
225 Broadhollow Road, Suite 307
Melville, New York 11747
Telephone: (212) 564-4922
Attention: Corporate Secretary
You may also access these documents, free of charge,
on the SEC’s website at www.sec.gov or on our website at www.dtst.com/sec-filings. The information contained in, or
that can be accessed through, our website is not incorporated by reference in, and is not part of, this prospectus or any accompanying
prospectus supplement.
In accordance with Rule 412 of the Securities
Act, any statement contained in a document incorporated by reference herein shall be deemed modified or superseded to the extent that
a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.
You should rely only on information contained in,
or incorporated by reference into, this prospectus and any prospectus supplement. We have not authorized anyone to provide you with information
different from that contained in this prospectus or incorporated by reference into this prospectus. We are not making offers to sell the
securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so or to anyone to whom it is unlawful to make such an offer or solicitation.
Up to $10,600,000
Shares of Common Stock
Prospectus
Maxim Group LLC
July 26, 2024
PROSPECTUS
$50,000,000
DATA STORAGE CORPORATION
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may, from time to time, offer and sell up to $50,000,000
of any combination of our common stock, par value $0.001 (the “common stock”), preferred stock, par value $0.001 (the “preferred
stock”), debt securities, warrants or units described in this prospectus, either individually or in combination with other securities,
at prices and on terms described in one or more supplements to this prospectus. We may also offer common stock or preferred stock upon
conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock, or debt securities upon
the exercise of warrants.
This prospectus provides you with a general description
of the securities that we may offer. Each time we offer and sell securities, we will provide a supplement
to this prospectus that contains specific information about the offering and the amounts, prices and terms of the securities. We
may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement
and any related free writing prospectus may also add, update or change information contained in this prospectus. You should carefully
read this prospectus, the applicable prospectus supplement and any related free writing prospectus, as well as the documents incorporated
by reference, before buying any of the securities being offered.
Securities may be sold by us to or through underwriters
or dealers, directly to purchasers or through agents designated from time to time. For additional information on the methods of sale,
you should refer to the section entitled “Plan of Distribution” in this prospectus and in the applicable prospectus supplement.
If any underwriters, dealers or agents are involved in the sale of any of the securities, their
names and any applicable purchase price, fee, commission or discount arrangement between or among them will be set forth, or will be calculable
from the information set forth, in the applicable prospectus supplement. The price to the public of such securities and the net
proceeds we expect to receive from such sale will also be set forth in a prospectus supplement. No
securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of
the offering of such securities.
Our common stock is listed on the Nasdaq Capital Market
under the symbol “DTST.” Warrants to purchase shares of our common stock issued by us on May 18, 2021 are listed on the Nasdaq
Capital Market under the symbol “DTSTW.” On July 9, 2024, the last reported sale price of our common stock on the Nasdaq Capital
Market was $6.44 per share. The applicable prospectus supplement will contain information, where applicable, as to any other listing,
if any, on any securities market or other exchange of the specific security covered by such prospectus supplement.
As of the date of this prospectus, the aggregate market
value of our outstanding common stock held by non-affiliates is approximately $32,092,110, which is calculated based on 4,109,105 shares
of our outstanding common stock held by non-affiliates and a price of $7.81 per share, the closing price of our common stock on May 29,
2024, which is the highest closing sale price of our common stock on the Nasdaq Capital Market within the prior 60 days of this prospectus.
During the prior twelve calendar month period that ends on and includes the date hereof, we have not offered and sold any of our securities
pursuant to General Instruction I.B.6 to Form S-3.
Investing in our securities involves a high degree
of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 7
of this prospectus and contained in the applicable prospectus supplement and in any free writing prospectuses we have authorized for use
in connection with a specific offering, and under similar headings in the other documents that are incorporated by reference into this
prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is July 26, 2024.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement
on Form S-3 that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration
process. Under this shelf registration statement, we may sell from time to time in one or more offerings up to a total dollar amount of
$50,000,000 of shares of common stock, preferred stock, various series of debt securities and/or warrants to purchase any of such securities,
either individually or as units in combination with other securities as described in this prospectus. Each time we sell any type or series
of securities under this prospectus, we will provide a prospectus supplement that will contain more specific information about the terms
of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information
relating to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize to be provided to
you may also add, update or change any of the information contained in this prospectus or in the documents we have incorporated by reference
into this prospectus. To the extent that any statement that we make in a prospectus supplement is inconsistent with statements made in
this prospectus, the statements made in this prospectus will be deemed modified or superseded by those made in a prospectus supplement.
You should carefully read both this prospectus and the applicable prospectus supplement and any related free writing prospectus, together
with the additional information described under “Where You Can Find More Information,” before buying any of the securities
being offered.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE
A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT
Neither we, nor any agent, underwriter or dealer has
authorized any person to give any information or to make any representation other than those contained or incorporated by reference in
this prospectus, any applicable prospectus supplement or any related free writing prospectus prepared by or on behalf of us or to which
we have referred you. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any
applicable supplement to this prospectus or any related free writing prospectus does not constitute an offer to sell or the solicitation
of an offer to buy any securities other than the registered securities to which they relate, nor does this prospectus, any applicable
supplement to this prospectus or any related free writing prospectus constitute an offer to sell or the solicitation of an offer to buy
securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You should not assume that the information contained
in this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent to
the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference, even though this prospectus, any applicable prospectus supplement or any related
free writing prospectus is delivered, or securities are sold, on a later date.
This prospectus contains summaries of certain provisions
contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the
summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed,
will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under the section entitled “Where You Can Find More Information.”
Except as otherwise indicated herein or as the context
otherwise requires, references in this prospectus to “Data Storage,” “the Company,” “we,” “us,”
“our” and similar references refer to Data Storage Corporation, an entity incorporated under the laws of the State of Nevada,
and where appropriate our consolidated subsidiaries.
This prospectus and the information incorporated herein
by reference include trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade
names included or incorporated by reference into this prospectus, any applicable prospectus supplement or any related free writing prospectus
are the property of their respective owners.
PROSPECTUS SUMMARY
The following summary highlights information contained
elsewhere in this prospectus or incorporated by reference herein and does not contain all the information that may be important to purchasers
of our securities. Prospective purchasers of our securities should carefully read the entire prospectus, the applicable prospectus supplement
and any related free writing prospectus, including the risks of investing in our securities discussed under the heading “Risk Factors”
contained in this prospectus, the applicable prospectus supplement and any related free writing prospectus, and under similar headings
in the other documents that are incorporated by reference into this prospectus. Prospective purchasers of our securities should also carefully
read the information incorporated by reference into this prospectus, including our financial statements, and the exhibits to the registration
statement of which this prospectus is a part.
Overview
Data Storage Corporation, a Nevada corporation (“Data
Storage,” “the Company,” “we,” “us,” and “our”), is headquartered in Melville, New
York. We leverage our expertise through our two subsidiaries: CloudFirst Technologies Corporation, a Delaware corporation (“CloudFirst
Technologies”), and Nexxis Inc., a Nevada corporation (“Nexxis”). Through these subsidiaries, we provide solutions and
services to a broad range of clients in various industries, including healthcare, banking and finance, distribution services, manufacturing,
construction, education, and government. Our subsidiaries maintain robust business development teams and independent distribution channels.
Strategic Growth and Infrastructure
In response to a capital raise and Nasdaq uplisting
in 2021, we expanded our distribution networks and bolstered our team, focusing on enhancing our sales, marketing, and technological capabilities.
We operate in six geographically diverse data centers across the U.S. and Canada, supporting our commitment to providing secure and reliable
subscription-based services.
Market Opportunity and Strategic Focus
Recognizing the urgent need for reliable and efficient
IT solutions, we aim to tap into the growing demand for managed cloud and cybersecurity services. CloudFirst Technologies is positioned
to capture a significant share of management’s estimate of the $36 billion annual recurring revenue market in the U.S. and Canada.
Our IBM platform, with assets deployed in six data centers, aligns with IBM’s estimate that 10% of workloads will migrate to cloud-based
solutions annually.
Our offerings are designed to support a spectrum of
needs, from cloud-based IBM Power System deployments for critical workloads to comprehensive disaster recovery and cybersecurity protections.
Our focus on hybrid cloud deployments ensures that data and workloads remain secure against various threats.
Operational Footprint
We operate from key locations in New York, Florida,
and Texas, with technology centers and labs designed to meet sophisticated client requirements. Our network includes seven geographically
diverse data centers across the U.S. and Canada, providing secure, resilient, and scalable IT solutions.
Solutions and Services
The Company provides fully integrated cloud hosting,
disaster recovery, cybersecurity, IT automation, and voice & data solutions. With strategic technical investments in multiple regions,
DTST serves a diverse clientele, including Fortune 500 companies, in sectors such as government, manufacturing, education, and healthcare.
Focused on the fast-growing, multi-billion-dollar business continuity market and cloud infrastructure solutions, DTST is recognized as
a stable and emerging growth leader. Our seven regional data centers across North America enable us to deliver sustainable services through
recurring subscription agreements.
Growth and Innovation
Driven by a steadfast commitment to innovation and
client satisfaction, we continuously refine our service offerings and expand our market reach. Our strategic growth is bolstered by a
team of solution architects and business development professionals dedicated to addressing complex business challenges and nurturing long-term
client relationships. By integrating organic growth strategies with targeted expansion efforts, we are well-positioned to seize opportunities
in the dynamic IT landscape and deliver exceptional value to our clients.
Growth Strategies
We aim to enhance revenue streams and market presence by:
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Expanding Our Service Offerings: We will continuously innovate and expand our service offerings to meet the evolving needs of our clients, ensuring that we remain at the forefront of industry trends and technological advancements. |
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Investing in Research and Development: By investing in R&D, we will drive innovation, develop cutting-edge solutions, and maintain our competitive edge in the market. |
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Enhancing Customer Experience: We will focus on improving customer satisfaction through personalized services, robust support systems, and continuous feedback mechanisms to ensure we meet and exceed client expectations. |
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Strengthening Strategic Alliances: We will forge and strengthen strategic alliances with key industry players to enhance our service portfolio and market reach. |
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Implementing Sustainable Practices: By adopting sustainable business practices, we will contribute to environmental conservation and appeal to the growing market segment that values corporate responsibility. |
Core Services
We provide a comprehensive suite of multi-cloud IT solutions, ensuring
high security and enterprise-level services for clients using IBM Power Systems, Microsoft Windows, and Linux. Our key service areas include:
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ezManage™: Comprehensive IT management solutions, including system monitoring, maintenance, and support to ensure optimal performance and uptime. |
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ezCompliance™: Compliance management services to help clients adhere to industry regulations and standards. |
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Advanced Analytics and Reporting: |
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ezAnalytics™: Advanced analytics services that provide actionable insights, helping clients make informed decisions. |
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ezReporting™: Customizable reporting solutions that offer real-time visibility into system performance and business metrics. |
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Application Development and Integration: |
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ezDevelop™: Custom application development services to meet specific business needs. |
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ezIntegrate™: Seamless integration services that ensure smooth interoperability between different systems and applications. |
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Training and Consulting Services: |
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ezTrain™: Comprehensive training programs to empower clients with the knowledge and skills needed to effectively utilize our solutions. |
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ezConsult™: Expert consulting services to provide strategic guidance and support for IT projects and initiatives. |
These strategies and services position us for sustained growth by meeting
the evolving needs of our clients and capitalizing on market opportunities.
Corporate Information
Data Storage Corporation, a Delaware corporation founded
in 2001, became a subsidiary of Data Storage Corporation, a Nevada corporation (“Data Storage Corporation Nevada”), in 2008.
Initially known as Euro Trend Inc., Data Storage Corporation Nevada was founded on October 20, 2008, and commenced its operations with
a share exchange transaction. Following this acquisition, we adopted our current corporate identity.
Our principal executive offices are located at 225
Broadhollow Road, Suite 307, Melville, New York 11747. You can reach us by phone at (212) 564-4922. For more information, please visit
our website at www.dtst.com. Please note that information on our website is provided for informational purposes only and is not incorporated
by reference into this prospectus. It should not be considered part of this prospectus or the registration statement to which it pertains.
The SEC maintains a website that contains reports, proxy and information statements, and other documents filed electronically with the
SEC by issuers like us. You can access these documents at www.sec.gov.
Smaller Reporting Company
We are a “smaller reporting company” as
defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, we may take advantage of certain
reduced disclosure obligations available to smaller reporting companies, including the exemption from compliance with the auditor attestation
requirements pursuant to the Sarbanes-Oxley Act of 2022, reduced disclosure about our executive compensation arrangements and the requirements
to provide only two years of audited financial statements in our annual reports and registration statements. We will continue to be a
“smaller reporting company” as long as (1) we have a public float (i.e., the market value of our common stock held by
non-affiliates) less than $250 million calculated as of the last business day of our most recently completed second fiscal quarter, or
(2) our annual revenues are less than $100 million for our previous fiscal year and we have either no public float or a public float
of less than $700 million as of the end of that fiscal year’s second fiscal quarter. Decreased disclosures in our SEC filings due
to our status as a “smaller reporting company” may make it harder for investors to analyze our results of operations and financial
prospects.
Risks Associated with our Business
Our business is subject to numerous risks, as described
under the heading “Risk Factors” contained in the applicable prospectus supplement and in any free writing prospectuses we
have authorized for use in connection with a specific offering, and under similar headings in the documents that are incorporated by reference
into this prospectus.
The Securities We May Offer
We may offer shares of our common stock, preferred
stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or as units in combination
with other securities, with a total value of up to $50,000,000 from time to time under this prospectus at prices and on terms to be determined
at the time of any offering. This prospectus provides you with a general description of the securities we may offer. Each time we offer
a type or series of securities under this prospectus, we will provide a prospectus supplement that will describe the specific amounts,
prices and other important terms of the securities, including, to the extent applicable:
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designation or classification; |
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aggregate principal amount or aggregate offering price; |
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original issue discount; |
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rates and times of payment of interest or dividends; |
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redemption, conversion, exercise, exchange or sinking fund terms; |
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voting or other rights; |
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conversion or exchange prices or rates and, if applicable, any provisions for changes to or adjustments in the conversion or exchange prices or rates and in the securities or other property receivable upon conversion or exchange; and |
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a discussion of material United States federal income tax considerations, if any. |
The prospectus supplement and any related free writing
prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in documents
we have incorporated by reference. However, no prospectus supplement or free writing prospectus will offer a security that is not registered
and described in this prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.
We may sell the securities directly to investors or
to or through agents, underwriters or dealers. We, and our agents, underwriters or dealers reserve the right to accept or reject all or
part of any proposed purchase of securities. If we do offer securities to or through agents, underwriters or dealers, we will include
in the applicable prospectus supplement:
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the names of those agents, underwriters, or dealers; |
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applicable fees, discounts and commissions to be paid to them; |
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details regarding over-allotment options, if any; and |
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the net proceeds to us. |
The following is a summary of the securities we may
offer with this prospectus.
Common Stock
We may issue shares of our common stock from time
to time. Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders,
including the election of directors. Under our articles of incorporation, as amended (the “Articles of Incorporation”) and
bylaws, as amended (the “Bylaws”), our stockholders do not have cumulative voting rights. Subject to preferences that may
be applicable to any then-outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any,
as may be declared from time to time by the board of directors out of legally available funds. In the event of our liquidation, dissolution
or winding up, holders of common stock are entitled to share ratably in the net assets legally available for distribution to stockholders
after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders
of any then-outstanding shares of preferred stock. Holders of shares of our common stock do not have preemptive, subscription, redemption,
or conversion rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and
privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock that we may designate in the future.
Preferred Stock
We may issue shares of our preferred stock from time
to time, in one or more series. Our board of directors will determine the designations, voting powers, preferences and rights of the preferred
stock, as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, preemptive rights,
terms of redemption or repurchase, liquidation preferences, sinking fund terms and the number of shares constituting any series or the
designation of any series. Convertible preferred stock will be convertible into our common stock or exchangeable for other securities.
Conversion may be mandatory or at the holder’s option and would be at prescribed conversion rates. If we sell any series of preferred
stock under this prospectus, we will fix the designations, voting powers, preferences and rights of such series of preferred stock, as
well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series. We will file
as an exhibit to the registration statement of which this prospectus is a part or will incorporate by reference from reports that we file
with the SEC, the form of any certificate of designation that describes the terms of the series of preferred stock that we are offering
before the issuance of the related series of preferred stock.
We urge you to read the applicable prospectus supplement
(and any free writing prospectus that we may authorize to be provided to you) related to the series of preferred stock being offered,
as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.
Debt Securities
We may issue debt securities from time to time, in
one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. The senior debt securities will
rank equally with any other unsecured and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right
of payment, to the extent and in the manner described in the instrument governing the debt, to all of our senior indebtedness. Convertible
debt securities will be convertible into or exchangeable for our common stock or other securities. Conversion may be mandatory or at your
option and would be at prescribed conversion rates.
Any debt securities issued under this prospectus will
be issued under one or more documents called indentures, which are contracts between us and a national banking association or other eligible
party, as trustee. In this prospectus, we have summarized certain general features of the debt securities. We urge you, however, to read
the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series
of debt securities being offered, as well as the complete indentures that contain the terms of the debt securities. A form of indenture
has been filed as an exhibit to the registration statement of which this prospectus is a part, and supplemental indentures and forms of
debt securities containing the terms of the debt securities being offered will be filed as exhibits to the registration statement of which
this prospectus is a part or will be incorporated by reference from reports that we file with the SEC.
Warrants
We may issue warrants for the purchase of common stock,
preferred stock and/or debt securities in one or more series. We may issue warrants independently or as units in combination with common
stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities. In this prospectus,
we have summarized certain general features of the warrants.
We urge you, however, to read the applicable prospectus
supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of warrants being offered,
as well as any warrant agreements and warrant certificates that contain the terms of the warrants. We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of warrant
and/or the warrant agreement and warrant certificate, as applicable, that contain the terms of the particular series of warrants we are
offering, and any supplemental agreements, before the issuance of such warrants.
Any warrants issued under this prospectus may be evidenced
by warrant certificates. Warrants also may be issued under an applicable warrant agreement that we enter into with a warrant agent. We
will indicate the name and address of the warrant agent, if applicable, in the prospectus supplement relating to the particular series
of warrants being offered.
Units
We may issue units consisting of any combination of
the other types of securities offered under this prospectus in one or more series. We may evidence each series of units by unit certificates
that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent will be a bank or
trust company that we select. We will indicate the name and address of the unit agent in the applicable prospectus supplement relating
to a particular series of units.
In this prospectus, we have summarized certain general
features of the units under “Description of Units.” We urge you, however, to read the applicable prospectus supplement (and
any related free writing prospectus that we may authorize to be provided to you) related to the series of units being offered, as well
as the complete unit agreement that contains the terms of the units. We will file as exhibits to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the specific unit agreement that contains
the terms of the particular series of units we are offering, before the issuance of such units.
RISK FACTORS
Investing in our securities involves a high degree
of risk. Before deciding whether to invest in our securities, you should consider carefully the risks and uncertainties described under
the heading “Risk Factors” contained in the applicable prospectus supplement and any related free writing prospectus, and
discussed under the section entitled “Risk Factors” contained in our most recent Annual Report on Form 10-K, as may be
updated by subsequent annual, quarterly and other reports that are incorporated by reference into this prospectus in their entirety. The
risks described in these documents are not the only ones we face, but those that we consider to be material. There may be other unknown
or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results.
Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate
results or trends in future periods. If any of these risks actually occurs, our business, financial condition, results of operations or
cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or
part of your investment. Please also read carefully the section below entitled “Forward-Looking Statements.”
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate
by reference herein, contains, and any applicable prospectus supplement or free writing prospectus including the documents we incorporate
by reference therein may contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Exchange Act, including statements regarding our future financial
condition, business strategy and plans and objectives of management for future operations. Forward-looking statements include all statements
that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “believe,”
“will,” “may,” “estimate,” “continue,” “anticipate,” “intend,”
“should,” “plan,” “might,” “approximately,” “expect,” “predict,”
“could,” “potentially” or the negative of these terms or other similar expressions. Forward-looking statements
include statements regarding our intentions, beliefs, projections, outlook, analyses or current expectations.
Discussions containing these forward-looking statements
may be found, among other places, in the sections entitled “Business,” “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” contained in the documents incorporated by reference herein,
including our most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K,
as well as any amendments thereto.
These statements relate to future events or our future
financial performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels
of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. We discuss
in greater detail, and incorporate by reference into this prospectus in their entirety, many of these risks and uncertainties under the
heading “Risk Factors” contained in the applicable prospectus supplement, in any free writing prospectus we may authorize
for use in connection with a specific offering, and in the documents incorporated by reference herein. These statements reflect our current
views with respect to future events and are based on assumptions and subject to risks and uncertainties. We undertake no obligation to
revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks
and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements
are qualified in their entirety by this cautionary statement.
USE OF PROCEEDS
We will retain broad discretion over the use of the
net proceeds from the sale of the securities offered hereby. Except as described in any prospectus supplement or in any related free writing
prospectus that we may authorize to be provided to you, we currently intend to use the net proceeds from the sale of the securities offered
by us hereunder primarily for working capital and general corporate purposes. We will set forth in the applicable prospectus supplement
or free writing prospectus our intended use for the net proceeds received from the sale of any securities sold pursuant to the prospectus
supplement or free writing prospectus.
DESCRIPTION OF CAPITAL STOCK
The following is a description of the material
terms of our capital stock. This is a summary only and does not purport to be complete. It is subject to and qualified in its entirety
by reference to our Articles of Incorporation and our Bylaws, each of which are incorporated by reference as an exhibit to the registration
statement of which this prospectus forms a part. We encourage you to read our Articles of Incorporation, our Bylaws and the applicable
provisions of the Nevada Revised Statute (the “NRS”), for additional information.
Our authorized capital stock consists of:
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250,000,000 shares of common stock, par value $0.001 per share; and |
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10,000,000 shares of preferred stock, par value $0.001 per share. |
Common Stock
Outstanding Shares. As of July 9, 2024, there
were 6,995,822 shares of our common stock outstanding.
Voting Rights. The holders of the common stock
are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election
of directors, and do not have cumulative voting rights. Accordingly, the holders of a majority of the shares of the common stock entitled
to vote in any election of directors can elect all of the directors standing for election.
Dividend Rights. Subject to preferences that
may be applicable to any then outstanding preferred stock, the holders of common stock are entitled to receive dividends, if any, as may
be declared from time to time by our board of directors out of legally available funds.
Liquidation Rights. In the event of our liquidation,
dissolution or winding up, holders of the common stock will be entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference
granted to the holders of any then outstanding shares of preferred stock.
Other Rights and Preferences. The holders of
the common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable
to the common stock. The rights, preferences and privileges of the holders of the common stock are subject to, and may be adversely affected
by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Fully Paid and Nonassessable. All of our outstanding
shares of common stock are fully paid and nonassessable.
Preferred Stock
The following summary of terms of our preferred stock
is not complete. We will file as an exhibit to the registration statement of which this prospectus is a part or will incorporate by reference
from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred
stock that we are offering before the issuance of the related series of preferred stock. We urge you to read the applicable prospectus
supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of preferred stock being
offered, as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.
Our board of directors may, without further action
by our stockholders, fix the rights, preferences, privileges and restrictions of up to an aggregate of 10,000,000 shares of preferred
stock in one or more series and authorize their issuance. There are no shares of preferred stock designated or outstanding. These rights,
preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater
than the rights of our common stock.
Our board of directors will fix the designations,
voting powers, preferences and rights of the preferred stock of each series we issue under this prospectus, as well as the qualifications,
limitations or restrictions thereof, in the certificate of designation relating to that series. We will describe in the applicable prospectus
supplement the terms of the series of preferred stock being offered, including, to the extent applicable:
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the title and stated value; |
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the number of shares we are offering; |
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the liquidation preference per share; |
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the dividend rate, period and payment date and method of calculation for dividends; |
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whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate; |
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the procedures for any auction and remarketing; |
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the provisions for a sinking fund; |
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the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights; |
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any listing of the preferred stock on any securities exchange or market; |
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whether the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be calculated, and the conversion period; |
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whether the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period; |
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voting rights of the preferred stock; |
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restrictions on transfer, sale or other assignment; |
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whether interests in the preferred stock will be represented by depositary shares; |
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a discussion of material United States federal income tax considerations applicable to the preferred stock; |
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the relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; |
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any limitations on the issuance of any class or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and |
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any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock. |
Anti-Takeover Effects of Nevada Law
The provisions of NRS, our Articles of Incorporation
and our Bylaws described below may have the effect of delaying, deferring or discouraging another party from acquiring control of us.
Business Combinations
The “business combination” provisions
of Sections 78.411 to 78.444, inclusive, of the NRS generally prohibit a Nevada corporation with at least 200 stockholders from engaging
in various “combination” transactions with any interested stockholder
for a period of two years after the date of the transaction
in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the
interested stockholder obtained such status or the combination is approved by the board of directors and thereafter is approved at a meeting
of the stockholders by the affirmative vote of stockholders representing at least 60% of the outstanding voting power held by disinterested
stockholders, and extends beyond the expiration of the two-year period, unless:
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the combination was approved by the board of directors prior to the person becoming an interested stockholder or the transaction by which the person first became an interested stockholder was approved by the board of directors before the person became an interested stockholder or the combination is later approved by a majority of the voting power held by disinterested stockholders; or |
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if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the two years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. |
A “combination” is generally defined to
include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition, in one transaction or
a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal to 5% or more
of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of the corporation, (c) 10% or more of the earning power or net income of the corporation,
and (d) certain other transactions with an interested stockholder or an affiliate or associate of an interested stockholder.
In general, an “interested stockholder”
is a person who, together with affiliates and associates, owns (or within two years, did own) 10% or more of a corporation’s voting
stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts
to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above
the prevailing market price.
Control Share Acquisitions
The “control share” provisions of Sections
78.378 to 78.3793, inclusive, of the NRS apply to “issuing corporations” that are Nevada corporations with at least 200 stockholders,
including at least 100 stockholders of record who are Nevada residents, and that conduct business directly or indirectly in Nevada. The
control share statute prohibits an acquirer, under certain circumstances, from voting its shares of a target corporation’s stock
after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation’s disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and
a majority or more, of the outstanding voting power. Generally, once an acquirer crosses one of the above thresholds, those shares in
an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares are deprived of
the right to vote until disinterested stockholders restore the right. These provisions also provide that if control shares are accorded
full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote
in favor of authorizing voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance
with statutory procedures established for dissenters’ rights.
A corporation may elect to not be governed by, or
“opt out” of, the control share provisions by making an election in its articles of incorporation or bylaws, provided that
the opt-out election must be in place on the 10th day following the date an acquiring person has acquired a controlling interest, that
is, crossing any of the three thresholds described above. We have not opted out of the control share statutes, and will be subject to
these statutes if we are an “issuing corporation” as defined in such statutes.
The effect of the Nevada control share statutes is
that the acquiring person, and those acting in association with the acquiring person, will obtain only such voting rights in the control
shares as are conferred by a resolution of the stockholders at an annual or special meeting. The Nevada control share law, if applicable,
could have the effect of discouraging takeovers of our company.
Anti-takeover Effects of our Articles of Incorporation
and Bylaws
Our Articles of Incorporation and Bylaws contain certain
provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of the
Company or changing our board of directors and management. According to the Articles of Incorporation and Bylaws, the holders of our common
stock do not have cumulative voting rights in the election of our directors. The lack of cumulative voting makes it more difficult for
other stockholders to replace our board of directors or for a third party to obtain control of our Company by replacing its board of directors.
Effects of Certain Provisions of our Articles of Incorporation and Bylaws
Provisions of our Articles of Incorporation and Bylaws
may delay or discourage transactions involving an actual or potential change of control or change in our management, including transactions
in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to
be in their best interests. Therefore, these provisions could adversely affect the price of our common stock.
Board of Directors; Removal of Directors for Cause.
Our Bylaws provide for the election of directors to one-year terms at each annual meeting of the stockholders. All directors elected to
our Board will serve until the election and qualification of their respective successors or their earlier resignation or removal. The
Board is authorized to create new directorships, subject to the Articles of Incorporation, and to fill such positions so created by a
majority vote of the directors. Members of the Board may only be removed by the affirmative vote of the holders of not less than two-thirds
of the voting power of our issued and outstanding stock entitled to vote at a special meeting of stockholders.
Board Vacancies. Vacancies on the Board may
be filled by the remaining members of the Board.
Special Meetings of Stockholders. Special meetings
of the stockholders may be called only by Board pursuant to the requirements of our Bylaws.
Blank-Check Preferred Stock. The Board is authorized
to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the Board and that,
if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition
that our Board does not approve.
Potential Effects of Authorized but Unissued Stock.
We have shares of common stock available for future issuance without stockholder approval. We may utilize these additional shares for
a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate corporate acquisitions or
payment as a dividend on the capital stock. The existence of unissued and unreserved common stock may enable our board of directors to
issue shares to persons friendly to current management.
Quorum. At each meeting of stockholders, except
where otherwise provided by law, the presence in person or by proxy of the holders of thirty-three and one-third percent of the outstanding
shares of our voting stock shall constitute a quorum.
Limitations of Director Liability and Indemnification
of Directors, Officers and Employees
NRS 78.138 provides that a director of a corporation
is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act
in his or her capacity as a director or officer unless: (a) the presumption that directors and officers acted in good faith on an
informed basis with a view toward the best interest of the corporation has been rebutted and (b) it is proven that:
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The director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and |
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such breach involved intentional misconduct, fraud or a knowing violation of law. |
Our Bylaws provide that a
director shall cause us to indemnify a director or former director and the directors may cause us
to indemnify a director or former director of a corporation of which we are or were a shareholder and the heirs and personal representatives
of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually
and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment inactive criminal or administrative
action or proceeding to which he is or they are made a party by reason of his or her being or having been our director or a director of
such corporation, including an action brought by us or such corporation. Each of our directors on being elected or appointed is deemed
to have contracted with the Corporation on the terms of the foregoing indemnity. Our Bylaws also provide that the directors may
cause us to indemnify an officer, employee or agent of the Corporation or of a corporation of which the Corporation is or was a shareholder
(notwithstanding that he is also a director), and his or her heirs and personal representatives against all costs, charges and expenses
incurred by him or them and resulting from his or her acting as an officer, employee or agent of the Corporation or corporation.
Our Bylaws also
provide that the directors may cause the Corporation to purchase and maintain insurance for the benefit of a person who is or was serving
as a director, officer, employee or agent of the Corporation or as a director, officer, employee or agent of a corporation of which the
Corporation is or was a shareholder and his or her heirs or personal representatives against a liability incurred by him as a director,
officer, employee or agent. We have obtained a policy of directors’ and officers’ liability insurance.
We believe that these bylaw provisions are necessary
to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions
in our Articles of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their
fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action,
if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to
the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons controlling us, we have been informed that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
At present, there is no pending litigation or proceeding
involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened
litigation or proceeding that may result in a claim for indemnification.
Description of Common Stock Purchase Warrants Issued
on May 18, 2021
The material provisions of the Warrants that we issued
on May 18, 2021 (the “May 2021 Warrants”) are set forth below and a copy of the Warrant Agency Agreement, dated as of May
18, 2021 (the “Warrant Agency Agreement”), by and between us and VStock Transfer, LLC, as warrant agent (the “Warrant
Agent”), governing the May 2021 Warrants has been filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May
18, 2021. The Company and the Warrant Agent may amend or supplement the Warrant Agency Agreement without the consent of any holder for
the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained therein or adding or changing
any other provisions with respect to matters or questions arising under the Warrant Agency Agreement as the parties thereto may deem necessary
or desirable and that the parties determine, in good faith, shall not adversely affect the interest of the holders. All other amendments
and supplements shall require the vote or written consent of holders of at least 50.1%. The exercise price and number of shares of common
stock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary
dividend on or recapitalization, reorganization, merger or consolidation.
Outstanding May 2021 Warrants. As of July 9,
2024, there were 1,464,610 May 2021 Warrants outstanding to purchase 1,464,610 shares of our common stock.
Exercisability
The May 2021 Warrants are exercisable at any time
after their original issuance and at any time up to the date that is five (5) years after their original issuance. The May 2021 Warrants
may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the Warrant Agent, with
the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the
exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. Under the terms of the
Warrant Agency Agreement, if at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of, the common stock issuable upon exercise of the warrants, the holders of the May
2021 Warrants shall have the right to exercise the warrants solely via a cashless exercise feature provided for in the warrants, until
such time as there is an effective registration statement and current prospectus. Notwithstanding the foregoing, on the expiration date
of the May 2021 Warrants, the warrants shall be automatically exercised via cashless exercise pursuant to the terms of the May 2021 Warrants.
Exercise Limitation
A holder may not exercise any portion of a May 2021
Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than
4.99% (or, upon election by a warrant holder prior to the issuance of such warrants, 9.99%) of the outstanding common stock immediately
after such exercise, as such percentage ownership is determined in accordance with the terms of the warrant, except that upon at least
61 days’ prior notice from the holder to us, the holder may waive such limitation up to a percentage not in excess of 9.99%.
Exercise Price
The exercise price per whole share of common stock
purchasable upon exercise of the May 2021 Warrants is $7.425 per share. The exercise price is subject to appropriate adjustment in the
event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our
common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Fractional Shares
No fractional shares of our common stock will be issued
upon exercise of the May 2021 Warrants. If, upon exercise of the May 2021 Warrants, a holder would be entitled to receive a fractional
interest in a share, we will, upon exercise, and our election, either pay a cash adjustment in respect of such fraction in an amount equal
to such fraction multiplied by the exercise price or round up to the next whole share. If multiple warrants are exercised by the holder
at the same time, we shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
exercise price.
Transferability
Subject to applicable laws, the May 2021 Warrants,
at the option of the holder upon surrender of the May 2021 Warrants to us or our designated agent, together with the appropriate instruments
of transfer may be offered for sale, sold, transferred or assigned without our consent.
Amendment and Waiver
Subject to any non-conflicting terms of the Warrant
Agency Agreement and the exercise adjustment provisions of the May 2021 Warrants, the May 2021 Warrants may be modified or amended or
the provisions thereof waived (i) with respect to an amendment or modification, upon obtaining the written consent of us and the holders
of at least 50.1% of the shares common stock issuable upon the exercise of the then-outstanding May 2021 Warrants issued pursuant to the
Warrant Agency Agreement and (ii) in the case of a waiver, by the party against whom enforcement of any such waived provision is sought;
provided, that, in each case, if any amendment, modification or waiver disproportionately, materially and adversely impacts a warrant
holder (or group of holders), the written consent of such disproportionately impacted holder (or group of holders) shall also be required,
and provided further that such modification, amendment or waiver applies to all of the then-outstanding May 2021 Warrants.
Exchange Listing
The May 2021 Warrants are listed on Nasdaq Capital
Market under the symbol “DTSTW.”
Fundamental Transactions
In the event of a fundamental transaction, as described
in the May 2021 Warrants and generally including any reorganization, recapitalization or reclassification of our common stock, the sale,
transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another
person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50%
of the voting power represented by our outstanding common stock, the holders of the May 2021 Warrants will be entitled to receive the
kind and amount of securities, cash or other property that the holders would have received had they exercised the May 2021 Warrants immediately
prior to such fundamental transaction.
Rights as a Stockholder
The holders of the May 2021 Warrants do not have the
rights or privileges of holders of our common stock or any voting rights until they exercise their May 2021 Warrants and receive shares
of our common stock. After the issuance of shares of our common stock upon exercise of the May 2021 Warrants, each holder will be entitled
to one vote for each share held of record on all matters to be voted on by stockholders.
Governing Law
The May 2021 Warrants and the Warrant Agency Agreement
are governed by New York law.
Listing of the Common Stock and May 2021 Warrants
on the Nasdaq Capital Market
Our common stock is listed on the Nasdaq Capital Market
under the symbol “DTST.” The May 2021 Warrants are listed on the Nasdaq Capital Market under the symbol “DTSTW.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock
and Warrant Agent for the May 2021 Warrants is VStock Transfer, LLC with an address at 18 Lafayette Place, Woodmere, New York 11598, telephone:
(212) 828-843.
Stock Options
As of July 9, 2024, we had options outstanding to
purchase an aggregate of 935,721 shares of common stock that were issued under our equity compensation plans. As of July 9, 2024, there
were 961,782 shares of common stock reserved for future issuance under our equity incentive plans.
DESCRIPTION OF DEBT SECURITIES
We may issue debt securities from time to time, in
one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we have summarized
below will apply generally to any debt securities that we may offer under this prospectus, we will describe the particular terms of any
debt securities that we may offer in more detail in the applicable prospectus supplement. The terms of any debt securities offered under
a prospectus supplement may differ from the terms described below. Unless the context requires otherwise, whenever we refer to the indenture,
we also are referring to any supplemental indentures that specify the terms of a particular series of debt securities.
We will issue the debt securities under the indenture
that we will enter into with the trustee named in the indenture. The indenture will be qualified under the Trust Indenture Act of 1939,
as amended (the “Trust Indenture Act”). We have filed the form of indenture as an exhibit to the registration statement of
which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of the debt securities
being offered will be filed as exhibits to the registration statement of which this prospectus is a part or will be incorporated by reference
from reports that we file with the SEC.
The following summary of material provisions of the
debt securities and the indenture is subject to, and qualified in its entirety by reference to, all of the provisions of the indenture
applicable to a particular series of debt securities. We urge you to read the applicable prospectus supplement and any related free writing
prospectus related to the debt securities that we may offer under this prospectus, as well as the complete indenture that contains the
terms of the debt securities.
General
The indenture will not limit the amount of debt securities
that we may issue. It provides that we may issue debt securities up to the principal amount that we may authorize and may be in any currency
or currency unit that we may designate. Except for the limitations on consolidation, merger and sale of all or substantially all of our
assets contained in the indenture, the terms of the indenture do not contain any covenants or other provisions designed to give holders
of any debt securities protection against changes in our operations, financial condition or transactions involving us.
We may issue the debt securities issued under the
indenture as “discount securities,” which means they may be sold at a discount below their stated principal amount. These
debt securities, as well as other debt securities that are not issued at a discount, may be issued with “original issue discount,”
or OID, for U.S. federal income tax purposes because of interest payment and other characteristics or terms of the debt securities. Material
U.S. federal income tax considerations applicable to debt securities issued with OID will be described in more detail in any applicable
prospectus supplement.
We will describe in the applicable prospectus supplement
the terms of the series of debt securities being offered, including:
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the title of the series of debt securities; |
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any limit upon the aggregate principal amount that may be issued; |
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the maturity date or dates; |
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the form of the debt securities of the series; |
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the applicability of any guarantees; |
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whether or not the debt securities will be secured or unsecured, and the terms of any secured debt; |
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whether the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms of any subordination; |
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if the price (expressed as a percentage of the aggregate principal amount thereof) at which such debt securities will be issued is a price other than the principal amount thereof, the portion of the principal amount thereof payable upon declaration of acceleration of the maturity thereof, or if applicable, the portion of the principal amount of such debt securities that is convertible into another security or the method by which any such portion shall be determined; |
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the interest rate or rates, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates; |
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our right, if any, to defer payment of interest and the maximum length of any such deferral period; |
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if applicable, the date or dates after which, or the period or periods during which, and the price or prices at which, we may, at our option, redeem the series of debt securities pursuant to any optional or provisional redemption provisions and the terms of those redemption provisions; |
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the date or dates, if any, on which, and the price or prices at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities and the currency or currency unit in which the debt securities are payable; |
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the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof; |
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any and all terms, if applicable, relating to any auction or remarketing of the debt securities of that series and any security for our obligations with respect to such debt securities and any other terms which may be advisable in connection with the marketing of debt securities of that series; |
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whether the debt securities of the series shall be issued in whole or in part in the form of a global security or securities; the terms and conditions, if any, upon which such global security or securities may be exchanged in whole or in part for other individual securities; and the depositary for such global security or securities; |
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if applicable, the provisions relating to conversion or exchange of any debt securities of the series and the terms and conditions upon which such debt securities will be so convertible or exchangeable, including the conversion or exchange price, as applicable, or how it will be calculated and may be adjusted, any mandatory or optional (at our option or the holders’ option) conversion or exchange features, the applicable conversion or exchange period and the manner of settlement for any conversion or exchange; |
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if other than the full principal amount thereof, the portion of the principal amount of debt securities of the series which shall be payable upon declaration of acceleration of the maturity thereof; |
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additions to or changes in the covenants applicable to the particular debt securities being issued, including, among others, the consolidation, merger or sale covenant; |
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additions to or changes in the events of default with respect to the securities and any change in the right of the trustee or the holders to declare the principal, premium, if any, and interest, if any, with respect to such securities to be due and payable; |
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additions to or changes in or deletions of the provisions relating to covenant defeasance and legal defeasance; |
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additions to or changes in the provisions relating to satisfaction and discharge of the indenture; |
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additions to or changes in the provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture; |
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the currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars; |
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whether interest will be payable in cash or additional debt securities at our or the holders’ option and the terms and conditions upon which the election may be made; |
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the terms and conditions, if any, upon which we will pay amounts in addition to the stated interest, premium, if any and principal amounts of the debt securities of the series to any holder that is not a “United States person” for federal tax purposes; |
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any restrictions on transfer, sale or assignment of the debt securities of the series; and |
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any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, any other additions or changes in the provisions of the indenture, and any terms that may be required by us or advisable under applicable laws or regulations. |
Conversion or Exchange Rights
We will set forth in the applicable prospectus supplement
the terms on which a series of debt securities may be convertible into or exchangeable for our common stock or our other securities. We
will include provisions as to settlement upon conversion or exchange and whether conversion or exchange is mandatory, at the option of
the holder or at our option. We may include provisions pursuant to which the number of shares of our common stock or our other securities
that the holders of the series of debt securities receive would be subject to adjustment.
Consolidation, Merger or Sale
Unless we provide otherwise in the prospectus supplement
applicable to a particular series of debt securities, the indenture will not contain any covenant that restricts our ability to merge
or consolidate, or sell, convey, transfer or otherwise dispose of our assets as an entirety or substantially as an entirety. However,
any successor to or acquirer of such assets (other than a subsidiary of ours) must assume all of our obligations under the indenture or
the debt securities, as appropriate.
Events of Default under the Indenture
Unless we provide otherwise in the prospectus supplement
applicable to a particular series of debt securities, the following are events of default under the indenture with respect to any series
of debt securities that we may issue:
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if we fail to pay any installment of interest on any series of debt securities, as and when the same shall become due and payable, and such default continues for a period of 90 days; provided, however, that a valid extension of an interest payment period by us in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of interest for this purpose; |
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if we fail to pay the principal of, or premium, if any, on any series of debt securities as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise, or in any payment required by any sinking or analogous fund established with respect to such series; provided, however, that a valid extension of the maturity of such debt securities in accordance with the terms of any indenture supplemental thereto shall not constitute a default in the payment of principal or premium, if any; |
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if we fail to observe or perform any other covenant or agreement contained in the debt securities or the indenture, other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive written notice of such failure, requiring the same to be remedied and stating that such is a notice of default thereunder, from the trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and |
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if specified events of bankruptcy, insolvency or reorganization occur. |
If an event of default with respect to debt securities
of any series occurs and is continuing, other than an event of default specified in the last bullet point above, the trustee or the holders
of at least 25% in aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing, and to the
trustee if notice is given by such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if any, due and
payable immediately. If an event of default specified in the last bullet point above occurs with respect to us, the principal amount of
and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice or other action
on the part of the trustee or any holder.
The holders of a majority in principal amount of the
outstanding debt securities of an affected series may waive any default or event of default with respect to the series and its consequences,
except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured the default or
event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indenture, if an event
of default under an indenture shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or
powers under such indenture at the request or direction of any of the holders of the applicable series of debt securities, unless such
holders have offered the trustee reasonable indemnity. The holders of a majority in principal amount of the outstanding debt securities
of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee,
or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
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the direction so given by the holder is not in conflict with any law or the applicable indenture; and |
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subject to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding. |
A holder of the debt securities of any series will
have the right to institute a proceeding under the indenture or to appoint a receiver or trustee, or to seek other remedies only if:
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the holder has given written notice to the trustee of a continuing event of default with respect to that series; |
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the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request, |
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such holders have offered to the trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred by the trustee in compliance with the request; and |
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the trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and offer. |
These limitations do not apply to a suit instituted
by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file statements with the trustee
regarding our compliance with specified covenants in the indenture.
Modification of Indenture; Waiver
We and the trustee may change an indenture without
the consent of any holders with respect to specific matters:
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to cure any ambiguity, defect or inconsistency in the indenture or in the debt securities of any series; |
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to comply with the provisions described above under “Description of Debt Securities—Consolidation, Merger or Sale;” |
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to provide for uncertificated debt securities in addition to or in place of certificated debt securities; |
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to add to our covenants, restrictions, conditions or provisions such new covenants, restrictions, conditions or provisions for the benefit of the holders of all or any series of debt securities, to make the occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default or to surrender any right or power conferred upon us in the indenture; |
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to add to, delete from or revise the conditions, limitations, and restrictions on the authorized amount, terms, or purposes of issue, authentication and delivery of debt securities, as set forth in the indenture; |
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to make any change that does not adversely affect the interests of any holder of debt securities of any series in any material respect; |
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to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided above under “Description of Debt Securities—General” to establish the form of any certifications required to be furnished pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of debt securities; |
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to evidence and provide for the acceptance of appointment under any indenture by a successor trustee; or |
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to comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act. |
In addition, under the indenture, the rights of holders
of a series of debt securities may be changed by us and the trustee with the written consent of the holders of at least a majority in
aggregate principal amount of the outstanding debt securities of each series that is affected. However, unless we provide otherwise in
the prospectus supplement applicable to a particular series of debt securities, we and the trustee may make the following changes only
with the consent of each holder of any outstanding debt securities affected:
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extending the fixed maturity of any debt securities of any series; |
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reducing the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon the redemption of any series of any debt securities; or |
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reducing the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification or waiver. |
Discharge
Each indenture provides that we can elect to be discharged
from our obligations with respect to one or more series of debt securities, except for specified obligations, including obligations to:
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provide for payment; |
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register the transfer or exchange of debt securities of the series; |
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replace stolen, lost or mutilated debt securities of the series; |
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pay principal of and premium and interest on any debt securities of the series; |
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maintain paying agencies; |
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hold monies for payment in trust; |
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recover excess money held by the trustee; |
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compensate and indemnify the trustee; and |
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appoint any successor trustee. |
In order to exercise our rights to be discharged,
we must deposit with the trustee money or government obligations sufficient to pay all the principal of, any premium, if any, and interest
on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt securities of each series only
in fully registered form without coupons and, unless we provide otherwise in the applicable prospectus supplement, in denominations of
$1,000 and any integral multiple thereof. The indenture provides that we may issue debt securities of a series in temporary or permanent
global form and as book-entry securities that will be deposited with, or on behalf of, The Depository Trust Company, or DTC, or another
depositary named by us and identified in the applicable prospectus supplement with respect to that series. To the extent the debt securities
of a series are issued in global form and as book-entry, a description of terms relating such securities will be set forth in the applicable
prospectus supplement. At the option of the holder, subject to the terms of the indenture and the limitations applicable to global securities
described in the applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for
other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the indenture and the limitations
applicable to global securities set forth in the applicable prospectus supplement, holders of the debt securities may present the debt
securities for exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed thereon duly executed if
so required by us or the security registrar, at the office of the security registrar or at the office of any transfer agent designated
by us for this purpose. Unless otherwise provided in the debt securities that the holder presents for transfer or exchange, we will impose
no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We will name in the applicable prospectus supplement
the security registrar, and any transfer agent in addition to the security registrar, that we initially designate for any debt securities.
We may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for the debt
securities of each series.
If we elect to redeem the debt securities of any series,
we will not be required to:
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issue, register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and ending at the close of business on the day of the mailing; or |
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register the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion of any debt securities we are redeeming in part. |
Information Concerning the Trustee
The trustee, other than during the occurrence and
continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically set forth in the applicable
indenture. Upon an event of default under an indenture, the trustee must use the same degree of care as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision, the trustee is under no obligation to exercise any of the
powers given it by the indenture at the request of any holder of debt securities unless it is offered reasonable security and indemnity
against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus
supplement, we will make payment of the interest on any debt securities on any interest payment date to the person in whose name the debt
securities, or one or more predecessor securities, are registered at the close of business on the regular record date for the interest.
We will pay principal of and any premium and interest
on the debt securities of a particular series at the office of the paying agents designated by us, except that unless we otherwise indicate
in the applicable prospectus supplement, we will make interest payments by check that we will mail to the holder or by wire transfer to
certain holders. Unless we otherwise indicate in the applicable prospectus supplement, we will designate the corporate trust office of
the trustee as our sole paying agent for payments with respect to debt securities of each series. We will name in the applicable prospectus
supplement any other paying agents that we initially designate for the debt securities of a particular series. We will maintain a paying
agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying agent or the trustee
for the payment of the principal of or any premium or interest on any debt securities that remains unclaimed at the end of two years after
such principal, premium or interest has become due and payable will be repaid to us, and the holder of the debt security thereafter may
look only to us for payment thereof.
Governing Law
The indenture and the debt securities will be governed
by and construed in accordance with the internal laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
DESCRIPTION OF WARRANTS
The following description, together with the additional
information we may include in any applicable prospectus supplement and in any related free writing prospectus, summarizes the material
terms and provisions of the warrants that we may offer under this prospectus, which may consist of warrants to purchase common stock,
preferred stock or debt securities and may be issued in one or more series. Warrants may be offered independently or in combination with
common stock, preferred stock or debt securities offered by any prospectus supplement. While the terms we have summarized below will apply
generally to any warrants that we may offer under this prospectus, we will describe the particular terms of any series of warrants in
more detail in the applicable prospectus supplement. The following description of warrants will apply to the warrants offered by this
prospectus unless we provide otherwise in the applicable prospectus supplement. The applicable prospectus supplement for a particular
series of warrants may specify different or additional terms.
We have filed or will file forms of the warrant agreements
and forms of warrant certificates containing the terms of the warrants that may be offered as exhibits to the registration statement of
which this prospectus is a part. We will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate
by reference from reports that we file with the SEC, the form of warrant and/or the warrant agreement and warrant certificate, as applicable,
that contain the terms of the particular series of warrants we are offering, and any supplemental agreements, before the issuance of such
warrants. The following summaries of material terms and provisions of the warrants are subject to, and qualified in their entirety by
reference to, all the provisions of the form of warrant and/or the warrant agreement and warrant certificate, as applicable, and any supplemental
agreements applicable to a particular series of warrants that we may offer under this prospectus. We urge you to read the applicable prospectus
supplement related to the particular series of warrants that we may offer under this prospectus, as well as any related free writing prospectus,
and the complete form of warrant and/or the warrant agreement and warrant certificate, as applicable, and any supplemental agreements,
that contain the terms of the warrants.
General
We will describe in the applicable prospectus supplement
the terms of the series of warrants being offered, including, to the extent applicable:
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the offering price and aggregate number of warrants offered; |
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the currency for which the warrants may be purchased; |
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the designation and terms of the securities with which the warrants are issued, and the number of warrants issued with each such security or each principal amount of such security; |
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the date on and after which the warrants and the related securities will be separately transferable; |
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in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise; |
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in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise; |
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the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants; |
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the terms of any rights to redeem or call the warrants; |
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any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants; |
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the dates on which the right to exercise the warrants will commence and expire; |
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the manner in which the warrant agreements and warrants may be modified; |
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a discussion of material United States federal income tax consequences of holding or exercising the warrants; |
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the terms of the securities issuable upon exercise of the warrants; and |
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any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
Before exercising their warrants, holders of warrants
will not have any of the rights of holders of the securities purchasable upon such exercise, including:
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in the case of warrants to purchase common stock or preferred stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to exercise voting rights, if any; or |
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in the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture. |
Exercise of Warrants
Each warrant will entitle the holder to purchase the
securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable prospectus
supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at
any time up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of
business on the expiration date, unexercised warrants will become void.
Unless we otherwise specify in the applicable prospectus
supplement, holders of the warrants may exercise the warrants by delivering the warrant or warrant certificate representing the warrants
to be exercised together with specified information, and paying the required amount to the warrant agent, if applicable, in immediately
available funds, as provided in the applicable prospectus supplement. We will set forth on the reverse side of any warrant certificate
and in the applicable prospectus supplement the information that the holder of the warrant will be required to deliver to any warrant
agent in connection with the exercise of the warrant.
Upon receipt of payment and the warrant or warrant
certificate, as applicable, properly completed and duly executed at the corporate trust office of the warrant agent, if any, or any other
office, including ours, indicated in the prospectus supplement, we will, as soon as practicable, issue and deliver the securities purchasable
upon such exercise. If fewer than all of the warrants (or the warrants represented by such warrant certificate) are exercised, a new warrant
or a new warrant certificate, as applicable, will be issued for the remaining warrants.
Governing Law
Unless we provide otherwise in the applicable prospectus
supplement, the warrants and warrant agreements, and any claim, controversy or dispute arising under or related to the warrants or warrant
agreements, will be governed by and construed in accordance with the laws of the State of New York.
Enforceability of Rights by Holders of Warrants
Each warrant agent, if any, will act solely as our
agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder of
any warrant. A single bank or trust company may act as warrant agent for more than one issue of warrants. A warrant agent will have no
duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty or responsibility
to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may, without the consent of the
related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right to exercise, and receive the securities
purchasable upon exercise of, its warrants.
DESCRIPTION OF UNITS
The following description, together with the additional
information we may include in any applicable prospectus supplement and related free writing prospectus, summarizes the material terms
and provisions of the units that we may offer under this prospectus. We may issue units consisting of any combination of the other types
of securities offered under this prospectus in one or more series. We will issue each unit so that the holder of the unit is also the
holder of each security included in the unit. As a result, the holder of a unit will have the rights and obligations of a holder of each
included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be held
or transferred separately, at any time or at any time before a specified date. We may evidence each series of units by unit certificates
that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent will be a bank or
trust company that we select. We will indicate the name and address of any unit agent in the applicable prospectus supplement relating
to a particular series of units. The summary below and that contained in any prospectus supplement is qualified in its entirety by reference
to all of the provisions of the unit agreement and/or unit certificate, and depositary arrangements, if applicable. We urge you to read
the applicable prospectus supplements and any related free writing prospectuses related to the units that we may offer under this prospectus,
as well as the complete unit agreement and/or unit certificate, and depositary arrangements, as applicable, that contain the terms of
the units.
We will file as exhibits to the registration statement
of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of unit agreement
and/or unit certificate, and depositary arrangements, as applicable, that contain the terms of the particular series of units we are offering,
and any supplemental agreements, before the issuance of such units.
We will describe in the applicable prospectus supplement
the terms of the series of units being offered, including:
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the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; |
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any provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units; |
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whether the units will be issued in fully registered or global form; and |
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any other terms of the units. |
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in the
form of one or more global securities. We describe global securities in greater detail below. We refer to those persons who have securities
registered in their own names on the books that we or any applicable trustee, depositary or warrant agent maintain for this purpose as
the “holders” of those securities. These persons are the legal holders of the securities. We refer to those persons who, indirectly
through others, own beneficial interests in securities that are not registered in their own names, as “indirect holders” of
those securities. As we discuss below, indirect holders are not legal holders, and investors in securities issued in book-entry form or
in street name will be indirect holders.
Book-Entry Holders
We may issue securities in book-entry form only, as
we will specify in the applicable prospectus supplement. This means securities may be represented by one or more global securities registered
in the name of a financial institution that holds them as depositary on behalf of other financial institutions that participate in the
depositary’s book-entry system. These participating institutions, which are referred to as participants, in turn, hold beneficial
interests in the securities on behalf of themselves or their customers.
Only the person in whose name a security is registered
is recognized as the holder of that security. Global securities will be registered in the name of the depositary or its participants.
Consequently, for global securities, we will recognize only the depositary as the holder of the securities, and we will make all payments
on the securities to the depositary. The depositary passes along the payments it receives to its participants, which in turn pass the
payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have
made with one another or with their customers; they are not obligated to do so under the terms of the securities.
As a result, investors in a global security will not
own securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution
that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the securities are
issued in global form, investors will be indirect holders, and not legal holders, of the securities.
Street Name Holders
We may terminate a global security or issue securities
that are not issued in global form. In these cases, investors may choose to hold their securities in their own names or in “street
name.” Securities held by an investor in street name would be registered in the name of a bank, broker or other financial institution
that the investor chooses, and the investor would hold only a beneficial interest in those securities through an account he or she maintains
at that institution.
For securities held in street name, we or any applicable
trustee or depositary will recognize only the intermediary banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities, and we or any such trustee or depositary will make all payments on those securities
to them. These institutions pass along the payments they receive to their customers who are the beneficial owners, but only because they
agree to do so in their customer agreements or because they are legally required to do so. Investors who hold securities in street name
will be indirect holders, not holders, of those securities.
Legal Holders
Our obligations, as well as the obligations of any
applicable trustee or third party employed by us or a trustee, run only to the legal holders of the securities. We do not have obligations
to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect holder of a security or has no choice because we are issuing the securities only in global
form.
For example, once we make a payment or give a notice
to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with its
participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, we may want to obtain the
approval of the holders to amend an indenture, to relieve us of the consequences of a default or of our obligation to comply with a particular
provision of an indenture, or for other purposes. In such an event, we would seek approval only from the legal holders, and not the indirect
holders, of the securities. Whether and how the legal holders contact the indirect holders is up to the legal holders.
Special Considerations for Indirect Holders
If you hold securities through a bank, broker or other
financial institution, either in book-entry form because the securities are represented by one or more global securities or in street
name, you should check with your own institution to find out:
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how it handles securities payments and notices; |
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whether it imposes fees or charges; |
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how it would handle a request for the holders’ consent, if ever required; |
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whether and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted in the future; |
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how it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to protect their interests; and |
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if the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global Securities
A global security is a security that represents one
or any other number of individual securities held by a depositary. Generally, all securities represented by the same global securities
will have the same terms.
Each security issued in book-entry form will be represented
by a global security that we issue to, deposit with and register in the name of a financial institution or its nominee that we select.
The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus
supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all securities issued in book-entry
form.
A global security may not be transferred to or registered
in the name of anyone other than the depositary, its nominee or a successor depositary, unless special termination situations arise. We
describe those situations below under “—Special Situations When a Global Security Will Be Terminated.” As a result of
these arrangements, the depositary, or its nominee, will be the sole registered owner and legal holder of all securities represented by
a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be
held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with
another institution that does. Thus, an investor whose security is represented by a global security will not be a legal holder of the
security, but only an indirect holder of a beneficial interest in the global security.
If the prospectus supplement for a particular security
indicates that the security will be issued in global form only, then the security will be represented by a global security at all times
unless and until the global security is terminated. If termination occurs, we may issue the securities through another book-entry clearing
system or decide that the securities may no longer be held through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investor’s rights
relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary,
as well as general laws relating to securities transfers. We do not recognize an indirect holder as a holder of securities and instead
deal only with the depositary that holds the global security.
If securities are issued only as global securities,
an investor should be aware of the following:
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an investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the securities, except in the special situations we describe below; |
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an investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of his or her legal rights relating to the securities, as we describe above; |
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an investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form; |
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an investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
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the depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in the global security; |
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we and any applicable trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in the global security, nor will we or any applicable trustee supervise the depositary in any way; |
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the depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security within its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and |
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financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in the global security, may also have their own policies affecting payments, notices and other matters relating to the securities. |
There may be more than one financial intermediary
in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries.
Special Situations When a Global Security Will
Be Terminated
In a few special situations described below, a global
security will terminate and interests in it will be exchanged for physical certificates representing those interests. After that exchange,
the choice of whether to hold securities directly or in street name will be up to the investor. Investors must consult their own banks
or brokers to find out how to have their interests in securities transferred to their own names, so that they will be direct holders.
We have described the rights of holders and street name investors above.
Unless we provide otherwise in the applicable prospectus
supplement, a global security will terminate when the following special situations occur:
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if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 90 days; |
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if we notify any applicable trustee that we wish to terminate that global security; or |
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if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived. |
The applicable prospectus supplement may also list
additional situations for terminating a global security that would apply only to the particular series of securities covered by the applicable
prospectus supplement. When a global security terminates, the depositary, and neither we nor any applicable trustee, is responsible for
deciding the names of the institutions that will be the initial direct holders.
PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant
to underwritten public offerings, direct sales to the public, an “at the market offering” within the meaning of Rule 415(a)(4) of
the Securities Act to or through a market maker or into an existing trading market on an exchange or otherwise, negotiated transactions,
block trades or a combination of these methods. We may sell the securities to or through one or more underwriters or dealers (acting as
principal or agent), through agents, or directly to one or more purchasers. We may distribute securities from time to time in one or more
transactions:
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at a fixed price or prices, which may be changed; |
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at market prices prevailing at the time of sale; |
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at prices related to such prevailing market prices; or |
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at negotiated prices. |
A prospectus supplement or supplements (and any related
free writing prospectus that we may authorize to be provided to you) will describe the terms of the offering of the securities, including,
to the extent applicable:
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the name or names of the underwriters, dealers, agents or other purchasers, if any; |
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the purchase price of the securities or other consideration therefor, and the proceeds we will receive from the sale; |
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any option to purchase additional shares or other options under which underwriters, dealers, agents or other purchasers may purchase additional securities from us; |
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any agency fees or underwriting discounts to be allowed or paid to the agent or underwriters and other items constituting agents’ or underwriters’ compensation; |
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any public offering price; |
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any discounts or concessions allowed or reallowed or paid to dealers; and |
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any securities exchange or market on which the securities may be listed. |
Only underwriters named in the prospectus supplement
will be underwriters of the securities offered by the prospectus supplement. Dealers and agents participating in the distribution of the
securities may be deemed to be underwriters, and compensation received by them on resale of the securities may be deemed to be underwriting
discounts. If such dealers or agents were deemed to be underwriters, they may be subject to statutory liabilities under the Securities
Act.
If underwriters are used in the sale, they will acquire
the securities for their own account and may resell the securities from time to time in one or more transactions at a fixed public offering
price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject
to the conditions set forth in the applicable underwriting agreement. We may offer the securities to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate. Subject to certain conditions, the underwriters will be obligated
to purchase all of the securities offered by the prospectus supplement other than securities covered by any option to purchase additional
shares or other option. If a dealer is used in the sale of securities, we, or an underwriter, will sell the securities to the dealer,
as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of
resale. To the extent required, we will set forth in the prospectus supplement the name of the dealer and the terms of the transaction.
Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may change from time to time. We may
use underwriters, dealers or agents with whom we have a material relationship. We will describe in the prospectus supplement, naming the
underwriter, dealer or agent, the nature of any such relationship.
We may sell securities directly or through agents
we designate from time to time. We will name any agent involved in the offering and sale of securities, and we will describe any commissions
we will pay the agent in the prospectus supplement. Unless the prospectus supplement states otherwise, the agent will act on a best-efforts
basis for the period of its appointment.
We may authorize agents or underwriters to solicit
offers by certain types of institutional investors to purchase securities from us at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. We will describe
the conditions to these contracts and the commissions we must pay for solicitation of these contracts in the prospectus supplement.
We may provide agents, dealers and underwriters with
indemnification against civil liabilities, including liabilities under the Securities Act, or contribution with respect to payments that
the agents, dealers or underwriters may make with respect to these liabilities. Agents, dealers and underwriters or their affiliates may
engage in transactions with, or perform services for, us in the ordinary course of business.
All securities we may offer, other than common stock,
will be new issues of securities with no established trading market. Any underwriters may make a market in these securities, but will
not be obligated to do so and may discontinue any market making at any time without notice. We cannot guarantee the liquidity of the trading
markets for any securities.
Any underwriter may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids. Overallotment involves sales in excess of the offering size, which create
a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum price. Syndicate covering or other short-covering transactions involve purchases of the securities, either through
exercise of the option to purchase additional shares or in the open market after the distribution is completed, to cover short positions.
Short covering transactions involve purchases of the securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the
dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of the securities
to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time. These transactions
may be effected on any exchange or over-the-counter market or otherwise.
Any underwriters, dealers or agents that are qualified
market makers on the Nasdaq Capital Market may engage in passive market making transactions in our common stock on the Nasdaq Capital
Market in accordance Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement
of offers or sales of the securities. Passive market makers must comply with applicable volume and price limitations and must be identified
as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent
bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s
bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities
at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
The specific terms of any lock-up provisions in respect of any given offering
will be described in the applicable prospectus supplement.
The anticipated date of delivery of offered securities
will be set forth in the applicable prospectus supplement relating to each offer.
LEGAL MATTERS
The validity
of the securities being offered by this prospectus with respect to matters of Nevada law is being passed upon by Parsons Behle &
Latimer, Reno, Nevada. The validity of the securities being offered by this prospectus with respect
to matters of New York law is being passed upon by Blank Rome LLP, New York, New York, which is acting as securities counsel
to Data Storage Corporation. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that
we will name in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of Data Storage
Corporation as of December 31, 2023 and 2022 and for each of the two years in the period ended December 31, 2023 incorporated
by reference in this prospectus and in the registration statement of which this prospectus forms a part have been so incorporated in reliance
on the report of Rosenberg Rich Baker Berman, P.A., an independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement
we filed with the SEC. This prospectus does not contain all of the information set forth in the registration statement and the exhibits
to the registration statement. For further information with respect to us and the securities we are offering under this prospectus, we
refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Neither we nor any
agent, underwriter or dealer has authorized any person to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as
of any date other than the date on the front page of this prospectus, regardless of the time of delivery of this prospectus or any
sale of the securities offered by this prospectus.
We file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov.
Our SEC filings are also available on our website, www.dtst.com under the heading “SEC Filings.” The reference to our
website is an inactive textual reference only, the information contained in, and that can be accessed through our website, is not incorporated
into and is not a part of this prospectus. We make available on our website our SEC filings as soon as reasonably practicable after those
reports are filed with the SEC.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
information from other documents that we file with it, which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to be part of this prospectus. Information in this prospectus
supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus.
We incorporate by reference into this prospectus and
the registration statement of which this prospectus is a part the information or documents listed below that we have filed with the SEC
(Commission File No. 001-35384):
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Our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 28, 2024; |
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Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024 filed with the SEC on May 15, 2024; |
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Our Current Reports on Form 8-K filed with the SEC on January 5, 2024, January 18, 2024, January 19, 2024, March 11, 2024, March 27, 2024, April 2, 2024, May 6, 2024 and June 24, 2024; |
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The description of our common stock and May 2021 Warrants set forth in (i) our registration statement on Form 8-A12B, filed with the SEC on May 10, 2021 (File No. 001-35384) and (ii) Exhibit 4.10—Description of Securities to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 28, 2024. |
We also incorporate by reference any future filings
(other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to
such items unless such Form 8-K expressly provides to the contrary) made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, including those made (i) on or after the date of the initial filing of the registration statement of which this
prospectus forms a part and prior to effectiveness of such registration statement, and (ii) on or after the date of this prospectus
but prior to the termination of the offering (i.e., until the earlier of the date on which all of the securities registered hereunder
have been sold or the registration statement of which this prospectus forms a part has been withdrawn). Information in such future filings
updates and supplements the information provided in this prospectus. Any statements in any such future filings will automatically be deemed
to modify and supersede any information in any document we previously filed with the SEC that is incorporated or deemed to be incorporated
herein by reference to the extent that statements in the later filed document modify or replace such earlier statements.
We will furnish without charge to each person, including
any beneficial owner, to whom a prospectus is delivered, upon written or oral request, a copy of any or all of the documents incorporated
by reference into this prospectus but not delivered with the prospectus, including exhibits that are specifically incorporated by reference
into such documents. You should direct any requests for documents to:
Data Storage Corporation
225 Broadhollow Road, Suite 307
Melville, New York 11747
Telephone: (212) 564-4922
Attention: Corporate Secretary
You may also access these documents, free of charge,
on the SEC’s website at www.sec.gov or on our website at www.dtst.com/sec-filings. The information contained in, or
that can be accessed through, our website is not incorporated by reference in, and is not part of, this prospectus or any accompanying
prospectus supplement.
In accordance with Rule 412 of the Securities
Act, any statement contained in a document incorporated by reference herein shall be deemed modified or superseded to the extent that
a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.
You should rely only on information contained in,
or incorporated by reference into, this prospectus and any prospectus supplement. We have not authorized anyone to provide you with information
different from that contained in this prospectus or incorporated by reference into this prospectus. We are not making offers to sell
the securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such an offer or solicitation.
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