DTCX

Business Context and Reporting Period

Datacentrex, Inc. (DTCX) is a digital infrastructure company focused on Scrypt-based proof-of-work mining, primarily targeting Dogecoin and Litecoin. The company operates a fleet of 3,085 ASIC miners across four U.S. colocation facilities. This Form 10-Q covers the quarterly and six-month periods ended June 30, 2026. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.

Key Financial Metrics

Non-GAAP Measure: Adjusted EBITDA for the six months ended June 30, 2026, was $(3,038,555), compared to $690,692 in the prior year period.

Material Changes vs. Prior Period

• Revenue Growth: Six-month revenue increased 91% to $4.1 million from $2.1 million in the prior year, driven by fleet expansion and a shift to a hashrate marketplace model settling in Bitcoin.
• Margin Compression: Gross profit declined to $718,135 (17.5% margin) from $1,014,180 (48.6% margin) year-over-year. This was caused by a 214% increase in cost of revenue, primarily due to higher power rates and expanded fleet operations.
• Operating Expenses: Operating expenses surged 283% to $10.5 million, driven by a 179% increase in depreciation ($6.6 million) due to the larger in-service fleet and $2.0 million in stock-based compensation (none in the prior period).
• Digital Asset Volatility: The company recognized a net unrealized and realized loss of $2.5 million on digital assets for the six months ended June 30, 2026, compared to a gain of $71,482 in the prior year period.
• Liquidity: Cash balances increased by $13.0 million to $51.9 million, primarily due to $17.9 million in net proceeds from a public offering in March 2026.

Outlook, Risks, and Management Commentary

• Capital Raise: In March 2026, the company completed a public offering raising approximately $20.2 million gross, issuing common stock and pre-funded warrants.
• Operational Strategy: Management intends to maintain a stable fleet of 3,085 miners with no material additions planned for the immediate term. The strategy focuses on monetizing hashrate via marketplaces, with settlement typically in Bitcoin.
• Key Risks:
  • Power Competition: Intense competition for data center power from AI and High-Performance Computing (HPC) workloads may increase colocation costs or reduce availability.
  • Tariff Uncertainty: U.S. tariffs on Chinese-manufactured ASIC hardware could disrupt supply chains and increase capital expenditure costs.
  • Market Volatility: Revenue and asset valuations are highly sensitive to digital asset price fluctuations and network difficulty adjustments.
  • Regulatory Environment: Evolving regulations regarding digital asset mining and energy usage pose potential operational constraints.
• Dividends: The company declared Series A Preferred Stock dividends payable in shares, with some declared but not yet issued as of June 30, 2026.

Investor Verification Checklist

• Cash Burn vs. Runway: Verify the sustainability of operations given the $5.0 million net cash used in operating activities over six months against the $51.9 million cash balance.
• Power Cost Contracts: Review the specific terms of colocation agreements to understand exposure to power rate increases or curtailment risks.
• Digital Asset Valuation: Assess the fair value of the $5.98 million digital asset treasury (Bitcoin, Dogecoin, Litecoin) and the impact of further price declines on the balance sheet.
• Depreciation Policy: Confirm the two-year useful life assumption for mining equipment and its impact on reported net loss versus cash flow.
• Dilution: Evaluate the impact of outstanding warrants (5.5 million shares) and convertible preferred stock on future share count and earnings per share.