Form 8-K/A

8-K/A — HeartSciences Inc.

Accession: 0001213900-26-081833

Filed: 2026-07-27

Period: 2026-06-23

CIK: 0001468492

SIC: 3842 (ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES)

Item: Financial Statements and Exhibits

Documents

8-K/A — ea0299145-8ka1_heartsciences.htm (Primary)

EX-23.1 — CONSENT OF CBIZ CPAS, P.C., FORTITUDE'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ea029914501ex23-1.htm)

EX-99.1 — AUDITED FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE FISCAL YEARS ENDED DECEMBER 31, 2025 AND 2024, AND THE ACCOMPANYING NOTES (ea029914501ex99-1.htm)

EX-99.2 — UNAUDITED INTERIM FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025, AND THE ACCOMPANYING NOTES (ea029914501ex99-2.htm)

EX-99.3 — UNAUDITED PRO FORMA FINANCIAL STATEMENTS AS OF AND FOR THE FISCAL YEAR ENDED APRIL 30, 2026 WITH RESPECT TO HEARTSCIENCES AND AS OF AND FOR THE TWELVE MONTHS ENDED MARCH 31, 2026 WITH RESPECT TO FORTITUDE (ea029914501ex99-3.htm)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K/A — AMENDMENT NO. 1 TO FORM 8-K

8-K/A (Primary)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

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

On June 23, 2026, HeartSciences

Inc., a Texas corporation (“HeartSciences” or “Parent”), filed a Current Report on Form 8-K (the

“Initial Form 8-K”) 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 “Transactions.” This Amendment No. 1 on Form 8-K/A (this “Amendment”)

is being filed solely for the purpose of supplementing Items 9.01(a) and 9.01(b) of the Initial Form 8-K to provide the required financial

statements, as specified in Rule 3-05 of Regulation S-X, and the pro forma financial information required in connection with the Transactions

pursuant to Article 11 of Regulation S-X. This Amendment should be read in conjunction with the Initial Form 8-K.

Additional Information

and Where to Find It

HeartSciences intends to file

with the U.S. Securities and Exchange Commission (“SEC”) a proxy statement (together with any amendments or supplements

thereto, the “Proxy Statement”) in connection with the Transactions. The definitive Proxy Statement and other relevant

documents will be mailed to stockholders of HeartSciences as of a record date to be established for voting on the Transactions and other

matters as described in the Proxy Statement. HeartSciences will also file other documents regarding the Transactions with the SEC. This

Amendment does not contain all of the information that should be considered concerning the Transactions and is not intended to form the

basis of any investment decision or any other decision in respect of the Transactions. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION,

STOCKHOLDERS OF HEARTSCIENCES AND OTHER INTERESTED PARTIES ARE URGED TO READ, WHEN AVAILABLE, THE PRELIMINARY PROXY STATEMENT, AND AMENDMENTS

THERETO, AND THE DEFINITIVE PROXY STATEMENT AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC IN CONNECTION WITH

HEARTSCIENCES’ SOLICITATION OF PROXIES FOR THE SPECIAL MEETING OF ITS STOCKHOLDERS TO BE HELD TO APPROVE THE TRANSACTIONS AND OTHER

MATTERS AS DESCRIBED IN THE PROXY STATEMENT BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT HEARTSCIENCES AND FORTITUDE

AND THE TRANSACTIONS. Investors and security holders will also be able to obtain copies of the Proxy Statement and all other documents

filed or that will be filed with the SEC by HeartSciences, without charge, once available, on the SEC’s website at www.sec.gov.

NEITHER THE SEC NOR ANY STATE

SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED HEREIN, PASSED UPON THE MERITS OR FAIRNESS OF THE

TRANSACTIONS 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, Fortitude,

HoldCo and their respective directors and executive officers, and certain executive officers of Digital Currency Group, Inc., the sole

stockholder of Fortitude, may be deemed under SEC rules to be participants in the solicitation of proxies from HeartSciences’ stockholders

in connection with the Transactions. A list of the names of such persons, and information regarding their interests in the Transactions

and their ownership of HeartSciences’ securities are, or will be, contained in HeartSciences’ filings with the SEC, including

HeartSciences’ Annual Report on Form 10-K for the year ended April 30, 2026 filed with the SEC on July 23, 2026. Additional information

regarding the interests of the persons who may, under SEC rules, be deemed participants in the solicitation of proxies of HeartSciences’

stockholders in connection with the Transactions, including the names and interests of Fortitude’s directors and executive officers,

will be set forth in the Proxy Statement and other relevant materials, which are expected to be filed by HeartSciences with the SEC when

they become available. Investors and security holders may obtain free copies of these documents as described above.

No Offer or Solicitation

The information contained

in this Amendment and the exhibits filed or furnished herewith are for informational purposes only and are not a proxy statement or solicitation

of a proxy, consent or authorization with respect to any securities or in respect of the Transactions and shall not constitute an offer

to sell or exchange, or a solicitation of an offer to buy or exchange the securities of HeartSciences, or any commodity or instrument

or related derivative, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation,

sale or exchange would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No

offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act or an exemption therefrom.

Investors should consult with their counsel as to the applicable requirements for a purchaser to avail itself of any exemption under the

Securities Act.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

In accordance with Item 9.01(a)

of Form 8-K, (i) the audited financial statements of Fortitude as of December 31, 2025, and 2024 and for the years then ended, and the

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

financial statements of Fortitude for the three months ended March 31, 2026 and 2025, and the accompanying notes, are filed herewith as

Exhibit 99.2 and incorporated by reference into this Item 9.01(a). The consent of CBIZ CPAs, P.C., Fortitude’s independent registered

public accounting firm as of and for the years ended December 31, 2025, and 2024, is filed herewith as Exhibit 23.1.

(b) Pro Forma Financial Information.

In accordance with Item 9.01(b)

of Form 8-K, the following unaudited pro forma financial information with respect to the Transactions is filed herewith as Exhibit 99.3

and incorporated by reference into this Item 9.01(b): (x) the unaudited pro forma condensed combined statement of financial condition

as of April 30, 2026 with respect to HeartSciences and as of March 31, 2026 with respect to Fortitude, and (y) the unaudited pro forma

condensed combined statement of operations for the fiscal year ended April 30, 2026 with respect to HeartSciences and for the twelve months

ended March 31, 2026 with respect to Fortitude, and the accompanying notes.

(d) Exhibits

Number

Description

23.1*

Consent of CBIZ CPAs, P.C., Fortitude’s independent registered public accounting firm.

99.1*

Audited financial statements of Fortitude as of and for the fiscal years ended December 31, 2025 and 2024, and the accompanying notes.

99.2*

Unaudited interim financial statements of Fortitude as of and for the three months ended March 31, 2026 and 2025, and the accompanying notes.

99.3*

Unaudited pro forma financial statements as of and for the fiscal year ended April 30, 2026 with respect to HeartSciences and as of and for the twelve months ended March 31, 2026 with respect to Fortitude.

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: July 27, 2026

By:

/s/ Andrew Simpson

Name:

Andrew Simpson

Title:

President, Chief Executive Officer and

Chairman of the Board of Directors

EX-23.1 — CONSENT OF CBIZ CPAS, P.C., FORTITUDE'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-23.1

Filename: ea029914501ex23-1.htm · Sequence: 2

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

We consent to the incorporation by reference in

this Registration Statement on Form S-3 (No. 333-274554) and on Form S-8 (Nos. 333-277374 and 333-291297) of HeartSciences Inc. and the

Offering Statement on Form 1-A (File No. 024-12572) of HeartSciences Inc. of our report dated March 13, 2026 with respect to the consolidated

financial statements of Fortitude Mining Holdings, Inc. and Subsidiaries for the years ended December 31, 2025 and 2024 appearing in this

Current Report of HeartSciences Inc. on Form 8-K/A dated July 27, 2026.

/s/ CBIZ CPAs P.C.

New York, NY

July 27, 2026

EX-99.1 — AUDITED FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE FISCAL YEARS ENDED DECEMBER 31, 2025 AND 2024, AND THE ACCOMPANYING NOTES

EX-99.1

Filename: ea029914501ex99-1.htm · Sequence: 3

Exhibit 99.1

CONSOLIDATED FINANCIAL STATEMENTS

Fortitude Mining Holdings, Inc. and Subsidiaries

As of and for the Years Ended December 31, 2025 and 2024

With Report of Independent Registered Public Accounting Firm

Fortitude Mining Holdings, Inc. and Subsidiaries

Table of Contents

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 199)

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Changes in Stockholder’s / Member’s Equity for the Years Ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024

Notes to Consolidated Financial Statements

Report of Independent Registered Public

Accounting Firm

To the Member and Board of Directors of

Fortitude Mining Holdings, Inc. and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Fortitude Mining Holdings, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related

consolidated statements of operations, changes in stockholder’s / member’s equity, and cash flows for each of the two years

in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2025 and 2024, and the results of its operations and its cash flows for each of the two years ended December 31, 2025, in conformity with

accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We

are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are

required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal

control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.

/s/ CBIZ CPAs P.C.

We have served as the Company’s auditor

since 2025.

New York, NY

March 13, 2026

Fortitude Mining Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

December 31,

2025

2024

Assets

Cash

$ 9,995

$ 4,496

Digital assets

3,413

Deposits

903

1,576

Due from related party

Prepaid expenses and other current assets

984

324

Total current assets

15,308

6,519

Property and equipment, net

39,646

59,938

Deposits, net of current portion

10,767

8,986

Right-of-use assets

2,812

1,732

Intangible asset, net

4,259

—

Total assets

$ 72,792

$ 77,175

Liabilities and stockholder's / member's equity

Liabilities:

Accounts payable and accrued expenses

$ 2,989

$ 2,648

Lease liabilities, current portion

350

278

Total current liabilities

3,339

2,926

Deferred tax liability

4,172

—

Lease liabilities, net of current portion

2,454

1,420

Total liabilities

9,965

4,346

Commitments and Contingencies (Note 15)

Stockholder's / member's equity:

Member's equity

—

72,829

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

—

Additional paid-in capital

59,507

—

Retained earnings

3,319

—

Total stockholder's / member's equity

62,827

72,829

Total liabilities and stockholder's / member's equity

$ 72,792

$ 77,175

The accompanying notes are an integral part of

these consolidated financial statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands)

Years Ended December 31,

2025

2024

Revenues:

Mining revenues, net (includes related party amounts of $58,091 and $61,364, respectively)

$ 89,482

$ 81,780

Other revenue

—

Total revenues

89,497

81,780

Costs and expenses:

Cost of revenues (exclusive of depreciation shown below)

60,455

54,653

Depreciation and amortization

32,570

30,374

General and administrative expenses

9,936

7,997

Loss on disposal of equipment, net

2,600

2,767

Impairment of mining equipment

—

552

Change in fair value of digital assets, net

367

(173 )

Total operating expenses

105,928

96,170

Other income:

Rental income - related party

Total other income

Loss before income taxes

(16,359 )

(14,382 )

Income tax benefit

3,683

—

Net loss

$ (12,676 )

$ (14,382 )

The accompanying notes are an integral part of

these consolidated financial statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholder's

/ Member's Equity

(in thousands, except share amounts)

Member's

Common Stock

Additional Paid-in

Retained

Equity

Amount

Capital

Earnings

Total

Balance, January 1, 2024

$ 63,260

—

$ —

$ 63,260

Net investment from Parent

20,676

—

20,676

Capital contributions from Parent

2,936

—

2,936

Stock-based compensation

339

—

339

Net loss

(14,382 )

—

(14,382 )

Balance, December 31, 2024

72,829

—

72,829

Capital contributions from Parent

200

—

9,616

—

9,816

Stock-based compensation

—

Net (loss) income

(15,995 )

—

3,319

(12,676 )

Effect of the Reorganization

(57,064 )

5,000,000

49,826

—

(7,237 )

Balance, December 31, 2025

$ —

5,000,000

$ 1

$ 59,507

$ 3,319

$ 62,827

The accompanying notes are an integral part of

these consolidated financial statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2025

2024

Cash flows from operating activities:

Net loss

$ (12,676 )

$ (14,382 )

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

Depreciation and amortization

32,570

30,374

Impairment of mining equipment

—

552

Loss on disposal of equipment, net

2,600

2,767

Mining revenues, net

(89,482 )

(81,780 )

Other revenue

(15 )

—

Proceeds from the sale of digital assets

81,681

78,627

Digital assets paid for services

4,113

3,249

Change in fair value of digital assets, net

367

(173 )

Stock-based compensation

339

Deferred income taxes

(3,065 )

—

Change in operating assets and liabilities:

Deposits

2,863

(1,022 )

Due from related party

(46 )

Prepaid expenses and other current assets

(660 )

(164 )

Right-of-use assets

329

274

Accounts payable and accrued expenses

341

645

Lease liabilities

(303 )

(264 )

Net cash provided by operating activities

18,791

18,996

Cash flows from investing activities:

Purchases of property and equipment

(9,570 )

(37,379 )

Deposits on property and equipment

(7,004 )

(1,449 )

Proceeds from disposal of property and equipment

230

716

Aurora acquisition

(6,305 )

—

Net cash used in investing activities

(22,649 )

(38,112 )

Cash flows from financing activities:

Capital contributions from Parent

9,357

2,936

Net investment from Parent

—

20,676

Net cash provided by financing activities

9,357

23,612

Net increase in cash

5,499

4,496

Cash, beginning of year

4,496

—

Cash, end of year

$ 9,995

$ 4,496

Supplemental disclosure of cash flow information:

Cash paid for interest

$ —

Cash paid for taxes

$ —

Non-cash investing and financing activities:

Capitalizations of deposits to property and equipment

$ 1,449

$ 10,293

Deferred tax liability contributed from Parent

$ 7,237

$ —

Property and equipment contributed from Parent

$ 459

$ —

Hosting deposit applied to Aurora acquisition purchase price

$ 1,584

$ —

Right-of-use assets obtained in exchange for lease liabilities

$ 1,409

$ —

The accompanying notes are an integral part of

these consolidated financial statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(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 Bitcoin and other high-growth digital assets in emerging ecosystems.

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

The digital asset mining operations of the Company

historically were a component of Foundry Digital, LLC (“Foundry”), a wholly-owned subsidiary of DCG, and did not operate as

a standalone company. On October 1, 2024, as further detailed below, the digital asset mining operations were carved out of Foundry, and

Fortitude began operating as a standalone entity (the “Transaction”).

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 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 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. The Reorganization, including these deferred tax liabilities, are presented within the effect of the Reorganization

in the Consolidated Statements of Changes in Stockholder’s / Member’s Equity.

Liquidity and Capital Resources

On an annual basis, as required by Accounting

Standards Codification (“ASC”) 205, Presentation of Financial Statements – Going Concern, the Company performs

an evaluation to determine whether there are conditions or events (known and reasonably knowable), considered in the aggregate, that raise

substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated

financial statements are available to be issued. The Company has 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 December 31, 2025, the Company had cash

and working capital balances of $9,995 and $11,969, 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 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.

Note 2. Summary of Significant Accounting

Policies

Basis of Presentation and Principles

of Consolidation

The accompanying 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”). Prior to the Transaction on October 1, 2024, the financial

statements have been prepared on a carve-out basis. All intercompany transactions and balances have been eliminated in consolidation.

On June 18, 2024, the Company, entered into an

asset contribution agreement with Foundry and DCG Holdco II, LLC (“DCG Holdco”), as amended and restated, pursuant to which

Foundry agreed to contribute certain assets and liabilities of Foundry’s digital asset mining operations to DCG Holdco, and thereafter,

DCG Holdco further contributed such assets to the Company for no consideration effective October 1, 2024. In addition, on November 6,

2024, the Company entered into a contribution agreement by and among DCG, DCG Real Estate Holdings LLC, DCG Real Estate LLC, and DCG Holdco

pursuant to which DCG Real Estate Holdings LLC contributed all of the issued and outstanding membership interests of Fairport 45 O’Connor

LLC through a series of transactions to the Company for no consideration (together, the “Contribution Agreement”). The net

assets transferred pursuant to the Contribution Agreement represent a transfer of net assets under common control and therefore were recognized

by the Company at the historical cost and carrying value of Foundry.

Prior to the Transaction, the digital asset mining

operations of the Company historically were a component of Foundry and did not operate as a standalone company. These consolidated financial

statements, representing the historical assets, liabilities, operations and cash flows attributable to the digital asset mining operations

of the Company, have been prepared on a carve-out basis. Subsequent to October 1, 2024 and the effectiveness of the Contribution Agreement,

the assets, liabilities, operations and cash flows presented within these consolidated financial statements are of Fortitude as a standalone

legal entity. Historically, separate financial statements had not been prepared for Fortitude and it had not operated as a standalone

business from Foundry.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

All revenues and costs, as well as assets and

liabilities that were directly associated with what was historically Foundry’s mining

operations, are included in these consolidated financial statements on a carve-out basis. Additional costs allocated to Fortitude include

corporate general and administrative expenses including, but not limited to, employee compensation and benefits, professional services,

facilities and corporate office expenses, information technology, and stock-based compensation. Other than costs that were identified

as directly attributable to the digital asset mining operations, the corporate and general and administrative expenses allocated are primarily

based on an estimate of headcount and time-spent of historical Foundry employees that participated in the digital asset mining operations.

Management believes the assumptions underlying these consolidated financial statements, including the expense methodology and resulting

allocation, are reasonable for all periods presented, however, the allocations may not include all of the actual expenses that would have

been incurred by the Company and may not reflect its results of operations, financial position and cash flows had it been a standalone

company during the carve-out periods presented. Actual costs that might have been incurred had the Company been a standalone company during

the entirety of the periods presented would depend on a number of factors, including the organizational structure, what corporate functions

the Company might have performed directly or outsourced, and strategic decisions the Company might have made in areas such as executive

management, legal and other professional services, and certain corporate overhead functions. These costs also may not be indicative of

the expenses that the Company will incur in the future or would have incurred if the Company had obtained these services from a third

party.

All intracompany

transactions within Fortitude have been eliminated, and all intercompany transactions between Fortitude, Foundry, or Parent prior to the

Transaction are considered to be effectively settled in Fortitude’s consolidated financial statements at the time the transactions

are recorded. The total net effect of these intercompany transactions considered to be settled is reflected in the Consolidated Statements

of Cash Flows within financing activities and in the Consolidated Statements of Changes in Stockholder’s / Member’s

Equity as net investment from Parent and capital contributions from Parent.

Fortitude’s

equity balance in its consolidated financial statements represents the excess of total liabilities over assets. Net investment from Parent

is primarily impacted by contributions or distributions with Parent which are the result of net funding provided by or distributed to

Parent.

Prior to

the Transaction, cash was managed through bank accounts controlled and maintained by Foundry. Fortitude did not have legal ownership of

any bank accounts containing cash balances prior to the Transaction. As such, cash held in commingled accounts with Foundry prior to the

Transaction is presented within net investment from Parent, which is a component of stockholder’s

/ member’s equity on the Consolidated Balance Sheets. In addition, all digital assets

acquired in mining operations were managed in wallets controlled and maintained by Foundry. Fortitude did not have legal ownership of

any wallets containing digital assets and therefore did not recognize any gains or losses from digital assets prior to the Transaction.

As such, digital assets held in commingled accounts with Foundry prior to the Transaction are also presented within net investment from

Parent.

Use of Estimates

The preparation of the 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 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, fair value of the intangible asset, 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 a third party, as well as pools operated by Foundry. 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

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, which is separately presented.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

Cash

The Company maintains cash at institutions that

are insured by the Federal Deposit Insurance Corporation (“FDIC”). Cash balances, at times, may exceed levels insured by the

FDIC, however, the Company does not believe there is a significant credit risk with respect to these balances.

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 EST 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 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 Consolidated Statements of Operations. 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 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 asset are capitalized and depreciated over the remaining useful lives of the assets. 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. Land is not depreciated.

Useful life (years)

Mining and other computer equipment

3 - 5

Buildings

Furniture and fixtures

Leasehold improvements

** Leasehold improvements are amortized using

the straight-line method over the shorter of the lease term or estimated useful life of the asset.

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 Consolidated Statements of Operations. No impairments of the definite-lived intangible asset or

property and equipment were recognized during the year ended December 31, 2025. See Note 5 for additional information regarding impairments

of property and equipment during the year ended December 31, 2024.

Asset Acquisitions

The Company assesses acquisitions of assets and

other similar transactions to determine whether the transaction should be accounted for as a business combination or an asset acquisition

in accordance with ASC 805, Business Combinations. A transaction is accounted for as an asset acquisition when substantially all

of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets,

or when the acquired set does not meet the definition of a business.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

In an asset acquisition, the cost of the acquisition

is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. Transaction costs are capitalized

as part of the cost of the assets acquired. No goodwill is recognized in an asset acquisition. Any difference between the cost of an asset

acquisition and the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based on their relative

fair values.

Leases

The Company determines if an arrangement is a

lease at inception and classifies its leases at commencement. As lessee, operating leases are presented as right-of-use (“ROU”)

assets and the corresponding operating lease liabilities are included in lease liabilities, current portion and lease liabilities, net

of current portion on the Company’s Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying

asset, and lease liabilities represent the Company’s obligation for lease payments in exchange for the ability to use the asset

for the duration of the lease term.

ROU assets and lease liabilities are recognized

at commencement date and are based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company’s

lease agreements is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present

value of the sum of the lease payments. The lease term may include options to extend when it is reasonably certain that the Company will

exercise that option. In addition, the Company does not recognize short-term leases that have a term of twelve months or less as ROU assets

or lease liabilities for all asset classes. The Company recognizes operating lease expense on a straight-line basis over the lease term.

The Company has lease agreements which contain

both lease and non-lease components, which it has elected to account for as a single lease component for all asset classes when the payments

are fixed. As such, variable lease payments, including those not dependent on an index or rate, such as real estate taxes, common area

maintenance, and other costs that are subject to fluctuation from period to period, are not included in lease measurement.

Fair Value Measurement

The Company applies ASC 820, which establishes

a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an

exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or

most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established

in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed

based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions

based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or

liability and are to be developed based on the best information available in the circumstances.

Certain assets and liabilities of the Company

are required to be recorded at fair value either on a recurring or nonrecurring 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 nonrecurring basis, in

the period an impairment charge is recognized.

The carrying amounts reflected in the Consolidated

Balance Sheets for cash, prepaid expenses and other current assets, deposits, due from related party, 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.

In certain cases, the inputs used to measure fair

value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value

hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value

measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires

judgment and considers factors specific to the financial instrument.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

The following table presents information about

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

Fair Value Measurement Using

Total

Level 1

Level 2

Level 3

December 31, 2025

Digital assets

$ 3,413

$ —

$ 3,413

$ —

December 31, 2024

Digital assets

$ 77

$ —

$ 77

$ —

There were no transfers between Levels 1, 2 or

3 during the years ended December 31, 2025 and 2024.

Stock-Based Compensation

The Company recognizes stock-based compensation

expense for stock appreciation rights (“SARs”) that provide for cash settlement as employee awards within the scope of ASC

718, Stock Compensation (“ASC 718”). The awards reference the shares of DCG and not the Company. The SARs are recorded

as a liability on the books and records of DCG. Compensation cost is recognized within general and administrative expenses on the Consolidated

Statements of Operations using a straight-line method over the requisite period of the award, which is generally the vesting term. The

impact of remeasuring SARs each reporting period and the recognition of stock-based compensation cost is reflected in the Company’s

consolidated financial statements as a capital contribution (or investment from Parent) (i.e., compensation cost with an offsetting entry

to stockholder’s / member’s equity). The Company does not record a liability related to SARs given the liability-classified

awards are reflected as a liability by DCG and are remeasured at intrinsic value under the practical expedient provided in Accounting

Standards Update (“ASU”) 2016-09, Compensation–Stock Compensation.

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 Consolidated Statements of Operations and the Company

has determined that the expenses presented in the 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 Consolidated Statements of Operations, segment assets are reported in the Consolidated Balance Sheets, and capital expenditures

are reported in the 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 has 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 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 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.

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

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 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

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 Consolidated Statements

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

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In December 2023, the Financial Accounting Standards

Board (“FASB”) issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”) to provide more

detailed tax disclosure requirements. The guidance requires entities to disclose qualitative information about significant differences

between the statutory tax rate and effective tax rate, income taxes paid, and disaggregate information by foreign and domestic income

from continuing operations. The disclosure requirements will be applied on a prospective basis, with the option to apply it retrospectively.

The effective date for ASU 2023-09 is for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted

ASU 2023-09 effective January 1, 2025. The adoption of this standard did not have a material impact on the Company's consolidated financial

statements.

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03,

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. The amendments require the disclosure

of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation, intangible

asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas producing activities. It also requires

the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated

quantitatively as well as the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling

expenses. 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 provisions of the ASU will have on the Company’s

consolidated financial statements.

Note 3. Revenues

The Company participates in mining pools operated

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

hash calculations for the mining pool, 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”), Pay-Per-Share+

(“PPS+”) and Pay Per Last N Shares (“PPLNS”) pools pay block rewards and transaction fees, less mining pool fees.

For FPPS and PPS+ 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 primarily 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.

● 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

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.

PPS+ Mining Pools

The Company participated in PPS+ pools that provide

non-cash consideration similar to the FPPS pools except the PPS+ amount of transaction fees is determined based on the share of actual

transaction fees paid to the specific blocks the mining pool successfully mined in the Litecoin and Dogecoin blockchains in a daily 24-hour

period in accordance with the operator’s specifications. Within the PPS+ pools, the non-cash consideration received by the Company

is made up of block rewards and transaction fees less mining pool fees. While the non-cash consideration is variable, the Company has

the ability to estimate the variable consideration at contract inception with reasonable certainty. 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 Litecoin and Dogecoin determined using the Company’s principal market for

Litecoin and Dogecoin.

PPLNS Mining Pools

The Company also participated 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.

The following table presents disaggregation of

the Company’s mining revenues:

Years Ended December 31,

2025

2024

Revenues from contracts with customers:

Mining pool participant – related party

Bitcoin

$ 58,072

$ 61,170

Other

194

Total mining pool participant – related party

58,091

61,364

Mining pool participant – third party

Zcash

25,188

11,745

Bitcoin

—

1,620

Other

6,203

7,051

Total mining pool participant – third party

31,391

20,416

Total mining revenues

$ 89,482

$ 81,780

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

The following table presents information about

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

Years Ended December 31,

2025

2024

Bitcoin

65 %

77 %

Zcash

28 %

14 %

Other

7 %

9 %

Note 4. Aurora Acquisition

On October 22, 2025, 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 located in Aurora, Nebraska (the “Aurora Acquisition”). As consideration for the

acquired assets, the Company agreed to pay $7,650, of which $1,584 was paid by application of a previously paid hosting deposit, with

the remainder being paid in cash at closing. The primary purpose of the Aurora Acquisition is to acquire owned and controlled power in

efforts for vertical integration.

The transaction was determined to be an asset

acquisition pursuant to ASC 805, Business Combinations, and therefore the purchase price, including transaction costs of $239,

were allocated to the assets acquired based on their relative fair values as a percentage of the total fair value of the assets acquired,

with no goodwill recognized. The total purchase consideration was allocated to the acquired assets as follows:

Amount

Intangible asset

$ 4,473

Mining and other computer equipment

2,715

Building

567

Land

134

Total

$ 7,889

The power contract intangible asset was valued

utilizing a with-and-without methodology, which incorporates significant unobservable inputs, including remaining useful life of the power

contract, discount rate, and market-based power pricing information. Because these inputs are not directly observable in the market and

require significant management judgment, the power contract is classified as Level 3 within the fair value hierarchy. See Note 6 for additional

information related to the intangible asset acquired.

Note 5. Property and Equipment, Net

Property and equipment, net consists of the following:

December 31,

2025

2024

Mining and other computer equipment

$ 126,514

$ 128,935

Leasehold improvements

3,982

3,434

Buildings

1,547

980

Furniture and fixtures

348

395

Land

377

243

Total

132,768

133,987

Less: accumulated depreciation

(93,122 )

(74,049 )

Property and equipment, net

$ 39,646

$ 59,938

Depreciation expense was $32,356 and $30,374 for

the years ended December 31, 2025 and 2024, respectively.

During the years ended December 31, 2025 and 2024,

the Company acquired property and equipment of $12,986 and $37,379, respectively, of which $3,416 was acquired as part of the Aurora Acquisition

during the year ended December 31, 2025. In addition, mining equipment deposits of $1,449 and $10,293 were capitalized into property and

equipment during the years ended December 31, 2025 and 2024, respectively.

During the years ended December 31, 2025 and 2024,

the Company sold or otherwise disposed of property and equipment resulting in net proceeds of $230 and $716, respectively, and a loss

on disposal of equipment, net of $2,600 and $2,767, respectively.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

During the year ended December 31, 2024, the Company

recorded impairment to mining and other computer equipment due to decreases in the observable market prices of similar equipment of $552

which is included in impairment of mining equipment on the Consolidated Statements of Operations. No impairment expense was recorded for

the year ended December 31, 2025.

Note 6. Intangible Asset, Net

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

3.75

During the years ended December 31, 2025 and 2024,

amortization expense related to the Company’s intangible asset was $214 and $0, respectively.

The following table presents the estimated future

amortization of the Company’s intangible asset as of December 31, 2025:

2026

$ 1,118

2027

1,118

2028

1,118

2029

905

Total

$ 4,259

Note 7. 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 Consolidated Balance Sheets which totaled $5,420 and $1,449 as of December 31, 2025 and 2024, respectively.

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 $903 and

$1,576 and deposits, net of current portion which totaled $5,347 and $7,537 on the Consolidated Balance Sheets as of December 31, 2025

and 2024, respectively.

Note 8. Digital Assets

The following table presents the digital assets

held by the Company:

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 %

December 31, 2024

Quantity

Cost Basis

Fair Value

Concentration

Zcash

697

$ 39

50 %

Dogecoin

64,093

26 %

Horizen

568

21 %

Other

3 %

$ 78

$ 77

100 %

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

The following table presents information about the Company’s

digital assets:

Balance, January 1, 2024

$ —

Revenue recognized from digital assets mined

81,780

Proceeds from sale of digital assets

(78,627 )

Digital assets paid for services

(3,249 )

Change in fair value of digital assets, net

173

Balance, December 31, 2024

Revenue recognized from digital assets mined

89,482

Other revenue

Proceeds from sale of digital assets

(81,681 )

Digital assets paid for services

(4,113 )

Change in fair value of digital assets, net

(367 )

Balance, December 31, 2025

$ 3,413

Realized gains from the sale of digital assets,

net, were $138 and $173 for the years ended December 31, 2025 and 2024, respectively, and are included in change in fair value of digital

assets, net on the Consolidated Statements of Operations.

Note 9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist

of the following:

December 31,

2025

2024

Accounts payable

$ 1,458

$ 904

Accrued bonus expense

1,207

423

Accrued hosting expenses

187

1,196

Other

137

125

Total

$ 2,989

$ 2,648

Note 10. Income Taxes

The components of the income tax benefit attributable

to loss before income taxes are as follows:

Year ended December 31,

2025

2024

Current income tax benefit:

Federal

$ (268 )

$ —

State and local

(350 )

—

Total current income tax benefit

(618 )

—

Deferred income tax benefit:

Federal

(3,056 )

—

State and local

(9 )

—

Total deferred income tax benefit

(3,065 )

—

Income tax benefit

$ (3,683 )

$ —

The following table displays the difference between

the U.S. federal statutory corporate tax rate and the effective tax rate:

Year ended

December 31, 2025

Amount

Rate

Tax benefit at federal statutory rate

$ (3,437 )

21.00 %

Increase (decrease) in tax benefit at federal statutory rate:

State and local income taxes, net of federal tax

(288 )

1.76 %

Other

-0.25 %

Effective tax rate

$ (3,683 )

22.51 %

Temporary differences accumulate in deferred income

tax balances and are recorded as deferred tax assets and deferred tax liabilities.

The components of deferred tax assets and liabilities

were as follows:

December 31,

2025

2024

Deferred tax assets

Lease liability

$ 638

$ —

Unrealized losses

115

—

Other

—

Subtotal

759

—

Valuation allowance

—

Total deferred tax asset

759

—

Deferred tax liabilities

Depreciation and amortization

(4,208 )

—

Right-of-use assets

(640 )

—

Prepaid expenses

(83 )

—

Total deferred tax liability

(4,931 )

—

Net deferred tax liability

$ (4,172 )

$ —

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 has 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 has not identified any uncertain tax

positions that warrant tax reserves based on the “more-likely-than-not” threshold. The Company does not expect unrecognized

tax benefits to significantly change in the next twelve months.

Management has assessed positive and negative

evidence to determine whether a valuation allowance against the existing gross deferred tax assets is required. Although this is the first

year of operations, the Company and its ultimate parent generated significant taxable income in each year and projects that sufficient

future taxable income will be generated. Additionally, the Company has a net deferred tax liability, and therefore after consideration

of the evidence applicable to the Company, management believes that it is more-likely-than-not that the gross deferred tax asset will

be realized in the future. As a result, as of December 31, 2025, the Company did not have a valuation allowance recorded against its deferred

tax asset.

The Company is subject to U.S. federal income

tax and state and local income tax in multiple jurisdictions. As of December 31, 2025, the earliest year the Company remains subject to

examination by the Internal Revenue Service is for the tax year ended December 31, 2024. The earliest year the Company remains subject

to examination by 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 / 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.

All member’s equity presented prior to the

Transaction represents Parent’s historical net investment in the Company, as well as the accumulated net losses and the net effect

of settled transactions with and allocations from Parent.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

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 December 31, 2025, 5,000,000 shares of common stock

were issued and outstanding, all of which is ultimately held by Parent as a result of the Reorganization.

Note 12. Stock-based Compensation

Digital Currency Group, Inc. Stock Appreciation

Rights Plan

The Stock Appreciation Rights Plan (the “SARs

Plan”) provides for the grant of SARs to employees, directors, and key persons of DCG and any subsidiary. The awards reference the

shares of DCG and not the Company. The SARs Plan provides the employees with the right to receive, at the date the rights are exercised,

cash settlements in the amount equal to the fair value of the market appreciation of the common stock since the grant date of the rights.

The SARs typically vest 25% on the one-year anniversary from the grant date with the remaining 75% vesting in equal quarterly installments

over the following three years. DCG’s Board of Directors is responsible for administration of the SARs Plan and has the sole discretion

to determine which grantees will be granted awards and the terms and conditions of the awards granted.

The following table summarizes the activities

related to SARs granted by DCG to employees of the Company:

Number of SARs

(in Shares)

Weighted Average

Exercise Price

Weighted Average

Remaining

Contractual Term

Outstanding, January 1, 2024

10,639

$ 53.59

9.0

Granted

6,145

55.87

Exercised

(4,475 )

27.93

Outstanding, December 31, 2024

12,309

64.05

8.4

Granted

1,894

54.03

Exercised

(895 )

27.93

Forfeited or cancelled

(531 )

54.40

Outstanding, December 31, 2025

12,777

$ 65.50

7.6

Exercisable, December 31, 2025

7,627

$ 73.61

7.1

During the years ended December 31, 2025 and 2024,

the Company recorded stock-based compensation expense of $95 and $339, respectively, which includes an allocation of cost related to Foundry

employees that participated in the digital asset mining business prior to the legal separation of Fortitude. As of December 31, 2025,

$30 of unrecognized compensation expense related to non-vested SARs awards is expected to be recognized over the weighted average remaining

vesting period of 2.3 years, which is dependent on the subsequent intrinsic value of the awards.

Note 13. 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 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 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.

Note 14. Related Party Transactions

Foundry is a mining pool operator in which the

Company is a mining participant. For the years ended December 31, 2025 and 2024 related party mining participant revenue was $58,091 and

$61,364, respectively.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

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 (see Note 12 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 December 31, 2025 and 2024, the Company recognized $618 and $0,

respectively, within prepaid expenses and other current assets on the Consolidated Balance Sheets in relation to these tax attributes.

During the year ended December 31, 2025, DCG contributed

$9,357 to the Company which was used to finance the Aurora Acquisition and acquisitions of other property and equipment. In addition,

DCG, via Foundry, contributed $459 of property and equipment to the Company.

During the year ended December 31, 2024, the Company

had net contributions from Parent of $20,676, which primarily represent contributions from Parent to acquire property and equipment, partially

offset by the Company’s cash flows from operations that were controlled and maintained by Foundry prior to the legal separation

of Fortitude. Transactions with Foundry that were not settled in cash are presented within the Consolidated Statements of Changes in Stockholder’s

/ Member’s Equity as net investment from Parent. In addition, subsequent to the Transaction, DCG contributed $2,936 to the Company

during the year ended December 31, 2024 which was used to acquire property and equipment.

During the year ended December 31, 2024,

the Company’s consolidated financial statements include corporate general and administrative expenses of Foundry that have been

allocated to the Company for purposes of these consolidated financial statements and presentation of Fortitude as a standalone company.

The allocations include significant support functions provided by Foundry including, but not limited to, employee compensation and benefits,

professional services, facilities and corporate office expenses, and information technology, some of which are continuing after the legal

separation of Fortitude pursuant to a certain shared services agreement further detailed below. These expenses have been allocated to

the Company on the basis of direct usage when identifiable, with the remainder primarily allocated on the basis of headcount or other

allocation methodology that is considered to be a reasonable reflection of the utilization of the services by the Company. The allocations,

however, may not be indicative of the actual expenses that would have been incurred had the Company operated as a standalone company and

obtained services from unaffiliated entities. See Note 2 for further information on the carve-out and basis of presentation.

Effective October 1, 2024, the Company entered

into a shared services agreement (the “SSA”) with Foundry, under which Foundry agreed to provide certain services, including

data platform, energy management advisory, information technology and infrastructure support, human resources support and other services

to the Company. The SSA includes both 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. Further effective October

1, 2024, the Company entered into a managed services agreement (the “MSA”) with Foundry, under which Foundry agreed to provide

on-site and remote management and monitoring services at the Company’s mining locations. The MSA includes both fixed monthly fees

and variable components based on usage of certain services which are due and payable on a monthly basis. The MSA has an initial term of

two years, and includes automatic one-year renewals unless terminated by either party. During the years ended December 31, 2025 and 2024,

the Company incurred costs of $1,399 and $423 pursuant to the SSA and MSA, which are included within cost of revenues and general and

administrative expenses on the Consolidated Statements of Operations based on the nature of the costs.

Effective January 1, 2025, the Company entered

into a transition services agreement (the “TSA”) with DCG, under which DCG agreed to provide certain services, including financial

planning and analysis, accounting support, communications and events support and other services to the Company. The TSA includes fixed

monthly fees and also requires payment for any additional services performed. During the year ended December 31, 2025, the Company

incurred costs of $329 pursuant to the TSA, which are included within general and administrative expenses on the 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 Consolidated Statements of Operations. On November 1, 2025, the lease

was terminated by both parties.

As of December 31, 2025 and 2024, amounts

due from related party resulting from the aforementioned agreements totaled $13 and $46, respectively, and are included within due from

related party on the Consolidated Balance Sheets. These amounts are expected to be settled in the short term and are non-interest bearing.

Note 15. 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 $449 and $360 for

the years ended December 31, 2025 and 2024, respectively, and are included in general and administrative expenses on the Consolidated

Statements of Operations. The weighted-average remaining lease term for operating leases was 8.0 years and the weighted-average discount

rate was 4.92% as of December 31, 2025.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

asset amounts)

The following table presents the Company’s

future minimum operating lease payments as of December 31, 2025:

2026

$ 480

2027

461

2028

458

2029

461

2030

463

Thereafter

1,126

Total minimum lease payments

3,449

Less effects of discounting

(645 )

Total lease liabilities

$ 2,804

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 consolidated financial

statements.

Note 16. Subsequent Events

The Company evaluated subsequent events through

March 13, 2026, the issuance date of these consolidated financial statements.

Under certain hosting arrangements, the Company

has the ability to shut off hosted mining machines as a “stop-loss” contract mechanic, provided that the hosting facility

has the ability to utilize the Company’s mining machines during the shutdown period for its own benefit. Effective March 1, 2026,

the Company made a strategic decision to suspend operation of certain mining machines at a hosting provider based on the underlying productivity

of the machines. The Company has the right to renew operation of the machines at its discretion.

EX-99.2 — UNAUDITED INTERIM FINANCIAL STATEMENTS OF FORTITUDE AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025, AND THE ACCOMPANYING NOTES

EX-99.2

Filename: ea029914501ex99-2.htm · Sequence: 4

Exhibit 99.2

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fortitude Mining Holdings, Inc. and Subsidiaries

As of and for the Three Months Ended March 31,

2026 and 2025

Fortitude Mining Holdings, Inc. and Subsidiaries

Table of Contents

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

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder's / Member's Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

March 31,

2026

December 31,

2025

Assets

Cash

$ 8,899

$ 9,995

Digital assets

1,912

3,413

Deposits

728

903

Prepaid expenses and other current assets

1,643

997

Total current assets

13,182

15,308

Property and equipment, net

35,486

39,646

Deposits, net of current portion

11,653

10,767

Right-of-use assets

2,721

2,812

Intangible asset, net

3,980

4,259

Total assets

$ 67,022

$ 72,792

Liabilities and stockholder’s equity

Liabilities:

Accounts payable and accrued expenses

$ 3,362

$ 2,989

Lease liabilities, current portion

341

350

Total current liabilities

3,703

3,339

Deferred tax liability

2,766

4,172

Lease liabilities, net of current portion

2,372

2,454

Total liabilities

8,841

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 March 31, 2026 and December 31, 2025

Additional paid-in capital

59,510

59,507

Retained earnings (deficit)

(1,330 )

3,319

Total stockholder’s equity

58,181

62,827

Total liabilities and stockholder’s equity

$ 67,022

$ 72,792

The accompanying notes are an integral part of

these condensed consolidated financial statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands)

Three Months Ended March 31,

2026

2025

Revenues:

Mining revenues, net (includes related party amounts of $8,125 and $17,310, respectively)

$ 19,211

$ 21,961

Other revenue

—

Total revenues

19,225

21,961

Operating expenses:

Cost of revenues (exclusive of depreciation and amortization)

10,422

17,124

Depreciation and amortization

5,942

9,342

General and administrative expenses

5,397

1,567

Loss on disposal of equipment

588

577

Change in fair value of digital assets, net

2,879

193

Total operating expenses

25,228

28,803

Other income:

Rental income - related party

—

Total other income

—

Loss before income taxes

(6,003 )

(6,828 )

Income tax benefit

1,354

—

Net loss

$ (4,649 )

$ (6,828 )

The accompanying notes are an integral part of

these consolidated financial statements.

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

—

200

Stock-based compensation

—

Net loss

(6,828 )

—

(6,828 )

Balance, March 31, 2025

$ 66,213

—

$ —

$ 66,213

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

—

(4,649 )

Balance, March 31, 2026

$ —

5,000,000

$ 1

$ 59,510

$ (1,330 )

$ 58,181

See accompanying notes to the consolidated financial

statements.

Fortitude Mining Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

Three Months Ended March 31,

2026

2025

Cash flows from operating activities:

Net loss

$ (4,649 )

$ (6,828 )

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

Depreciation and amortization

5,942

9,342

Loss on disposal of equipment

588

577

Mining revenues, net

(19,051 )

(21,961 )

Other revenue

(14 )

—

Proceeds from the sale of digital assets

12,316

20,071

Digital assets paid for services

303

1,719

Change in fair value of digital assets, net

2,879

193

Non-cash lease expense

—

Stock-based compensation

Deferred income taxes

(1,406 )

—

Change in operating assets and liabilities:

Deposits

1,039

398

Prepaid expenses and other current assets

(646 )

(223 )

Accounts payable and accrued expenses

373

(289 )

Net cash (used in) provided by operating activities

(2,323 )

3,013

Cash flows from investing activities:

Proceeds from the sale of digital assets

5,068

—

Purchases of property and equipment

(2,113 )

(2,132 )

Deposits on property and equipment

(1,750 )

(221 )

Proceeds from disposal of property and equipment

134

Net cash provided by (used in) investing activities

1,227

(2,219 )

Cash flows from financing activities:

Capital contributions from Parent

—

200

Net cash provided by financing activities

—

200

Net increase in cash

(1,096 )

994

Cash, beginning of year

9,995

4,496

Cash, end of year

$ 8,899

$ 5,490

Non-cash investing and financing activities:

Capitalizations of deposits to property and equipment

$ —

$ 1,449

See accompanying notes to the consolidated financial

statements.

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.

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 March 31, 2026, the Company had cash

and working capital balances of $8,899 and $9,479, 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.

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 its wholly-owned subsidiaries 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

asset amounts)

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

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.

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 EST 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

asset amounts)

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. Land

is not depreciated.

Useful life

(years)

Mining and other computer equipment

3 - 5

Buildings

Furniture and fixtures

Leasehold improvements

** Leasehold improvements are amortized using

the straight-line method over the shorter of the lease term or estimated useful life of the asset.

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 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.

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 information about

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

Fair Value Measurement Using

Total

Level 1

Level 2

Level 3

March 31, 2026

Digital assets

$ 1,912

$ —

$ 1,912

$ —

December 31, 2025

Digital assets

$ 3,413

$ —

$ 3,413

$ —

There were no transfers between Levels 1, 2 or

3 during the three months ended March 31, 2026.

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 has 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

asset amounts)

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.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards

Board issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. The amendments

require the disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation,

depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas producing

activities. It also requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are

not separately disaggregated quantitatively as well as the total amount of selling expenses and, in annual reporting periods, an entity’s

definition of selling expenses. 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 provisions of the ASU

will have on the Company’s condensed consolidated financial statements.

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”),

Pay-Per-Share+ (“PPS+”) and Pay Per Last N Shares (“PPLNS”) pools pay block rewards and transaction fees, less

mining pool fees. For FPPS and PPS+ 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

asset amounts)

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.

● 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.

Fortitude Mining Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

asset amounts)

PPS+ Mining Pools

The Company participates in PPS+ pools that provide