Datacentrex, Inc.

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item 7. management’s discussion and analysis of financial condition and results of operations

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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.

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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.

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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.

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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.

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Fiscal Year 2025 Operational Highlights

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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:

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*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.

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*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.

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*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.

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*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.”

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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.

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RESULTS OF OPERATIONS

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YEARS ENDED DECEMBER 31, 2025

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

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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.

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Summary of Mining Results

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

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Cost of Revenue

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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.

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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.

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The Company realized a net loss from operations before income taxes of $7,918,371 for the year ended December 31, 2025 which is attributed to the reasons stated above in the section “Operating Expenses.”

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Other income (expense)

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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.

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Net Loss Before Income Taxes

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The Company realized a net loss before income taxes of $8,502,885 for the year ended December 31, 2025, and is due to the reasons stated above in the preceding sections.

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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.

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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.

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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.

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Capital Resources

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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.

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Revenue from Mining Operations

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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.

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

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Contractual Obligations

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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.

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Non-GAAP Financial Measures

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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.

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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.

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Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

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FORWARD LOOKING STATEMENTS

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Sections of this Form 10-K including the Management’s Discussion and Analysis or Plan of Operation, contain “forward-looking statements”. These forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. You should not unduly rely on these statements. Forward-looking statements involve assumptions and describe our plans, strategies, and expectations. You can generally identify a forward-looking statement by words such as “may,” “will,” “should,” “would,” “could,” “plans,” “goal,” “potential,” “expect,” “anticipate,” “estimate,” “believe,” “intent,” “project,” and similar words and variations thereof.

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INTRODUCTION

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Thumzup Media Corporation (“Thumzup” or “Company”) was incorporated on October 27, 2020, under the laws of the State of Nevada, and its headquarters is located in Los Angeles. The Company’s primary business is software as a service provider dedicated to connecting businesses with consumers and allowing the business to incentivize consumers to post about their experience on social media. Thumzup mission is to democratize social media marketing by connecting advertisers with non-professional people, who can be paid for their posts about products and services they love through its technology which utilizes a proprietary mobile app (“App”). The App generates scalable word-of-mouth product posts and recommendations for advertisers on social media and is designed to connect advertisers with individuals who are willing to promote their products online.

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The Thumzup App enables users to select a brand they want to post about on social media. Once the Thumzup user selects the brand and takes a photo (using the App), the App will post the photo and a caption to the user’s social media account(s). As of the date of this filing, Instagram is the Company’s initial social media platform that is being used, due to its wide acceptance and its great functionality using photographs. The Company expects to add other social media platforms in the future. For the advertiser, the Thumzup system enables brands to get real people to promote products to their friends, rather than displaying banner ads that consumers now mostly ignore, or contracting with expensive professional influencers. The Company has recorded nominal revenues during the year ended December 31, 2024 and continues with the development of enhancements to its App and marketing efforts.

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The Company is an “emerging growth company” as that term is used in the Jumpstart our Business Startups Act of 2012, and as such, has elected to comply with certain reduced public company reporting requirements.

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Thumzup® Products and Services

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The Company operates in a single business segment which is social media marketing and advertising. The Thumzup® App works on both iPhone and Android mobile operating systems and connects brands and people who use and love these brands. For the Advertiser, Thumzup® incentivizes ordinary people to become paid content Creators and post authentic valuable posts on social media about the Advertiser and its products.

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The Company seeks to capitalize on nationwide-wide gig economy and business democratization trends. Immense value and opportunity have been created through the democratization of ride sharing, hospitality, finance and other industries. The Thumzup® tools are designed to facilitate this democratization trend for the consumer and the Advertiser within the online marketing and advertising space.

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The Company has built the technology to support an influencer and “gig” economy community around its Thumzup® App. This technology and community are designed to generate scalable authentic product posts and recommendations for advertisers on social media. It is designed to connect advertisers with individuals who are willing to tell their friends about the advertisers’ products online and offline.

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Emerging Growth Company

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We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:

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The Section 107 of the JOBS Act provides that we may elect to utilize the extended transition period for complying with new or revised accounting standards and such election is irrevocable if made. As such, we have made the election to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

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We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

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We were formed in October 2020 and have not yet established profitable operations. For the year ended December 31, 2024, we incurred a net loss available to shareholders of $3,999,905 primarily due to software research and development expenses of $244,909, marketing expenses of $1,392,661, and general and administrative expenses of $2,210,775. For the year ended December 31, 2023, we incurred a net loss of $3,384,380, primarily due to software research and development expenses of $513,088, marketing expenses of $855,270, professional and consulting expenses of $727,554, and general and administrative expenses of $395,624.

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FOR THE YEARS ENDED DECEMBER 31, 2024 and 2023

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The Company generated revenues of $71 and $2,048 for the years ended December 31, 2024 and 2023, respectively, a decrease of $1,307, as the Company focused on expanding its footprint of listed businesses in fiscal year 2024.

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For the years ended December 31, 2024 and 2023, the Company incurred operating expenses of $3,946,663 and $2,521,078, respectively, an increase of $1,425,585. The increase in operating expenses was caused by costs of revenues decreasing by $144 from $144 during the year ended December 31, 2023 to $0 during the year ended December 31, 2024, marketing expenses increasing $540,692 from $855,270 during the year ended December 31, 2023 to $1,395,962 during the year ended December 31, 2024, general and administrative expenses increasing $257,987 from $395,624 during the year ended December 31, 2023 to $653,611 during the year ended December 31, 2024, depreciation and amortization expenses increasing $68,919 from $29,398 during the year ended December 31, 2023 to $98,317 during the year ended December 31, 2024, an increase in professional and consulting of $826,310 from $727,554 during the year ended December 31, 2023 to $1,553,864 during the year ended December 31, 2024, offset in part by a decrease in software research development expenses of $268,179 from $513,088 during the year ended December 31, 2023 to $244,909 during the year ended December 31, 2024.

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The Company realized a net loss from operations of $3,945,922 and $2,519,030 for the years ended December 31, 2024 and 2023, respectively, an increase of $1,426,892 for the reasons stated above.

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Other expenses

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For the years ended December 31, 2024 and 2023, the Company had $70,444 and $73,498 in interest expense primarily related to preferred stock dividends and liquidated damages, respectively. For the years ended December 31, 2024 and 2023, the Company had a liquidated damages expense of $0 and $731,652, respectively. For the years ended December 31, 2024 and 2023, the Company had a liquidated damages expense of $0 and $731,652, respectively. For the years ended December 31, 2024 and 2023, the Company had interest income of $16,641 and $0, respectively.

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Net Loss applicable to common shareholders

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The Company realized a net loss applicable to shareholders of $3,999,905 , and $3,324,180 for the years ended December 31, 2024 and 2023, respectively, an increase of $675,725 for the reasons stated above.

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As of December 31, 2024 and 2023, the Company had stockholders’ equity of $4,767,261 and $349,327, respectively.

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The Company used net cash in operations of $3,485,899 and $2,326,523 for the years ending December 31, 2024 and 2023, respectively.

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Net cash used in investing activities for years ending December 31, 2024 and 2023 was $211,950 and $176,499, respectively, primarily utilized for capitalized software development, along with the purchase of computer equipment.

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Net cash provided by financing activities was $8,119,477 for the year ended December 31, 2024, comprised of $7,339,477, $210,000, and $805,000, from the sale of common stock (net offering costs), issuance of related-party notes payable, and the sale of preferred stock, respectively, offset by $210,000 in repayment of related-party notes payable and $25,000 in offering costs for sales of preferred stock.

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Net cash provided by financing activities was $1,606,891 net of offering costs of $17,601 for the year ended December 31, 2023 comprised of $33,000 from subscription receivable and $1,591,492 from the sale of common stock.