8-K/A: HeartSciences Files 8-K/A, Adds Fortitude Financials

HeartSciences Inc. has filed an amended 8-K to include the unaudited interim financial statements of Fortitude Mining Holdings, Inc. for the six months ended June 30, 2026 and 2025, as part of their proposed merger.

Summary

• This filing is an amendment (Amendment No. 2) to a previous Form 8-K announcing a merger agreement between HeartSciences Inc. and Fortitude Mining Holdings, Inc.
• The amendment's primary purpose is to provide the unaudited interim financial statements for Fortitude Mining Holdings, Inc. for the six-month periods ended June 30, 2026, and June 30, 2025.
• Fortitude Mining Holdings, Inc. reported a net loss of $14,174,000 for the six months ended June 30, 2026, compared to a net loss of $13,698,000 for the same period in 2025.
• Total revenues for Fortitude decreased slightly to $40,145,000 for the six months ended June 30, 2026, from $40,820,000 in the prior year period.
• Fortitude recorded a significant impairment charge of $10,278,000 related to its mining equipment during the six months ended June 30, 2026.
• The company has a pending lawsuit filed by Malikie Innovations Ltd. and Key Patent Innovations Ltd. alleging patent infringement.
• The merger transaction is expected to close in the second half of 2026 and is accounted for as a reverse acquisition with Fortitude as the accounting acquirer.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant net loss, substantial impairment charges, and ongoing litigation, despite the proposed merger.

Positives

• Fortitude's cash and working capital balances were $14,056,000 and $8,554,000 respectively as of June 30, 2026, and management believes these resources are sufficient for at least 12 months.
• The company has a credit facility with DCG providing up to $26,000,000 for the acquisition of Zcash mining equipment.
• A preliminary recommendation to dismiss the patent infringement lawsuit against Fortitude for improper venue was made by a magistrate judge.

Negatives

• Fortitude reported a net loss of $14,174,000 for the six months ended June 30, 2026, an increase from $13,698,000 in the prior year period.
• Total revenues for Fortitude decreased to $40,145,000 for the six months ended June 30, 2026, from $40,820,000 in the prior year period.
• A significant impairment charge of $10,278,000 was recorded for mining equipment during the six months ended June 30, 2026.
• The company is involved in a patent infringement lawsuit filed by Malikie Innovations Ltd. and Key Patent Innovations Ltd.
• The company experienced a weather-related incident on July 25, 2026, causing damage to mining equipment and a reduction in hashrate, with an estimated loss of less than $1.2 million in revenue between July 25 and August 18, 2026.

Risks

• Market risk, industry risk, regulatory risk, liquidity risk, concentration risk, credit risk, counterparty risk, and digital asset risk are significant risks to the company's operations.
• The company depends on a single supplier of Zcash miners, and any disruption could adversely affect its business.
• The digital asset industry is largely unregulated, highly speculative, and volatile, with potential for substantial losses due to price fluctuations.
• The pending patent infringement lawsuit could result in significant costs and potential damages if not dismissed.
• The weather-related incident on July 25, 2026, caused damage to mining equipment and a reduction in hashrate, with ongoing uncertainty regarding the full financial impact of lost mining revenue.

Future Outlook

The merger with HeartSciences Inc. is expected to close in the second half of 2026. Fortitude Mining Holdings, Inc. believes its existing financial resources will be sufficient to meet operating and capital requirements for at least 12 months from the issuance date of the financial statements. However, if additional liquidity is required, the company may not be able to secure financing on favorable terms.

Management Comments

• Management believes that its existing financial resources, including 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.
• Management estimates aggregate repair costs and market value of equipment losses from the July 25, 2026 weather incident to be less than $1.0 million. This estimate is preliminary.

Industry Context

StockSavvy.ai notes that this filing highlights the ongoing consolidation and financial reporting complexities within the digital asset mining sector. The inclusion of Fortitude's financials, particularly the impairment charges and net losses, reflects the inherent volatility and capital intensity of the industry, alongside the increasing scrutiny of digital asset valuations and operational risks.

Comparison to Industry Standards

• Fortitude's net loss of $14.17 million for the six months ended June 30, 2026, is a significant concern when compared to industry peers who may be achieving profitability or managing losses more effectively.
• The $10.28 million impairment charge on mining equipment is substantial and suggests potential over-investment or a rapid decline in the value of assets, a trend that has affected other mining operations facing fluctuating cryptocurrency prices and increased energy costs.
• The company's reliance on related party transactions, particularly mining revenues from Foundry Digital, LLC ($28.27 million in the period), is a common practice in the industry but can also present risks if not managed transparently and at arm's length.
• The significant decrease in cost of revenues (exclusive of depreciation and amortization) from $32.7 million to $18.7 million for the six months ended June 30, 2026, compared to the prior year, indicates a reduction in mining activity or operational efficiency improvements, which needs to be assessed against revenue declines.

Legal Proceedings

• On December 12, 2025, Malikie Innovations Ltd. and Key Patent Innovations Ltd. filed suit against the Company and other parties in the United States District Court for the Western District of Texas, alleging patent infringement. On August 17, 2026, the magistrate judge recommended dismissal for improper venue, but the outcome is pending potential objections.

Related Party Transactions

• Fortitude Mining Holdings, Inc. participates in mining pools operated by Foundry Digital, LLC (a related party), generating $28,269,000 in revenue for the six months ended June 30, 2026.
• The Company has a credit and security agreement with DCG (the Parent) for a term loan facility of up to $26,000,000, with $5,249,000 drawn as of June 30, 2026.
• Fortitude has a tax-sharing agreement with DCG for settling tax liabilities and benefits.
• Costs of $221,000 and $147,000 were incurred under shared services and transition services agreements with Foundry and DCG, respectively, during the six months ended June 30, 2026.

Stakeholder Impact

• Shareholders of HeartSciences will be voting on the proposed merger, with important information to be provided in proxy statements.
• Fortitude's financial performance, including net losses and impairment charges, could impact its equity value and future prospects, affecting its members.
• Creditors and lenders, including DCG through its credit facility, are exposed to Fortitude's financial health and operational performance.
• Suppliers and service providers to Fortitude, such as equipment manufacturers and hosting providers, are impacted by the company's ongoing operations and payment capabilities.

Next Steps

• Completion of the merger transaction between HeartSciences Inc. and Fortitude Mining Holdings, Inc., expected in the second half of 2026.
• HeartSciences will mail a definitive proxy statement to shareholders regarding the special meeting for the proposed transaction.
• Fortitude will continue to manage its digital asset mining operations, subject to market conditions and operational risks.
• Resolution of the patent infringement lawsuit filed by Malikie Innovations Ltd. and Key Patent Innovations Ltd.

Key Dates

Recommendation

The filing presents a mixed picture. While the proposed merger with HeartSciences offers a potential strategic direction, Fortitude's underlying financial performance shows significant deterioration with increased net losses, substantial impairment charges, and ongoing litigation. The company's reliance on digital asset prices and the volatile nature of the industry introduce considerable risk. Therefore, a 'hold' recommendation is appropriate, pending further clarity on the merger's completion and Fortitude's ability to stabilize its operations and financial results.

Keywords

digital asset mining, merger agreement, financial statements, Fortitude Mining, HeartSciences, impairment charge, patent infringement, Zcash