DTCX 10-K & 10-Q changes, risk factors and insider trading

We are an early-stage company with limited operating history.

We are an early-stage company currently and have a limited operating history. We have not maintained consistent profitability from period to period, and no assurances can be made that we will achieve consistent profitability in the near future, if ever. Accordingly, you should consider our business prospects in light of the costs, uncertainties, delays, and difficulties frequently encountered by companies in the early stages of development. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we may be unable to:

We have a short operating history in the cryptocurrency mining space, and our new business is subject to a number of significant risks and uncertainties which affect its future viability.

As of December 31, 2025, Doge had invested approximately $29 million towards the development of its new cryptocurrency mining business. Doge entered into agreements and arrangements for equipment and services but has only recently commenced cryptocurrency mining operations. Among the risks and uncertainties applicable to the Company and its operations are:

For all of these reasons, our cryptocurrency mining business may not be successful and you may lose all of your investment.

Failure of critical systems related to our offerings and/or infrastructure could have a material adverse effect on our business, financial condition, and results of operations.

The critical systems related to our offerings and infrastructure are subject to failure. Failure of any of our or our colocation hosts’ critical systems, including a breakdown in critical plant, equipment or services, routers, switches or other equipment, power supplies, or network connectivity, whether or not within our control, could result in service interruptions to us and/or damage to equipment, which could significantly disrupt business operations, harm our reputation, and reduce our revenue. The destruction or severe impairment of any of the facilities where our equipment is hosted could result in significant downtime.

Our or our colocation hosts’ infrastructure and offerings are subject to temporary or permanent interruption by factors that include but are not limited to:

The occurrence of any of these events may have a material adverse effect on our business, financial condition, and results of operations. Moreover, service interruptions and equipment failures may expose us to potential legal liability.

Our operations are concentrated across a limited number of third-party colocation facilities, and an outage, service degradation, or operational disruption at any one facility could materially reduce our hashrate and revenue. Because our mining equipment is deployed in third-party environments, our ability to prevent, detect, and remediate certain events may be constrained by the policies, procedures, staffing, maintenance practices, security posture, and incident-response timelines of our colocation hosts and their upstream providers. In addition, relocating or redeploying mining equipment at scale can be time-consuming and costly due to logistical constraints, limited near-term capacity in comparable facilities, permitting or interconnection lead times applicable to hosts, shipping delays, and the need to reconfigure infrastructure, all of which could extend downtime and increase costs. Any prolonged interruption, reduced availability, or inability to promptly transition to an alternative hosting solution could have a material adverse effect on our business, financial condition, and results of operations.

Our business may be heavily impacted by geopolitical, social, economic, and other events and circumstances in the United States, or elsewhere.

Our business may be heavily impacted by geopolitical, social, economic, and other events and circumstances in the United States, and elsewhere. These include natural disasters, health pandemics (like the COVID-19 pandemic), geopolitical tensions sanctions or other restrictive actions, interest rate fluctuations, inflationary issues and associated changes in monetary policy or potential economic recession, commodity prices, legislative and regulatory changes, foreign currency fluctuations, international tariffs, fluctuations in capital markets, and broad trends in industry and finance. For example, equipment necessary for our operations and our offerings is manufactured in large part outside of the United States. There is currently significant uncertainty about the future relationship between the United States and other countries, including Canada, Mexico, China, the European Union, and others, with respect to trade policies, treaties, tariffs, and taxes. These events and circumstances are largely outside of our influence and control and, while the impact of such events or circumstances is not presently known, any of them could adversely affect our business, financial condition, and results of operations.

We face significant competition and may not be able to compete effectively against our current and future competitors.

The industries in which we operate are highly competitive and continuously evolving. We expect competition to further intensify as existing and new competitors introduce new offerings or enhance existing offerings and as the industries that we operate in continue to grow. As we continue to expand in our existing markets and enter new markets, we compete against an increasing number of companies operating both within North America and abroad, that may be more established or have greater financial and other resources and/or expertise.

Driven by the proliferation of energy-intensive applications such as cryptocurrency mining and high-performance computing (“HPC”), demand for energy capacity continues to outpace supply. For example, HPC workloads require high-density infrastructure with capacity demands multiples greater than legacy data centers can provide, while cryptocurrency mining remains a competitive market that requires operational efficiency and low-cost energy at scale. At the same time, supply chain disruptions and regulatory constraints have extended lead times for critical infrastructure, including graphics processing units (“GPUs”), application-specific integrated circuits (“ASICs”), generators, and transformers. Grid interconnection bottlenecks have further constrained access to power and digital infrastructure development. In this evolving landscape, we compete directly with cloud services providers, digital infrastructure developers, and large-scale cryptocurrency miners. The nature of competition varies across the layers of our platform:

We are subject to risks associated with our need for significant electrical power.

Our operations require significant amounts of electrical power and our business, financial condition, and results of operations may be impacted by the unavailability of power and price fluctuations in the power market. Market prices for power, capacity, and other ancillary services applicable to our colocation hosts are unpredictable and tend to fluctuate substantially. Unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use. As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets. Power availability and prices may also be materially impacted by other factors outside of our control, including:

Such factors and the associated fluctuations in power availability and prices could affect wholesale power generation profitability and cost of power for our operations. We currently draw power from various power sources, which include the MISO grid, the ERCOT grid, and the Georgia Power grid. Power grids, including those we rely on, subject us to a variety of risks, including the breakdown or failure of equipment, accidents, security breaches, viruses or outages affecting information technology systems, labor disputes, obsolescence, delivery/transportation problems, disruptions of fuel supply, and performance below expected levels. These events may impact our ability to conduct our businesses efficiently and lead to increased costs, expenses, or losses.

Furthermore, there can be no assurance that power suppliers will service our colocation partner facilities or that, once they have entered into a power purchase agreement, such suppliers will continue to provide them with power for any period of time. These agreements may be terminated, or our colocation hosts may lose access to power under certain circumstances, and replacement power may not be available on commercially reasonable terms, or at all, particularly in light of limited power availability and grid constraints in many markets. The inability of our colocation hosts to secure or maintain adequate power arrangements could have a material adverse effect on our business, financial condition, and results of operations. Moreover, there may be significant competition for suitable locations with access to affordable power as we look to expand our operations.

We may be exposed to cybersecurity threats and breaches.

Threats to network and data security are increasingly diverse and sophisticated and security breaches, computer malware and computer hacking attacks have been an increasing concern. Despite our efforts and processes in place to prevent them, our computer servers and systems may be vulnerable to cybersecurity risks, including denial-of-service attacks, physical or electronic break-ins, employee theft or misuse and similar disruptions from unauthorized tampering. As techniques used to breach security change frequently and are generally not recognized until launched against a target, we may not be able to promptly detect that a cyber breach has occurred, implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented. Recent developments in the cyber threat landscape include use of artificial intelligence (“AI”) and machine learning, as well as an increased number of cyber extortion and ransomware attacks, with the potential for higher ransom demand amounts and increasing sophistication and variety of ransomware techniques and methodology. Further, any adoption of AI by us or by third parties may pose new security challenges. A party who is able to compromise the security measures on our networks or the security of our infrastructure could misappropriate the proprietary or sensitive information of us. We also may be required to expend significant capital and resources to protect against such threats or to alleviate problems caused by cyber breaches in our physical or virtual security systems. Any breaches that may occur in the future could expose us to increased risk of lawsuits, regulatory penalties, damage relating to loss of proprietary information, harm to our reputation, and increases in our security costs, which could have a material adverse effect on our business, financial condition, and results of operations.

Furthermore, we hold our cryptocurrency through a third-party qualified custodian rather than directly in self-custody. As a result, we are exposed to risks associated with the operations, security controls, systems, and financial condition of such custodian. A cybersecurity incident, operational failure, insolvency event, or other disruption affecting our custodian could result in delayed access to, partial loss of, or permanent loss of some or all of our cryptocurrency, which could have a material adverse effect on our business, financial condition, and results of operations. While the custodian maintains cold-storage and other security protocols designed to safeguard digital assets, no custodial system is immune to cyberattacks, internal failures, human error, or evolving threat vectors.

We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully covered by insurance.

Our operations are subject to many hazards and operational risks inherent to our business, including:

The measures we take to protect against these risks may not be sufficient. The realization of any hazard or operational risk may result in business interruption, liability, or litigation. While we believe we maintain an amount of insurance protection that we consider adequate, but we cannot provide any assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject and, even if we do have insurance coverage for a particular circumstance, we may be subject to a large deductible and maximum cap. We carry liability, property, and other insurance policies to cover certain insurable risks to our company. We select the types of insurance, the limits, and the deductibles based on our specific risk profile, the cost of the insurance coverage versus its perceived benefit, and general industry standards. Our insurance policies contain certain industry standard exclusions for events such as war and nuclear reaction. A successful claim for which we are not fully insured could materially harm our business, financial condition, and results of operations. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on our business, financial condition, and results of operations.

If we incur debt in the future, it may adversely affect our economic and business condition.

We currently do not have material indebtedness. However, we may incur debt in the future to fund working capital, infrastructure investments, mining capacity, or strategic initiatives. Any future indebtedness could increase our vulnerability to adverse economic or business conditions, require significant cash flows for debt service, reduce funds available for operations and growth, and limit our flexibility in responding to competitive pressures. Debt agreements may include covenants that restrict our ability to incur additional indebtedness, dispose of assets, make investments, or engage in other transactions, and a breach of such covenants could permit lenders to accelerate maturity and exercise remedies.

Banks and financial institutions may be unwilling to provide, or may discontinue providing, accounts and other financial services to digital-asset-related businesses due to evolving regulatory expectations, perceived compliance risk, cost, or reputational concerns. Such “de-risking” has occurred within the digital asset industry and could be exacerbated by enforcement actions, insolvencies, or heightened regulatory scrutiny. If we were unable to maintain adequate banking relationships, we could experience increased costs, operational delays, reduced ability to pay vendors or employees, and constraints on capital raising and treasury operations, any of which could materially adversely affect our business, financial condition, and results of operations.

Most of our infrastructure is located on leased or collocated premises and the termination or higher renewal rate of our leases or colocation contracts could have a material adverse effect on our business, financial condition, and results of operations.

Because our mining equipment is hosted in third-party colocation facilities, we are exposed to additional risks if a colocation host or a critical vendor to that host experiences financial distress, insolvency, operational failure, or a business interruption event. If a host becomes subject to bankruptcy or similar proceedings, disputes could arise regarding access to our equipment, the prioritization of site operations, the continuation of services, or the enforcement of contractual rights, which could result in delayed access to, restricted use of, or inability to retrieve our equipment for an extended period. Even absent a bankruptcy, a host’s deterioration in financial condition could lead to deferred maintenance, staffing reductions, weakened security controls, reduced redundancy, or increased pricing and more restrictive contract terms. Any inability of a host to continue providing services at the required performance levels, or any delay or limitation on our access to hosted equipment, could have a material adverse effect on our business, financial condition, and results of operations.

Most of our infrastructure is located in collocated premises and there can be no assurance that our colocation host will remain in compliance with the colocation contract, that the colocation provider will continue to support our operations, and that the colocation contract will not be terminated despite negotiation for long term colocation periods and renewal provisions. When the initial terms of our existing colocation contracts expire, in some instances, we have the right to extend the terms of our contract for one or more renewal periods. Upon the end of our initial term or, if applicable, the renewal periods, we would have to renegotiate our lease terms with the applicable landlords. If renewal rates are less favorable than those we currently have, we may be required to increase revenues to offset such increase in lease payments. Failure to increase revenues to sufficiently offset these projected higher costs could adversely impact our operating income. We may also not be able to renew such leases at all. The termination of a lease could have a material adverse effect on our business, financial condition, and results of operations.

We may face the risk of Internet-related disruptions.

Our mining operations are dependent on the availability and reliability of Internet connectivity at third-party colocation facilities where our equipment is hosted. We do not own or operate these data centers and do not provide Internet services; instead, we rely on our colocation providers and their third-party network service providers to maintain adequate and uninterrupted connectivity. There can be no assurance that such providers will continue to supply sufficient Internet connectivity to the facilities where our equipment is located, or that connectivity, once established, will not be disrupted, degraded, or terminated. Any significant interruption, degradation, or loss of Internet connectivity at one or more colocation facilities could require us to curtail or suspend mining operations at the affected sites, which could materially and adversely affect our business, financial condition, and results of operations.

Our success depends on key personnel whose continued service is not guaranteed.

We depend on the efforts of our key personnel, including our senior leadership, many of whom have strong technology, finance, real estate, and/or power expertise and industry reputations. They are important to our success for many reasons, including that they attract investors and business and investment opportunities and assist us in negotiations with investors, lenders, and industry personnel. If we lost their services, our business and investment opportunities and our relationships with lenders and other capital markets participants, and industry personnel could suffer. As the number of our competitors increases, it becomes more likely that a competitor would attempt to hire certain of these individuals away from us. The loss of any of these key personnel would result in the loss of these and other benefits and could materially and adversely affect our business, financial condition, and results of operations.

We also depend on the talents and efforts of highly skilled technical individuals. Our success depends on our continuing ability to identify, hire, develop, motivate, and retain highly skilled technical personnel for all areas of our business. Competition in our industry for qualified technical employees is intense, and the availability of qualified technical personnel is not guaranteed. We cannot assure you that we will be able to attract or retain the personnel we require. If we are unable to identify, hire, develop, motivate, and retain such personnel, it could have a material adverse effect on our business, financial condition, and results of operations.

We do not directly obtain or hold material facility-level permits or approvals for our mining operations, as our equipment is hosted at third-party colocation facilities. Our colocation providers are responsible for obtaining, maintaining, and complying with permits, licenses, and approvals required to own and operate their data center facilities, including those related to zoning, construction, power usage, and environmental or energy regulation.

Although we generally rely on our colocation providers to satisfy applicable permitting and licensing requirements, our operations may be adversely affected if a colocation provider fails to obtain, maintain, or comply with required permits or approvals, or if such permits or approvals are revoked, modified, delayed, or become subject to more restrictive conditions as a result of legal, regulatory, or policy changes. Any such failure or disruption could result in the suspension, curtailment, or termination of operations at one or more facilities where our equipment is hosted, which could materially and adversely affect our business, financial condition, and results of operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Cautionary Note on Forward-looking Statements” for a discussion of the uncertainties and assumptions associated with these statements. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

Datacentrex, Inc. (“Datacentrex,” the “Company,” “we,” “us,” or “our”) is a digital infrastructure and capital deployment company that owns and operates Scrypt-based proof-of-work (“PoW”) compute assets. On December 15, 2025, the Company consummated the acquisition of Doge through a reverse recapitalization (the “Transaction”), following which the combined company changed its name to Datacentrex, Inc. Doge, the accounting acquirer, had commenced digital asset mining operations prior to the Transaction. The following discussion reflects the operations of Doge and its successors for the full fiscal year ended December 31, 2025, which represents the Company’s inaugural year of mining operations. There was no comparable activity in the prior-year period.

We generate revenue by deploying owned Scrypt application-specific integrated circuit (“ASIC”) hardware to produce PoW hashrate, which we monetize primarily through a hashrate marketplace model with settlement typically denominated in Bitcoin. Our Scrypt compute contributes hashrate to the Litecoin blockchain, and through merged-mining architecture, simultaneously secures and validates additional Scrypt-based networks, including Dogecoin, without incremental energy consumption. The Company’s mining operations produce exposure to multiple digital asset networks from a single deployment of compute and power, with Dogecoin representing the largest share of protocol-native coin production during the period and Bitcoin representing the primary settlement asset received through marketplace monetization channels.

We manage a treasury of digital assets and cash intended to preserve capital, maintain liquidity, and enhance long-term value creation. As of December 31, 2025, the Company held over $4.5 million in digital assets, comprising a mix of Bitcoin accumulated through hashrate marketplace settlement and unsold Dogecoin and Litecoin from pool-based mining. Management expects that future treasury concentration will favor Bitcoin over time, consistent with the Company’s hashrate marketplace monetization model in which settlement is typically received in Bitcoin.

Fiscal Year 2025 Operational Highlights

Fiscal year 2025 represented the Company’s inaugural year of digital asset mining operations, during which the Company scaled from initial deployment to a fully operational mining platform. Key operational highlights for the year include:

Fleet Scaling and Deployment. The Company began the first quarter of 2025 with an initial deployment of approximately 1,500 Scrypt ASIC miners at a single colocation facility outside of the United States. During the second quarter, the Company evaluated additional colocation partners and deployed approximately 1,000 additional units across two new domestic colocation sites. In the third quarter, in response to changes in the tariff environment and to capture lower operating expenses, the Company relocated the original fleet of approximately 1,500 miners back to the United States and distributed them across two facilities. In the fourth quarter, the Company deployed an additional 520 rigs, bringing the total operating fleet to 3,094 Scrypt ASIC miners as of December 31, 2025, deployed across four geographically diversified colocation facilities, all located in the United States.

Hashrate and Power Capacity. As of December 31, 2025, the Company’s fleet of 3,094 operating Scrypt ASIC miners had an average nameplate capacity of approximately 14 GH/s per unit, representing aggregate deployed hashrate of approximately 43.3 TH/s at full uptime. The fleet’s average nameplate power consumption was approximately 3.95 kW per unit, representing approximately 12.5 MW of total deployed power capacity across the Company’s four colocation facilities.

Revenue and Financial Performance. For the year ended December 31, 2025, the Company generated revenues of approximately $7.0 million from digital asset mining operations, with cost of revenue of approximately $3.6 million and gross profit of approximately $3.4 million. The Company reported a net loss attributable to common stockholders of approximately $8.5 million, driven primarily by depreciation expense of $7.5 million on mining equipment (amortized over a two-year useful life), professional fees, stock-based compensation, and other operating expenses associated with building operational infrastructure during the Company’s first year of operations. The Company generated positive Adjusted EBITDA of approximately $0.6 million for the period.

Corporate Transaction. On December 15, 2025, the Company consummated the Transaction, issuing an aggregate of 13,835,188 shares of Common Stock and 16,239.812 shares of Series D Convertible Preferred Stock (convertible into 16,239,812 shares of Common Stock) to the stockholders of Doge. Following the Transaction, the Company changed its name to Datacentrex, Inc. and its shares continued to trade on the Nasdaq Capital Market under the ticker symbol “DTCX.”

Our results are primarily driven by realized revenue rates per unit of hashrate deployed, power costs and facility-level economics, fleet uptime and operational execution, hardware supply and replacement cycle dynamics, digital asset market conditions, and treasury and capital allocation decisions. For a further discussion of these key operating inputs, see Item 1, “Business — Key Operating Inputs” and the discussion of results of operations below.

The following table sets forth certain selected consolidated statements of operations data for the year ended December 31, 2025.

The Company generated revenues of $6,963,477 for the years ended December 31, 2025. The Company was incorporated and commenced operations, specifically its digital mining operations in fiscal year 2025 and therefore had no activity in 2024. Cryptocurrency mining are impacted significantly by volatility in coin prices, as well as increases in the Blockchain’s Network Hash Rate resulting from the growth in the overall quantity and quality of rigs utilizing the Scrypt mining algorithm working to solve blocks on the blockchain and the difficulty index associated with the secure hashing algorithm employed in solving the blocks.

Summary of Mining Results

The following table presents additional information about our cryptocurrency mining activities in coins and amounts during the year ended December 31, 2025.

Cost of Revenue

Cost of revenue for the year ended December 31, 2025 approximately $3.560 million consisted primarily of direct production costs of the mining operations, including utilities and fees paid to one of the Company’s colocation agreement hosts ($3.353 million) and value added tax expense ($206,000), but excluding depreciation and amortization, which are separately stated.

For the year ended December 31, 2025 the Company incurred operating expenses of $11,332,284. Operating expenses consisted mainly of office expenses of $802,667, contract labor of $155,676, professional fees of $954,679, depreciation expense of $7,503,386 and stock based compensation of $1,389,989. Office expenses are primarily attributable to the Company moving colocation locations during the year and shipping mining equipment between locations. Contract labor and professional fees is related to operational activity for the company’s first year operations and the reverse recapitalization consummated during the year. Depreciation expense is attributable to in-service mining equipment which is amortized over two-year useful life. Stock based compensation is attributable to expense under the employee’s equity plan for eligible employees.

For the year ended December 31, 2025, the Company had ($584,514) in other income (expense). This included the net unrealized and realized loss on digital assets (cryptocurrencies) of ($443,696) during the year ended December 31, 2025 $(140,818) of net interest expense.

Net Loss Before Income Taxes

As of December 31, 2025, the Company had cash in the amount of $38,919,486. Of the cash held at December 31, 2025, $36,408,077 relates to Doge (the accounting acquirer) and $2,511,409 relating to Thumzup (the legal acquirer) and Thumzup Inc. which is excluded from the statement of cash flows as discussed in Note 2 of the consolidated financial statement. As of December 31, 2025, the Company had stockholders’ equity of $66,247,252.

The Company used net cash in operating activities of $6,447,474 for the year ended December 31, 2025. For the year ended December 31, 2025, cashflows were impacted by depreciation of $7,503,386, digital asset mining revenue of $6,963,477, stock based compensation of $1,389,989, net unrealized and realized loss on digital assets, $443,696, loss on sale of equipment $395, change in prepaid expense of $198,707, change in other assets of $621,660 and change in accrued expenses of $501,789.

Net cash used in investing activities for the year ended December 31, 2025 was $24,866,515. During the year ended December 31, 2025, we invested $25,938,181 in mining equipment, received $29,990 proceeds from sale of equipment, deposited $3,600,100 on mining equipment to be received and received $4,641,776 in proceeds from sale of digital assets.

There was cash generated by financing activities for the year ended December 31, 2025 of $70,233,475. For the year ended December 31, 2025, this was comprised of $8,550,000 in proceeds from long term debt, offset by repayments of $8,550,000, cash acquired in reverse recapitalization of $42,140,304, proceeds from the issuance Class A-1 units of $17,945,000, proceeds from the issuance of Class A-2 units net of issuance costs of $10,422,402, and the repurchase of treasury stock of $274,321.

Capital Resources

As of December 31, 2025, we had cash and cash equivalents on hand of $38,919,486. We currently have minimal sources of liquidity such as arrangements with credit institutions that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

Revenue from Mining Operations

Funding our operations on a go-forward basis will rely significantly on our ability to continue to mine cryptocurrency and the spot or market price of the cryptocurrency we mine and raise additional funds as equity, debt or convertible securities. We expect to generate ongoing revenues from the production of cryptocurrencies, primarily Dogecoin currency rewards, for example, in our mining facilities and our ability to liquidate for currency rewards at future values will be evaluated from time to time to generate cash for operations. Generating Dogecoin and other currency rewards, for example, which exceed our production and overhead costs will determine our ability to report profit margins related to such mining operations, although accounting for our reported profitability is significantly complex. Furthermore, regardless of our ability to generate revenue from the sale of our cryptocurrency assets, we may need to raise additional capital in the form of equity or debt to fund our operations and pursue our business strategy.

The ability to raise funds as equity, debt or conversion of cryptocurrency to maintain our operations is subject to many risks and uncertainties.

Contractual Obligations

The Company utilizes third-party data center facilities to support its digital asset mining operations. Specifically, the Company has entered into colocation and hosting services agreements with independent data center providers for the ongoing provision of rack space, electrical power capacity, network connectivity, and cooling infrastructure required to operate the Company’s mining hardware. For the year ended December 31, 2025, the Company incurred $3,353,355 of colocation and hosting-related service expenses, which are included in cost of revenues in the accompanying consolidated statements of operations.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we rely on Adjusted EBITDA to evaluate our business, measure our performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss), adjusted for impacts of interest expense, income tax provision or benefit and depreciation and amortization, and non-cash stock-based compensation. You are encouraged to evaluate each of these adjustments and the reasons our Board and management team consider them appropriate for supplemental analysis.

Our board of directors and management team use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items (such as non-recurring transactions mentioned above) that impact the comparability of financial results from period to period.

RESULTS OF OPERATIONS

Six Months Ended June 30, 2026 and 2025

The following table sets forth certain selected consolidated statements of operations data for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.

Revenues

The Company generated revenues of $4,092,987 for the six months ended June 30, 2026 as compared to $2,088,212 for the six months ended June 30, 2025. The increase of $2,004,775 was driven primarily growth in the number of deployed units and expanded capacity, as well as the Company’s transition during 2026 to the hashrate marketplace monetization model under which settlement is typically received in Bitcoin.

Cost of Revenue

Cost of revenue increased by $2,300,820, to $3,374,852 for the six months ended June 30, 2026, from $1,074,032 for the six months ended June 30, 2025. Consistent with the three-month comparison, the increase was primarily attributable to the expansion of the Company’s deployed mining fleet, increased power rates and increased operating activity during 2026.

Operating expenses

For the six months ended June 30, 2026 the Company incurred operating expenses of $10,531,999, consisting of general and administrative expenses of $1,950,490, depreciation and amortization of $6,574,585, and stock-based compensation of $2,006,924. For the six months ended June 30, 2025 the Company incurred operating expenses of $2,746,981, consisting of general and administrative expenses of $394,970, depreciation and amortization of $2,352,011, and no stock-based compensation. The increase of $7,785,018 in operating expenses period over period is primarily attributable to increases in depreciation expense of $4,222,574 reflecting the substantially larger in-service mining fleet, stock-based compensation of $2,006,924, legal and accounting fees of approximately $416,000, insurance cost of approximately $250,000 and payroll and outside consultant fees of approximately $700,000.

Net Loss from operations

The Company realized a net loss from operations of $9,813,864 for the six months ended June 30, 2026, as compared to a net loss from operations of $1,732,801 for the six months ended June 30, 2025, which is attributed to the reasons stated above in the section “Operating Expenses.”

Other income (expense)

For the six months ended June 30, 2026, the Company had $1,806,200 in other expense, net. This included net unrealized and realized loss on digital assets of $2,481,598, other income of $6,467, and interest income, net, of $668,931. For the six months ended June 30, 2025, the Company had $105,024 in other expense, net, consisting of net unrealized and realized gain on digital assets of $71,482 and interest expense, net of $176,506.

Net Loss Before Income Taxes

The Company realized a net loss before income taxes of $11,620,064 for the six months ended June 30, 2026, as compared to $1,837,825 for the six months ended June 30, 2025. Our net losses were due to the reasons stated above in the preceding sections.

The following table presents additional information about our cryptocurrency mining activities in coins and amounts during the six months ended June 30, 2026.

The following table presents additional information about our cryptocurrency mining activities in coins and amounts during the six months ended June 30, 2025.

Our board of directors and management team use Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items that impact the comparability of financial results from period to period. We believe each of these adjustments provides useful information to investors for the following reasons: (i) interest expense is excluded because it is a function of our financing arrangements and capital structure rather than our core operating performance, and its exclusion facilitates comparisons with companies that have different capital structures; (ii) depreciation and amortization is excluded because it is a non-cash charge that reflects the cost of capital assets acquired in prior periods and does not directly correspond to the current period operating performance of our mining operations, and its exclusion allows investors to evaluate operating results independent of the timing and magnitude of capital expenditures; and (iii) stock-based compensation expense is excluded because it is a non-cash charge that varies significantly based on the timing, size, and nature of equity awards granted, as well as factors such as stock price volatility and forfeiture rates, which are not directly related to our underlying operational performance, and its exclusion enables investors to compare our results with those of other companies that may utilize different forms and levels of employee compensation.

Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric as of the six months ended June 30, 2026 and June 30, 2025, are presented in the table below: