Establishing Wholly Owned Subsidiary Developing AI Continuity Control Plane Designed to Support Recovery, Validation and Compliance for Sovereign AI and AI Factory Environments

Targeting High-Margin, Recurring Revenue Opportunity Across Healthcare, Financial Services and Insurance, Supported by Debt-Free Balance Sheet and Stable Nexxis Operating Base

NEW YORK, May 12, 2026 (GLOBE NEWSWIRE) -- Data Storage Corporation (Nasdaq: DTST) (“DTST” and the “Company”), today provided a letter to shareholders from its Chairman and Chief Executive Officer, Chuck Piluso, unveiling the Company’s strategy targeting AI continuity infrastructure through the establishment of a new wholly owned subsidiary, Sovereign AI Solutions (“SaiS”). SaiS is being developed as 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.

“To Our Shareholders:

The past year was one of deliberate transformation. In fiscal year 2025, we completed the $40 million sale of our cloud solutions business —a transaction that validated the value we built over two decades and gave us the financial foundation to pursue something far larger. Thereafter, using a portion of the proceeds from such sale, we completed a tender offer of our common stock resulting in our payment of $29.3 million upon our repurchase of outstanding shares of common stock from our shareholders that reduced the number of our shares outstanding by approximately 72%, to roughly 2.17 million shares. Today, Data Storage Corporation carries no long-term debt, holds substantial working capital, and is focused on capitalizing on a critical market gap.

This decision was not reactive—it was strategic. The CloudFirst sale funded our pivot, and the intervening months were spent in evaluation: adding strategic advisors to our team and assessing market structure, regulatory trajectory, competitive dynamics, and technology feasibility. Industries are rapidly moving beyond AI for analytics and document creation and toward using it to run critical business processes. We’ve seen this evolution before with CPUs, where business continuity became essential, driving the need for geo-diverse data centers and regulatory requirements not just for security, but for full recovery in the same state. Our findings reinforce the same pattern emerging today: AI is being embedded in mission-critical workflows across healthcare, financial services, and insurance.

The gap we identified is specific and structural. We believe no purpose-built platform currently exists to provide these regulated industries with the ability to recover, validate, and ensure that they remain in regulatory compliance if the AI systems on which they rely were to fail. The targets are sovereign AI and AI Factory installations—purpose-built, on-premises or private-cloud AI infrastructure that regulated industries are deploying to run proprietary models on sensitive data. When those systems experience failures, drift, or model degradation, the enterprise has no standardized playbook for recovery. That gap represents both a compliance liability and an uninsured operational risk.

The significance of this infrastructure gap was further validated this month, as leading AI developers announced multi-billion dollar initiatives specifically designed to embed AI into enterprise-wide operations — confirming that large-scale AI deployment in mission-critical workflows is no longer a future event.

While this is a nascent, rapidly evolving market, we believe we have an opportunity to establish an early position in this emerging market. Importantly, we have an exemplary track record supporting critical enterprise IT infrastructure. We believe this rapidly emerging market could reach billions of dollars annually, based on our preliminary analysis of regulatory-driven enterprise AI infrastructure spend. Moreover, we are not aware of any similar purpose-built platform targeting compliance-driven AI recovery for regulated enterprises.

In response, we are establishing a wholly owned subsidiary of DTST focused on developing a proprietary platform and are at the first stage of a purpose-built AI Continuity Control Plane for regulated enterprises. The intention, and client requirement, will be to serve as the resilience, recovery, and compliance layer for their AI systems: detecting behavioral anomalies, executing validated recovery sequences, and producing the audit-ready documentation that regulators in healthcare, financial services, and insurance increasingly require. This proprietary framework is intended to define recovery objectives in behavioral terms—model outputs, inference consistency, and compliance posture—rather than restoring hardware or GPU availability. We believe this approach is materially differentiated, delivers significant ROI, reduces client CapEx, and offers a more defensible solution than anything currently available.

Although pre-revenue and still in the development stage, we are focused on advancing this new platform. Our go-to-market strategy will target regulated enterprises, with an economic model built around mission-critical, compliance-driven, high-margin, recurring revenue. We expect to provide further commercial updates throughout the year, as we work to advance the platform toward its first client engagements.

Our continuing operations include Nexxis Inc., our telecom, direct internet access, and SD-WAN business, which provides a stable revenue base. The overall DTST financial position is strong: no long-term debt, disciplined capital deployment, and a management team with a demonstrated track record of building and monetizing technology infrastructure businesses.

At the same time, we are approaching this opportunity with strategic flexibility. While our primary focus remains on advancing SaiS and establishing an early leadership position in AI continuity infrastructure supporting regulated industries, we will continue to evaluate complementary opportunities that may enhance shareholder value. This includes remaining attentive to potential partnerships, strategic investments, and M&A opportunities that could accelerate our capabilities, expand our market reach, or further strengthen our competitive position as this market evolves.

We appreciate your continued confidence and look forward to reporting on our progress.

Sincerely,

Charles M. Piluso

Chairman and Chief Executive Officer

Data Storage Corporation”

About Data Storage Corporation
Data Storage Corporation (Nasdaq: DTST), through its subsidiary today, Nexxis, provides Voice over Internet Protocol (“VoIP”), Internet access, and data transport services as part of DTST’s one-stop solution set. In the future, DTST plans to invest in and support businesses, including, but not limited to, GPU Infrastructure, AI-driven software applications, cybersecurity, and voice/data telecommunications. The Company’s mission is to build sustainable, recurring revenue streams while maintaining financial discipline and strategic focus. 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 being positioned for M&A, JV, and organic driven growth; pursuing accretive opportunities; the Company executing opportunities it is evaluating in billion-dollar markets, including but not limited to AI-enabled vertical SaaS and GPU infrastructure, cybersecurity and SOC-related solutions, and scalable technology services with recurring revenue models; the Company targeting high-growth and high-margin businesses where it can accelerate scale and enhance long-term shareholder value; Nexxis providing a stable and growing operating foundation for the Company; the Company rapidly advancing initiatives targeting emerging AI infrastructure opportunities within enterprise technology; aligning capital deployment with large, evolving market needs and evaluating multiple strategic pathways for execution; the Company expecting to provide near-term updates as these initiatives progress; deploying capital into high-quality businesses where the Company can drive scale, expand margins, and create long-term shareholder value; the highly attractive and actionable opportunities that the Company has identified having the potential to create significant value for the Company; the Company’s advancement of these initiatives; the Company providing meaningful updates in the near term as these initiatives continue to develop; the Company investing in and supporting businesses, including, but not limited to, GPU Infrastructure, AI-driven software applications, cybersecurity, and voice/data telecommunications; the Company’s building sustainable, recurring revenue streams while maintaining financial discipline and strategic focus, and 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 the Company executing opportunities it is evaluating in billion-dollar markets, including but not limited to AI-enabled vertical SaaS and GPU infrastructure, cybersecurity and SOC-related solutions, and scalable technology services with recurring revenue models; the Company accelerating scale and enhancing long-term shareholder value; Nexxis providing a stable and growing operating foundation for the Company; the highly attractive and actionable opportunities that the Company has identified having the potential to create significant value for the Company; the Company’s advancement of these initiatives; the Company building sustainable, recurring revenue streams while maintaining financial discipline and strategic focus. These risks should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s 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.

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