Data Storage Corporation Provides First Quarter 2026 Business Update
Rhea-AI Summary
Data Storage Corporation (Nasdaq: DTST) issued a Q1 2026 business update highlighting expansion into AI continuity infrastructure for regulated industries and the launch of wholly owned subsidiary Sovereign AI Solutions (SaiS).
Nexxis sales rose 10.9% year over year, gross profit grew 32.1%, and gross margin improved to 53.7% with no long-term debt and substantial working capital.
Positive
- Nexxis Q1 2026 sales increased by 10.9% year over year
- Nexxis Q1 2026 gross profit increased by 32.1% year over year
- Nexxis gross margin expanded to 53.7% from 45.0% year over year
- Company reports no long-term debt and substantial working capital
- Launch of wholly owned subsidiary Sovereign AI Solutions (SaiS) targeting regulated AI infrastructure
Negative
- None.
News Market Reaction – DTST
In the May 15 session, DTST declined 6.88%, reflecting a notable negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Historical Context
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 12 | AI strategy launch | Positive | +8.2% | Outlined new AI continuity strategy via Sovereign AI Solutions subsidiary. |
| May 05 | Earnings call notice | Neutral | +1.0% | Announced timing and access details for Q1 2026 business update call. |
| Apr 14 | FY 2025 results | Positive | -4.3% | Reported record net income, CloudFirst sale proceeds, and large tender offer. |
| Apr 09 | Call rescheduled | Neutral | +5.2% | Rescheduled fiscal 2025 business update conference call to a later date. |
| Mar 31 | Call postponed | Negative | -3.0% | Postponed 2025 results call due to complex transactions and audit timing. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Positive strategic/AI or capital return news has sometimes seen mixed price reactions, with strong earnings/tender headlines not always translating into gains.
Over the last few months, DTST has undergone a major transition. It completed a $40.0 million CloudFirst divestiture, returned $29.3 million via a tender offer at $5.20, and ended 2025 debt-free with over $10 million cash and record net income of $19.2 million. Recent news emphasized the new AI continuity strategy through Sovereign AI Solutions and stable Nexxis operations. Today’s Q1 2026 update continues that AI-focused, Nexxis-driven trajectory.
Key Terms
sovereign ai technical
ai factory technical
voip technical
sd-wan technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
Highlights Strategic Expansion into AI Continuity Infrastructure for Regulated Industries
Conference Call to be Held Today at 11:00 am ET
NEW YORK, May 15, 2026 (GLOBE NEWSWIRE) -- Data Storage Corporation (Nasdaq: DTST) (“DTST” and the “Company”), today provided a business update for the first quarter ended March 31, 2026, highlighting the Company’s strategic initiatives focused on emerging AI infrastructure opportunities and regulated enterprise continuity solutions.
Business Highlights:
- Launching Sovereign AI Solutions (SaiS): Establishing a wholly owned subsidiary, Sovereign AI Solutions (“SaiS”), focused on developing a purpose-built AI Continuity Control Plane for regulated industries designed to support recovery, validation, and compliance for sovereign AI and AI Factory environments across sectors such as healthcare, financial services, and insurance.
- Strong Financial Position: Maintained strong financial position with no long-term debt and substantial working capital.
- Stable Nexxis Operations: Continued stable recurring operations through Nexxis Inc.’s telecom, internet access, VoIP, and SD-WAN services.
- Evaluation of Strategic Opportunities: Continuing to evaluate strategic partnerships, investments, and acquisition opportunities that enhance shareholder value.
Chuck Piluso, Chief Executive Officer of Data Storage Corporation, commented, “During the first quarter, we continued executing our strategic transformation following the sale of our cloud solutions business in 2025, with a focus on identifying large-scale infrastructure opportunities where we believe regulatory requirements and enterprise AI adoption are creating meaningful long-term demand. As organizations increasingly deploy sovereign AI and AI Factory environments across healthcare, financial services, and insurance sectors, we believe a significant infrastructure gap is emerging around AI recovery, resiliency, validation, and compliance for mission-critical systems.”
“To address this opportunity, we are establishing Sovereign AI Solutions, a wholly owned subsidiary focused on developing a purpose-built AI Continuity Control Plane designed for regulated industries. We believe this initiative positions DTST to participate in a large and rapidly evolving market opportunity while leveraging our experience supporting critical enterprise infrastructure environments.”
“At the same time, Nexxis continues to provide a stable recurring revenue base through its telecom, VoIP, direct internet access, SD-WAN, and data transport services. During the first quarter of 2026, sales from Nexxis increased
“Importantly, we are pursuing this strategy from a position of financial strength. With no long-term debt, substantial working capital, disciplined capital deployment, and stable recurring operations, we believe we are well positioned to advance our strategic initiatives while maintaining operational flexibility.”
“Looking ahead, we expect to continue advancing development initiatives associated with SaiS throughout 2026 and anticipate providing additional commercial and operational updates as the platform progresses toward potential customer engagements. We also continue evaluating complementary opportunities, including strategic partnerships, investments, and acquisitions, that we believe may strengthen our long-term positioning while enhancing shareholder value.”
Conference Call
Management will host a business update call today at 11:00 a.m. Eastern Time, to discuss the Company's financial results for the first quarter of 2026 which ended March 31, 2026, as well as corporate progress and other developments.
The conference call will be available via telephone by dialing toll-free 877-407-9219 for U.S. callers or for international callers +1-412-652-1274. A webcast of the call may be accessed at DTST Business Update Call or on the Company’s News & Events section of the website, www.dtst.com/news-events.
A webcast replay of the call will be available on the Company’s website (www.dtst.com/news-events) through November 15, 2026. A telephone replay of the call will be available approximately three hours following the call, through May 22, 2026, and can be accessed by dialing 877-660-6853 for U.S. callers or + 1-201-612-7415 for international callers and entering conference ID: 13760358.
About Data Storage Corporation
Data Storage Corporation (Nasdaq: DTST), through its subsidiary Nexxis Inc., provides VoIP, internet access, SD-WAN, and data transport services as part of its integrated technology solutions platform. The Company is also pursuing strategic initiatives focused on AI continuity infrastructure for regulated industries, including the planned establishment of Sovereign AI Solutions (“SaiS”), which is intended to support recovery, resiliency, and compliance for sovereign AI and AI Factory environments.
DTST continues to evaluate strategic opportunities, including potential investments, partnerships, acquisitions, and other transactions focused on AI infrastructure, cybersecurity, telecommunications, and emerging enterprise technology markets. For more information, visit www.dtst.com.
Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. These forward-looking statements are based on management’s expectations and assumptions as of the date of this press release and include statements regarding establishing SaiS to develop a purpose-built AI Continuity Control Plane for regulated industries to support recovery, validation, and compliance for sovereign AI and AI Factory environments across sectors such as healthcare, financial services, and insurance; continuing to evaluate strategic partnerships, investments, and acquisition opportunities that enhance shareholder value; identifying large-scale infrastructure opportunities where regulatory requirements and enterprise AI adoption will create meaningful long-term demand; a significant infrastructure gap emerging around AI recovery, resiliency, validation, and compliance for mission-critical systems; the SaiS initiative positioning the Company to participate in a large and rapidly evolving market opportunity while leveraging its experience supporting critical enterprise infrastructure environments; Nexxis continuing to provide a stable recurring revenue base through its telecom, VoIP, direct internet access, SD-WAN, and data transport services; first quarter results reflecting continuing demand for the Company’s connectivity solutions and the operational foundation necessary to support its broader strategic initiatives; being positioned to advance the Company’s strategic initiatives while maintaining operational flexibility; continuing advancing development initiatives associated with SaiS throughout 2026; providing additional commercial and operational updates as the platform progresses toward potential customer engagements; continuing to evaluate complementary opportunities, including strategic partnerships, investments, and acquisitions, to strengthen the Company’s long-term positioning while enhancing shareholder value. While DTST believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to it on the date of this release. These forward-looking statements are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the Company’s ability to identify strategic partnerships, investments, and acquisition opportunities that enhance shareholder value; the Company’s ability to identify large-scale infrastructure opportunities where regulatory requirements and enterprise AI adoption will create meaningful long-term demand; the Company’s ability to advance development initiatives associated with SaiS and participate in the AI evolving market opportunity; the Company’s ability to use the demand for its connectivity solutions as the operational foundation necessary to support its broader strategic initiatives; and the Company’s ability to advance its strategic initiatives while maintaining operational flexibility. These risks should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8- K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it was initially made. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or otherwise.
Contact:
Crescendo Communications, LLC
212-671-1020
DTST@crescendo-ir.com
| CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, 2026 (Unaudited) | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 114,622 | $ | 1,989,354 | ||||
| Accounts receivable, net of allowance for expected credit losses of | 29,538 | 34,605 | ||||||
| Escrow funds receivable | 1,500,000 | 1,500,000 | ||||||
| Marketable securities | 9,571,837 | 39,004,124 | ||||||
| Prepaid expenses and other current assets | 398,789 | 98,843 | ||||||
| Total current assets | 11,614,786 | 42,626,926 | ||||||
| Property and equipment, net | 16,715 | 16,866 | ||||||
| Other long-term assets | 121,945 | 378,682 | ||||||
| Total assets | $ | 11,753,446 | $ | 43,022,474 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 562,399 | $ | 842,473 | ||||
| Payable to purchaser of discontinued operations | — | 15,889 | ||||||
| Income taxes payable | 434,685 | 1,166,315 | ||||||
| Total current liabilities | 997,084 | 2,024,677 | ||||||
| Deferred tax liability - non-current | 86,445 | 312,334 | ||||||
| Total long-term liabilities | 86,445 | 312,334 | ||||||
| Total liabilities | 1,083,529 | 2,337,011 | ||||||
| Commitments and contingencies (Note 8) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value | — | — | ||||||
| Common stock, par value | 7,793 | 7,793 | ||||||
| Treasury stock, at cost; 5,625,129 and 0 shares as of March 31, 2026 and December 31, 2025, respectively | (29,821,464 | ) | — | |||||
| Additional paid-in capital | 41,117,566 | 40,706,616 | ||||||
| Retained earnings (accumulated deficit) | (409,161 | ) | 222,111 | |||||
| Accumulated other comprehensive loss | — | (14,235 | ) | |||||
| Total Data Storage Corporation stockholders’ equity | 10,894,734 | 40,922,285 | ||||||
| Non-controlling interest in consolidated subsidiary | (224,817 | ) | (236,822 | ) | ||||
| Total stockholders’ equity | 10,669,917 | 40,685,463 | ||||||
| Total liabilities and stockholders’ equity | $ | 11,753,446 | $ | 43,022,474 | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Sales | $ | 346,707 | $ | 312,744 | ||||
| Cost of sales | 160,688 | 171,967 | ||||||
| Gross profit | 186,019 | 140,777 | ||||||
| Selling, general and administrative | 1,472,113 | 856,915 | ||||||
| Loss from operations | (1,286,094 | ) | (716,138 | ) | ||||
| Interest income | 118,385 | 120,906 | ||||||
| Other income | 119,215 | — | ||||||
| Loss from continuing operations before income taxes | (1,048,494 | ) | (595,232 | ) | ||||
| (Benefit) provision for income taxes | (280,236 | ) | — | |||||
| Loss from continuing operations, net of tax | (768,258 | ) | (595,232 | ) | ||||
| Income from discontinued operations, net of tax | — | 621,620 | ||||||
| Gain on sale of discontinued operations, net of tax | 148,991 | — | ||||||
| Income from discontinued operations, net of tax | 148,991 | 621,620 | ||||||
| Net (loss) income | (619,267 | ) | 26,388 | |||||
| Less: net income attributable to non-controlling interest of consolidated subsidiary | 12,005 | 2,310 | ||||||
| Net (loss) income attributable to common stockholders | $ | (631,272 | ) | $ | 24,078 | |||
| Loss per share from continuing operations – basic | $ | (0.25 | ) | $ | (0.08 | ) | ||
| Loss per share from continuing operations – diluted | $ | (0.25 | ) | $ | (0.08 | ) | ||
| (Loss) earnings per share from discontinued operations – basic | $ | (0.05 | ) | $ | 0.09 | |||
| (Loss) earnings per share from discontinued operations – diluted | $ | (0.05 | ) | $ | 0.09 | |||
| (Loss) earnings per share attributable to common stockholders – basic | $ | (0.20 | ) | $ | 0.00 | |||
| (Loss) earnings per share attributable to common stockholders – diluted | $ | (0.20 | ) | $ | 0.00 | |||
| Weighted average number of shares – basic | 3,104,660 | 7,077,913 | ||||||
| Weighted average number of shares – diluted | 3,104,660 | 7,077,913 | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Loss from continuing operations, net of tax | $ | (768,258 | ) | $ | (595,232 | ) | ||
| Net income from discontinued operations, net of tax | 148,991 | 621,620 | ||||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 554 | 530 | ||||||
| Stock based compensation | 561,408 | 136,600 | ||||||
| Change in fair value of warrant liability | (150,458 | ) | — | |||||
| Change in fair value of investment | 31,243 | — | ||||||
| Deferred taxes | (225,889 | ) | — | |||||
| Provision for credit losses | — | 6,655 | ||||||
| Changes in Assets and Liabilities: | ||||||||
| Accounts receivable | 5,067 | (61,856 | ) | |||||
| Prepaid expenses and other assets | (74,855 | ) | (56,817 | ) | ||||
| Accounts payable and accrued expenses | (281,728 | ) | (189,028 | ) | ||||
| Income taxes payable | (1,024,137 | ) | — | |||||
| Changes in assets and liabilities of discontinued operations | — | (962,279 | ) | |||||
| Net cash used in operating activities | (1,778,062 | ) | (1,099,807 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | — | (1,156 | ) | |||||
| Purchase of marketable securities | (128,113 | ) | (120,906 | ) | ||||
| Sale of marketable securities | 29,560,400 | 975,000 | ||||||
| Cash used in investing activities of discontinued operations | — | (66,363 | ) | |||||
| Net cash provided by investing activities | 29,432,287 | 786,575 | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Share repurchases in connection with Tender Offer | (29,528,957 | ) | — | |||||
| Cash used in financing activities of discontinued operations | — | (51,520 | ) | |||||
| Net cash used in financing activities | (29,528,957 | ) | (51,520 | ) | ||||
| Effect of exchange rates on cash | — | 212 | ||||||
| Decrease in cash and cash equivalents | (1,874,732 | ) | (364,540 | ) | ||||
| Cash and cash equivalents, beginning of period | 3,489,354 | 1,070,097 | ||||||
| Cash and cash equivalents, end of period | $ | 1,614,622 | $ | 705,557 | ||||
| Reconciliation to consolidated balance sheets: | ||||||||
| Cash and cash equivalents | $ | 114,622 | $ | 705,557 | ||||
| Escrow funds receivable | 1,500,000 | — | ||||||
| Cash, cash equivalents, and restricted cash | $ | 1,614,622 | $ | 705,557 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid for interest | $ | — | $ | 489 | ||||
| Cash paid for income taxes | $ | 1,024,137 | $ | — | ||||
| Non-cash investing and financing activities: | ||||||||
| Reclassification of warrants from equity to liability | $ | 300,533 | $ | — | ||||
| Tender offer costs included in income taxes payable | $ | 292,507 | $ | — | ||||
| Receivable due from Buyer (Note 3) | $ | 225,937 | $ | — | ||||
