Data Storage Corporation

What they do

DTST sold its cloud solutions business (CloudFirst Technologies Corporation and CloudFirst Europe Ltd.) on September 11, 2025. It continues to operate Nexxis Inc., which provides fully managed business voice, internet, data transport, and SD-WAN communication solutions nationwide to healthcare, professional services, financial services, manufacturing, and distributed enterprise customers. Nexxis sells a unified service agreement combining voice communications with internet and WAN infrastructure, with 24/7 monitoring, multi-carrier redundancy, single invoicing, and 24/7 support.

Revenue drivers

• Nexxis voice and data solutions — The only remaining operating segment after the CloudFirst sale; sells managed VoIP, internet access, SD-WAN, and data transport under unified service agreements. Continuing operations revenue was $1,382,929 for the year ended December 31, 2025, up 13.4% from $1,219,247 in 2024.
• Existing customer expansion — Management attributes 2025 growth primarily to adding new customers and increased spending from existing customers in the Nexxis voice and data business.
• Acquisition-driven revenue (planned) — No acquisition has been completed; management states it is evaluating acquisitions of recurring-revenue technology businesses in AI infrastructure, cybersecurity, communications, and enterprise software.

Recent performance

Continuing operations revenue for the year ended December 31, 2025 was $1,382,929, up 13.4% from $1,219,247 in 2024, driven by Nexxis customer additions and higher spending from existing customers. Quarterly revenue from continuing operations was $416,956 (2025-09-30), $325,278 (2025-12-31), $346,707 (2026-03-31), and $358,530 (2026-06-30). The 8-K release dated August 14, 2026 reported second quarter 2026 Nexxis revenue from continuing operations up 9.3% year over year. Reported 2025 net income of $19.2M and diluted EPS of $2.64 reflect the gain on the CloudFirst sale, not continuing operations; 2025 operating cash flow was negative $3.2M. At June 30, 2026, total assets were $11.1M, total liabilities $1.0M, shareholder equity $10.3M, and cash and equivalents $270,691.

Strategy

After the CloudFirst sale, management has shifted to capital allocation: it completed a tender offer in which it purchased 5,625,129 shares at $5.20 per share on January 15, 2026, for an aggregate cost of $29,250,971, leaving 2,167,138 shares outstanding. The Board is evaluating uses of remaining proceeds, including targeted acquisitions in AI-enabled vertical SaaS, GPU IaaS, cybersecurity (such as SOC), or investments in other sectors. It is also open to a sale of the company, a reverse merger, or another business combination that would use its public listing, cash, 250 million authorized shares, and capital structure. Management says it is actively evaluating acquisitions of businesses with recurring revenue, predictable cash flows, and established customer relationships. The 8-K also describes planned establishment of Sovereign AI Solutions (SaiS) for AI continuity infrastructure for regulated industries.

Risks

• Dependence on a single small operating business — After the CloudFirst sale, revenue comes almost entirely from Nexxis, which generated only $1,382,929 in 2025 continuing-operations revenue.
• Uncertain acquisition execution — Management states no acquisition or merger agreement has been entered into and no transaction or new business initiative has been agreed or approved.
• Thin cash for acquisitions — Cash and equivalents were $270,691 at June 30, 2026, though management cites approximately $9.3 million in cash plus marketable securities in the August 2026 release.
• Possible need to raise capital — The 10-K states the company may need additional capital to fund acquisitions and that equity issuance could dilute stockholders.

Outlook

Management says it is actively evaluating acquisitions of recurring-revenue technology businesses in AI infrastructure, cybersecurity, communications, and enterprise software, and has not committed to any transaction. It describes Nexxis as a stable recurring-revenue foundation while it pursues deals that could expand scale and earnings. It cites approximately $9.3 million in cash and cash equivalents plus marketable securities, no long-term debt, and a streamlined corporate structure as positioning it to act on opportunities. The Board has not made a final determination on the use of sale proceeds beyond those used in the tender offer.