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Data Storage Corp (NASDAQ:DTST), a technology company with a current market capitalization of $33.19 million and annual revenue of $25.46 million, announced Friday that it has issued supplemental disclosures related to its proposed divestiture of its cloud solutions business, including the sale of its subsidiary CloudFirst Technologies Corporation and its interests in CloudFirst Europe Ltd. The announcement follows requests from certain shareholders for additional information regarding financial multiples and metrics used in the company’s previously filed proxy statement for the planned asset sale. According to InvestingPro analysis, the company maintains a strong financial health score of 2.51, rated as "GOOD," with notably robust liquidity metrics.
The company stated that it received letters from shareholders on August 14, August 18, and August 27 seeking further details on the financial analyses supporting the transaction, specifically those prepared by Cassel Salpeter & Co., LLC, the financial advisor to Data Storage Corp’s board. These shareholders, through their counsel, alleged that the proxy statement omitted material information about the divestiture proposal and requested supplemental disclosures.
According to the SEC filing, Data Storage Corp maintains that the claims are without merit and that the original disclosures were sufficient. The company indicated that the decision to provide additional information was made to avoid the cost and distraction of potential litigation that could delay or affect shareholder approval of the divestiture. With a current ratio of 5.5x, InvestingPro analysis shows the company maintains strong liquidity to manage its operations and potential transaction-related expenses.
The supplemental disclosures include detailed tables of financial multiples for selected comparable companies and transactions reviewed by Cassel Salpeter & Co., LLC. For example, the analysis included enterprise value to normalized EBITDA multiples for companies such as Dell Technologies Inc., Hewlett Packard Enterprise Company, NetApp, Inc., and others, with LTM (last twelve months) multiples ranging from 2.5x to 11.7x and projected 2025 multiples from 2.9x to 12.6x. The financial advisor applied multiples of 6.0x to 7.0x to Data Storage Corp’s LTM normalized EBITDA and 5.5x to 6.5x to projected 2025 EBITDA, indicating an implied value range of $34.7 million to $40.8 million for the business, compared to the base purchase price of $40 million.
The company also provided details on selected transactions, with enterprise value to EBITDA multiples ranging from 3.9x to 48.1x, and noted that none of the selected companies or transactions are identical to the business being divested.
The information is based on a press release statement contained in the company’s SEC filing.
In other recent news, Data Storage Corp reported its second-quarter 2025 earnings, which showed a larger-than-anticipated loss and a revenue shortfall. The company announced an earnings per share of -$0.10, which fell short of the forecasted -$0.01. Revenue figures were also disappointing, with the company reporting $5.15 million, below the expected $6.2 million. These financial results have been a focal point for investors as they assess the company’s current performance. Analyst firms are closely monitoring these developments, although specific upgrades or downgrades were not mentioned. These recent financial disclosures highlight the company’s current challenges in meeting earnings and revenue expectations.
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