Highlights Strategic Expansion into AI Continuity Infrastructure for
Conference Call to be Held Today at
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.
“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 10.9% year over year, while gross profit increased 32.1% with gross margin expanding to 53.7% from 45.0% in the prior year period. We believe these results reflect continued demand for our connectivity solutions, increased spending from existing customers, and the operational foundation necessary to support our broader strategic initiatives.”
“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
The conference call will be available via telephone by dialing toll-free 877-407-9219 for
A webcast replay of the call will be available on the Company’s website (www.dtst.com/news-events) through
About
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
Contact:
212-671-1020
DTST@crescendo-ir.com
| CONSOLIDATED BALANCE SHEETS | ||||||||
| 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 | ||||||
| (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 | ) | |||||
| 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 | ||||||||
| 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 | $ | — | ||||
