Form 8-K/A

8-K/A — HeartSciences Inc.

Accession: 0001213900-26-091764

Filed: 2026-08-19

Period: 2026-06-23

CIK: 0001468492

SIC: 6199 (FINANCE SERVICES)

Item: Financial Statements and Exhibits

Documents

8-K/A — ea0302420-8ka2_heart.htm (Primary)

EX-99.1 — UNAUDITED INTERIM FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025, AND THE ACCOMPANYING NOTES (ea030242001ex99-1.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K/A — AMENDMENT NO. 2 TO FORM 8-K

8-K/A (Primary)

Filename: ea0302420-8ka2_heart.htm · Sequence: 1

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2026-06-23

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 2)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

Date of Report (Date of earliest event reported):

June 23, 2026

HEARTSCIENCES INC.

(Exact name of Registrant as Specified in Its

Charter)

Texas

001-41422

26-1344466

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

550 Reserve Street, Suite 360

Southlake, Texas

76092

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including

Area Code: (682) 237-7781

(Former Name or Former Address, if Changed Since

Last Report)

Check the appropriate box below if the Form 8-K

filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities

Act (17 CFR 230.425)

☒ Soliciting material pursuant to Rule 14a-12 under the Exchange

Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b)

under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c)

under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b)

of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

HSCS

The Nasdaq Stock Market LLC

Warrants

HSCSW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant

is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2

of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check

mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Explanatory Note

June 23, 2026, HeartSciences Inc., a Texas corporation (“HeartSciences”

or “Parent”), filed a Current Report on Form 8-K (the “Initial

Form 8-K”) with the U.S. Securities and Exchange Commission (“SEC”)

announcing the entry into an Agreement and Plan of Merger (the “Merger

Agreement”) among Parent, Fortitude Mining Holdings, Inc., a Delaware corporation (“Fortitude”),

Fortitude Mining HoldCo, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Fortitude (“HoldCo”),

and Cordis Acquisition, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Parent. The transactions

contemplated by the Merger Agreement are referred to herein as the “Proposed

Transaction.” The Initial Form 8-K was previously amended by the filing of Amendment No. 1 on Form 8-K/A with the SEC

on July 27, 2026 (“Amendment No. 1”). This Amendment No. 2 on Form 8-K/A

(this “Amendment”) is being filed solely for the purpose of

supplementing Item 9.01(a) of the Initial Form 8-K and Amendment No. 1 to provide Fortitude’s unaudited interim financial

statements as of and for the six months ended June 30, 2026 and 2025. This Amendment should be read in conjunction with the Initial

Form 8-K and Amendment No. 1.

Additional Information and Where to Find It

Communications related to each of Fortitude and HeartSciences, their

respective businesses and the Proposed Transaction may be deemed solicitation material in respect of the Proposed Transaction. In connection

with the Proposed Transaction, HeartSciences filed with the SEC a preliminary proxy statement on Schedule 14A on July 27, 2026 and may

file additional relevant materials with the SEC. Following the filing of a definitive proxy statement with the SEC, HeartSciences will

mail the definitive proxy statement and a proxy card to each shareholder entitled to vote at the special meeting relating to the Proposed

Transaction. INVESTORS AND SHAREHOLDERS OF HEARTSCIENCES ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)

AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT HEARTSCIENCES HAS FILED OR MAY FILE WITH THE SEC WHEN

THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT HEARTSCIENCES AND THE PROPOSED TRANSACTION. COMMUNICATIONS THAT

DO NOT CONTAIN ALL THE INFORMATION THAT SHOULD BE CONSIDERED CONCERNING THE PROPOSED TRANSACTION AND RELATED MATTERS ARE NOT INTENDED

TO PROVIDE THE BASIS FOR ANY INVESTMENT DECISION OR ANY OTHER DECISION IN RESPECT OF SUCH MATTERS. The preliminary proxy statement, the

definitive proxy statement and other relevant materials in connection with the Proposed Transaction (when they become available), and

any other documents filed by HeartSciences with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. In

addition, investors and shareholders may obtain free copies of the documents filed with the SEC or by sending a request to the HeartSciences

Investor Relations Department at investorrelations@heartsciences.com.

NEITHER THE SEC NOR ANY STATE

SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE PROPOSED TRANSACTION DESCRIBED HEREIN, PASSED UPON THE MERITS OR FAIRNESS

OF THE PROPOSED TRANSACTION OR ANY RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS AMENDMENT. ANY

REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

Participants in the Solicitation

HeartSciences and Fortitude,

their respective directors and executive officers, and certain executive officers of Digital Currency Group, Inc., the parent company

of Fortitude, may be deemed to be participants in the solicitation of proxies from HeartSciences’ shareholders with respect to the

Proposed Transaction. Information regarding the identity of the potential participants, and their direct or indirect interests in the

Proposed Transaction, by security holdings or otherwise, is set forth in the preliminary proxy statement and other materials filed or

that may be filed with the SEC in connection with the Proposed Transaction.

No Offer or Solicitation

Any information contained

herein is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation

to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval

in any jurisdiction, pursuant to the Proposed Transaction or otherwise, nor shall there be any sale, issuance or transfer of securities

in any jurisdiction in contravention of applicable law. The Proposed Transaction will be implemented solely pursuant to the terms and

conditions of the merger agreement, which contain the full terms and conditions of the Proposed Transaction.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

In accordance with Item

9.01(a) of Form 8-K, the unaudited interim financial statements of Fortitude as of and for the six months ended June 30, 2026 and

2025, and the accompanying notes, are filed herewith as Exhibit 99.1 and incorporated by reference into this Item 9.01(a).

(d) Exhibits

Number

Description

99.1*

Unaudited interim financial statements of Fortitude as of and for the six months ended June 30, 2026

and 2025, and the accompanying notes.

104**

Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements

of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto

duly authorized.

HEARTSCIENCES INC.

Date: August 19, 2026

By:

/s/ Andrew Simpson

Name:

Andrew Simpson

Title:

President, Chief Executive Officer and

Chairman of the Board of Directors

EX-99.1 — UNAUDITED INTERIM FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025, AND THE ACCOMPANYING NOTES

EX-99.1

Filename: ea030242001ex99-1.htm · Sequence: 2

Exhibit 99.1

Fortitude Mining Holdings, Inc. and Subsidiaries

Table of Contents

Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025

F-2

Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2026 and 2025 (unaudited)

F-3

Condensed Consolidated Statements of Changes in Stockholder’s / Member’s Equity for the Six Months Ended June 30, 2026 and 2025 (unaudited)

F-4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (unaudited)

F-5

Notes to Condensed Consolidated Financial Statements (unaudited)

F-6

F-1

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

June 30,

2026

December 31,

2025

Assets

Cash

$ 14,056

$ 9,995

Digital assets

1,249

3,413

Deposits

181

903

Prepaid expenses and other current assets

1,065

997

Total current assets

16,551

15,308

Property and equipment, net

25,392

39,646

Deposits, net of current portion

16,034

10,767

Right-of-use assets

2,629

2,812

Intangible asset, net

3,700

4,259

Total assets

$ 64,306

$ 72,792

Liabilities and stockholder’s equity

Liabilities:

Accounts payable and accrued expenses

$ 7,652

$ 2,989

Lease liabilities, current portion

345

350

Total current liabilities

7,997

3,339

Deferred tax liability

109

4,172

Credit facility - related party

5,249

Lease liabilities, net of current portion

2,289

2,454

Total liabilities

15,644

9,965

Commitments and Contingencies (Note 14)

Stockholder’s equity:

Common stock, $0.0001 par value; 10,000,000 shares authorized; 5,000,000 issued and outstanding as of June 30, 2026 and December 31, 2025

Additional paid-in capital

59,516

59,507

Retained earnings (deficit)

(10,855 )

3,319

Total stockholder’s equity

48,662

62,827

Total liabilities and stockholder’s equity

$ 64,306

$ 72,792

The accompanying notes are an integral part of

these condensed consolidated financial statements.

F-2

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands)

Six Months Ended

June 30,

2026

2025

Revenues:

Mining revenues, net (includes related party amounts of $28,269 and $31,987, respectively)

$ 40,125

$ 40,820

Other revenue

Total revenues

40,145

40,820

Operating expenses:

Cost of revenues (exclusive of depreciation and amortization)

18,727

32,702

Depreciation and amortization

11,543

16,888

General and administrative expenses

9,142

3,324

Transaction related costs

4,322

Loss on disposal of equipment

260

1,326

Impairment of mining equipment

10,278

Change in fair value of digital assets, net

2,861

306

Total operating expenses

57,133

54,546

Other (expense) income:

Rental income - related party

Interest expense - related party

(55 )

Total other (expense) income

(55 )

Loss before income taxes

(17,043 )

(13,698 )

Income tax benefit

2,869

Net loss

$ (14,174 )

$ (13,698 )

The accompanying notes are an integral part of

these condensed consolidated financial statements.

F-3

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes

in Stockholder’s / Member’s Equity

(Unaudited)

(in thousands, except for share amounts)

Member’s

Common Stock

Additional

Paid-in

Retained

Earnings

Equity

Amount

Capital

(Deficit)

Total

Balance, January 1, 2025

$ 72,829

$ -

$ 72,829

Capital contributions from Parent

200

Stock-based compensation

Net loss

(13,698 )

Balance, June 30, 2025

$ 59,355

$ -

$ 59,355

Member’s

Common Stock

Additional

Paid-in

Retained

Earnings

Equity

Amount

Capital

(Deficit)

Total

Balance, January 1, 2026

$ -

5,000,000

$ 1

$ 59,507

$ 3,319

$ 62,827

Stock-based compensation

Net loss

(14,174 )

Balance, June 30, 2026

$ -

5,000,000

$ 1

$ 59,516

$ (10,855 )

$ 48,662

The accompanying notes are an integral part of

these condensed consolidated financial statements.

F-4

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Six Months Ended

June 30,

2026

2025

Cash flows from operating activities:

Net loss

$ (14,174 )

$ (13,698 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

11,543

16,888

Loss on disposal of equipment

260

1,326

Impairment of mining equipment

10,278

Mining revenues, net

(39,930 )

(40,820 )

Other revenue

(20 )

Proceeds from the sale of digital assets

30,754

37,549

Digital assets paid for services

455

2,929

Change in fair value of digital assets, net

2,861

306

Non-cash lease expense

Stock-based compensation

Deferred income taxes

(4,063 )

Change in operating assets and liabilities:

Deposits

3,153

726

Prepaid expenses and other current assets

(68 )

(183 )

Accounts payable and accrued expenses

4,663

(248 )

Net cash provided by operating activities

5,734

4,806

Cash flows from investing activities:

Proceeds from the sale of digital assets

8,044

Purchases of property and equipment

(3,960 )

(5,348 )

Deposits on property and equipment

(11,197 )

Proceeds from disposal of property and equipment

191

216

Net cash used in investing activities

(6,922 )

(5,132 )

Cash flows from financing activities:

Capital contributions from Parent

200

Proceeds from credit facility - related party

5,249

Net cash provided by financing activities

5,249

200

Net increase in cash

4,061

(126 )

Cash, beginning of period

9,995

4,496

Cash, end of period

$ 14,056

$ 4,370

Non-cash investing and financing activities:

Capitalizations of deposits to property and equipment

$ 3,499

$ 1,449

The accompanying notes are an integral part of

these condensed consolidated financial statements.

F-5

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Note 1. Organization and Nature of Operations

Fortitude Mining Holdings, Inc. (together, with

its wholly-owned subsidiaries collectively referred to as “Fortitude” or the “Company”) was incorporated in the

state of Delaware on August 12, 2025 in connection with an internal corporate reorganization, as further described below. The Company

is a wholly-owned subsidiary of Digital Currency Group, Inc. (“DCG” or the “Parent”). The Company operates a digital

asset mining business focused on achieving strong returns by mining Zcash, Bitcoin and other high-growth digital assets in emerging proof-of-work

ecosystems. The Company performs its mining operations at its owned and leased mining sites.

Reorganization

On August 14, 2025, pursuant to a distribution

and contribution agreement, DCG implemented an internal corporate reorganization in which DCG and certain of its subsidiaries contributed

the membership interests of Fortitude Mining, LLC to the Company in exchange for 5,000,000 shares of common stock of the Company (the

“Reorganization”). The Reorganization was considered to be a transaction between entities under common control and the historical

operations of Fortitude Mining, LLC prior to the Reorganization are deemed to be those of the Company. Thus, these condensed consolidated

financial statements reflect (i) the historical operating results of Fortitude Mining, LLC prior to the Reorganization, including the

assets and liabilities of Fortitude Mining, LLC at their historical cost; and (ii) the condensed consolidated results of the Company following

the Reorganization. Further, in connection with the Reorganization and the Company’s change in tax status as an entity subject to

U.S. federal and state income taxes, certain deferred tax liabilities relating to the historical operations of the Company in the amount

of $7,237 were contributed from DCG to the Company.

Merger Agreement

On June 23, 2026, the Company and HeartSciences

Inc. (“HeartSciences”), a publicly traded company that develops artificial intelligence-enhanced electrocardiography

solutions, entered into a definitive merger agreement (the “Merger Agreement”) to combine in an all-stock transaction.

The Merger Agreement contemplates that the operating subsidiaries of the Company will become consolidated subsidiaries of HeartSciences

in exchange for a number of newly created vote-only non-economic shares of HeartSciences, as well as a number of economic shares

of HeartSciences in exchange for a $2,000 contribution of cash or Zcash cryptocurrency. It is expected that DCG will own approximately

95% of the voting interests of the combined company at closing on a fully diluted basis.

The transaction is expected to be accounted for

as a reverse acquisition using the acquisition method of accounting, with Fortitude determined to be the accounting acquirer and HeartSciences

determined to be the accounting acquiree. The completion of the merger is subject to customary closing conditions, including approval

by HeartSciences stockholders and other regulatory and contractual requirements. The merger is expected to close during the second half

of 2026.

The Company has incurred transaction related costs,

consisting primarily of legal and other professional fees which are presented within transaction related costs in the Condensed Consolidated

Statements of Operations.

Liquidity and Capital Resources

The Company has historically funded its operational

strategy with cash flows from operations including the liquidation of digital assets mined, as well as capital contributions from Parent.

The Company historically has required significant investments in property and equipment for use in its mining operations.

As of June 30, 2026, the Company had cash

and working capital balances of $14,056 and $8,554, respectively. The Company believes that its existing financial resources, including

its anticipated cash flows from operations, will be sufficient to meet its operating and capital requirements for at least 12 months from

the date these condensed consolidated financial statements are issued. In the event additional liquidity is required, the Company may

not be able to timely secure additional debt or equity financings on favorable terms, if at all, from Parent or third parties, which could

limit the Company’s ability to support its operational strategy.

F-6

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of

Consolidation

The accompanying unaudited condensed consolidated

financial statements include the accounts of the Company and have been prepared in conformity with accounting principles generally accepted

in the United States of America (“U.S. GAAP”) for interim financial information. The unaudited condensed consolidated financial

statements reflect all adjustments consisting of normal recurring adjustments which are, in the opinion of management, necessary for a

fair presentation of the Company’s financial position and results of operations as of and for the interim periods presented. All

intercompany transactions and balances have been eliminated in consolidation. These condensed consolidated financial statements and accompanying

notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the

fiscal years ended December 31, 2025 and 2024.

Use of Estimates

The preparation of the condensed consolidated

financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements

and the reported amounts of revenue and expenses during the reporting periods. The Company evaluates its estimates and assumptions on

an ongoing basis using historical experience and other factors, including the current economic environment, which management believes

to be reasonable under the circumstances. The Company’s significant estimates and assumptions include estimation of useful lives

of property and equipment, evaluation of impairment of property and equipment and intangible asset, deferred income taxes, and the fair

value of stock-based awards. Actual results could differ from those estimates.

Revenue Recognition

The Company participates in mining pools operated

by third parties, as well as pools operated by a related party. As a participant in the mining pools, the Company provides a service to

perform hash calculations for the mining pool, which is an output of its ordinary activities.

The Company recognizes revenue in accordance with

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The core

principle of the revenue standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers

in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The following

five steps are applied to achieve that core principle: (1) identify the customer contract; (2) identify performance obligations that are

distinct; (3) determine the transaction price; (4) allocate the transaction price to the distinct performance obligations; and (5) recognize

revenue as the performance obligations are satisfied.

The Company considers the mining pool operators

to be its customers under ASC 606. Contract inception and the Company’s enforceable right to consideration begins when the Company

commences providing hash calculation services to the mining pool operators. Refer to Note 3 for further information.

Cost of Revenues

Cost of revenues consists primarily of direct

costs related to mining operations, including electricity and other utilities, co-location hosting fees, labor, insurance, and equipment

repairs, but excludes depreciation and amortization, which is separately presented.

F-7

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Digital Assets

Digital assets are earned as noncash consideration

for providing hash computation services to mining pools, in accordance with the Company’s revenue recognition policy. The Company

uses fair value as its method of accounting for its digital assets that are within the scope of ASC 350-60, Intangibles - Goodwill

and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The fair value for each underlying digital

asset is determined by which of the eligible digital asset exchanges is the Company’s principal market and valued using the prices

as reported by such digital asset exchanges as of 4 pm ET on the last day of the Company’s reporting period. The Company has deemed

the price of its digital assets to be a Level 1 input under the ASC 820, Fair Value Measurement (“ASC 820”), hierarchy

as these were based on observable quoted prices in the Company’s principal market for identical assets. Gains and losses from remeasurement

of digital assets are recorded within change in fair value of digital assets, net on the Condensed Consolidated Statements of Operations.

Realized gains and losses are calculated using the specific identification method and are also recorded within change in fair value of

digital assets, net on the Condensed Consolidated Statements of Operations. Proceeds from the sale of digital assets that occur nearly

immediately after receipt are included within operating activities on the Condensed Consolidated Statements of Cash Flows. To the extent

the Company holds digital assets for more than a few days, proceeds from the sale of digital assets are included within investing activities

on the Condensed Consolidated Statements of Cash Flows. The cost of each digital asset is determined using a specific identification method

which allocates cost based on a tranche methodology, with each group of digital assets acquired being deemed a tranche.

Property and Equipment, Net

Property and equipment, net is stated at cost,

less accumulated depreciation. Maintenance and repairs are expensed when incurred. Additions and improvements that extend the economic

useful life of the assets are capitalized and depreciated over the remaining useful lives of the assets. Costs incurred during construction

are capitalized as construction in progress and reclassified to the appropriate categories and depreciated when the project is completed

and the assets are placed in service. The cost and accumulated depreciation of assets sold or retired are removed from the respective

accounts, and any resulting gain or loss is reflected in current earnings. Depreciation is provided using the straight-line method in

amounts considered to be sufficient to amortize the cost of the assets to operations over their estimated useful lives as follows. Leasehold

improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Land

is not depreciated.

Useful life (years)

Mining and other computer equipment

3 - 5

Buildings

Furniture and fixtures

Long-Lived Assets, Including Definite-Lived Intangible Asset

The Company’s definite-lived intangible asset consists of strategic

contracts which are amortized using the straight-line method over the estimated economic life of the asset.

Long-lived assets, including the definite-lived

intangible asset and property and equipment, are evaluated for impairment whenever events or changes in circumstances indicate that the

carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. Factors

that the Company considers in deciding when to perform an impairment review include significant changes in the Company’s forecasted

projections for the asset or asset group for reasons including, but not limited to, significant changes, or planned changes in the Company’s

use of the assets and significant negative industry or economic trends. The impairment test is based on a comparison of the undiscounted

cash flows expected to be generated from the use of the asset group to the carrying value of the assets. If impairment is indicated, the

asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset with the related

impairment charge recognized within the Condensed Consolidated Statements of Operations. No impairments of the definite-lived intangible

asset were recognized during the six months ended June 30, 2026 and 2025. During the six months ended June 30, 2026, the Company

recognized an impairment charge related to property and equipment, while no such impairment charge was recognized during the six months

ended June 30, 2025. See Note 4 for additional information regarding the impairment of property and equipment during the six months

ended June 30, 2026.

F-8

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Fair Value Measurement

Certain assets and liabilities of the Company

are required to be recorded at fair value either on a recurring or non-recurring basis. The Company’s non-financial assets such

as property and equipment are recorded at cost. Fair value adjustments are made to these non-financial assets, on a non-recurring basis,

in the period an impairment charge is recognized. The Company’s impairment related to mining

equipment held in property and equipment during the six months ended June 30, 2026 utilized

Level 3 inputs including manufacturer and secondary market pricing sources, and comparable market transactions, as available.

The carrying amounts reflected in the Condensed

Consolidated Balance Sheets for cash, prepaid expenses and other current assets, deposits, and accounts payable and accrued expenses approximate

fair value due to their short-term nature.

The valuation hierarchy is composed of three levels.

The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The levels within the valuation hierarchy are described below:

· Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges.

Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

· Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets

and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves

that are observable at commonly quoted intervals.

· Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions,

and valuation techniques when little or no market data exists for the assets or liabilities.

The following table presents information about

the Company’s assets measured at fair value on a recurring basis as of the Condensed Consolidated Balance Sheet dates:

Fair Value Measurement Using

Total

Level 1

Level 2

Level 3

June 30, 2026

Digital assets

$ 1,249

$ —

$ 1,249

$ —

December 31, 2025

Digital assets

$ 3,413

$ —

$ 3,413

$ —

There were no transfers between Levels 1, 2 or

3 during the six months ended June 30, 2026.

F-9

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Segment Reporting

Operating segments are defined as components of

an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker

(“CODM”) in deciding how to allocate resources and assess performance. The Company’s CODM is its Chief Executive Officer.

The CODM is regularly provided with the consolidated expenses as presented in the Condensed Consolidated Statements of Operations and

the Company has determined that the expenses presented in the Condensed Consolidated Statements of Operations represent significant segment

expenses. The CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis, such that the Company

has one operating and one reportable segment.

The CODM manages the one reportable segment on

a consolidated basis using consolidated net loss. The CODM reviews the measure of consolidated net loss to evaluate the Company’s

operating results and the effectiveness of business strategies. As the Company discloses a single reportable segment, total revenue is

reported in the Condensed Consolidated Statements of Operations, segment assets are reported in the Condensed Consolidated Balance Sheets,

and capital expenditures are reported in the Condensed Consolidated Statements of Cash Flows.

Income Taxes

On August 14, 2025, pursuant to the Reorganization,

DCG and certain of its subsidiaries contributed the membership interests of Fortitude Mining, LLC to the Company, a corporate entity for

tax purposes. Prior to August 2025, the Company operated as a limited liability company that by default is classified as a disregarded

entity for tax purposes, and was included in the consolidated federal income tax return, as well as various combined state and local income

tax returns, with DCG. For the period from January 1, 2025 through the Reorganization date, the Company elected to include in its separately

issued financial statements the allocated amount of current and deferred income tax expense in accordance with ASC 740-10-30-27A. The

Company is included in the consolidated federal, state, and local income tax returns of DCG and has a tax-sharing agreement with DCG,

pursuant to which tax liabilities and attributes are settled as payable and utilized by DCG.

The Company recognizes deferred tax assets and

liabilities for the expected future tax consequences of events on the condensed consolidated financial statements in accordance with ASC

740, Income Taxes. Under this accounting standard, deferred tax assets and liabilities are based on the differences between the

book value of assets and liabilities on the condensed consolidated balance sheet and tax bases of assets and liabilities, by applying

the enacted statutory tax rates in effect for the years when the differences are expected to reverse. Valuation allowances are established

when necessary to reduce deferred tax assets to an amount that, in the opinion of management, is “more-likely-than-not” to

be realized. The effective tax rate used for interim purposes is based on the Company’s best estimate of factors impacting the effective

tax rate for the annual period. There can be no assurance that the effective tax rate estimated for interim purposes will approximate

the determined annual effective tax rate.

Under ASC 740-10-25, guidance on accounting for

uncertainty in income tax positions describes how uncertain tax positions should be recognized, measured, presented and disclosed in the

condensed consolidated financial statements. The guidance requires the Company to determine whether a tax position is “more-likely-than-not”

to be sustained upon examination, including resolution of any related appeals or litigation process, based on the technical merits of

the position. For tax positions meeting the “more-likely-than-not-threshold”, the tax benefit recognized in the condensed

consolidated financial statements is the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement

with the relevant taxing authorities.

The Company’s policy is to accrue interest

and penalties associated with unrecognized tax benefits, if applicable, as a component of the income tax benefit on the Condensed Consolidated

Statements of Operations, and the corresponding asset netted within deferred tax liability, on the Condensed Consolidated Balance Sheets.

F-10

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards

Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive

Income—Expense Disaggregation Disclosures and in January 2025, the FASB issued ASU 2025-01, Clarifying the Effective Date

(“ASU 2025-01”). The amendments require the disclosure of specified information about certain costs and expenses

including employee compensation, depreciation, intangible asset amortization, and depreciation. As clarified by ASU 2025-01, the standard

will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s disclosures.

In May 2025, the FASB issued ASU 2025-03, Business

Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest

Entity (“ASU 2025-03”), which clarifies current guidance for determining the accounting acquirer for a transaction effected

primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business.

The standard becomes effective for annual periods beginning after December 15, 2026, and for interim periods within those fiscal years.

Early adoption is permitted. The Company early adopted ASU 2025-03 on April 1, 2026 on a prospective basis. The Company expects that ASU

2025-03 will impact the accounting for the transaction contemplated by the Merger Agreement such that the Company is expected to be the

accounting acquirer.

Note 3. Revenue

The Company participates in mining pools operated

by a third party, as well as pools operated by a related party. As a participant in the mining pools, the Company provides a service to

perform hash calculations for the mining pools, and the Company is entitled to non-cash consideration based on the pool operator’s

payout model. The payout methodologies differ depending on the type of operated mining pool. Full-Pay-Per-Share (“FPPS”) and

Pay Per Last N Shares (“PPLNS”) pools pay block rewards and transaction fees, less mining pool fees. For FPPS pools, the Company

is entitled to non-cash consideration even if a block is not successfully validated by the mining pool operators.

The contracts are terminable at any time by either

party with no substantive termination penalty. The Company’s enforceable right to compensation begins when, and lasts for as long

as, the Company provides computing power to the mining pool operator. The Company’s performance obligation extends over the contract

term given the Company’s continuous provision of hashrate. This period of time corresponds with the period of service for which

the mining pool operator determines compensation due to the Company. Given cancellation terms of the contract, and the Company’s

customary business practice, the contract effectively provides the Company with the option to renew for successive contract terms of 24

hours. The options to renew are not material rights because they are offered at the standalone selling price of computing power. The Company

elected the optional exemption to not disclose the transaction price allocated to remaining performance obligations that are part of a

contract that has an original expected duration of one year or less.

FPPS Mining Pools

The Company participates in mining pools that

use the FPPS payout method. The Company is entitled to compensation once it begins to perform hash calculations for the pool operator

in accordance with the operator’s specifications over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on a daily

basis. The non-cash consideration that the Company is entitled to for providing hash calculations to the pool operator under the FPPS

payout method is made up of block rewards and transaction fees less pool operator expenses determined as follows:

· The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated

on the Bitcoin network for the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula:

the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin network’s implied hash calculations

as determined by the network difficulty, multiplied by the total Bitcoin network block rewards expected to be generated for the same daily

period.

F-11

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

· The non-cash consideration in the form of transaction fees paid by transaction requestors is based on

the share of total actual fees paid over the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the

following formula: total actual transaction fees generated on the Bitcoin network during the 24-hour period as a percent of total block

rewards the Bitcoin network actually generated during the same 24-hour period, multiplied by the block rewards the Company earned for

the same 24-hour period noted above.

· The block reward and transaction fees earned by the Company is reduced by mining pool fees charged by

the operator for operating the pool based on a rate schedule per the mining pool contract. The mining pool fee is only incurred to the

extent the Company performs hash calculations and generates revenue in accordance with the pool operator’s payout formula during

the same 24-hour period beginning midnight UTC daily.

Since the amount of block rewards earned depends

on the amount of hash calculations the Company performs, the amount of transaction fees the Company is entitled to depends on the actual

Bitcoin network transaction fees over the same 24-hour period. The operator fees for the same 24-hour period are variable since they are

determined based on the total block rewards and transaction fees in accordance with the pool operator’s agreement, and therefore

the above non-cash consideration is variable. While the non-cash consideration is variable, the Company has the ability to estimate the

variable consideration at contract inception with reasonable certainty without the risk of significant revenue reversal. The Company does

not constrain this variable consideration because it is probable that a significant reversal in the amount of revenue recognized from

the contract will not occur when the uncertainty is subsequently resolved and recognizes the non-cash consideration on the same day that

control of the contracted service of providing hashrate is transferred, which is the same day as contract inception.

The Company measures the non-cash consideration

at contract inception based on the daily spot rate of Bitcoin determined using the Company’s principal market for Bitcoin.

PPLNS Mining Pools

The Company also participates in PPLNS pools that

pay rewards only when the pool successfully validates a block. For these pools, the Company only earns a reward when the pool successfully

mines a block and its reward is the fractional share of the successfully mined block and transaction fees, reduced by pool operator expenses,

based on the proportion of hash calculations the Company performed for the mining pool operator to the total hash calculations performed

by all mining pool participants in validating the block during the 24-hour period beginning at midnight UTC and ending 23:59:59 UTC daily.

Contract inception and the enforceable right to

consideration begins when the Company commences the performance of hash calculations for the mining pool operator. The non-cash consideration

is variable as it depends on whether the mining pool successfully validates a block during each 24-hour period. In addition, other inputs

such as the amount of hash calculations and the Company’s fractional share of consideration earned by the pool operator also cause

variability. The Company does not have the ability to estimate whether a block will be successfully validated with reasonable certainty

at contract inception. The Company constrains the variable consideration at contract inception because it is not probable that a significant

reversal in the amount of revenue recognized from the contract will not occur when the uncertainty is subsequently resolved. Once a block

is successfully validated, the constraint is lifted. The Company recognizes the non-cash consideration on the same day that control of

the contracted service of providing hashrate is transferred, which is the same day as contract inception.

The Company measures the non-cash consideration

at contract inception based on the daily spot rate of Zcash determined using the Company’s principal market for Zcash.

F-12

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

The following table presents disaggregation of

the Company’s mining revenues:

Six Months Ended

June 30,

2026

2025

Revenues from contracts with customers:

Mining pool participant – related party

Bitcoin

$ 13,059

$ 31,967

Zcash

15,210

Other

Total mining pool participant – related party

28,269

31,987

Mining pool participant – third party

Zcash

11,059

5,043

Other

797

3,790

Total mining pool participant – third party

11,856

8,833

Total mining revenues

$ 40,125

$ 40,820

The following table presents information about

the Company’s concentration of mining revenues by digital asset:

Six Months Ended

June 30,

2026

2025

Zcash

65 %

13 %

Bitcoin

33 %

78 %

Other(1)

2 %

9 %

(1) Includes various other digital

assets, none of which individually exceeded 10% of mining revenue for the period.

Note 4. Property and Equipment, Net

Property and equipment, net consists of the following:

June 30,

2026

December 31,

2025

Mining and other computer equipment

$ 128,086

$ 126,514

Leasehold improvements

3,819

3,982

Construction in progress(1)

3,059

Buildings

1,547

Furniture and fixtures

348

Land

377

Total

137,236

132,768

Less: accumulated depreciation

(111,844 )

(93,122 )

Property and equipment, net

$ 25,392

$ 39,646

(1) Construction in progress relates to the build out of a mining

facility in Grand Island, Nebraska that was completed and placed into service in July 2026.

Depreciation expense was $10,984 and $16,888 for

the six months ended June 30, 2026 and 2025, respectively.

F-13

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

During the six months ended June 30, 2026,

the Company identified indicators of impairment of its mining equipment, including sustained declines in digital asset prices, declines

in mining hashprice, and significant decreases in secondary market values for digital asset mining equipment. As a result, the Company

performed a recoverability assessment of its mining equipment in accordance with ASC 360-10. The undiscounted future cash flows associated

with certain mining equipment asset groups were less than their carrying amounts, indicating that the asset groups were not recoverable.

The Company measured the fair value of the affected mining equipment asset groups using a market approach based on manufacturer and secondary

market pricing sources, and comparable market transactions, as available.

During the six months ended June 30, 2026,

the Company recorded an impairment charge of $10,278 related to its Bitcoin and other non-Zcash mining equipment. No impairment charge

was recorded during the six months ended June 30, 2025.

Note 5. Intangible Asset, Net

Intangible asset, net consists of the following

as of June 30, 2026:

Gross Book

Value

Accumulated

Amortization

Net Book

Value

Weighted-

Average

Remaining

Amortization

(Years)

Strategic contracts

$ 4,473

$ (773 )

$ 3,700

3.3

Intangible asset, net consists of the following

as of December 31, 2025:

Gross Book

Value

Accumulated

Amortization

Net Book

Value

Weighted-

Average

Remaining

Amortization

(Years)

Strategic contracts

$ 4,473

$ (214 )

$ 4,259

3.8

During the six months ended June 30, 2026

and 2025, amortization expense related to the Company’s intangible asset was $559 and $0, respectively. No impairment charges related

to the intangible asset were recognized during the six months ended June 30, 2026 and 2025.

The following table presents the estimated future

amortization of the Company’s intangible asset as of June 30, 2026:

Rest of 2026

$ 559

2027

1,118

2028

1,118

2029

905

Total

$ 3,700

Note 6. Deposits

The Company contracts with mining equipment manufacturers

to procure equipment necessary for the operation of its mining operations. These agreements typically require a certain percentage of

the value of the total order to be paid in advance at specific intervals, usually within several days of execution of a contract and periodically

thereafter with final payments due prior to each shipment date. Deposits on mining equipment are included within deposits, net of current

portion on the Condensed Consolidated Balance Sheets which totaled $13,118 and $5,420 as of June 30, 2026 and December 31, 2025,

respectively.

F-14

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

In addition, the Company contracts with various

service providers for hosting of its equipment, operational support in data centers where the Company’s equipment is deployed and

construction of data centers on leased sites. These contracts typically require advance payments to service providers in conjunction with

the contractual obligations associated with these services. The Company includes these deposits within deposits which totaled $181 and

$903 and deposits, net of current portion which totaled $2,916 and $5,347 on the Condensed Consolidated Balance Sheets as of June 30,

2026 and December 31, 2025, respectively.

Note 7. Digital Assets

The following table presents the digital assets

held by the Company:

June 30, 2026

Quantity

Cost Basis

Fair Value

Concentration

Zcash

2,956

$ 1,551

$ 1,181

95 %

Other

488

5 %

$ 2,039

$ 1,249

100 %

December 31, 2025

Quantity

Cost Basis

Fair Value

Concentration

Zcash

6,273

$ 3,528

$ 3,195

94 %

Other

397

218

6 %

$ 3,925

$ 3,413

100 %

Note 8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist

of the following:

June 30,

2026

December 31,

2025

Accounts payable

$ 3,005

$ 1,458

Accrued hosting expenses

458

187

Accrued bonus expense

1,125

1,207

Accrued professional fees

2,120

Other

944

137

Total

$ 7,652

$ 2,989

Note 9. Credit Facility - Related Party

On June 1, 2026, the Company entered into a credit

and security agreement with DCG (the “DCG Credit Agreement”), which provides for a multi-draw term loan facility with an aggregate

committed amount of $26,000 (the “DCG Credit Facility”). The DCG Credit Facility permits borrowings for a period of up to

18 months from June 1, 2026, after which no additional borrowings may be made, and may only be used to fund the acquisition of certain

Zcash mining equipment. Draws under the DCG Credit Facility bear interest at 11.0% per annum. Interest is payable monthly and may, at

the Company’s option, be paid in cash or paid-in-kind (“PIK”), with PIK interest capitalized to the outstanding principal

balance and accruing at a rate of 12.0% per annum. The Company is also required to pay a commitment fee of 0.5% per annum on the unused

committed portion of the DCG Credit Facility. The DCG Credit Facility matures on June 1, 2028 and is secured by mining equipment funded

with proceeds of the DCG Credit Facility.

F-15

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

As of June 30, 2026, the Company had drawn

$5,249 under the DCG Credit Facility and had $20,751 of remaining loan commitments. During the six months ended June 30, 2026, the

Company incurred $55 of interest expense under the DCG Credit Facility, of which $9 was the commitment fee. As of June 30, 2026,

the outstanding principal balance under the DCG Credit Facility was $5,249 and is included within credit facility - related party in the

Condensed Consolidated Balance Sheets.

Note 10. Income Taxes

For the six months ended June 30, 2026, the

Company’s income tax benefit and effective tax rate were $2,869 and 16.8%, respectively. The Company did not recognize an income

tax benefit for the six months ended June 30, 2025. This rate differed from the statutory federal income tax rate of 21.0% primarily due

to certain nondeductible expenses which the Company incurred during the quarter.

The Company is subject to U.S. federal income

tax and state and local income tax in multiple jurisdictions. As of June 30, 2026, the earliest year the Company remains subject

to examination by the Internal Revenue Service and state and local tax authorities is for the tax year ended December 31, 2024. The Company

is not currently under examination for any open tax periods.

Note 11. Stockholder’s Equity/Member’s

Equity

Fortitude Mining, LLC Member’s

Equity

Prior to the Reorganization and pursuant to the

terms of the Limited Liability Company Agreement, the business and affairs of the Company were managed and operated by the management

of the Company, however, as a single member, LLC membership interests were ultimately controlled by DCG.

Fortitude Mining Holdings, Inc. Stockholder’s

Equity

On August 12, 2025, in connection with the Reorganization,

the Company’s Board of Directors approved the certificate of incorporation. The certificate of incorporation authorizes the issuance

of 10,000,000 shares of common stock, par value $0.0001 per share. Holders of common stock are entitled to one vote per share on all matters

submitted to a vote of stockholders, including the election of directors. As of June 30, 2026 and December 31, 2025, 5,000,000

shares of common stock were issued and outstanding, all of which are ultimately held by Parent as a result of the Reorganization.

Note 12. Risk and Uncertainties

The Company’s operating activities expose

it to various types of risk that are associated with the mining, liquidation, and holding of digital assets. The significant types of

risks to which the Company is exposed include, but are not limited to, market risk, industry risk, regulatory risk, liquidity risk, concentration

risk, credit risk, counterparty risk, and digital asset risk. Certain aspects of those risks include, but are not limited to, the risk

of loss related to the value of digital assets mined but not yet liquidated, the risk that the type of digital assets that the Company

mines will decrease in value, the risk of reliance on mining revenues which are highly concentrated, and the risk of reliance on vendors

such as mining pool operators, equipment vendors and hosting and energy providers. The Company depends on a single supplier of Zcash miners,

and any disruption could adversely affect the Company’s business.

The digital asset industry is currently largely

unregulated, highly speculative, and volatile. The price of digital assets has a limited history. During such history, digital asset prices

have been volatile and subject to influence by many factors including the levels of liquidity. If digital asset markets continue to experience

significant price fluctuations, the Company may experience substantial losses. Several factors may affect the price of digital assets,

including, but not limited to, global supply and demand, and competition from other forms of digital asset or payment services.

F-16

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Note 13. Related Party Transactions

Foundry Digital, LLC (“Foundry”) is

a mining pool operator in which the Company is a mining participant. For the six months ended June 30, 2026 and 2025, related party

mining participant revenue was $28,269 and $31,987, respectively.

The Company recognizes stock-based compensation

expense for awards that reference the shares of DCG and not the Company. Awards that reference the shares of DCG and are expected to be

settled in cash are recorded as a liability on the books and records of DCG. During the six months ended June 30, 2026 and 2025,

the Company recorded stock-based compensation expense of $9 and $24, respectively.

On June 1, 2026, the Company entered into a secured

credit facility with DCG. As of June 30, 2026, the outstanding principal balance under the DCG Credit Facility was $5,249 (see Note

9 for further details).

The Company has a tax-sharing agreement with DCG

whereby any tax liabilities or benefits attributable to the Company will be settled between the Company and DCG when such tax liabilities

or benefits are used in the consolidated tax returns of DCG. As of June 30, 2026 and December 31, 2025, the Company recognized

$280 and $618 within accounts payable and accrued expenses and prepaid expenses and other current assets, respectively, on the Condensed

Consolidated Balance Sheets in relation to these tax attributes.

During the six months ended June 30, 2026

and 2025, capital contributions from DCG were $0 and $200, respectively.

The Company has a shared services agreement (the

“SSA”) and a managed services agreement (the “MSA”) with Foundry, under which Foundry agreed to provide certain

services to the Company. Both agreements include fixed monthly fees and variable components based on usage of certain services which are

due and payable on a monthly basis. The SSA includes automatic one-year renewals unless terminated by either party. As of December 31,

2025, the MSA agreement was terminated. During the six months ended June 30, 2026 and 2025, the Company incurred costs of $221 and

$859, respectively, pursuant to the SSA and MSA, which are included within cost of revenues and general and administrative expenses on

the Condensed Consolidated Statements of Operations based on the nature of the costs.

The Company has a transition services agreement

(the “TSA”) with DCG, under which DCG agreed to provide various services to the Company. The TSA includes fixed monthly fees

and also requires payment for any additional services performed. During the six months ended June 30, 2026 and 2025, the Company

incurred costs of $147 and $220, respectively, pursuant to the TSA, which are included within general and administrative expenses on the

Condensed Consolidated Statements of Operations.

The Company leased a portion of its building site

to Foundry which is included in rental income - related party on the Condensed Consolidated Statements of Operations. On November 1, 2025,

the lease was terminated by both parties.

As of June 30, 2026 and December 31,

2025, amounts due from related party resulting from the aforementioned agreements totaled $5 and $13, respectively, and are included within

prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. These amounts are expected to be settled in the

short term and are non-interest bearing.

F-17

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

Note 14. Commitments and Contingencies

Leases

The Company, as lessee, leases building and mining

site operational space under various operating lease arrangements. Certain lease arrangements include renewal options, and certain of

the Company’s lease agreements require compliance with certain customary covenants throughout the term of the leases.

Operating lease costs totaled $250 and $205 for

the six months ended June 30, 2026 and 2025, respectively, and are included in general and administrative expenses on the Condensed

Consolidated Statements of Operations. The weighted-average remaining lease term for operating leases was 7.6 years, and the weighted-average

discount rate was 4.9% as of the six months ended June 30, 2026.

The following table presents the Company’s

future minimum operating lease payments as of June 30, 2026:

Rest of 2026

$ 243

2027

461

2028

458

2029

461

2030

463

Thereafter

1,126

Total minimum lease payments

3,212

Less effects of discounting

(578 )

Total lease liabilities

$ 2,634

Other Commitments and Contingencies

The Company is subject at times to various claims,

lawsuits and governmental proceedings that arise in the ordinary course of business. The Company reviews its legal proceedings on an ongoing

basis and provides disclosure and records loss contingencies pursuant to the loss contingencies accounting guidance. The Company establishes

accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss

is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the condensed consolidated

financial statements.

On December 12, 2025, Malikie Innovations Ltd. (“Malikie”) and Key Patent Innovations Ltd. (collectively, the “Malikie

Plaintiffs”) filed suit against the Company and other parties in the United States District Court for the Western District of Texas,

alleging that certain of the Company’s technologies infringe on certain of Malikie Plaintiffs’ patents. On August 17, 2026,

the magistrate judge in the United States District Court for the Western District of Texas recommended that the Company’s motion to dismiss

for improper venue be granted. The Malikie Plaintiffs may file objections to the magistrate judge’s recommendation in which case a district

court judge will decide whether to adopt the recommendation and dismiss the Company from the case or overrule the magistrate judge’s recommendation

and deny the Company’s motion to dismiss. The Company cannot reasonably predict the outcome of such ongoing litigation, or the magnitude

of such outcome, at this time.

F-18

Fortitude Mining Holdings,

Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands, except share, per share, and digital

asset amounts)

On May 21, 2026, the Company entered into

an equipment purchase agreement to support its ongoing infrastructure expansion and hashrate growth initiatives. The aggregate contractual

commitment under this agreement is $31,491, of which $9,447 has been paid and is included within Deposits, net of current portion, as

of June 30, 2026. The remaining outstanding balance of $22,044 is expected to be settled during the remainder of 2026. The Company

expects to use proceeds from the DCG Credit Facility to fund a substantial portion of the remaining payments (see Note 9 for further details).

Note 15. Subsequent Events

The Company evaluated subsequent events through

the date the condensed consolidated financial statements were available to be issued.

On July 7, 2026, the Company entered into a purchase

agreement with a third party, pursuant to which the Company acquired certain mining related assets, including power contracts, land, a

building, and other mining equipment in Prosser, Nebraska. As consideration for the acquired assets, the Company agreed to pay $6,250,

of which $985 was satisfied through the application of previously funded deposits and $466 through the sale of mining equipment, with

the remainder paid in cash at closing on July 7, 2026.

On July 1, 2026 and July 31, 2026, the Company

made draws under the DCG Credit Facility of $3,149 and $6,298, respectively. Through the date these condensed consolidated financial statements

were available to be issued, the Company had an outstanding principal balance under the DCG Credit Facility of $14,742, inclusive of PIK

interest.

On August, 12, 2026, the Company entered into

a subscription agreement with HeartSciences, pursuant to which the Company agreed to purchase 411,522 shares of HeartSciences common stock

at $2.43 per share, for an aggregate purchase price of $1,000 in a private placement.

On July 25, 2026, the Company experienced a weather-related incident affecting mining operations at each of its Aurora, Prosser, and Grand

Island, Nebraska sites, resulting in physical damage to certain mining and support equipment. There has been no observed damage to any

of the data centers. This event occurred subsequent to the quarter ended June 30, 2026, and its effects are not reflected in the accompanying

financial statements for the same period.

Based on management’s evaluation through the date of filing of these interim financial statements,

the Company estimates aggregate repair costs and the market value of equipment losses at less than $1.0 million. This estimate is preliminary,

based on information available as of the filing date, and may be revised as the Company’s assessment of the damage continues.

In addition

to the amounts above, mining hashrate at these sites initially fell by approximately 1,136 MSol and approximately 522 PH (representing

28% and 25% of average daily production of MSol and PH respectively during the six months ended June 30, 2026) across our Zcash and Bitcoin

mining businesses, respectively. Through repair efforts to date, our Zcash hashrate has recovered by approximately 917 MSol (approximately

81% of the initial decrease in hashrate) while Bitcoin repair efforts are commencing and as such there has been no Bitcoin hashrate recovery

to date. Due to the variability of factors affecting mining revenue, including digital asset prices and network hashrate the financial

impact is difficult to be reasonably estimated at this time, however assuming a price of approximately $64,000 and network hashrate of

916 EH/s for bitcoin and assuming a price of approximately $487 and network hashrate of 24 GS/s for zcash, the revenue loss between July

25, 2026 and August 18, 2026 represents less than $1.2 million. The financial impact of lost mining revenue associated with this event

subsequent to the issuance of the financial statements cannot be reasonably estimated at this time.

F-19

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Jun. 23, 2026

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