Data Storage Corp Leases Disclosure

Note 6-Leases

 

Operating Leases

 

The Company currently maintains two leases for office space located in Melville, NY and one lease for office space in Austin, TX.

 

The lease for office space in Melville, NY commenced on September 1, 2019. The term of this lease is for three years and eleven months and runs co-terminus with the Company’s existing lease in the same building. The base annual rent is $11,856 payable in equal monthly installments of $988. The lease has since expired.

 

On July 31, 2021, the Company signed a three-year lease for approximately 2,880 square feet of office space at 980 North Federal Highway, Boca Raton, FL. The commencement date of the lease was August 2, 2021. The monthly rent was approximately $4,965. The lease has since expired.

 

On January 1, 2022, the Company entered into a lease agreement for office space with WeWork in Austin, TX. On September 3, 2024, the Company amended this agreement and is on an eight-month lease agreement with payments of a $1,056 per month.

 

On January 17, 2024, the Company entered into a lease agreement for office space in Melville, NY. The lease commenced on April 1, 2024, and has a term of sixty-seven months. The lease requires monthly payments of $11,931 and expires on October 30, 2029.

 

Finance Lease Obligations

 

On November 1, 2021, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $3,152. The lease carried an interest rate of 6% and is a three-year lease. The term of the lease ended on November 1, 2024.

 

On January 1, 2022, the Company entered into a lease agreement with a finance company for technical equipment. The lease obligation is payable in monthly installments of $17,718. The lease carried an interest rate of 5% and is a three-year lease. The term of the lease ended January 1, 2025.

 

On January 1, 2022, the Company entered into a technical equipment lease with a finance company. The lease obligation is payable in monthly installments of $2,037. The lease carried an interest rate of 6% and is a three-year lease. The term of the lease ended January 1, 2025.

 

Finance Lease Obligations – Related Party

 

On March 4, 2021, the Company entered into a lease agreement with Systems Trading, Inc. (“Systems Trading”), a technology leasing company established by Mr. Schwartz, the Company’s President where he currently serves as Chief Executive Officer and President, effective April 1, 2021. This lease obligation is payable to Systems Trading with monthly installments of $1,567 and expired on March 31, 2024. The lease carried an interest rate of 8%.

 

On January 1, 2022, the Company entered into a lease agreement with Systems Trading effective January 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $7,145 and expires on April 1, 2025. The lease carries an interest rate of 8%.

 

On April 1, 2022, the Company entered into a lease agreement with Systems Trading effective May 1, 2022. This lease obligation is payable to Systems Trading with monthly installments of $6,667 and expired on February 1, 2025. The lease carried an interest rate of 8%.

 

The Company determines whether an arrangement contains a lease at the inception of the contract. Right-of-Use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date, based on the present value of estimated lease payments over the lease term. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise those options. The Company has elected the practical expedient to exclude leases with terms of 12 months or less from the balance sheet. Lease expense for these short-term leases is recognized on a straight-line basis over the lease term. Variable lease payments that depend on an index or rate are initially measured using the index or rate in effect at the lease commencement date. Other variable payments are recognized in the period in which the obligation is incurred. A discount rate of 9% was used in the preparation of ROU assets and lease liabilities.

 

The components of lease expense were as follows:

 

Schedule of components of lease expense
		Year Ended December 31, 2024
Finance leases:
Amortization of assets, included in depreciation and amortization expense		$	418,700
Interest on lease liabilities, included in interest expense			23,549
Operating lease:
Amortization of assets, included in total operating expense			91,425
Interest on lease liabilities, included in total operating expense			773
Total net lease cost		$	534,447
Supplemental balance sheet information related to leases was as follows:
Operating Leases:
Operating lease right-of-use asset		$	575,380
Current operating lease liabilities		$	98,860
Noncurrent operating lease liabilities			523,070
Total operating lease liabilities		$	621,930

 

		December 31, 2024
Finance leases:
Property and equipment, at cost		$	5,521,716
Accumulated amortization			(5,008,846	)
Property and equipment, net		$	512,870
Current obligations of finance leases		$	51,520
Finance leases, net of current obligations			—
Total finance lease liabilities		$	51,520

 

Supplemental cash flow and other information related to leases were as follows:

 

Schedule of supplemental cash flow and other information related to leases
		Year Ended December 31, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases		$	90,010
Financing cash flows related to finance leases		$	485,962
Weighted average remaining lease term (in years):
Operating leases			4.83
Finance leases			0.11
Weighted average discount rate:
Operating leases			9	%
Finance leases			7	%

 

Long-term obligations under the operating and finance leases at December 31, 2024, mature as follows:

 

Schedule of long term obligations operating and finance leases
For the Twelve Months Ended December 31,			Operating Leases				Finance Leases
2025			$	146,931			$	52,009
2026				152,074				—
2027				157,396				—
2028				162,905				—
2029				140,266				—
Total lease payments				759,572				52,009
Less: Amounts representing interest				(137,642	)			(489	)
Total lease obligations				621,930				51,520
Less: long-term obligations				(523,070	)			—
Total current			$	98,860			$	51,520

 

As of December 31, 2024, the Company had no additional significant operating or finance leases that had not yet commenced. Rent expense under all operating leases for the year ended December 31, 2024 and 2023 was $330,500 and $276,676, respectively.