Host Digital seals $1.25B AI data center lease
Host Digital Inc. (formerly Healthy Choice Wellness Corp., HCWC) completed a reverse acquisition of Host Digital Infrastructure LLC, issuing 25,085,454 shares of common stock and pre-funded warrants exercisable for 19,888,093 shares.
Host Digital Inc. (formerly Healthy Choice Wellness Corp., HCWC) completed a reverse acquisition of Host Digital Infrastructure LLC, issuing 25,085,454 shares of common stock and pre-funded warrants exercisable for 19,888,093 shares. Immediately after closing, legacy Host DI members held 96.4% of the outstanding common stock, leaving pre-merger holders with a small minority stake.
The business is now a development-stage, AI/HPC-focused data center platform anchored by a 45+ megawatt campus in northeast Oklahoma and a 15‑year, 43 MW take‑or‑pay lease with aggregate base rent of about $1.25 billion, expected to commence in the first quarter of 2027, while legacy natural and organic grocery operations continue as a division. Host Digital currently has no cash, significant losses and large working capital deficits, and auditors and management highlight substantial doubt about its ability to continue as a going concern pending successful project financing and capital raises.
The company implemented a 1-for-35 reverse stock split effective August 28, 2026 and will trade on NYSE American under the new ticker “HOST”. The board, committees and executive team were reconstituted, UHY LLP was dismissed as auditor, and Carr, Riggs & Ingram, L.L.C. engaged as the new independent registered public accounting firm.
Positive
- Long-term anchor lease: 15-year, 43 MW take-or-pay lease with a major cloud infrastructure tenant, totaling about $1.25 billion in base-term contracted rent with 3% annual escalators, providing potential future cash flow once the Oklahoma facility is delivered.
- Strategic transformation: Reverse acquisition shifts HCWC into a pure-play digital infrastructure and AI/HPC data center platform while retaining its grocery division, creating a more diversified business model.
- NYSE American listing and recapitalization: Completion of the Merger, reverse stock split and ticker change to HOST position the company to access public capital markets for needed project and growth financing.
Negative
- Severe liquidity and losses: Host DI had no cash, a net loss of $5.0 million for the six months ended July 31, 2026 and a working capital deficit of about $27.5 million, with operations funded mainly by sponsor equity and related-party advances.
- Going-concern doubt: Both prior audit reports and management’s MD&A state there is substantial doubt about the company’s ability to continue as a going concern without successful capital raises and project financing.
- High dilution and ownership concentration: Legacy Host DI members now own about 96.4% of outstanding common stock, and insiders collectively control a substantial majority, limiting influence of pre‑merger public stockholders.
- Single-project and single-tenant dependence: Near-term economics depend on one Oklahoma facility and one 43 MW tenant; delays, financing shortfalls or tenant issues could materially impair revenue and cash flow.
- Financing and execution risk: The company must secure approximately $27.7 million to purchase the project facility plus substantial construction capital; failure to close project financing on acceptable terms could jeopardize the project and strain liquidity.
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reverse acquisition financial
Pre-Funded Warrants financial
take-or-pay financial
right of first refusal financial
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United States real property holding corporation financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Explanatory Note
On September 17, 2026 (the “Closing Date”), Host Digital Inc., a Delaware corporation (formerly known as Healthy Choice Wellness Corp.) (the “Parent”), completed the previously announced Merger (as defined below) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated May 27, 2026, by and among Parent, Healthy Choice Wellness II Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), and Host Digital Infrastructure LLC, a Delaware limited liability company (“Host DI”). On the Closing Date, pursuant to the Merger Agreement and on the terms and conditions set forth therein, Merger Sub merged with and into Host DI, with Host DI surviving the Merger as a wholly owned subsidiary of the Parent (the “Merger”). In connection with the Merger, all of the Common Units and Preferred Units of Host DI (collectively, the “Host DI Units”), in each case as defined in that certain Amended and Restated Limited Liability Company Agreement of Host DI, dated effective as of February 13, 2026, outstanding immediately prior to the effective time of the Merger (the “Effective Time”), were converted into the right to receive shares of Class A common stock, par value $0.001 per share, of the Parent (“Parent Common Stock”), or pre-funded warrants (“Pre-Funded Warrants”) to purchase Parent Common Stock at an exercise price of $0.001 per share, in lieu of such shares.
All defined terms used in this Current Report on Form 8-K that are not otherwise defined herein have the meanings ascribed to such terms in the Merger Agreement.
| Item 1.01 | Entry into a Material Definitive Agreement. |
Merger Closing
Registration Rights Agreement
In connection with the consummation of the Merger (the “Closing”), Parent entered into registration rights agreements, each dated September 17, 2026 (the “Registration Rights Agreements”), each by and among the Parent and certain stockholders of Parent party thereto (collectively, the “Holders”), pursuant to which, among other things, Parent has agreed to register for resale certain shares of Parent Common Stock held by such Holders from time to time, including shares of Parent Common Stock issued as consideration in the Merger.
Pursuant to the Registration Rights Agreements, Parent is obligated to prepare and file a shelf registration statement covering the resale of covered shares of Parent Common Stock within 30 calendar days following the Closing Date, subject to certain exceptions, pursuant to Rule 415 of the Securities Act of 1933, as amended (“Securities Act”). Parent also agreed to use commercially reasonable efforts to keep such registration statement continuously effective under the Securities Act until the date on which all relevant registrable securities have been sold under each Registration Rights Agreement. Parent has also agreed under the Registration Rights Agreements to pay certain expenses of the Holders incident to any registration demand and indemnify the applicable securityholders against certain liabilities.
The foregoing description of the Registration Rights Agreements does not purport to be complete and are qualified in their entirety by the full text of such agreements, copies of which are filed hereto as Exhibit 10.1 and Exhibit 10.2 and are incorporated herein by reference.
Indemnification Agreements
In connection with the Closing, Parent entered into indemnification agreements with each director and executive officer of Parent as of the Closing that provide for indemnification of certain expenses (including attorneys’ fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred in any action or proceeding arising by reason of the indemnitee’s service as a director or officer, as applicable, to the maximum extent permitted by applicable law.
The foregoing description of the indemnification agreements is qualified in its entirety by the full text of the form of indemnification agreement, which is filed hereto as Exhibit 10.3 and incorporated herein by reference.
Preferential Rights Agreement
In connection with the Closing, Parent entered into a Preferential Rights Agreement, dated September 17, 2026 (the “Preferential Rights Agreement”), with Host Infrastructure Holdings LLC, a Delaware limited liability company formed and controlled by the founders of Host DI (the “Sponsor”). Under the Preferential Rights Agreement, Parent has (i) a right of first offer with respect to any project site acquisition subsidiary of the Sponsor (each, a “Project Subsidiary”) that the Sponsor markets or determines to contribute, sell, or otherwise dispose of, exercisable within 30 days of the applicable offer notice, and (ii) a right of first refusal with respect to any unsolicited bona fide third-party offer for a Project Subsidiary that the Sponsor desires to accept, exercisable within five days of the applicable notice. Any project site acquisition company formed or acquired by the Sponsor after the effective date is automatically included as a Project Subsidiary. The Sponsor is not obligated to develop, retain, market, or contribute any Project Subsidiary to Parent, and if Parent does not exercise its rights, the Sponsor may consummate the applicable transaction with a third party. The Preferential Rights Agreement expires on the second anniversary of its effective date.
Because the Sponsor is controlled by, among others, our chief executive officer, Harmol Samra, and Hans Thomas, an owner of a substantial number of the outstanding shares of Parent Common Stock, the Preferential Rights Agreement constitutes a related-person transaction for purposes of Item 404 of Regulation S-K. The foregoing description of the Preferential Rights Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is filed as Exhibit 10.4 hereto and incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Pursuant to the Merger Agreement and on the terms and conditions set forth therein, Merger Sub merged with and into Host DI, with Host DI surviving the Merger as a wholly owned subsidiary of the Parent. In connection with the Merger, all of the Host DI Units outstanding immediately prior to the Effective Time, were converted into the right to receive shares of Parent Common Stock or Pre-Funded Warrants.
At the Effective Time, Parent issued 25,085,454 shares of Parent Stock (the “Stock Merger Consideration”) and Pre-Funded Warrants to purchase an aggregate of 19,888,093 shares of Parent Common Stock (the “PFW Merger Consideration,” and together with the Stock Merger Consideration, the “Merger Consideration”), to the previous holders of the Host DI Units. Immediately following the Effective Time, the legacy Host DI members owned approximately 96.4% of Parent’s issued and outstanding Common Stock. A copy of the form of Pre-Funded Warrant is filed as Exhibit 10.5 hereto and incorporated herein by reference.
The Merger Consideration was issued pursuant to a private placement exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder. We intend to register the Stock Merger Consideration and the shares of Common Stock underlying the Pre-Funded Warrants on a registration statement on Form S-3, covering the resale and issuance, as applicable, of such Parent Common Stock. For more information, reference the “Registration Rights Agreement” section in Item 1.01 to this Current Report on Form 8-K.
Effective September 18, 2026, the Parent Common Stock will begin trading on the NYSE American under the new ticker symbol “HOST”, represented by the existing CUSIP number 42227T303.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is filed hereto as Exhibit 2.1 and is incorporated herein by reference.
| Item 2.02 | Results of Operations and Financial Condition. |
Management’s Discussion and Analysis of Financial Condition and Results of Operation of Host DI is filed as Exhibit 99.1 hereto and incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 3.03 | Material Modification to Rights of Security Holders. |
The information set forth in Items 1.01, 2.01, 5.01 and 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 4.01 | Changes in Registrant’s Certifying Accountant. |
Dismissal of UHY LLP
On September 17, 2026, the Board dismissed UHY LLP (“UHY”) as the Company’s independent registered public accounting firm, effective as of that date. The decision to change independent registered public accounting firms was approved by the Board of Directors of the Parent on September 17, 2026.
UHY LLP previously served as the independent registered public accounting firm of Parent since 2024. UHY’s report on the Parent’s financial statements for the fiscal year ended December 31, 2025 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that such report included an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern.
During the fiscal year ended December 31, 2025 and the subsequent interim period through September 17, 2026, there were no disagreements (within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Parent and UHY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to UHY’s satisfaction, would have caused UHY to make reference to the subject matter of the disagreement in connection with its report.
Parent has provided UHY with a copy of the disclosures made by the Company in this Item 4.01 and has requested that UHY furnish Parent with a letter addressed to the Securities and Exchange Commission (the “SEC”) stating whether UHY agrees with the statements made by Parent herein and, if not, stating the respects in which it does not agree. A copy of UHY’s letter is attached hereto as Exhibit 16.1 and incorporated herein by reference.
Engagement of Carr, Riggs & Ingram, L.L.C.
For accounting purposes, the Merger is treated as a reverse acquisition, with Host DI as the accounting acquirer. Accordingly, the historical financial statements of Host DI, which have been audited by Carr, Riggs & Ingram, L.L.C. (“CRI”), will become the historical financial statements of the Company. In a reverse acquisition, a change in accountants is deemed to have occurred unless the same independent registered public accounting firm audited the pre-transaction financial statements of both the legal acquirer and the accounting acquirer.
Effective September 17, 2026, Parent engaged CRI as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2026. The engagement of CRI was approved by the Board of Directors on September 17, 2026.
During Parent’s two most recent fiscal years and the subsequent interim period through September 17, 2026, neither Parent nor anyone acting on its behalf consulted CRI regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Parent’s financial statements, and no written report or oral advice was provided to Parent that CRI concluded was an important factor considered by Parent in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
| Item 5.01 | Changes in Control of Registrant. |
The information set forth in Items 2.01 and 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 5.01.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Resignation of Directors
In accordance with the Merger Agreement, upon consummation of the Merger, Gary Bodzin, Behnam Myers and Michael Lerman resigned from the Board and committees of the Board on which they respectively served. Such resignations were not the result of any disagreements with Parent relating to its operations, policies or practices.
Appointment of Directors
Effective upon the Closing, the Board was reconstituted as follows: Robert Byrne, Omar Hussein, Guhan Kandasamy and Shawn Matthews, with Mr. Matthews serving as Chairperson. Mr. Hussein and Mr. Matthews were appointed as Class I directors, with their terms expiring at Parent’s 2028 annual meeting, Mr. Byrne was appointed as the Class II director, with his term expiring at Parent’s 2026 annual meeting, and Mr. Kandasamy as appointed as the Class III director, with his term expiring at Parent’s 2027 annual meeting.
Under the listing rules of the NYSE American (the “NYSE Listing Rules”), a majority of the members of the Board must be “independent directors.” Under the NYSE Listing Rules, an “independent director” is a person other than an executive officer or employee of Parent, and no director qualifies as independent unless the Board affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that each of Robert Byrne, Omar Hussein and Guhan Kandasamy qualify as “independent” under the NYSE Listing Rules.
Each of the newly appointed directors’ biographical information is set forth below.
Robert Byrne. Mr. Byrne has nearly three decades of experience as an entrepreneur, trader, writer and capital markets adviser to public and private companies. Since November 2025, he has served as a member of the board of directors of Sky Quarry, Inc. Since September 2024, he has served as a principal and strategic advisor through Alpha Nine Ventures LTD and, since 2021, has held similar issuer-side advisory roles as president of TB Byrne & Associates, focusing on acquisitions, corporate finance and restructuring (including debt workouts and debt–equity swaps), recapitalizations and exit strategies, primarily utilizing traditional initial public offerings and alternative public offerings. In this capacity, he advises boards and management teams of micro- and small-cap companies on complex capital structures and balance-sheet repair, including secured and unsecured debt, convertible securities, warrants, merchant cash advances and other quasi-debt instruments, and on strategic financings such as private investment in public equity, registered directs and Regulation A/Regulation Crowdfunding offerings, as well as digital-asset treasury and real-world-asset tokenization strategies intended to complement traditional capital-raising and listing pathways. From 1997 to 2018, Mr. Byrne was a full-time equities and futures trader, specializing in basket trading, auction-market theory and short-term index and commodity futures. Since 2008, he has written on markets and trading strategy as a contributing columnist for TheStreet.com and has also been involved in research, publishing and analytical roles, including as president of Asymmetric Publishing and as an equity analyst at Monument & Cathedral Holdings LLC. Parent believes that Mr. Byrne is qualified to serve on the Board due to his extensive experience in capital markets, corporate finance, restructuring and strategic advisory services, which provide valuable financial and transactional experience to the Board.
Omar Hussein. Mr. Hussein is the Co-Founder and Chief Strategic Officer of ConvergeFi, a VC-backed AI company transforming real estate lending, which he launched in 2024. Since November 2025, he has served as a member of the board of directors of Sky Quarry, Inc. Prior to ConvergeFi, from 2022-2023, Mr. Hussein was the CFO of two successive companies with announced IPOs - Sparks Energy, a $475 million power services company, and PrimeBlock, a $1.25 billion data center company with over 100MW of deployed capacity. From 2015-2022, Mr. Hussein was a TMT investment banker at Citigroup and from 2014-2015 he was an M&A banker at BMO Capital Markets. From 2003-2014, Mr. Hussein held various roles at startups including Strategic Growth Bank, a tech-enabled bank backed by leading Growth Equity funds. From 2001-2003, Mr. Hussein was an investor at Insight Venture Partners. From 1999-2001, Mr. Hussein was an investment banker at Morgan Stanley. Mr. Hussein holds an MBA from Stanford University Graduate School of Business, and a B.A. from New York University. Parent believes that Mr. Hussein is qualified to serve on the Board due to his extensive experience in investment banking, corporate finance and strategic leadership, which provide valuable financial and operational insight to the Board.
Guhan Kandasamy. From April 2018 to December 2023, Mr. Kandasamy served as the chief credit and data officer of 10X Capital Partners, LLC. In 2015, Mr. Kandasamy co-founded TheNumber, a One Zero Capital company, which provides credit market analytics and intelligence to leading credit hedge funds, Bulge Bracket Banks and Retail Banks. At TheNumber, he first served as the founding product manager, and as chief executive officer from January 2016 to March 2018. From October 2010 to January 2015, Mr. Kandasamy served as global head of product and data analytics at Opera Solutions, LLC (now ElectrifAi), where he co-founded the company’s financial services vertical while helping the founders raise its first private capital from Silver Lake Partners, KKR & Co. Inc. and Wipro Limited (NYSE: WIT). Mr. Kandasamy has also previously served as Vice President of US Structured Finance for the global credit ratings agency DBRS, Inc. and as analyst for the private secondary market firm SecondMarket, Inc., which was later acquired by Nasdaq. Prior to that, as its first product employee, he served as the founding product manager at CoreLogic, Inc. (NYSE: CLGX) from January 2004 to June 2007, and there he led development of CoreLogic’s product suite including Loansafe, the credit risk product used by a large portion of the mortgage market, as well as CoreLogic’s initial Automated Value Models (“AVMs”) and AVM cascade models for real estate assets, which remain the industry standard. During his tenure, he provided key evaluation and assistance to CoreLogic through several major corporate acquisitions, including First American Corporation. CoreLogic now produces over $1.7 billion in annual revenue and has an enterprise value of $5.3 billion. Mr. Kandasamy began his career in 2003 at the Federal National Mortgage Association as a credit risk policy analyst, where he developed the agency’s still-operational and patented Consumer Credit Risk Assessment Model (FMCA), along with several capital allocation, collateral risk and property valuation models. Mr. Kandasamy received an MBA with a concentration in Finance from Oxford University in 2010 and received a dual B.A. from Johns Hopkins University in 2003. Parent believes that Mr. Kandasamy is qualified to serve on the Board due to his extensive experience in credit and data analytics, financial services and structured finance, which provide valuable strategic, financial and operational expertise to the Board.
Shawn Matthews. Mr. Matthews is currently the Founder and Chief Investment Officer of Hondius Capital Management, a global alternative asset manager. In this role, he has oversight of and responsibility for all firm investments. Mr. Matthews has been actively investing in global markets for over 30 years, with the majority of his career focused on trading across asset classes. Prior to founding Hondius Capital Management, Mr. Matthews served as Chief Executive Officer of Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) from 2009 through April 2018. Before becoming Chief Executive Officer at Cantor Fitzgerald, he held a number of senior investment leadership roles there, including Head of Capital Markets and Head of Mortgage Trading. Earlier in his career, Mr. Matthews worked as a fixed income derivatives trader, traded privatization certificates in Eastern Europe, and later founded both an equity-focused hedge fund, Alchemist Capital Management, and a fixed income broker-dealer, West Side Capital. Mr. Matthews holds a Bachelor of Science in Finance from Fairfield University and an MBA from Hofstra University. Parent believes that Mr. Matthews is qualified to serve on the Board due to his extensive leadership experience in global investing, alternative asset management and financial services, which provide valuable leadership and financial expertise to the Board.
Board Committees
As of the Closing, the Board reconstituted its existing committees as follows:
Audit Committee
Omar Hussein, Robert Byrne, and Guhan Kandasamy were appointed to the Audit Committee of the Board, each of whom were determined by the Board to satisfy the requirements for audit committee membership under the NYSE Listing Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mr. Hussein was appointed chair of the Audit Committee.
Compensation Committee
Omar Hussein, Robert Byrne and Guhan Kandasamy were appointed to the Compensation Committee of the Board. Mr. Byrne was appointed chair of the Compensation Committee.
Nominating and Corporate Governance Committee
Omar Hussein, Robert Byrne and Guhan Kandasamy were appointed to the Nominating and Corporate Governance Committee of the Board. Mr. Kandasamy was appointed chair of the Nominating and Corporate Governance Committee.
Departure of Executive Officers
In accordance with the Merger Agreement, effective as of the Closing, Jeffrey Holman resigned as Chief Executive Officer, Chairman and director of Parent, and Christopher Santi resigned as President and Chief Operating Officer of Parent.
Appointment of Executive Officers
Effective upon the Closing, the Board appointed Harmol Samra as Chief Executive Officer of Parent. John Ollet remained in his role as Chief Financial Officer of Parent. Mr. Samra’s biographical information is set forth below.
Harmol Samra. Mr. Samra has served as Chief Executive Officer of Host DI since June 2025. Mr. Samra has over a decade of experience in digital infrastructure and real estate private equity, with a focus on underwriting, structuring and executing large-scale real asset and development-oriented investments across multiple markets. Prior to joining Host DI, Mr. Samra held investment roles at ICONIQ Capital, Starwood Capital Group and PGIM Real Estate, where he evaluated and executed complex infrastructure and real estate transactions involving significant capital coordination and development planning. While at ICONIQ Capital, Mr. Samra was a member of the team that built IPI Partners, one of the world’s largest digital infrastructure investment platforms, which was subsequently sold to Blue Owl Capital. Mr. Samra holds a Bachelor of Science in Business Administration from the Haas School of Business at the University of California, Berkeley. The Board believes that Mr. Samra’s extensive experience in digital infrastructure investment and development, together with his expertise in structuring large-scale real asset transactions, qualifies him to serve as Chief Executive Officer and provides valuable leadership to Parent.
There are no family relationships among any of our executive officers or directors. Other than as set forth in this Current Report on Form 8-K, none of the newly appointed directors are party to any transaction with the Company that would require disclosure under Item 404(a) of Regulation S-K or any arrangement or understanding with any other person pursuant to which he was selected as a director.
Executive Officer Employment Arrangements
Executive Employment Agreement – Harmol Samra
In connection with the Closing, Parent entered into an executive employment agreement (the “CEO Employment Agreement”) with Harmol Samra, effective as of September 17, 2026, pursuant to which Mr. Samra will serve as Chief Executive Officer of Parent. Pursuant to the CEO Employment Agreement, Mr. Samra is entitled to receive an annual base salary of $200,000, subject to adjustments from time to time by the Board in its reasonable discretion, and is eligible to earn an annual incentive bonus pursuant to Parent’s annual incentive bonus program to be established for executive-level employees. Mr. Samra is also eligible to participate in any equity incentive plan of Parent. If Mr. Samra’s employment is terminated by Parent without “Cause” (as defined in the CEO Employment Agreement), he will be entitled, subject to his execution of a release of claims and continued compliance with applicable restrictive covenants, to continued payment of his then-current base salary for 12 months, any annual incentive bonus earned for the prior year and a pro-rated annual incentive bonus for the year of termination.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On September 17, 2026, Parent filed a Certificate of Amendment (the “Certificate of Amendment”) to Parent’s Second Amended and Restated Certificate of Incorporation (as amended), with the Secretary of State of the State of Delaware. The purpose of the Certificate of Amendment was to change Parent’s name from “Healthy Choice Wellness Corp.” to “Host Digital Inc.”.
Effective as of the Closing, the Board approved pursuant to Parent’s Bylaws a change in the Parent’s fiscal year end from January 31 to December 31 of each year.
The foregoing description of the Certificate of Amendment is qualified by reference to the Certificate of Amendment, a copy of which is filed hereto as Exhibit 3.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(a) Financial statements of businesses or funds acquired
In accordance with Item 9.01(a), the audited consolidated financial statements of Host DI as of January 31, 2026 and for the period from July 8, 2025 (inception) through January 31, 2026, and the accompanying notes, and the unaudited condensed financial statements of Host DI for the three and six months ended July 31, 2026, and the accompanying notes, are attached to this Current Report on Form 8-K as Exhibit 99.3.
(b) Pro forma financial information
In accordance with Item 9.01(b), the unaudited condensed consolidated combined financial information for the year ended December 31, 2025, and as of, and for, the six months ended June 30, 2026, and the accompanying notes, are attached to this Current Report on Form 8-K as Exhibit 99.3.
(c) Exhibits
| Exhibit No. | Description | |
| 2.1 | Agreement and Plan of Merger, dated May 27, 2026, by and among Healthy Choice Wellness Corp., Healthy Choice Wellness II Corp., and Host Digital Infrastructure LLC (incorporated by reference from Exhibit 2.1 to Parent’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 29, 2026) | |
| 3.1 | Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Healthy Choices Wellness Corp. | |
| 10.1*# | Registration Rights Agreement, dated September 17, 2026, between the Company and the Stockholders party thereto | |
| 10.2* | Registration Rights Agreement, dated September 17, 2026, between the Company and the Holders party thereto | |
| 10.3 | Form of Indemnification Agreement | |
| 10.4# | Preferential Rights Agreement, dated as of September 17, 2026, between Host Infrastructure Holdings LLC and Parent | |
| 10.5# | Form of Pre-Funded Warrant | |
| 16.1 | Letter from UHY LLP to the Securities and Exchange Commission regarding change in certifying accountant | |
| 21.1 | Subsidiaries of Parent | |
| 23.1 | Consent of UHY LLP | |
| 23.2 | Consent of Carr, Riggs & Ingram, L.L.C. | |
| 99.1 | Management’s Discussion and Analysis of Financial Condition and Results of Operations of Host Digital Infrastructure LLC | |
| 99.2 | Business of Host Digital Inc., Risk Factors and Related Party Transactions | |
| 99.3 | Financial Statements of Businesses Acquired and Pro Forma Financial Information | |
| 99.4 | Policy for the Recovery of Erroneously Awarded Incentive Compensation | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * | Certain exhibits, schedules and annexes to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted exhibits, schedules or annexes to the SEC upon its request. |
| # | Certain portions of this exhibit (indicated by “[***]”) have been redacted pursuant to Regulation S-K, Item 601(a)(6). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOST DIGITAL INC. | |||
| Date: | September 17, 2026 | By: | /s/ John Ollet |
| John Ollet | |||
| Chief Financial Officer | |||
Exhibit 99.1
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HOST DIGITAL INFRASTRUCTURE LLC
The following discussion should be read together with Host Digital Infrastructure LLC’s (the “Company”, “we”, “our” and “us”) financial statements and the related notes included elsewhere in this Current Report on Form 8-K. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions, including those described under “Risk Factors” and elsewhere in this Current Report on Form 8-K. Actual results may differ materially. Except as required by law, the Company undertakes no obligation to update any forward-looking statements.
Overview
The Company is a development-stage entity with no material revenue from operations. The Company was organized to develop, own and operate large-scale data center campuses in the United States serving high-performance computing and artificial intelligence workloads. The Company has no significant operating history. The Company’s continuing operations did not generate revenue during the periods presented.
The Company’s initial project is expected to be the development of an approximately 45+ megawatt data center campus in Northeast Oklahoma (the “Project Facility”), comprising 45+ megawatts of contracted power capacity, related electrical
equipment, and an 80,000+ square foot building under an exercised acquisition option. In the event that the Company does not complete the acquisition of the Project Facility, the Company may instead pursue the lease or acquisition of one or more other facilities with similar power output and other characteristics to the Project Facility.
In February 2026, we acquired T-20 Mining LLC (“T-20”), a Delaware limited liability company that held an Electric Service Agreement (“ESA”) with the applicable utility provider for the Project Facility’s location. The ESA provides us with a contractual right to a specified level of electrical power capacity at the Project Facility, a critical infrastructure asset for the Project Facility to be used as a data center by the tenant as discussed below. The acquisition of T-20 was undertaken specifically to secure power access at the Project Facility and is directly related to our intended use of the Project Facility.
On August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately held cloud infrastructure companies, pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility (the “Lease”). The Lease is structured on a take-or-pay basis, which is expected to be backstopped by an investment-grade technology company, with aggregate base-term contracted rent of approximately $1.25 billion, inclusive of 3% annual escalators. The Lease may be renewed for a total Lease term of 30 years. The Project Facility is not currently generating revenue and the Lease is expected to commence in the first quarter of 2027, which is when we expect to deliver to the tenant the Project Facility.
This lease strengthens our ability to obtain project financing for the acquisition of the Project Facility and supports management’s plans to address the going concern uncertainty (see Note 1 — Organization and Nature of Operations and Note 2 — Going Concern to the Company’s unaudited condensed consolidated financial statements for the three and six months ended July 31, 2026 included elsewhere in this Current Report on Form 8-K).
The Company will not commence material revenue-generating operations until, at the earliest, a lease has been executed, construction of the Project Facility or another similar facility has been completed and the tenant has occupied the property. As of the date of this filing the Company has executed the Lease, but neither of the other steps has occurred.
Plan of Operations
Because the Company has not commenced material revenue-generating operations, its principal activities for the foreseeable future will consist of: (i) closing the contemplated project financing described below; (ii) completing construction and commissioning of the Project Facility; (iii) achieving tenant occupancy and lease commencement at the Project Facility; and (iv) advancing site control, utility arrangements, customer dialogue and design work across future developments. The timing and achievement of each of these milestones is subject to a number of risks and uncertainties, including construction risk, supply-chain availability for long-lead-time equipment, utility delivery risk, anchor tenant negotiation risk, the timing of the project financing, and capital markets conditions.
Results of Operations
We have not generated material revenue from operations during any period presented and do not expect to generate material revenue until, at the earliest, the prospective anchor tenant has executed a lease, occupied the Project Facility and commenced rent payments, of which only execution of the Lease has occurred. The Company’s operating expenses to date have consisted principally of (i) general and administrative expenses, including legal, accounting, audit and tax-advisory fees, (ii) project pre-development costs (including engineering, environmental, surveying, permitting, power costs, and pre-construction expenses), (iii) compensation expense, and (iv) costs of pursuing its public listing and the contemplated project financing.
Liquidity and Capital Resources
The Company’s activities to date have been funded principally through sponsor equity and related-party advances. We have not generated material cash from operations during any period presented. As of January 31, 2026, the Company had no cash and incurred a net loss of $518,705. In addition, the Company had net cash used in operations of $1,208,046 and a working capital deficit of $1,195,242 as of January 31, 2026. As of July 31, 2026, the Company had no cash and incurred a net loss of $3,703,223 and $5,039,396 as of the three and six months ended July 31, 2026, respectively. In addition, the Company had net cash used in operations of $480,181 and a working capital deficit of $27,465,029 as of the six months ended July 31, 2026.
The Company expect its principal future sources of liquidity to be (i) the net proceeds of a contemplated project financing the proceeds of which would fund the balance of the development and construction costs at the Project Facility, together with a debt service reserve and cost-overrun protection; (ii) continued sponsor or affiliate funding; and (iii) following tenant occupancy, contracted cash flows under the Lease. The pricing and closing of the contemplated project financing is dependent on, among other things, prevailing capital markets conditions, interest rates, and the overall progress of the Project Facility’s development. There can be no assurance that the financing will be completed on the contemplated terms, or at all.
Off-Balance Sheet Arrangements
As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
The preparation of the Company’s financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions. The Company considers the following to be its critical accounting policies:
Business Combination Accounting
The Merger was accounted for as a reverse acquisition under GAAP in accordance with Accounting Standards Codification Topic 805, Business Combinations. We were identified as the accounting acquirer because its former members hold a majority of the voting rights in the combined entity, designate a majority of the board of directors, and appoint senior management. Host Digital Inc. (f/k/a Healthy Choice Wellness Corp.) was the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities of Host Digital Inc. will be recorded at their estimated fair values as of the acquisition date, and any excess of the purchase price over the fair value of the net assets acquired will be recorded as goodwill. The assets and liabilities of the Company will be carried over at their historical carrying values, as the combined entity is a continuation of the Company’s financial statements.
Asset Acquisition Accounting
The Company accounts for acquisitions of assets or groups of assets that do not meet the definition of a business under ASC 805, Business Combinations, as asset acquisitions in accordance with ASC 805-50, Business Combinations — Related Issues.
Under the asset acquisition model, the total cost of the acquisition, including direct and incremental transaction costs (such as legal, valuation, and due diligence fees), is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values. No goodwill is recognized in an asset acquisition. The cost of the acquisition is allocated to the individual assets and liabilities based on their relative fair values at the acquisition date.
Transaction costs directly attributable to the acquisition are capitalized as part of the cost of the assets acquired. The Company determines the fair value of acquired assets using appropriate valuation techniques, which may include income approaches (e.g., discounted cash flow models), market approaches, or cost approaches, depending on the nature of the assets.
Going Concern
The Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of its consolidated financial statements. The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets, including as a result of the Company’s access to public capital markets as a result of the Merger, with some additional funding from other traditional financing sources, including pursuing project financing, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company also believes that execution of the Lease strengthens the Company’s ability to obtain project financing in connection with development of the Project Facility and supports management’s plans to address the going concern uncertainty.
The future viability of the Company is dependent on its ability to raise additional capital to finance its operations, which is uncertain. The Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year after the date that the consolidated financial statements are issued.
For further discussion on the Company’s ability to continue as a going concern, see Note 2 to the Company’s financial statements included elsewhere in this Current Report on Form 8-K.
Recent Accounting Pronouncements
For a discussion of recently issued accounting pronouncements that may affect the Company, see Note 3 to the Company’s financial statements included elsewhere in this Current Report on Form 8-K.
Exhibit 99.2
INFORMATION ABOUT HOST DIGITAL INC.
Unless the context otherwise requires, references to “Host Digital”, the “Company”, “we”, “our” and “us” refers to Host Digital Inc. and its consolidated subsidiaries following the completion of its merger with Host Digital Infrastructure LLC, unless otherwise indicated.
Business Overview
We are a pure-play vertically integrated digital infrastructure platform, serving as owner and operator of institutional quality data centers in the United States, focused on supporting artificial intelligence (“AI”) and high-performance computing (“HPC”) workloads. Our strategy is focused aggregation and control of powered assets, with a mix of on-grid (controlled with long term power purchase agreements with the utility) and behind-the-meter or private grid power. We plan to integrate power procurement, site development and delivery of fully commissioned data centers on both a powered-shell and turnkey basis, and contract our capacity to Tier 1, AI compute and enterprise customers under long-term lease arrangements with credit-enhanced counterparties.
We partner with our sponsor, Host Infrastructure Holdings LLC (“Sponsor”), pursuant to a Preferential Rights Agreement whereby our Sponsor provides us with an exclusive right of first offer and right of first refusal to acquire key assets being developed by our Sponsor to be contributed to a public company, which we believe will help support our growing data center platform. Under the Preferential Rights Agreement, for 24 months we will have priority with respect to acquisitions of all data center assets being acquired and developed by our sponsor and its affiliates.
Our team is highly experienced with building digital infrastructure platforms, both at the data center level and in the capital markets, led by Chief Executive Officer Harmol Samra, who in his previous roles at ICONIQ Capital and Starwood Capital helped build large real estate and data center platforms. During his time at ICONIQ, he helped build one of the largest digital infrastructure development platforms in the world, IPI, prior to its sale to Blue Owl, and Chairman Shawn Matthews, the former CEO of Cantor Fitzgerald.
Following the Merger (as defined below), our legacy natural and organic grocery retail operations continue as a division of the combined company. Through our subsidiaries, these operations include Ada’s Natural Market, Paradise Health & Nutrition, Mother Earth’s Storehouse, Green’s Natural Foods, Ellwood Thompson’s and GreenAcres Market, as well as our online vitamin, supplement and personal care products business operated through Healthy U Wholesale, Inc.
Recent Developments
Closing of the Merger with Host LLC
On
September
In
connection with the closing of the Merger, we changed our corporate name from “Healthy Choice Wellness Corp.” to “Host
Digital Inc.”, effective as of September
Reverse Stock Split
On August 27, 2026, our board of directors (the “Board”) approved a one-for-35 reverse stock split of our Common Stock (the “Reverse Stock Split”), following approval by our stockholders of an amendment to our certificate of incorporation authorizing the Board to effect a reverse stock split at a ratio of up to and including one-for-100. The Reverse Stock Split became effective at 11:59 p.m., Eastern Time, on August 28, 2026, and our Common Stock began trading on a split-adjusted basis on the NYSE American at market open on August 31, 2026. As a result of the Reverse Stock Split, every 35 shares of our Common Stock issued and outstanding immediately prior to the effective time were automatically converted into one share of our Common Stock, without any change in the par value per share. No fractional shares were issued in connection with the Reverse Stock Split; fractional shares otherwise issuable to a stockholder were rounded up to the next whole share after aggregating all fractional shares issuable to such stockholder.
Unless otherwise indicated, all share and per-share amounts presented herein have been adjusted to reflect the Reverse Stock Split.
Business Strategy
Our business strategy is focused on the development, acquisition, ownership, and operation of medium-to-large scale, power-advantaged data centers with long-term contracted tenancy with Tier 1 clients. The key elements of our strategy are:
| ● | Power-First Site Sourcing. We prioritize sites with executed or executable power agreements, with scalable capacity over its hold and access to long-duration, cost-competitive electricity rates. |
| ● | Control of Core Infrastructure. We seek to retain ownership or long-term control of key infrastructure assets, including land, interconnection rights, executed utility service agreements, electrical and cooling infrastructure and, where appropriate, on-site generation. |
| ● | Long-Term Contracting with Strong Tenants. We seek to enter into leases with contracted rent and market standard escalators, and renewal options, with credit support from credit-enhanced counterparties. |
| ● | Phased, Scalable Development. We aim to acquire campuses ready for phased build-out, aligned with customer deployment schedules and power availability. |
| ● | Brownfield Conversion Where Available. Where suitable, we may repurpose existing energized industrial facilities and completed substation infrastructure to reduce development, interconnection and ramp-up risk relative to greenfield development. |
| ● | Private Grid / Behind the Meter Where Available. Wherever possible, we seek to augment grid capacity with novel generation from a variety of power sources. |
The Project Facility – Northeast Oklahoma
On November 25, 2025, we entered into a lease agreement (the “Property Lease”) for a facility located in northeastern Oklahoma (the “Project Facility”), with Host LLC as lessee and the current owner as lessor. Pursuant to the Property Lease, we have the right to occupy and prepare the Project Facility for data center development. The annual base rent under the Property Lease is $495,581. In addition, we are responsible for ongoing monthly expenses of approximately $6,500 under the Property Lease. On March 26, 2026, we exercised the purchase option contained in the Property Lease, which gives us the right to purchase the Project Facility. The purchase agreement was executed in June 2026, which also reflects the exercise of our option to purchase the Project Facility’s parking lot. The purchase price for the Project Facility, inclusive of the parking lot, under the purchase agreement is $27.7 million. Host Digital expects to complete the acquisition by September 26, 2026.
On August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately held cloud infrastructure companies, pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility (the “Lease”). The Lease is structured on a take-or-pay basis, and is expected to be supported by a backstop from an investment-grade technology company, which backstop has not yet taken effect and is subject to the completion of our anticipated project financing, with aggregate base-term contracted rent of approximately $1.25 billion, inclusive of 3% annual escalators. The Lease may be renewed for a total Lease term of 30 years. The Project Facility is not currently generating revenue and the Lease is expected to commence in the first quarter of 2027, which is when we expect to deliver to the tenant the Project Facility.
The service level agreement (the “SLA”) with the tenant is in line with market standards. The SLA provides significant monthly abatements in the event of outages of significant duration (with abatements ranging from 10% of monthly rent for the affected racks to 100% depending on the cumulative duration of the outage). Total rent abatements payable on account of service level failures in any given calendar month are capped at 100% of the monthly base rent payable in such calendar month (i.e. base rent abatements are not compounding or cumulative across multiple months).
Development Pipeline and Preferential Rights Agreement
Our initial asset is the development of the Project Facility, which we acquired through the Merger. Separately our Sponsor holds or controls a pipeline of additional data center development opportunities held in project site acquisition subsidiaries (each, a “Project Subsidiary”). We do not own these Project Subsidiaries. Currently, the Sponsor’s pipeline consists of sites with an aggregate of approximately 450 MW at various and preliminary stages of development and site control across multiple markets, certain of which are associated with prospective or signed tenant arrangements.
In connection with the Merger, we entered into a Preferential Rights Agreement with the Sponsor. Under the agreement, if the Sponsor markets or determines to contribute, sell, or otherwise dispose of a Project Subsidiary to a public company vehicle, we have a right of first offer to acquire that Project Subsidiary (exercisable within 30 days), and if the Sponsor receives an unsolicited third-party offer it desires to accept, we have a right of first refusal to acquire that Project Subsidiary on the same terms (exercisable within five days). The Sponsor is not obligated to develop, retain, or contribute any Project Subsidiary, and if we do not exercise our rights, the Sponsor may transact with third parties. The agreement expires on the second anniversary of its effective date. Because the Sponsor is controlled by, among others, our chief executive officer and one of our stockholders who owns a substantial interest in our company, we have determined that the Preferential Rights Agreement is a related-party arrangement. See “Risk Factors” and “Certain Relationships and Related Person Transactions” below. Because the assets in the Sponsor’s pipeline are owned by the Sponsor and not by us, and our ability to acquire these assets is subject to the Preferential Rights Agreement. Neither the Preferential Rights Agreement nor any other agreement prohibits us from acquiring, owning, or developing data center projects on our own or with parties other than the Sponsor.
The base price of our initial asset was $425 million under the Merger Agreement. Newmark, a third-party firm that, in part, provides valuations, provided an indicated valuation range for the Northeast Oklahoma facility of approximately $676 million to $954 million, based on an indicated capitalization rate range of 5.0% to 6.5%. The negotiated base price represents an implied discount of approximately 48% to the midpoint of that indicated range. The Newmark indicated valuation is an estimate based on assumptions and does not represent an offer to purchase or a determination of fair value; there can be no assurance that we would realize the indicated value upon a sale, financing, or otherwise. See “Risk Factors” below.
We intend to fund the $27.7 million purchase price following the closing of the Merger through project financing in connection with the development of the Project Facility from one or more lenders, the terms of which are currently being negotiated. There can be no assurance that project financing will be available on acceptable terms or within the time required to complete the acquisition by September 26, 2026. In the event the acquisition of the Project Facility is not consummated by September 26, 2026, for any reason, we have the right to request two additional 30-day extensions of the purchase option deadline from the seller, if required. Our acquisition of the Project Facility is at our option, and we are under no obligation to consummate the acquisition or to obtain project financing. The scheduled closing date under the purchase agreement is October 1, 2026, and we have the unilateral right, exercisable by delivery of notice to the seller prior to the then-scheduled closing date, to extend the closing date for two consecutive 30-day periods. If we do not obtain project financing on acceptable terms prior to the extended closing date and the acquisition of the Project Facility is not consummated, we would be in breach of the purchase agreement and could be subject to claims by the seller for damages or specific performance, and could forfeit any deposit paid in connection with the purchase agreement. Any such claim, if successful, could adversely affect our liquidity and ability to develop the Project Facility. If the acquisition of the Project Facility is not consummated, we would continue to hold our rights as lessee under the Property Lease, which has approximately five years of remaining term, and would continue to own the Electric Service Agreement (as defined below) and the adjacent land we acquired for approximately $33.5 million, each of which would remain available to support our operations and our performance of our obligations under the Lease, irrespective of whether we consummate the acquisition of the Project Facility.
Development and Construction. The Project Facility consists of an existing building that will be retrofitted and built out as a data center for artificial intelligence and/or high-performance computing in accordance with specifications agreed to with the Tenant. The majority of the required construction will occur within the existing building structure. The Project Facility is expected to be delivered as a single phase. The estimated cost of the required buildout and the anticipated completion date are currently being finalized in coordination with the Tenant’s design specifications, which are in the final stages of development.
Alternative Facilities. The identification and evaluation of sites to be developed for use as an AI or HPC data center is part of the ordinary course of our business as a digital infrastructure owner. As of the date hereof, no specific alternative facilities have been identified or pursued as a replacement for the Project Facility. In the event that the acquisition of the Project Facility is not consummated for any reason, we reserve the right to identify, acquire and/or develop one or more alternative facilities in the ordinary course of our business development activities.
Acquisition of T-20 Mining LLC. In February 2026, we acquired T-20 Mining LLC (“T-20”), a Delaware limited liability company that held an Electric Service Agreement (“Electric Service Agreement”) with the applicable utility provider for the Project Facility’s location, for an aggregate purchase price of approximately 33.5 million. The Electric Service Agreement provides us with a contractual right to a specified level of electrical power capacity at the Project Facility, a critical infrastructure asset for the Project Facility to be used as a data center by the Tenant. The acquisition of T-20 was undertaken specifically to secure power access at the Project Facility and is directly related to our intended use of the Project Facility. For information regarding certain related-party financing used in connection with the acquisition of T-20, see “Certain Relationships and Related Person Transactions” below.
Grocery Operations. We operate full-service natural and organic grocery stores throughout six regional natural-foods banners: Ada’s Natural Market, a full-service grocery store, and Greenleaf Grill, Ada’s flagship fast-casual in-store restaurant, serving Fort Myers, FL; Greens Natural Foods stores in New Jersey and New York; Paradise Health & Nutrition, with locations in the greater Melbourne, Florida area; Mother Earth’s Storehouse, located in Hudson Valley, NY; Ellwood Thompson’s, located in Richmond, Virginia; and GreenAcres Market, with stores located in Oklahoma and Kansas. We have retail stores in Florida, New York, New Jersey, Virginia, Kansas and Oklahoma. We consider these locations strategically important to our operations, serving key markets in the Southeastern, Northeastern, and Midwestern United States. We offer high-quality products and brands, including an extensive selection of widely recognized natural and organic food, dietary supplements, body care products, pet care products and books. We operate our stores in compliance with National Organic Program standards, which restrict the use of certain substances for cleaning and pest control and require rigorous recordkeeping, among other requirements. Our Grocery operating segment has been aggregated with our Wellness operating segment into a single reportable segment under ASC 280, given their shared economic characteristics and similarities in products sold, acquisition process, customer base, distribution methods and regulatory environment. Following the Merger, our existing grocery retail operations continue to operate as a division of the combined company.
Power Strategy
Our power strategy emphasizes reliability, cost-competitiveness and responsible integration with regional electric grids. Across our identified development opportunities, we target a meaningful share of capacity to be supported by behind-the-meter power resources, with the balance served by contracted utility-supplied electricity. On our first asset, the power is supplied by Public Service Company of Oklahoma (PSO) under the executed Electric Service Agreements described above; the project contemplates behind-the-meter generation for potential future expansion.
Competition
The market for digital infrastructure serving HPC and AI workloads is competitive. We compete with data center REITs, independent data center developers and colocation providers, hyperscale cloud platforms (which also build their own data centers), infrastructure funds, AI cloud providers and, in certain cases, digital asset miners with energized infrastructure suitable for HPC use. Principal competitive factors include site and power availability, delivered power economics, speed to market, execution capability, access to capital and customer relationships. Many of our competitors have substantially greater financial, operational and technical resources than we do.
The industry of our grocery and dietary supplement retail business is large, fragmented and highly competitive, with few barriers to entry. Our competition varies by market and includes conventional supermarkets, independent health food stores, dietary supplement retailers, drug stores, farmers’ markets, food co-ops, mail order and online retailers and multi-level marketers. These businesses compete with our grocery and dietary supplement retail business segment for customers on the basis of price, selection, quality, customer service, shopping experience or any combination of these or other factors. They also compete with us for products and locations. In addition, some of our competitors are expanding to offer a greater range of natural and organic foods. We believe our commitment to carrying only carefully vetted, affordably priced and high-quality natural and organic products and dietary supplements, as well as our focus on providing nutritional education, differentiate us in the industry and provide a competitive advantage.
Regulation
Regulation in the industry is evolving and we are or may become subject to a variety of federal, state and local laws, rules and regulations, and moratoria applicable to data center development, the supply and use of electricity, grid interconnection, environmental compliance, land use and zoning. The Project is served by PSO, a regulated electric utility subsidiary of American Electric Power Company, Inc., operating within the Southwest Power Pool. Power supply, capacity and tariff arrangements at the Project Facility are subject to oversight by the Oklahoma Corporation Commission and, where applicable, the Federal Energy Regulatory Commission. To the extent we develop on-site generation or storage at any site, additional federal, state and local permitting, environmental and reliability requirements may apply.
In operating our full-service natural and organic grocery stores and dietary supplement stores, we work with reputable suppliers we believe comply with established regulatory and industry standards, and our purchasing department requires a complete supplier and product profile as part of our approval process. Our dietary supplement suppliers are expected to follow FDA current good manufacturing practices, supported by quality assurance testing of both base ingredients and finished products. We operate our stores in accordance with National Organic Program requirements, which restrict certain substances used in cleaning and pest control and impose detailed recordkeeping obligations. We sell meat naturally raised without hormones, antibiotics or treatments and that were not fed animal by-products, and we primarily sell USDA certified organic produce. Many of our suppliers are inspected and certified under the USDA National Organic Program, along with voluntary industry associations and other third-party auditing programs covering ingredients, manufacturing, and handling standards.
Human Capital Resources
As
of the date hereof, we have
Cybersecurity
We are in the process of designing a cybersecurity program covering our information systems and operational technology, including administrative, physical and technical controls and incident response procedures. Under the Lease, the Tenant is responsible for the deployment, configuration and information security of its compute hardware. Site-level monitoring of electrical and mechanical systems at the Project Facility is supported by our third-party operations partner.
Properties
Our principal property is the Project Facility, described under “The Project Facility — Northeast Oklahoma” above. We lease our corporate headquarters.
Our grocery and dietary supplement retail business operates from numerous facilities in Florida, Virginia, New York, New Jersey, Kansas and Oklahoma. These leased facilities include our office location, warehouse and retail stores. In addition to real estate leases, the Company also leases mission-critical data center equipment under a long-term finance lease to support its corporate and store operations. As of the date hereof, we had 19 retail stores in Florida, New York, New Jersey, Virginia, Kansas and Oklahoma, which aggregate approximately 181,000 square feet, all of which are leased by our grocery stores.
Insurance
We maintain property and casualty insurance for the Project Facility consistent with industry practice for assets of this type, including replacement-cost all-risk property coverage, builder’s risk coverage during construction, general liability coverage and other customary lines, including cyber liability. We review coverage levels periodically and adjust them in consultation with our insurance advisors.
Environmental and Power Considerations
Our approach to environmental and energy considerations is grounded in responsible infrastructure design, operational efficiency, and reliable integration with regional electric grids. We develop and operate digital infrastructure on existing industrial and energy sites, prioritizing reuse of legacy assets and minimizing incremental land disturbance.
Our data center campuses are engineered to support high-density, mission-critical compute while emphasizing efficient power utilization, advanced cooling architectures, and resilient electrical design. These facilities are designed to operate with a range of long-duration power resources, including grid-supplied electricity and, where appropriate, on-site generation.
Our environmental focus is centered on disciplined development, efficient operations, and long-term infrastructure stewardship rather than reliance on any single energy source or environmental attribute.
Corporate Information
Host
Digital Inc. (f/k/a Healthy Choice Wellness Corp.) was incorporated in the State of Delaware on September 26, 2022. As of the date hereof,
our Common Stock trades on the NYSE American under the symbol “HCWC”. The symbol for our Common Stock will change to “HOST,”
effective at the opening of trading on September
Our principal executive offices are located at 3800 North 28th Way, Hollywood, Florida 33020, and our telephone number is (305) 600-5004. Our corporate website address is https://www.hostdigital.ai/. The information contained on or accessible through our website is not a part of this filing, and the inclusion of our website address in this filing is an inactive textual reference only.
RISK FACTORS
You should carefully consider the following risk factors. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to our business. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize the anticipated benefits of the Merger (as defined below), and may have a material adverse effect on the combined company and its financial condition or results of operations going forward. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by us which later may prove to be incorrect or incomplete. We may face additional risks and uncertainties that are not presently known to us, or that are currently deemed immaterial, which may also impair their business or financial condition.
You should also read and consider the risk factors specific to our pre-Merger business and operations that will affect the combined company after completion of the Merger. These risks are described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
For purposes of this section, references to “the Company”, “Host Digital”, “we”, “our” and “us” are to Host Digital Inc. (f/k/a Healthy Choice Wellness Corp.) and its subsidiaries.
Risks Related to the Merger
The market price of our Common Stock following the Merger may decline as a result of the Merger.
On
September
The market price of our Common Stock may decline as a result of the Merger for a number of reasons including if:
| ● | investors react negatively to the prospects of the combined company’s business and financial condition following the Merger; |
| ● | the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or |
| ● | the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts. |
Our stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.
If we are not able to realize the strategic and financial benefits currently anticipated from the Merger, our pre-Merger stockholders and the Host LLC members will have experienced substantial dilution of their ownership interests in their respective companies without receiving the expected commensurate benefit, or only receiving part of the commensurate benefit to the extent that the combined company is able to realize only part of the expected strategic and financial benefits currently anticipated from the Merger.
We may be unable to obtain project financing on acceptable terms within the timeframe required to consummate the acquisition of the Project Facility (as defined below), which could delay or prevent the development of the Project Facility.
The purchase price for the Project Facility, inclusive of the parking lot, is $27.7 million, which we intend to fund through project financing from one or more lenders in connection with the development of the Project Facility following the closing of the Merger. As of July 31, 2026, we had current assets of approximately $1,047,940 and had no committed financing facility in place for the acquisition of the Project Facility. Our ability to obtain project financing on acceptable terms will depend on a number of factors outside our control, including general credit market conditions, lender appetite for early-stage digital infrastructure development projects, interest rates, and the overall progress of the Project Facility’s development. There can be no assurance that we will be able to obtain project financing on acceptable terms, or at all. We must complete the acquisition of the Project Facility by September 26, 2026 pursuant to our purchase option under the Property Lease. We have the right to request two additional 30-day extensions of the purchase option deadline from the seller, if required. If we unable to consummate the acquisition of the Project Facility pursuant to its purchase option, it could adversely affect the timing and scale of the Project Facility’s development, or it could prevent the development of the Project Facility.
We do not own the development pipeline attributed to our Sponsor, and our Sponsor is under no obligation to contribute any of those assets to us.
The data center projects and development opportunities described as our “pipeline” are owned or controlled by Host Infrastructure Holdings LLC, an entity formed and controlled by the founders of Host LLC (the “Sponsor”), and are not owned by us. Under the Preferential Rights Agreement, we have a right of first offer and a right of first refusal with respect to the Sponsor’s project site acquisition subsidiaries (each, a “Project Subsidiary”). The Sponsor is under no obligation to develop, retain, market, or contribute any Project Subsidiary to us, may elect not to pursue or to abandon any project, and may dispose of Project Subsidiaries to third parties if we do not exercise our rights. As a result, none of the pipeline assets may ever be contributed to or acquired by us, and you should not assume that we will acquire any of them or realize any revenue, EBITDA, or other results attributed to them.
Our preferential rights are limited, and we may be unable to acquire Project Subsidiaries on favorable terms or at all.
Our rights under the Preferential Rights Agreement are limited to a right of first offer, exercisable within 30 days after the Sponsor markets or determines to contribute a Project Subsidiary, and a right of first refusal, exercisable within five days after the Sponsor receives an unsolicited third-party offer it desires to accept. The valuation and other terms of any proposed transaction are proposed by the Sponsor or a third party. If we do not timely exercise our rights, or if we fail to consummate a transaction within the prescribed period, the Sponsor may sell the applicable Project Subsidiary to a third party, and our rights with respect to that Project Subsidiary will not be reinstated. The Preferential Rights Agreement expires on the second anniversary of its effective date, after which we will have no contractual rights with respect to the Sponsor’s pipeline. Accordingly, our preferential rights may not result in any acquisitions, or in acquisitions on terms favorable to us, which may materially adversely impact our business and results of operations.
Our relationship with the Sponsor presents conflicts of interest.
The Sponsor is controlled by the founders of Host LLC, some of whom also serve as executive officers and/or employees of, and hold substantial equity interests in, the Company, including our chief executive officer. As a result, the same persons effectively control both the Sponsor and, to a significant extent, the Company. These persons will decide whether and when the Sponsor develops, markets, or contributes Project Subsidiaries, the valuation and terms proposed to us, and whether to transact with us or with third parties, and they may have economic and other incentives that differ from, or conflict with, the interests of our other stockholders. The Preferential Rights Agreement was not negotiated at arm’s length. Any transaction under the Preferential Rights Agreement will be subject to review and approval by a committee of independent directors in accordance with our related-person transaction policy; however, such procedures may not eliminate the conflicts described above.
We will require substantial additional capital to exercise our preferential rights and to acquire and develop any Project Subsidiary.
Even if we elect to acquire a Project Subsidiary, we will require substantial additional debt or equity financing to fund the acquisition and the subsequent site acquisition, development, construction, and commissioning, which financing may not be available on acceptable terms, or at all. Any such financing may be dilutive to our stockholders or increase our leverage and debt service obligations. For example, if we elect to acquire a Project Subsidiary, we may use shares of our capital stock as some or all of the consideration for such acquisition, which could cause immediate and significant dilution to our stockholders.
Absent any such financing described above, we may be unable to fund an acquisition even where we wish to exercise our preferential rights.
Pipeline information, including any projected capacity, contracted values, delivery dates, or any other financial metrics, is illustrative and subject to significant uncertainty.
Any information regarding the Sponsor’s potential development pipeline, including projected power capacity, in-service or delivery dates, contracted values, and any projected financial metrics, is illustrative only, is based on assumptions and estimates that are inherently uncertain, and does not represent our assets or results. These Project Subsidiaries are held or controlled by the Sponsor, and not by us, and our ability to acquire these assets is subject to the Preferential Rights Agreement. The Project Subsidiaries are at varying and preliminary stages of development; may not be subject to signed leases (and any leases may be terminated or may not commence); require power, permitting, site control, construction, and financing that may not be obtained; and are subject to the risk that they are never contributed to or acquired by us. Actual results may differ materially from any pipeline information, and you should not place undue reliance on it.
The negotiated base price for Host LLC reflects a discount to a third-party indicated valuation range that may not be realized.
Our disclosure references an indicated valuation range for the Project Facility provided by Newmark of approximately $676 million to $954 million (based on an indicated capitalization rate range of 5.0% to 6.5%), and a negotiated base price of $425 million representing an implied discount to that range. The indicated valuation is an estimate based on assumptions regarding capitalization rates, contracted cash flows, development, and market conditions, any of which may prove incorrect. It does not represent an offer to purchase or a determination of fair value, and we may be unable to realize the indicated value, or any premium to our negotiated base price, upon a sale, financing, or otherwise. You should not rely on the indicated valuation range or the implied discount as an indication of the value of our Common Stock.
The credit support for our anchor lease has not yet taken effect, and we may not obtain investment-grade backstop or guaranty arrangements if we do not consummate our project financing.
Our Lease is described as backstopped by, or supported by the credit of, an investment-grade technology company. As of the date hereof, the backstop arrangement has not yet taken effect and is subject to the completion of our anticipated project financing. There can be no assurance that the backstop arrangement will commence, that any backstop provider will maintain an investment-grade rating, or that the credit support will be sufficient. If the credit support is not obtained or proves inadequate, our exposure to the tenant’s credit, the value of the Lease, and our ability to obtain project financing could be materially and adversely affected.
Our Common Stock ownership is highly concentrated, and a small number of holders will control matters submitted to stockholders.
Following the Merger, our chief executive officer, the other founders of Host LLC and other insiders hold a substantial majority of our outstanding common stock, with Mr. Samra and Mr. Thomas each holding approximately 38%, and our directors and executive officers as a group holding approximately 76%. As a result, these holders, acting together, will be able to control or significantly influence the outcome of matters submitted to our stockholders, including the election of directors and the approval of significant transactions, and their interests may differ from those of our other stockholders. This concentration of ownership may also limit the liquidity of, and adversely affect the market price of, our Common Stock.
Litigation relating to the Merger could require us to incur significant costs and suffer management distraction.
We could be subject to demands or litigation relating to the Merger, even after consummation. In the past, securities class action or shareholder derivative litigation often follows certain significant business transactions, such as the announcement of a merger. Litigation is often expensive and diverts management’s attention and resources, which could adversely affect our business. Insurance may not be sufficient to cover all costs or damages related to this type of litigation.
The unaudited pro forma financial information included in our filings may not necessarily reflect our operating results and financial condition following the Merger.
The unaudited pro forma condensed combined financial information (“pro forma financial information”) included in our filings with the U.S. Securities and Exchange Commission (the “SEC”) is derived from separate historical consolidated financial statements of the Company (pre-Merger) and Host LLC. The preparation of this pro forma financial information is based upon available information and certain assumptions and estimates that we currently believe are reasonable. These assumptions and estimates may not prove to be accurate, and this pro forma financial information does not necessarily reflect what the combined company’s results of operations and financial position would have been had the Merger been completed on the relevant dates assumed and the assumptions and estimates were to prove accurate, or what our results of operations or financial position will be in the future.
The Merger could result in significant tax liability, and we may be obligated to indemnify HCMC for any such tax liability imposed on HCMC.
The completion of the Merger was conditioned upon the receipt by us and Host LLC of (a) an opinion to the effect that, for U.S. federal income tax purposes, the Merger qualified as a transaction under Section 351(a) of the Code (the “Merger Tax Opinion”), and (b) an opinion to the effect that, among other things, for U.S. federal income tax purposes, the Merger did not affect the tax-free status of certain prior transactions, including the Spin-Off (as defined below) (the “Spin-Off Tax Opinion”).
In rendering the Merger Tax Opinion and the Spin-Off Tax Opinion, tax counsel relied on, among other things, (1) customary representations and covenants made by Host LLC, us, and Healthier Choices Management Corp. (“HCMC”) and (2) specific assumptions. If any of those representations, covenants or assumptions were inaccurate, or the facts upon which either the Merger Tax Opinion or the Spin-Off Tax Opinion were based were materially different from the facts at the time of the transactions, the conclusions expressed in such opinions may be incorrect and the transactions may not qualify (in whole or part) for tax-free treatment. Opinions of counsel are not binding on the IRS. As a result, such conclusions therein could be challenged by the IRS, and if the IRS prevails in such a challenge, the consequences to us and our stockholders could be materially less favorable than anticipated.
Furthermore, HCMC announced on August 22, 2022 that its Board of Directors approved the separation of the grocery business, including wellness business, into an independent, publicly traded company (the “Spin-Off”). Prior to the Spin-Off, we were a subsidiary under HCMC. On September 13, 2024, after the NYSE American (“NYSEAM”) market closing, the Spin-Off of the Company business was completed. On September 14, 2024, we became an independent, publicly traded company, and on September 16, 2024, our Common Stock commenced trading on the NYSEAM under the stock ticker “HCWC.”
We and HCMC entered into a tax matters agreement, dated as of December 11, 2023, governing the respective rights, responsibilities and obligations of us and HCMC after the Spin-Off with respect to certain tax matters (the “Tax Matters Agreement”). The Tax Matters Agreement imposes certain restrictions on us and its subsidiaries that are designed to preserve the tax-free status of the Spin-Off and certain related transactions. The Merger was subject to these restrictions under the Tax Matters Agreement. In particular, under the Tax Matters Agreement, we were not permitted to complete the Merger without the consent of HCMC, which consent was obtained subject to satisfaction of certain conditions.
In particular, under the Tax Matters Agreement, the Merger was permitted on the condition that we provided HCMC with an Unqualified Tax Opinion (as defined in the Tax Matters Agreement) in form and substance satisfactory to HCMC in its sole and absolute discretion addressing the consequences of the Merger on the Spin-Off. We delivered to HCMC, with respect to the Merger, the Spin-Off Tax Opinion, which was intended to be an Unqualified Tax Opinion. HCMC has reviewed the Spin-Off Tax Opinion, accepted it as an Unqualified Tax Opinion, and consented to the completion of the Merger under the Tax Matters Agreement. Notwithstanding our delivery of such Unqualified Tax Opinion, we remain obligated under the Tax Matters Agreement to indemnify HCMC for certain tax liabilities imposed on HCMC as a result of the Merger.
Even if the Merger otherwise qualified generally for non-recognition treatment under Section 351(a) of the Code, the Distribution (as defined in the Tax Matters Agreement) would be taxable to HCMC (but not to our stockholders who received our stock in the Spin-Off) pursuant to Section 355(e) of the Code if one or more persons acquire a 50% or greater interest (measured by vote or value) in the our stock or the stock of HCMC, directly or indirectly, as part of a plan or series of related transactions that includes the Spin-Off. For this purpose, any acquisitions of our or HCMC common stock within the period beginning two years before the Spin-Off and ending two years after the Spin-Off are presumed to be part of such a plan, although we, HCMC, or Host LLC, as the case may be, may be able to rebut that presumption, depending on the facts and circumstances. For purposes of this test, the Spin-Off Tax Opinion concluded that the Merger will not be treated as part of such a plan. If the IRS determines that the Merger or other acquisitions of our Common Stock or HCMC common stock, either before or after the Spin-Off, are part of a plan or series of related transactions that included the Spin-Off, such determination, if sustained, could result in the recognition of a material amount of taxable gain by HCMC under Section 355(e) of the Code. In general, under the Tax Matters Agreement, we are liable for any taxes imposed on, and certain related amounts payable by, HCMC that arise from the failure of the Spin-Off, together with certain related transactions, to qualify as a tax-free transaction for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) and certain other relevant provisions of the Code, to the extent that the failure to so qualify is attributable to actions, events or transactions relating to our Common Stock or assets or business (such as the Merger), or a breach of relevant representations or covenants made by us in the Tax Matters Agreement.
In addition, changes in tax law could adversely affect the intended tax treatment of the completed Merger or could adversely affect the ability to rely on the Merger Tax Opinion and Spin-Off Tax Opinion.
The Merger may have resulted in the termination of any consolidated group of which were the common parent.
For certain U.S. federal income tax purposes, the Merger may constitute a “reverse acquisition” described in Treasury Regulations Section 1.1502-75(d)(3). As required under these regulations, for certain consolidated return compliance following the Merger, Host Digital may calculate and file consolidated tax returns as though Host LLC is the parent of the consolidated group of which we are a part. In addition, the Merger may result in the termination of any U.S. affiliated group as defined in Section 1502 of the Code of which we are the common parent, in accordance with Treasury Regulations Section 1.1502-75(d). Such termination may have a range of U.S. federal income tax consequences, including costs or expenses associated with modifying or otherwise preparing certain tax returns.
Our ability to use net operating losses (“NOLs”), research and development tax credits and other tax attributes to offset future taxable income may be subject to certain limitations.
In general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize certain pre-change NOLs, tax credits, or or other tax attributes to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. We have not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. The Merger is expected to have constituted an ownership change with respect to us and accordingly our utilization of our NOLs, research and development tax credit carryforwards and other tax attributes would be subject to an annual limitation under Section 382 of the Code. Any limitation may result in expiration of a portion of the NOLs, research and development tax credit carryforwards or other tax attributes before utilization. In addition, NOLs, tax credits or other tax attributes may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of certain NOLs, tax credits, or other tax attributes. Future changes in our stock ownership, some of which may be outside our control, could result in additional ownership changes and could further limit our ability to utilize these tax attributes.
Our shares of Common Stock and Company Units of Host LLC may constitute a United States real property interest before or after the Merger.
Our
shares of Common Stock and the Company Units previously outstanding in Host LLC may have constituted a United States real property interest
(a “USRPI”) by reason of Host LLC’s status as a “United States real property holding corporation” as such
term is defined in Section 897(c) of the Code (a “USRPHC”), at any time within the shorter of the five-year period preceding
the Merger or
In addition, our asset composition may change significantly over time, including as we acquire, develop and own additional data center properties and related infrastructure. Accordingly, even if we are not a USRPHC today, there can be no assurance that we will not become a USRPHC in the future.
Acquisitions may expose us to inherited tax liabilities, uncertain tax attributes and other adverse tax consequences.
As part of our business strategy, we may acquire entities or assets, including data center sites, power-related entities and other infrastructure. In connection with such acquisitions, we may succeed to historical tax liabilities or tax attributes of an acquired entity, assume tax risks relating to periods before the acquisition, or become responsible for unpaid taxes, interest or penalties attributable to the acquired entity or assets. Contractual indemnities or other protections, if any, may be unavailable or insufficient to protect us from these liabilities. Acquisitions may also affect the tax basis of acquired assets, the timing or amount of depreciation or amortization deductions, the availability or utilization of tax attributes, or other tax consequences in ways that differ from our expectations. Any such liabilities or adverse tax consequences could materially adversely affect our business, financial condition, results of operations and cash flows.
Risks Related to our Business, Financial Position and Capital Requirements
Our subsidiary Host LLC is at an early stage of development of its business with no material operating history or revenues.
Host LLC is an early stage company with a limited operating history and no history of generating material revenue from operations. Host LLC is subject to the risks and uncertainties of a new business, including the risk that it may never further develop, complete development of or successfully market any of its proposed services. Host LLC’s business model, which is focused on the development, ownership and operation of data center infrastructure supporting AI and HPC workloads, remains unproven. Host LLC has not yet completed development of its initial project, entered into a binding long-term customer lease, or commenced material revenue-generating operations. As a result, Host LLC’s historical financial and operating information may not be meaningful for evaluating its business or prospects, and investors may have limited information upon which to assess Host LLC’s ability to successfully develop and operate its business. Host LLC’s future success will depend on a number of factors, many of which are beyond its or our control, including its ability to complete construction of its initial facility, secure customers, obtain financing, access sufficient electrical power and effectively manage growth. Host LLC may not successfully execute its business plan, and its business may never achieve commercial success.
Host LLC has not commenced material revenue-generating operations and has not achieved or maintained. and may never achieve or maintain, profitability, which may have a material adverse impact on our business, financial condition and results of operations.
Host LLC has not commenced material revenue-generating operations and has incurred losses since inception. Following the Merger, we expect to incur substantial operating expenses and capital expenditures as we pursue development of our initial data center facility and broader infrastructure platform. Our ability to achieve profitability will depend on numerous factors, including our ability to execute any future leases with a creditworthy tenant, complete development and commissioning of the Project Facility on a timely and cost-effective basis, obtain sufficient financing, manage operating costs and successfully compete in the evolving AI and HPC infrastructure market. Even if we begin generating revenue from our data center operations, we may not be able to achieve or sustain profitability. In addition, our costs may increase significantly over time as we expand operations, hire additional personnel and develop additional projects.. If we are unable to generate sufficient revenues to offset our costs, our business, financial condition and results of operations could be materially adversely affected.
We may be unable to access sufficient additional capital needed to grow our business.
Our post-Merger business plan requires substantial additional capital. We expect to need to raise substantial additional capital to acquire the property for our Project Facility, complete construction and commissioning of the Project Facility, support working capital needs, and pursue development opportunities. We currently expect that our future liquidity needs will be funded through a combination of project financing, equity financings, debt financings, and, eventually, cash flows from operations. However, there can be no assurance that such financing will be available on acceptable terms, or at all. Our ability to raise capital may be adversely affected by many factors, including general market conditions, volatility in the technology, digital infrastructure and AI sectors, rising interest rates, lender appetite for data center development projects, construction and execution risks, and its limited operating history. If we are unable to obtain sufficient financing when needed, we may be required to delay, scale back or abandon one or more projects, reduce operations, sell assets, issue equity securities on dilutive terms or cease operations altogether.
Our near-term business plan depends substantially on the successful development and delivery of a single initial project in northeast Oklahoma.
Our near-term business prospects depend substantially on the successful development, completion and delivery to the Tenant of our initial project located in northeast Oklahoma. We currently expect the Project Facility to be our principal operating asset and primary source of anticipated future revenue in the near term. As a result, our business is highly concentrated and exposed to risks affecting a single facility, including construction delays, cost overruns, equipment failures, utility service interruptions, permitting or regulatory issues, customer concentration, adverse weather events, operational disruptions and changes in market demand for AI and HPC infrastructure. Any failure to successfully complete, lease, operate or expand the Project could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Any delays or unexpected costs implementing the Project or our future developments may delay and harm our growth prospects, future operating results and financial condition.
The development of the Project Facility involves significant risks and uncertainties. Construction and commissioning of data center infrastructure is complex and capital intensive and may be adversely affected by numerous factors, including those associated with:
| ● | delays in obtaining permits or approvals; |
| ● | labor shortages; |
| ● | federal, state, or local/municipal governmental legislation, rules, executive orders, actions, or moratoria being determined to apply to the Project, resulting in, among other things, delays or denials of entitlements or permits, including zoning, siting, utility and other permits, or other delays resulting from requirements of public agencies and utility companies; |
| ● | budget overruns, increased prices for raw materials or building supplies, or lack of availability and/or increased costs for specialized data center components, including long lead time items such as generators; |
| ● | construction site accidents and other casualties; |
| ● | labor availability, costs, disputes and work stoppages with contractors, subcontractors or others that are constructing the project; |
| ● | failure of contractors to perform on a timely basis or at all, or other misconduct on the part of contractors; |
| ● | access to sufficient power and related costs of providing such power to Host Digital’s customers; |
| ● | environmental issues; |
| ● | supply chain constraints; |
| ● | fire, flooding, earthquakes and other natural disasters; and |
| ● | geological, construction, excavation and equipment problems. |
In addition, the Project Facility is being retrofitted from an existing energized site for AI/HPC workloads, which may involve additional design, integration and operational complexities. Any delays in construction, energization, commissioning or tenant readiness could delay revenue generation, increase project costs and impair our ability to satisfy contractual obligations or obtain additional financing. Any material delay or cost overrun could materially adversely affect our business, financial condition, results of operations and growth prospects.
We expect to depend heavily on a single tenant for substantially all near-term revenue.
On August 7, 2026, we entered into a 15-year lease with one of the world’s largest privately-held cloud infrastructure companies, pursuant to which we will provide 43 MW of critical IT load capacity at the Project Facility. We currently expect that substantially all of our anticipated near-term revenue will be derived from the single tenant at the Project. We currently expect to deliver the Project Facility to the tenant by the end of the first quarter of 2027, subject to completion of our construction efforts, and prior to such time, we will not generate any revenue from the Lease. As a result, our business will be highly dependent on the financial condition, operational performance and contractual compliance of a single customer and its affiliate guarantor. The loss of such tenant, the failure of the tenant to commence occupancy or operations as expected, a reduction in the tenant’s compute usage or infrastructure requirements, or any deterioration in the tenant’s or guarantor’s creditworthiness could materially adversely affect our revenues, cash flows and ability to satisfy its financial obligations. In addition, because our near-term customer base is expected to be highly concentrated, we may have limited leverage in negotiating commercial terms and may be more vulnerable to customer-specific operational or strategic decisions. Any adverse change affecting such tenant or guarantor could materially adversely affect our business, financial condition and results of operations.
We are subject to risks associated with our need for significant electrical power.
Our business depends on the availability of significant amounts of reliable electrical power. AI and HPC data center operations are highly energy intensive, and our ability to develop and operate facilities depends on obtaining sufficient electrical capacity from utilities and other power providers. If we are unable to continue to obtain sufficient electrical power, we may not realize the anticipated benefits of our significant capital investments.
Additionally, our operations could be materially adversely affected by prolonged power outages. Although our data center campuses are designed to operate with a range of long-duration power resources, including grid-supplied electricity and, where appropriate, on-site generation, the availability of electrical power may be limited by grid constraints, transmission congestion, interconnection delays, utility allocation policies, generation shortages, regulatory restrictions, severe weather events or competing demand from other users. Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power. If this were to occur, our business and results of operations could be materially and adversely affected.
We depend upon third-party suppliers for power, and are vulnerable to service failures by such suppliers and to volatility in the supply of power in the open market.
We rely on third-party utility providers and other energy suppliers to provide power to its facilities. The Project Facility is served by Public Service Company of Oklahoma, and we cannot ensure that these third parties will deliver such power in adequate quantities or on a consistent basis. We are also reliant on third parties to deliver additional power capacity to support the growth of our business. If the amount of power available to us is inadequate to support our customer requirements, we may be unable to satisfy our obligations to our customers or grow our business. In addition, our data centers may be susceptible to power shortages and planned or unplanned power outages caused by these shortages. Power outages may last beyond our backup and alternative power arrangements, which would harm our customers and our business. Any loss of services or equipment damage could adversely affect both our ability to generate revenues and its operating results, harm our reputation and potentially lead to customer disputes or litigation.
Because electrical power is a significant component of data center operations, any reduction in power availability could materially adversely affect our business, financial condition and results of operations.
We have an evolving business model that is subject to various uncertainties.
Our business model continues to evolve, and our long-term strategy, operational structure and market positioning may change over time as we respond to technological developments, customer requirements, financing conditions and competitive pressures. Our strategy involves developing and operating infrastructure supporting AI and HPC workloads, including the potential use of behind the meter generation and repurposed industrial infrastructure. Because our business is at an early stage of development, we may modify our development plans, customer strategy, operational approach, financing structure or expansion plans in ways that may not be successful. In addition, portions of our current site infrastructure have historically supported digital asset mining activities, and we are transitioning the facility toward AI/HPC use cases. There can be no assurance that our business model will achieve market acceptance, generate anticipated returns or successfully adapt to changes in technology, customer demand or industry conditions. Any failure to successfully execute our evolving strategy could materially adversely affect our business, financial condition and results of operations.
We are subject to a highly evolving regulatory landscape and any adverse changes to certain laws or regulations could adversely affect its customers and its business, prospects or operations.
Our business is subject to extensive laws, rules and regulations relating to data center development, electricity usage, environmental compliance, energy generation, data protection, cybersecurity and tax. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, digital assets and related technologies. As a result, they do not contemplate or address unique issues associated with the data center economy, are subject to significant uncertainty, and vary widely across U.S. federal, state and local and international jurisdictions. These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another.
Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the digital asset economy requires us to exercise judgment as to whether certain laws, rules and regulations apply to us or our customers, and it is possible that governmental bodies and regulators may disagree with our or our customers’ conclusions. To the extent we or our customers have not complied with such laws, rules and regulations, we could be subject to significant fines and other regulatory consequences, which could adversely affect our business, prospects or operations. As digital assets have grown in popularity and in market size, the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the Commodity Futures Trading Commission, the SEC, the Financial Crimes Enforcement Network and the Federal Bureau of Investigation) have begun to examine the operations of such digital asset technologies, including regarding the energy consumption and environmental impact associated with AI and data center infrastructure. For example, power supply, capacity and tariff arrangements at the Project Facility are subject to oversight by the Oklahoma Corporation Commission and, where applicable, the Federal Energy Regulatory Commission. To the extent we develop on-site generation or storage at any site, additional federal, state and local permitting, environmental and reliability requirements may apply.
Ongoing and future regulatory actions could effectively prevent our mining operations, limiting or preventing future revenue generation or rendering our operations obsolete. Such actions could severely impact our ability to continue to operate and our ability to continue as a going concern or to pursue our strategy at all, which would have a material adverse effect on our business, prospects or operations.
We may not be able to compete with other companies, some of which have greater resources and experience.
The markets for AI, HPC and other digital infrastructure services are highly competitive and rapidly evolving. We may not be able to compete successfully against present or future competitors, including data center REITs, independent data center developers and colocation providers, hyperscale cloud companies, infrastructure funds, AI cloud providers and private developers or other operators of powered infrastructure assets. Many of our competitors have substantially greater financial, technical, operational and marketing resources than we do, as well as longer operating histories, more established customer bases, larger development pipelines and greater access to capital. In addition, certain hyperscale cloud providers and technology companies may continue to develop and operate their own infrastructure rather than lease capacity from third parties such as us.
With the limited resources we have available, we may experience great difficulties in expanding and improving our services and product offerings to remain competitive. Competition from existing and future competitors, particularly those that have access to competitively priced energy, could result in our inability to secure acquisitions and partnerships that it may need to expand its business in the future. This competition from other entities with greater resources, experience and reputations may result in our failure to maintain or expand its business, as we may never be able to successfully execute our business plan. If we are unable to expand and compete effectively, secure customers and develop projects on attractive terms, our business, results of operations and financial condition could be materially adversely affected.
We are substantially dependent on our ability to maintain a commercial relationship with a single tenant and if we are unable to do so, our business, financial condition and results of operations could be materially adversely affected.
We have entered into the Lease for the Project Facility with a single tenant, whose obligations under the Lease are backed by an affiliate guarantor. The Project Facility may be our only contracted asset in the immediate term, and if so substantially all of our near-term contracted revenue may be attributable to the single tenant and its affiliate guarantor. The loss of, or a material adverse change in the credit quality of, the tenant or its affiliate guarantor would have a material adverse effect on us.
Risks Relating to the Market for Our Common Stock and Listing
Raising additional capital may cause dilution to our existing stockholders and may restrict our operations.
We may raise additional capital at any time and may do so through one or more financing alternatives, including public or private sales of equity or debt securities directly to investors or through underwriters or placement agents. Raising capital through the issuance of common stock (or securities convertible into or exchangeable or exercisable for shares of our common stock) may depress the market price of our stock and may substantially dilute our existing stockholders. In addition, our board of directors may issue preferred stock with rights, preferences and privileges senior to those of the holders of our Common Stock. Debt financings could involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets, as well as prohibitions on our ability to create liens or make investments and may, among other things, preclude us from making distributions to stockholders (either by paying dividends or redeeming stock) and taking other actions beneficial to our stockholders. In addition, investors could impose more one-sided investment terms on companies that have or are perceived to have limited remaining funds or limited ability to raise additional funds. The lower our cash balance, the more difficult it is likely to be for us to raise additional capital on commercially reasonable terms, or at all.
The future exercise of registration rights may adversely affect the market price of our Common Stock.
In
connection with the Merger, we have entered into Registration Rights Agreements, each dated September
If we fail to maintain compliance with the NYSE American continued listing standards, the NYSE American may delist our Common Stock, which could materially and adversely affect our Company, the market price of our Common Stock and your ability to sell your shares.
Our Common Stock is currently listed on NYSE American. To maintain this listing, we must satisfy continued listing requirements and standards. If we fail to maintain compliance with the NYSE American continued listing standards, NYSE American may delist our Common Stock.
The delisting of our Common Stock could materially and adversely affect us by, among other things, reducing the liquidity and market price of our Common Stock; reducing the number of investors willing to hold or acquire our Common Stock, which could negatively impact our ability to raise equity financing; decreasing the amount of news and analyst coverage of us; and limiting our ability to issue additional securities or obtain additional financing in the future. In addition, delisting from the NYSE American may negatively impact our reputation and, consequently, our business and operations.
The stock price and trading volume for our securities may be volatile, which could result in substantial losses to investors.
The trading price for our Common Stock may be volatile and subject to wide fluctuations in response to factors, some of which are beyond our control, including the following:
| ● | developments relating to the closing of the Merger, including our ability to successfully integrate the business and operations of Host LLC, to execute the combined company’s business strategy and to realize the anticipated benefits of the Merger; |
| ● | actual or anticipated sales of shares of our Common Stock under any equity financings, and the potential dilutive effect of such transactions; |
| ● | changes in earnings estimates or recommendations by securities analysts; |
| ● | changes in applicable laws or regulations affecting our business; |
| ● | general economic, industry and market conditions; |
| ● | low trading volume of our Common Stock; or |
| ● | the other factors described in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2025 and in subsequent filings. |
In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. As a result, to the extent stockholders sell our securities in negative market fluctuation, they may not receive a price per share that is based solely upon our business performance. We cannot guarantee that stockholders will not lose some of their entire investment in our securities.
We do not intend to pay dividends on our Common Stock, so any returns will be limited to the value of our stock.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.
Future sales of our Common Stock in the public market, or the perception that such sales could occur, could cause our stock price to fall.
Sales of a substantial number of shares of our Common Stock or other equity-related securities in the public market could occur at any time. These sales, or the perception that such sales could occur, could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity securities. We may sell large quantities of our Common Stock at any time pursuant to one or more separate offerings. We cannot predict the effect that future sales of Common Stock or other equity-related securities would have on the market price of our Common Stock.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
The following describes transactions since January 1, 2025, and currently proposed transactions, to which we or our subsidiaries were or are to be a participant, in which the amount involved exceeded or will exceed $120,000, and in which any related person had or will have a direct or indirect material interest, other than compensation arrangements described elsewhere.
The Merger and Merger Consideration
In connection with the Merger, Mr. Samra, our Chief Executive Officer, and Mr. Thomas received Merger Consideration representing an aggregate of approximately 76% of our outstanding common stock (or approximately 44% assuming exercise of all of the Pre-Funded Warrants).
Preferential Rights Agreement
In connection with the Merger, we entered into a Preferential Rights Agreement with Host Infrastructure Holdings LLC, a Delaware limited liability company formed by the founders of Host LLC (the “Sponsor”), which holds project site acquisition companies (each, a “Project Subsidiary”). The Sponsor is controlled by the founders of Host LLC. Under the agreement, if the Sponsor markets or determines to contribute, sell, or otherwise dispose of a Project Subsidiary, we have a right of first offer (exercisable within 30 days) on the Sponsor’s proposed terms, and if the Sponsor receives an unsolicited third-party offer it desires to accept, we have a right of first refusal (exercisable within five days) on the same terms. Project Subsidiaries formed or acquired by the Sponsor after the effective date are automatically included. The Sponsor is under no obligation to develop, retain, market, or contribute any Project Subsidiary to us; if we do not exercise our rights, the Sponsor may transact with third parties, and our rights are not reinstated. The agreement expires on the second anniversary of its effective date. We do not own the Project Subsidiaries or the Sponsor’s pipeline, and no assurance can be given that any Project Subsidiary will be contributed to, or acquired by, us. See “Risk Factors” above.
Registration Rights Agreements; Lock-Up Agreements
In connection with the Merger, we entered into a Registration Rights Agreements certain holders of our Common Stock, including Mr. Samra and Mr. Thomas as well as certain of our former executive officers prior to the Merger, providing for the resale registration of their shares.
In connection with the signing of the Merger Agreement, we entered into lock up agreements with our directors and executive officers.
Incentive Awards
In connection with the Closing, we awarded an aggregate of 342,864 shares of Common Stock to certain employees and officers pursuant to the Merger Agreement, including awards to Mr. Ollet.
Indemnification Agreements
In connection with the Closing, we entered into indemnification agreements with each of our directors and executive officers and certain non-executive officers as of the Closing.
Policies and Procedures for Related Person Transactions
Our Board has adopted a written related person transaction policy under which our audit committee reviews and approves or ratifies transactions in which we are a participant, the amount involved exceeds $120,000, and a related person has a direct or indirect material interest, considering, among other things, whether the terms are no less favorable than those available from an unaffiliated third party. Any transaction under the Preferential Rights Agreement will be subject to this policy.
Exhibit 99.3
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF
HOST DIGITAL INFRASTRUCTURE LLC
| Page | |
| Consolidated Financial Statements: | |
| Report of Independent Registered Public Accounting Firm (PCAOB 213) | F-1 |
| Consolidated Balance Sheet as of January 31, 2026 | F-2 |
| Consolidated Statement of Operations for the period from July 8, 2025 (inception) through January 31, 2026 | F-3 |
| Consolidated Statement of Members’ Deficit for the period from July 8, 2025 (inception) through January 31, 2026 | F-4 |
| Consolidated Statement of Cash Flows for the period from July 8, 2025 (inception) through January 31, 2026 | F-5 |
| Notes to Consolidated Financial Statements | F-6 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of
Host Digital Infrastructure LLC
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Host Digital Infrastructure LLC (formerly known as 10X Digital Infrastructure LLC) (the “Company”) as of January 31, 2026, and the related consolidated statements of operations, members’ deficit, and cash flows for the period from July 8, 2025 (inception) through January 31, 2026, 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 January 31, 2026, and the results of its operations and its cash flows for the period from July 8, 2025 (inception) through January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has no cash, has a working capital deficit, and an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit, 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/ Carr, Riggs & Ingram, L.L.C.
We have served as the Company’s auditor since 2026.
Palm Beach Gardens, Florida
May 29, 2026
| F-1 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED BALANCE SHEET
JANUARY 31, 2026
| ASSETS | ||||
| Current assets: | ||||
| Deposit | $ | 500,000 | ||
| Total current assets | 500,000 | |||
| Right-of-use asset – operating lease | 1,906,639 | |||
| Security deposit | 123,895 | |||
| Total assets | $ | 2,530,534 | ||
| LIABILITIES AND MEMBERS’ DEFICIT | ||||
| Current liabilities: | ||||
| Loan payable – related party | $ | 1,372,067 | ||
| Accrued expenses | 300,929 | |||
| Operating lease liability – current portion | 22,246 | |||
| Total current liabilities | 1,695,242 | |||
| Operating lease liability – long-term | 1,353,997 | |||
| Total liabilities | $ | 3,049,239 | ||
| Commitments and contingencies (Note 8) | ||||
| MEMBERS’ DEFICIT | ||||
| Accumulated deficit | $ | (518,705 | ) | |
| Total members’ deficit | (518,705 | ) | ||
| Total liabilities and members’ deficit | $ | 2,530,534 |
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
| Operating expenses | ||||
| General and administrative expense | $ | 346,371 | ||
| Loss on disposal of equipment | 164,021 | |||
| Total operating expenses | (510,392 | ) | ||
| Loss from operations | (510,392 | ) | ||
| Interest expense | (8,313 | ) | ||
| Net Loss | $ | (518,705 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED STATEMENT OF MEMBERS’ DEFICIT
FOR THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
| Accumulated | Total Members’ | |||||||
| Deficit | Deficit | |||||||
| July 8, 2025 (inception) | $ | — | $ | — | ||||
| Net loss | (518,705 | ) | (518,705 | ) | ||||
| Balance January 31, 2026 | $ | (518,705 | ) | $ | (518,705 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JULY 8, 2025 (INCEPTION) THROUGH JANUARY 31, 2026
| 2026 | ||||
| Cash flows from operating activities: | ||||
| Net loss | $ | (518,705 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Loss on disposal of equipment | 164,021 | |||
| Non-cash lease expense | 45,185 | |||
| Changes in operating assets and liabilities: | ||||
| Prepaid-lease incentive | (80,000 | ) | ||
| Accrued expenses | 300,929 | |||
| Deposit | (500,000 | ) | ||
| Security deposit | (123,895 | ) | ||
| Operating lease liability | (495,581 | ) | ||
| Net cash (used in) operating activities | (1,208,046 | ) | ||
| Cash flows from Investing activities: | ||||
| Purchase of fixed assets | (164,021 | ) | ||
| Cash (used in) investing activities | (164,021 | ) | ||
| Cash flows from financing activities | ||||
| Loan Payable – related party payable proceeds | 1,372,067 | |||
| Cash provided by financing activities | 1,372,067 | |||
| Change in cash during the period | - | |||
| Cash beginning of the period | - | |||
| Cash end of the period | $ | - | ||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
| Right-of-use asset obtained in exchange for lease liability | $ | 1,853,995 | ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
HOST DIGITAL INFRASTRUCTURE LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Nature of Operations
Organization
Host Digital Infrastructure LLC, formerly known as 10X Digital Infrastructure LLC, is a U.S.-based infrastructure company focused on the development and operation of power-intensive data centers designed to support high-performance computing workloads, including artificial intelligence, data processing, and other compute-intensive applications. The Company’s strategy is centered on securing reliable, low-cost power and deploying scalable computing capacity in energy-efficient regions across the United States.
The Company was formed as a limited liability company (“LLC”) in the State of Delaware on July 8, 2025, and is based in Oklahoma. In accordance with the Company’s operating agreement, the Company shall continue to exist indefinitely unless dissolved earlier in accordance with the provisions of the operating agreement or by operation of law. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, a special purpose entity that leases and controls the building purchase option. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company is in the early stages of executing its business plan and has not yet commenced revenue-generating operations.
As of January 31, 2026, the Company’s activities have primarily consisted of organizational efforts, capital formation, and initial infrastructure development planning. The Company entered into a long-term lease agreement commencing January 1, 2026, for a facility intended to support its future data center operations.
Note 2 – Going Concern
The Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of these consolidated financial statements. As of January 31, 2026, the Company had no cash and incurred a net loss of $518,705. In addition, the Company had net cash used in operations of $1,208,046 and had a working capital deficit of $1,195,242 as of January 31, 2026.
The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements.
As of the issuance date of these annual consolidated financial statements, the Company expects its cash will not be sufficient to fund its operating expenses and capital expenditure requirements for a reasonable period of time from the date of issuance of these consolidated financial statements. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations, which is uncertain. The Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year after the date that the consolidated financial statements are issued.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
| F-6 |
Note 3 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information. The consolidated financial statements present the cumulative results of operations, cash flows and changes in members’ deficit since the Company’s inception on July 8, 2025.
Recent Accounting Pronouncements
On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amends ASC 740, Income Taxes to expand income tax disclosures and requires that we disclose (i) the income tax rate reconciliation using both percentages and reporting currency amounts; (ii) specific categories within the income tax rate reconciliation; (iii) additional information for reconciling items that meet a quantitative threshold; (iv) the composition of state and local income taxes by jurisdiction; and (v) the amount of income taxes paid disaggregated by jurisdiction. The Company is currently evaluating the impact of adopting ASU 2023-09 on its consolidated financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to disclose, in the notes to the financial statements, additional disaggregated information about certain expense captions presented on the face of the income statement, including amounts for specified categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion, as applicable. The amendments also require disclosure of selling expenses and, in annual reporting periods, the entity’s definition of selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statement disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 amends Topic 270 to improve the navigability of interim reporting guidance, clarify the applicability of interim reporting requirements, and provide additional guidance regarding the form and content of interim financial statements and related notes. The amendments also add a disclosure principle requiring entities to disclose events and changes since the end of the most recent annual reporting period that have had a material impact on the entity. The amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim consolidated financial statement disclosures.
Equipment
Equipment consists primarily of data center racking equipment and is stated at cost less accumulated depreciation. Costs include expenditures that are directly attributable to the acquisition and installation of the assets necessary to prepare them for their intended use.
Depreciation is computed using the straight-line method over the estimated useful life of the assets, which is seven years.
Expenditures for maintenance and repairs are expensed as incurred, while expenditures that improve or extend the useful life of the assets are capitalized.
Upon
retirement or disposal of property and equipment, the cost and related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in the consolidated
The Company evaluates property and equipment for impairment in accordance with its policy for long-lived assets.
| F-7 |
Long-Lived Assets
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flow expected to result from the use and eventual disposition of the asset. If the carrying amount exceeds those cash flows, an impairment loss is recognized in an amount equal to the excess of the carrying amount over the asset’s fair value.
Fair value is determined using appropriate valuation techniques, which may include discounted cash flow analyses or market-based approaches.
Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
During the period ended January 31, 2026, the Company determined that racking equipment with a carry value of $164,021 would not provide future economic benefit to the Company. Accordingly, the Company recorded a loss on disposal of equipment of $164,021, which is included in operating expenses in the consolidated statement of operations. As of January 31, 2026, the Company had no remaining book value related to the disposed equipment.
Income Taxes
The Company is treated as an LLC for legal purposes and generally is not subject to federal and state income taxes, as its taxable income or loss is passed through to its members. Accordingly, no provision for federal and state income taxes have been recorded in the accompanying consolidated financial statements.
The Company is subject to certain state and local taxes, including franchise and other similar taxes, which will be recorded as general and administrative expenses in the accompanying consolidated statement of operations.
The Company accounts for uncertainty in income taxes in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon examination by taxing authorities. The Company did not have any significant unrecognized tax benefits as of January 31, 2026.
The Company’s tax returns remain subject to examination by taxing authorities since inception.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
As an early-stage company that has not yet generated revenue, the Company’s estimates are based on limited historical information and therefore involve a higher degree of judgment and uncertainty. Management is required to make assumptions regarding, among other things, the estimated useful lives of data center equipment and the recoverability of long-lived assets. In addition, estimates are required in evaluating the classification and measurement of the related party loan payable, as well as the recoverability of security deposits and other prepaid assets.
Management also evaluates the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year from the date the consolidated financial statements are issued.
These estimates are based on management’s best judgment using currently available information and assumptions believed to be reasonable under the circumstances. However, due to the Company’s limited operating history and absence of revenues, actual results could differ materially from those estimates. Estimates are reviewed on an ongoing basis, and revisions are recognized in the period in which they become known.
| F-8 |
Earnings Per Share
The Company is an LLC with no issued or outstanding shares of common stock. Accordingly, Accounting Standards Codification (“ASC”) 260, Earnings Per Share, does not apply, and the presentation of earnings per share is not provided.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company views its operations and manages its business in one segment.
Related Party Transactions
The Company identifies related-party transactions in accordance with ASC 850, Related Party Disclosures, which requires disclosure of the nature of the relationship, the terms of the transaction, and any outstanding balances. Transactions with members, including promissory notes, are evaluated to ensure terms approximate those of comparable market transactions (See Note 5).
Leases
The Company accounts for leases in accordance with ASC Topic 842, Leases. The Company determines whether an arrangement is, or contains, a lease at inception. For leases with an initial term greater than 12 months, the Company recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the future lease payments over the lease term. The Company uses an estimated incremental borrowing rate to discount future lease payments, as the rates implicit in the leases are not readily determinable. The Company has elected the practical expedient to not separate lease and non-lease components for its real estate leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
Note 4 – Leases
The Company leases operating facilities under non-cancelable operating lease agreements. Lease commencement occurs on the date the Company obtains control of the leased property. On November 25, 2025, the Company executed a lease agreement for a facility with a lease commencement date of January 1, 2026, and an initial non-cancelable lease term of four years. The lease agreement also includes one optional one-year renewal period, which management determined was reasonably certain to be exercised and, accordingly, was included in the determination of the lease term.
In connection with the lease agreement, an entity owned by a member of the Company paid $80,000 to the landlord on behalf of the Company for costs associated with the relocation of the prior tenant, as required under the lease agreement. The Company accounted for this payment as a lease incentive in accordance with ASC 842.
Upon lease commencement on January 1, 2026, the Company recognized an ROU asset and corresponding operating lease liability based on the present value of future lease payments over the lease term. The prepaid lease incentive reduced the initial measurement of the ROU asset.
As the lease does not provide a readily determinable implicit rate, the Company utilizes its estimated incremental borrowing rate, determined on a collateralized basis, to discount lease payments. Renewal options are included in determining lease payments when management determines such options are reasonably certain of exercise.
| F-9 |
The lease agreement requires payment of certain variable costs, including common area maintenance, real estate taxes, insurance, and operating expenses, which are expensed as incurred and are not included in the measurement of lease liabilities. The lease agreement does not contain any material residual value guarantees or restrictive covenants.
| Balance Sheet Classification | January 31, 2026 | |||||
| Assets: | ||||||
| Operating lease | Right-of-use lease asset | $ | 1,906,639 | |||
| Liabilities: | ||||||
| Current: | ||||||
| Operating lease | Right-of-use lease liability | $ | 22,246 | |||
| Noncurrent: | ||||||
| Operating lease | Right-of-use lease liability | 1,353,997 | ||||
| Total right-of-use lease liabilities | $ | 1,376,243 | ||||
| Weighted average remaining term of operating leases, including option periods expected to renew | 4.92 years | |||||
| Discount rate | 15.75 | % | ||||
The following table presents supplemental cash flow information for the period ended January 31, 2026:
| 2026 | ||||
| Cash paid for operating lease liability | $ | 495,581 | ||
Aggregate future minimum lease payments under right-of-use operating lease are as follows:
| Operating Leases | ||||
| Twelve months ending: | ||||
| January 31, 2027 | $ | 42,537 | ||
| January 31, 2028 | 511,725 | |||
| January 31, 2029 | 527,076 | |||
| January 31, 2030 | 542,889 | |||
| January 31, 2031 | 511,298 | |||
| Total gross operating lease payments | 2,135,525 | |||
| Less: imputed interest | (759,282 | ) | ||
| Present value of future minimum lease payments | 1,376,243 | |||
| Less current portion of right-of-use lease liability | 22,246 | |||
| Operating lease liability, net of current portion | $ | 1,353,997 | ||
Note 5 – Related Party Transactions
The Company entered into a loan agreement dated December 31, 2025, with 10X LLC, an entity owned by a Member of the Company, pursuant to which the Company consolidated prior advances into a loan with an aggregate principal balance of $1,372,067.
The loan bears interest at a rate of 8% per annum and matures on January 31, 2027. Interest accrues on the outstanding principal balance and is payable at maturity.
| F-10 |
The loan represents a senior unsecured obligation of the Company and ranks senior in right of payment to all other existing and future indebtedness of the Company, except for any indebtedness that is expressly designated as senior in right of payment and approved in writing by 10X LLC. The loan may be prepaid at any time without penalty.
Upon the occurrence of a change of control or transformation transaction, the entire outstanding principal balance of the loan, together with all accrued but unpaid interest, becomes immediately due and payable. A change of control is defined as any transaction or series of related transactions in which a person or group acquires more than fifty percent (50%) of the outstanding equity or voting power of the Company. A transformation transaction includes any merger, consolidation, equity exchange, contribution of substantially all assets to another entity, or similar reorganization in which the Company’s equity holders receive securities or ownership interests in another entity.
The loan represents the consolidation of prior advances made by the related party to fund the Company’s operations. The proceeds of the loan were used to fund substantially all of the Company’s assets as of January 31, 2026, including equipment, security deposits, lease-related costs, and land deposits, as well as general operating expenses.
As of January 31, 2026, the outstanding balance of the loan was $1,372,067, with accrued interest of $8,313.
Note 6 – Members’ Deficit
The Company is organized as a Delaware LLC and, as such, does not have authorized or issued shares of common or preferred stock. Ownership interests are represented by membership interests.
As of January 31, 2026, no members have made capital contributions to the Company, and no membership interests have been issued. The Company has been funded through loans and has incurred a net loss since inception, resulting in a member’s deficit as of January 31, 2026.
Note 7 – Segment Information
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s chief operating decision maker has been identified as the Chief Executive Officer (“CODM”), who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has one operating segment.
When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics, which include the following from the consolidated statement of operations:
| For the Period from July 8, 2025 (inception) through January 31, 2026 | ||||
| General and administrative costs | $ | (346,371 | ) | |
| Loss on disposal of Equipment | $ | (164,021 | ) | |
| Interest expense | $ | (8,313 | ) | |
Note 8 – Commitments and Contingencies
On January 12, 2026, the Company entered into a Limited Liability Company Interest Purchase Agreement with T20 Mining Group, LLC. The Company made an initial escrow deposit of $500,000 on January 13, 2026. Pursuant to the terms and conditions of the Limited Liability Company Interest Purchase Agreement, the transaction closing date was February 12, 2026 (See Note 9).
| F-11 |
Note 9– Subsequent Events
We have evaluated subsequent events through May 29, 2026, the date these consolidated financial statements were issued.
The Company filed a Form 8832 with the IRS to elect to be treated as a corporation for United States federal income Tax purposes, which was effective as of February 12, 2026.
On February 13, 2026, the Company entered into and consummated a Unit Purchase Agreement (the “Agreement”) with Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd. (collectively, the “Purchasers”), pursuant to which the Purchasers purchased all of the Preferred Units for total consideration of $33,500,000 (the “Investment”). The proceeds from the Investment were used to fund the acquisition of T20 Mining Group, LLC (the “T20 Acquisition”).
Pursuant to the Agreement, the Company is contractually obligated to consummate a transaction (the “Contribution”) within a specified period, pursuant to which substantially all of the Company’s assets will be contributed to a publicly- traded company (“PubCo”) in exchange for equity securities of PubCo, subject to applicable regulatory approvals. Upon completion of the Contribution, the Purchasers will be entitled to receive 50% of the equity consideration issued by PubCo, which may consist of common stock or, at the election of the Purchasers, warrants or other equity-linked securities. If the Contribution is not completed within the required timeframe, the Purchasers have the right to require the Company to redeem all of the Preferred Units for cash at a price equal to 150% of the original Investment, senior to all other equity interests of the Company.
On February 13, 2026, the Company amended its Limited Liability Company Agreement to authorize a new class of Preferred Units, consisting of up to 1,000 units. The Preferred Units rank senior to Common Units with respect to distributions and payments upon any voluntary or involuntary liquidation, dissolution, or winding up of the Company. They do not bear dividends but participate in distributions according to the distribution waterfall. Each Preferred Unit is convertible into one Common Unit solely for purposes of calculating as-converted entitlements, and such conversion does not confer voting rights or other ownership rights. Holders of Preferred Units are entitled to certain mandatory redemption rights if the Contribution is not consummated within the specified period, including a cash redemption at 150% of the purchase price, senior to all other equity interests. Until the earlier of the consummation of the Contribution or the redemption of all Preferred Units, the Company may not, without the prior written consent of the Purchasers, declare or pay dividends or make distributions (other than redemption of Preferred Units), incur indebtedness or preferred equity (other than project financing), issue or sell equity, make investments or acquisitions outside approved transactions, sell or transfer assets (other than in the ordinary course or as part of the Contribution), enter into affiliate transactions on non-arm’s-length terms, amend the Certificate of Formation or LLC Agreement, enter into or amend material contracts outside the ordinary course, dissolve or wind up the Company, or consummate the T20 Acquisition or Contribution on terms unacceptable to the Purchasers. Except as expressly provided in the LLC Agreement (including the consent rights described above), Preferred Units do not carry voting rights.
On March 26, 2026, a wholly owned subsidiary of the Company exercised a purchase option contained within its operating lease agreement for the Project Facility. The purchase option was included in the original lease agreement executed on November 25, 2025 and was exercised through delivery of a formal notice to the landlord pursuant to Section 54(f) of the lease agreement. The agreement provides the Company with the right to purchase the facility for $23,500,000, subject to certain contractual conditions and customary closing adjustments.
Management determined that exercise of the purchase option was not reasonably certain as of January 31, 2026, as the decision to exercise the option remained contingent upon operational developments occurring subsequent to year end, including completion of the T20 acquisition, securing the related power agreement, and obtaining visibility into prospective tenant arrangements. Accordingly, the purchase option was not included in the initial measurement of the Company’s operating lease right-of-use asset and lease liability as of January 31, 2026. The Company is currently evaluating the accounting implications of the exercised purchase option under ASC 842.
On May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger with Healthy Choice Wellness Corp. and Healthy Choice Wellness II Corp.
| F-12 |
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF HOST DIGITAL INFRASTRUCTURE LLC
| PAGE | ||
| Condensed Consolidated Balance Sheets as of July 31, 2026 (Unaudited) and January 31, 2026 | F-14 | |
| Condensed
Consolidated |
F-15 | |
| Condensed
Consolidated |
F-16 | |
| Condensed
Consolidated |
F-17 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | F-18 |
| F-13 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED CONSOLIDATED BALANCE SHEETS
| July 31, 2026 | January 31, 2026 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Prepaid expenses and deposits | $ | 236,546 | $ | 500,000 | ||||
| Deferred costs | 811,394 | - | ||||||
| Total current assets | 1,047,940 | 500,000 | ||||||
| Right-of-use asset – operating lease | 1,347,182 | 1,906,639 | ||||||
| Right-of-use asset – finance lease | 21,871,038 | - | ||||||
| Security deposit | - | 123,895 | ||||||
| Intangible assets - electric service agreement | 32,642,125 | - | ||||||
| Total assets | $ | 56,908,285 | $ | 2,530,534 | ||||
| LIABILITIES, PREFERRED RIGHTS AND MEMBERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Loan payable – related party | $ | 1,852,248 | $ | 1,372,067 | ||||
| Accrued expenses | 3,707,689 | 300,929 | ||||||
| Operating lease liability – current portion | 80,911 | 22,246 | ||||||
| Finance lease liability – current portion | 22,872,121 | - | ||||||
| Total current liabilities | 28,512,969 | 1,695,242 | ||||||
| Operating lease liability – long-term | 1,296,650 | 1,353,997 | ||||||
| Total liabilities | $ | 29,809,619 | $ | 3,049,239 | ||||
| Commitments and contingencies (Note 11) | ||||||||
| Redeemable Preferred Units (Temporary Equity) | 33,500,000 | - | ||||||
| MEMBERS’ DEFICIT | ||||||||
| Common units (1,000 units issued and outstanding as of July 31, 2026 and January 31, 2026, no par value; no capital contributions) | - | - | ||||||
| Members’ capital | (843,233 | ) | - | |||||
| Accumulated deficit | $ | (5,558,101 | ) | $ | (518,705 | ) | ||
| Total members’ deficit | (6,401,334 | ) | (518,705 | ) | ||||
| Total liabilities, redeemable preferred units and members’ deficit | $ | 56,908,285 | $ | 2,530,534 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-14 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended July 31, 2026 | For the period from July 8, 2025 (Inception) through July 31, 2025 | Six Months Ended July 31, 2026 | For the period from July 8, 2025 (Inception) through July 31, 2025 | |||||||||||||
| Sales, net | $ | - | $ | - | $ | - | $ | - | ||||||||
| Cost of sales | - | - | - | - | ||||||||||||
| Gross profit | - | - | - | - | ||||||||||||
| Operating expenses | 2,793,597 | - | 3,617,954 | - | ||||||||||||
| Loss from operations | (2,793,597 | ) | - | (3,617,954 | ) | - | ||||||||||
| Interest expense | (909,626 | ) | - | (1,256,800 | ) | - | ||||||||||
| Net loss from continuing operations before income taxes | $ | (3,703,223 | ) | $ | - | $ | (4,874,754 | ) | $ | - | ||||||
| Income tax benefit | - | - | - | - | ||||||||||||
| Net loss from continuing operations | $ | (3,703,223 | ) | $ | - | $ | (4,874,754 | ) | $ | - | ||||||
| Net loss from discontinued operations, net of tax | - | - | (164,642 | ) | - | |||||||||||
| Net loss | $ | (3,703,223 | ) | $ | - | $ | (5,039,396 | ) | $ | - | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-15 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED
(Unaudited)
Six Months Ended July 31, 2026
| Redeemable Preferred Units | Common Units | Accumulated | Members’ | Total Members’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Deficit | Capital | Deficit | ||||||||||||||||||||||
| Balance February 1, 2026 | - | $ | - | - | $ | - | $ | (518,705 | ) | $ | - | $ | (518,705 | ) | ||||||||||||||
| Issuance of preferred units | 1,000 | 33,500,000 | - | - | - | - | - | |||||||||||||||||||||
| Issuance of common units | - | - | 1,000 | - | - | - | - | |||||||||||||||||||||
| Distribution to owners | - | - | - | - | - | (843,233 | ) | (843,233 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | (1,336,173 | ) | - | (1,336,173 | ) | |||||||||||||||||||
| Balance April 30, 2026 | 1,000 | $ | 33,500,000 | 1,000 | $ | - | $ | (1,854,878 | ) | $ | (843,233 | ) | $ | (2,698,111 | ) | |||||||||||||
| Net loss | - | - | - | - | (3,703,223 | ) | - | (3,703,223 | ) | |||||||||||||||||||
| Balance July 31, 2026 | 1,000 | $ | 33,500,000 | 1,000 | $ | - | $ | (5,558,101 | ) | $ | (843,233 | ) | $ | (6,401,334 | ) | |||||||||||||
For the period from July 8, 2025 (Inception) through July 31, 2025
| Redeemable Preferred Units | Common Units | Accumulated | Members’ | Total Members’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Deficit | Capital | Deficit | ||||||||||||||||||||||
| Balance July 8, 2025 (Inception) | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
| Net loss | - | - | - | - | - | - | - | |||||||||||||||||||||
| Balance July 31, 2025 | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-16 |
HOST DIGITAL INFRASTRUCTURE LLC
(FORMERLY KNOWN AS 10X DIGITAL INFRASTRUCTURE LLC)
CONDENSED
CONSOLIDATED
(Unaudited)
| Six Months Ended July 31, 2026 | For the period from July 8, 2025 (Inception) through July 31, 2025 | |||||||
| Cash flows from operating activities — continuing operations: | ||||||||
| Net loss from continuing operations | $ | (4,874,754 | ) | $ | - | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of right-of-use assets | 337,676 | - | ||||||
| Accrued expenses | 2,445,366 | - | ||||||
| Prepaid expenses and deposits | 387,349 | - | ||||||
| Lease liabilities | 1,224,182 | - | ||||||
| Net cash used in operating activities — continuing operations | (480,181 | ) | - | |||||
| Cash flows from Investing activities — continuing operations | ||||||||
| Cash paid for T20 Mining Group LLC asset acquisition | (33,500,000 | ) | - | |||||
| Cash (used in) investing activities — continuing operations | (33,500,000 | ) | - | |||||
| Cash flows from financing activities — continuing operations | ||||||||
| Principal payment on related party loan | (500,000 | ) | - | |||||
| Proceeds from related party loan | 980,181 | - | ||||||
| Proceeds from issuance of preferred units | 33,500,000 | - | ||||||
| Net cash provided by financing activities — continuing operations | 33,980,181 | - | ||||||
| Cash flows from discontinued operations: | ||||||||
| Net cash provided by (used in) operating activities (1) | - | - | ||||||
| Net cash provided by (used in) investing activities | - | - | ||||||
| Net cash provided by (used in) financing activities | - | - | ||||||
| Change in cash during the period | - | - | ||||||
| Cash beginning of the period | - | - | ||||||
| Cash end of the period | $ | - | $ | - | ||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income tax | $ | - | $ | - | ||||
| Right-of-use asset obtained in exchange for lease liability | $ | 22,107,226 | $ | - | ||||
| Non-cash transfer of net assets to a related entity under common control | $ | 32,373 | $ | - | ||||
| Capitalized transaction costs | $ | 150,000 | $ | - | ||||
| Non-cash deferred costs | $ | 811,394 | $ | - | ||||
(1) Net cash provided by (used in) operating activities from discontinued operations is calculated as follows: Net loss from discontinued operations ($164,642) + Depreciation expense $11,696 + Impairment loss $82,946 + Loss on crypto asset remeasurement $70,000 = $0.
The accompanying notes are an integral part of these condensed consolidated financial statements.
| F-17 |
HOST DIGITAL INFRASTRUCTURE LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Nature of Operations
Organization
Host
Digital Infrastructure LLC (the “Company,” “Host Digital,” “we,” “us,” or “our”)
was formed as a limited liability company under the laws of the State of Delaware on July 8, 2025. The Company’s principal executive
offices are located at
The Company operates through its wholly owned subsidiaries, 10X East Tulsa LLC, a Delaware limited liability company, and T20 Mining Group LLC (“T20”), an Oklahoma limited liability company. All significant intercompany balances and transactions have been eliminated in consolidation.
Nature of Operations
Host Digital is a U.S.-based digital infrastructure platform focused on the development, ownership, and operation of institutional-quality data centers supporting artificial intelligence (AI) and high-performance computing (HPC) workloads. The Company’s strategy is to secure reliable, low-cost power and to provide scalable computing capacity on a long-term contracted basis. The Company entered into a long-term lease agreement commenced January 1, 2026, for a facility intended to support its future data center operations.
Property Acquisition
On November 25, 2025, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Commercial Real Estate Lease (the “Property Lease”) with 5555 Property Developers, LLC (the “Seller”) for a data center facility located in Tulsa, Oklahoma (the “Property”). The Property Lease commenced on January 1, 2026, and originally had a five-year non-cancelable term. The Property Lease contained a purchase option allowing the tenant to acquire the Property for a fixed price of $23.5 million, exercisable with six months’ advance notice and closing required by October 1, 2026.
On March 26, 2026, the Company exercised the purchase option contained in the Property Lease to acquire the Property. On June 23, 2026, 10X East Tulsa LLC (the “Purchaser”) entered into a Purchase and Sale Agreement (the “PSA”) with the Seller to formally memorialize the acquisition of the Property and parking lot. The total purchase price under the PSA is (a) $27,650,000 plus (b) an amount equal to the aggregate of all payments that would otherwise become due and payable under the Property Lease from and after the Closing Date through the expiration of the term of the Property Lease. The Closing is scheduled to occur no later than October 1, 2026, subject to Purchaser’s right to adjourn the Closing Date for up to two successive 30-day periods by written notice to Seller. The closing of the purchase is conditioned upon, among other things, Purchaser’s receipt of certain requisite approvals, including zoning and land development plan approvals, and satisfactory completion of its due diligence investigations. The PSA includes representations and warranties from Seller, title review provisions, and inspection rights for Purchaser.
As of July 31, 2026, the acquisition of the Property and parking lot had not yet closed. The Company intends to fund the purchase price through project financing obtained in connection with the development of the Property.
Agreement and Plan of Merger with Healthy Choice Wellness Corp.
On May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Healthy Choice Wellness Corp. (“HCWC”), a Delaware corporation whose Class A common stock is listed on the NYSE American, and Healthy Choice Wellness II Corp., a Delaware corporation and a wholly owned subsidiary of HCWC (“Merger Sub”).
Pursuant to the Merger Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”) and the Delaware Limited Liability Company Act (the “DLLCA”), at the effective time of the Merger (the “Effective Time”), Merger Sub will merge with and into Host Digital, with Host Digital surviving as a wholly owned subsidiary of HCWC (the “Surviving Entity”).
| F-18 |
The Merger is intended to provide the Company with access to public capital markets and is expected to close in the third quarter of 2026, subject to the satisfaction or waiver of customary closing conditions, including approvals by HCWC’s stockholders and the Company’s members.
Merger Consideration
At the Effective Time, all outstanding Common Units and Preferred Units of the Company (collectively, the “Company Units”) will be automatically converted into the right to receive the Merger Consideration, which will consist of either (i) a number of shares of HCWC Class A common stock, or (ii) pre-funded warrants to purchase HCWC common stock at a nominal exercise price, in lieu of such shares.
The total Merger Consideration is based on a fixed Base Price of $425,000,000. The Exchange Ratio is calculated by dividing the Base Price by the Applicable Share Price (defined as $0.27 per share of HCWC common stock, which was the market price prior to the reverse stock split described below) and then dividing the result by the total number of Company Units outstanding (2,000 units). Based on the pre-reverse-split Applicable Share Price of $0.27, the Merger Consideration would have resulted in the issuance of approximately 1.57 billion shares of HCWC common stock (or Pre-Funded Warrants) to the members of Host Digital.
On August 28, 2026, HCWC effected a 1-for-35 reverse stock split of its Class A common stock (see Note 13 — Subsequent Events). In accordance with the Merger Agreement, the Merger Consideration will be equitably adjusted to reflect the reverse stock split. As a result, the number of shares of HCWC common stock (or Pre-Funded Warrants) to be issued to the members of Host Digital upon closing is expected to be approximately 44,973,545 shares, based on the post-reverse-split Applicable Share Price of $9.45 per share. Upon closing, the former members of Host Digital are expected to own approximately 96% of the outstanding HCWC common stock.
Governance and Post-Merger Operations
Immediately
following the Effective Time, the HCWC Board of Directors will be comprised of Robert Byrne, Omar Hussein, Guhan Kandasamy
On August 26, 2026, Host Digital and Shawn Matthews entered into an Agreement for Board Appointment (the “Board Appointment Agreement”) in connection with Mr. Matthews’ expected appointment as Chairman of the Board upon consummation of the Merger. Under this agreement, Mr. Matthews will receive compensation including: (i) an annual cash retainer of $300,000; (ii) an initial equity award with a grant date target value of $7,500,000; (iii) an annual equity bonus with a target value of $7,500,000; and (iv) eligibility to earn additional equity awards upon achievement of specified market capitalization milestones.
Director Independence: Following the Merger, and as a result of the Board Appointment Agreement, the composition and independence of the Board will be updated as follows:
| ● | Independent Directors: Messrs. Byrne, Hussein, and Kandasamy will be independent under the rules of NYSE American. |
| ● | Non-Independent Directors: Mr. Matthews will serve as Chairman of the Board (non-independent). |
| ● | The Board will maintain a majority of independent directors as required by NYSE American rules, and the composition of the Board committees will be evaluated and established to ensure compliance with applicable rules. |
Harmol Samra will serve as Chief Executive Officer, and John Ollet (HCWC’s current Chief Financial Officer) will serve as Chief Financial Officer. The combined company will change its name to a name selected by Host Digital, in its sole discretion, and its HCWC common stock is expected to continue trading on the NYSE American under the ticker symbol “HOST.” Following the Merger, HCWC’s existing grocery retail operations will continue to operate as a division of the combined company.
| F-19 |
Accounting Treatment
The Merger will be accounted for as a reverse acquisition under U.S. generally accepted accounting principles (“GAAP”) in accordance with Accounting Standards Codification Topic 805, Business Combinations. Host Digital has been identified as the accounting acquirer because its former members will hold a majority of the voting rights in the combined entity, designate a majority of the board of directors, and appoint senior management. HCWC is the accounting acquiree. Under the acquisition method of accounting, the assets and liabilities of HCWC will be recorded at their estimated fair values as of the acquisition date. The assets and liabilities of Host Digital will be carried over at their historical carrying values, as the combined entity is a continuation of Host Digital’s financial statements.
Conditions to Closing
The completion of the Merger is subject to certain conditions, including, but not limited to:
| ● | Approval of the Stock Issuance Proposal, the Authorized Shares Proposal, and the Name Change Proposal by HCWC’s stockholders. (Satisfied — all proposals were approved by HCWC stockholders at the special meeting held on August 27, 2026). | |
| ● | Approval of the Merger and the Merger Agreement by the requisite holders of the Company’s Common Units and Preferred Units. | |
| ● | The continued listing of HCWC’s common stock on the NYSE American. | |
| ● | Receipt of certain tax opinions, including a Merger Tax Opinion and a Spin-Off Tax Opinion. | |
| ● | Expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. | |
| ● | Other customary closing conditions as set forth in the Merger Agreement. |
Following the satisfaction of the stockholder approval condition, the companies currently expect to complete the Merger during late September 2026. There can be no assurance that the Merger will be completed. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Tenant Lease
On August 7, 2026, subsequent to the balance sheet date, the Company secured a 15-year, take-or-pay lease as a lessor with one of the world’s largest privately held cloud infrastructure companies for its data center facility in northeast Oklahoma. The lease is expected to be supported by a backstop from a U.S.-based, investment-grade global technology company.
The long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and covers 43 megawatts (“MW”) of critical IT load capacity at the Company’s currently energized facility. The lease includes annual rent escalators and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal options are exercised over a 30-year total term. Delivery to the tenant is expected in the first quarter of 2027.
Note 2 – Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
| F-20 |
The Company has evaluated its ability to continue as a going concern for at least twelve months from the issuance of these condensed consolidated financial statements. As of July 31, 2026, the Company had no cash and incurred a net loss of approximately $5.0 million for the six months ended July 31, 2026. In addition, the Company had net cash used in operating activities of $0.5 million and had a working capital deficit of approximately $27.5 million as of July 31, 2026. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.
Management’s plans to address these conditions include the following:
| ● | On February 13, 2026, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd. for total cash consideration of $33,500,000, which was used to fund the T20 Mining Group LLC acquisition. The terms of the Preferred Units include a mandatory redemption feature if a planned contribution of substantially all of the Company’s assets to a publicly-traded company (“PubCo”) is not completed within a specified period (see Note 12 - Members’ Deficit) | |
| ● | On May 27, 2026, the Company entered into a definitive Agreement and Plan of Merger with HCWC and a wholly owned subsidiary of HCWC (the “Merger Agreement”). On August 27, 2026, HCWC stockholders approved all proposals required to complete the merger, satisfying a key closing condition. The companies currently expect to complete the merger during late September 2026, subject to the satisfaction or waiver of remaining closing conditions. Upon closing, Host Digital will become a wholly owned subsidiary of HCWC, and former Host Digital members are expected to own approximately 96% of HCWC’s outstanding Class A common stock. The combined company expects to continue trading on the NYSE American under the ticker symbol HOST, subject to exchange approval. The Merger is intended to provide access to public capital markets. | |
| ● | Subsequent to the balance sheet date, on August 7, 2026, the Company secured a 15-year, take-or-pay lease as a lessor with one of the world’s largest privately held cloud infrastructure companies, representing approximately $1.25 billion in contracted revenue over the base term. This lease strengthens the Company’s ability to obtain project financing and supports management’s plans to address the going concern uncertainty (see Note 1 — Organization and Nature of Operations). | |
| ● | The Company continues to pursue project-level financing for its initial data center facility and is in negotiations with prospective tenants for a long-term lease. |
There can be no assurance that the Merger will be completed, that the Contribution to PubCo will occur, or that additional financing will be available on acceptable terms, or at all. The Merger remains subject to the satisfaction or waiver of the remaining closing conditions. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
| F-21 |
Note 3 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and the Accounting Standards Codification (“ASC”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information. The accompanying unaudited condensed consolidated financial statements include the accounts of Host Digital Infrastructure LLC and its wholly owned subsidiaries, 10X East Tulsa LLC and T20 Mining Group LLC. All significant intercompany balances and transactions have been eliminated in consolidation.
In the opinion of our management, the unaudited condensed consolidated financial statements have been prepared on a basis consistent with the audited consolidated financial statements and include all adjustments necessary for the fair presentation of the Company’s financial condition, results of operations and cash flows for the interim period presented. Such adjustments are of a normal, recurring nature. The results of operations and cash flows for the interim period presented may not necessarily be indicative of full-year results. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended January 31, 2026 included in the definitive proxy statement on Schedule 14A filed by Healthy Choice Wellness Corp. with the SEC on August 6, 2026.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. As an early-stage company that has limited operating history and limited revenue history, the Company’s estimates are based on limited historical information and therefore involve a higher degree of judgment and uncertainty.
Significant estimates include the fair value of net assets acquired in the T20 asset acquisition, including the Electric Service Agreement (“ESA”), which was valued using a discounted cash flow model with an assumed discount rate of 11.9%; the fair value of crypto assets, which is based on quoted market prices; the classification and measurement of leases, including the determination of incremental borrowing rates and lease terms; the valuation allowance against deferred tax assets; the assessment of the Company’s ability to continue as a going concern; and the recoverability of long-lived assets.
These estimates are based on management’s best judgment using currently available information and assumptions believed to be reasonable under the circumstances. However, due to the Company’s limited operating history and limited revenues, actual results could differ materially from those estimates. Estimates are reviewed on an ongoing basis, and revisions are recognized in the period in which they become known.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company’s continuing operations did not generate revenue during the periods presented.
Revenue from cryptocurrency mining and hosting services is presented as part of discontinued operations (see Note 6 — Discontinued Operations). The Company has no revenue from continuing operations and does not expect to generate material revenue until, at the earliest, the tenant lease commences and the data center facility is placed in service (see Note 1 — Organization and Nature of Operations).
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had no cash and cash equivalents as of July 31, 2026 and January 31, 2026.
| F-22 |
Deferred Costs
The Company defers specific incremental costs directly attributable to its project financing activities and its at-the-market (“ATM”) offering. Project finance costs consist of costs incurred in connection with obtaining project-level financing for the Company’s data center facility. These costs are deferred in accordance with ASC 835-30, Interest — Imputation of Interest, and will be a direct deduction from the carrying amount of the related debt liability and amortized over the term of the financing upon closing of the project financing. ATM costs consist of specific incremental costs directly attributable to the Company’s ATM offering and are deferred in accordance with SEC Staff Accounting Bulletin Topic 5.A, Expenses of Offering. These costs will be charged against the gross proceeds of the offering when it is completed. If the project financing or the ATM offering is not completed, the related deferred costs will be expensed in the period in which it becomes probable that the transaction will not be completed.
Long-Lived Assets
The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount exceeds those cash flows, an impairment loss is recognized in an amount equal to the excess of the carrying amount over the asset’s fair value.
Fair value is determined using appropriate valuation techniques, which may include discounted cash flow analyses or market-based approaches.
Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Income Taxes
Prior to February 12, 2026, the Company was treated as a limited liability company (“LLC”) for legal purposes and generally is not subject to federal and state income taxes, as its taxable income or loss is passed through to its members. Accordingly, no provision for federal and state income taxes has been recorded in the accompanying condensed consolidated financial statements.
On February 12, 2026, the Company filed an election on Internal Revenue Service (“IRS”) Form 8832 to change its U.S. federal income tax classification to a C corporation, effective as of February 12, 2026. As a result, for all periods beginning on or after February 12, 2026, the Company is subject to federal and state corporate income taxes on its taxable income.
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized.
The
Company is subject to certain state and local taxes, including franchise and other similar taxes, which will be recorded as general and
administrative expenses in the accompanying condensed consolidated
The Company accounts for uncertainty in income taxes in accordance with GAAP. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained upon examination by taxing authorities. The Company did not have any significant unrecognized tax benefits as of July 31, 2026.
The Company calculates its interim income tax provision in accordance with ASC 740-270, Income Taxes – Interim Reporting. At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to year-to-date ordinary income to determine the income tax expense (or benefit) for the period. Discrete items, such as changes in tax rates or valuation allowances, are recognized in the period in which they occur. As the Company incurred a loss for the three and six months ended July 31, 2026, and has recorded a full valuation allowance against its net deferred tax assets, no income tax expense or benefit has been recorded for the interim period.
The Company’s tax returns for periods beginning on or after February 12, 2026 remain subject to examination by federal and state taxing authorities. Prior to the change in tax status, the Company was a pass-through entity and generally not subject to entity-level income tax examinations.
| F-23 |
Earnings Per Share
The Company is a limited liability company (“LLC”) with 1,000 Common Units issued and outstanding as of July 31, 2026. The Common Units are not traded in a public market, and the Company has not filed, nor is it in the process of filing, with any regulatory agency in preparation for the sale of its Common Units in a public market. Accordingly, the Company is not required to present earnings per share under ASC 260, Earnings Per Share (“ASC 260”), and no such presentation is provided.
As of July 31, 2026, the Company also had 1,000 Preferred Units outstanding. In accordance with ASC 260, if the Company were required to present EPS, dividends on Preferred Units would be deducted from net income to arrive at income available to common unitholders, and the Preferred Units may be considered participating securities requiring the application of the two-class method for the allocation of earnings.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company views its operations and manages its business in one segment.
Related Party Transactions
The Company identifies related-party transactions in accordance with ASC 850, Related Party Disclosures (“ASC 850”), which requires disclosure of the nature of the relationship, the terms of the transaction, and any outstanding balances. A related party is generally defined as (i) any person that holds 10% or more of the Company’s units and their immediate families, (ii) the Company’s management, (iii) any entity that directly or indirectly controls, is controlled by, or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company.
A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Common types of related party transactions include, but are not limited to, sales, purchases, and transfers of real and personal property; services received or furnished; borrowings, lending, and guarantees; and use of property and equipment by lease or otherwise. The Company conducts business with its related parties in the ordinary course of business. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Transactions with related parties are subject to the disclosure requirements of ASC 850, even if they are not recognized in the financial statements. Related party transactions eliminated in the preparation of condensed consolidated financial statements are not required to be disclosed. Transactions with members, including promissory notes and other arrangements, are evaluated to ensure terms approximate those of comparable market transactions (see Note 7 — Related Party Transactions).
Leases
The Company accounts for leases in accordance with ASC Topic 842, Leases (“ASC 842”). The Company determines whether an arrangement is, or contains, a lease at inception. For leases with an initial term greater than 12 months, the Company recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the future lease payments over the lease term. The Company uses an estimated incremental borrowing rate to discount future lease payments, as the rates implicit in the leases are not readily determinable. The Company has elected the practical expedient to not separate lease and non-lease components for its real estate leases. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
If the Company becomes reasonably certain to exercise a purchase option, the lease liability is remeasured to include the present value of the purchase option price, and the ROU asset is adjusted by the same amount. The lease is then reclassified as a finance lease from the date of remeasurement.
| F-24 |
When
a lease modification decreases the scope of a lease (including shortening the lease term), the Company remeasures the lease liability
using a revised discount rate determined at the modification date. The Company proportionally decreases the carrying amount of the right-of-use
asset to reflect the partial or full termination of the lease. Any difference between the reduction in the lease liability and the proportionate
reduction in the right-of-use asset is recognized as a gain or loss in the condensed consolidated
Recent Accounting Pronouncements
On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 amends ASC 740, Income Taxes, to expand income tax disclosures and requires that we disclose (i) the income tax rate reconciliation using both percentages and reporting currency amounts; (ii) specific categories within the income tax rate reconciliation; (iii) additional information for reconciling items that meet a quantitative threshold; (iv) the composition of state and local income taxes by jurisdiction; and (v) the amount of income taxes paid disaggregated by jurisdiction. The Company adopted ASU 2023-09 for the year ending January 31, 2027. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements, as the Company has recorded a full valuation allowance against its deferred tax assets and has no material uncertain tax positions.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to disclose, in the notes to the financial statements, additional disaggregated information about certain expense captions presented on the face of the income statement, including amounts for specified categories such as purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion, as applicable. The amendments also require disclosure of selling expenses and, in annual reporting periods, the entity’s definition of selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2024-03 on its condensed consolidated financial statement disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 amends Topic 270 to improve the navigability of interim reporting guidance, clarify the applicability of interim reporting requirements, and provide additional guidance regarding the form and content of interim financial statements and related notes. The amendments also add a disclosure principle requiring entities to disclose events and changes since the end of the most recent annual reporting period that have had a material impact on the entity. The amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. For public business entities, ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim condensed consolidated financial statement disclosures.
Note 4 — Deferred Costs
Deferred costs represent specific incremental costs incurred by the Company in connection with its financing activities that have not yet been completed as of the balance sheet date. These costs are deferred and will be applied against the proceeds of the related transaction when it is completed, or expensed if it becomes probable that the transaction will not be completed. As of July 31, 2026, deferred costs totaled $811,394, consisting of $789,257 related to project finance work and $22,137 related to the Company’s ATM offering.
The $789,257 project finance costs were incurred in connection with obtaining project-level financing for the Company’s data center facility. These costs are deferred in accordance with ASC 835-30, Interest — Imputation of Interest, and will be reclassified as a direct deduction from the carrying amount of the related debt liability and amortized over the term of the financing upon closing of the project financing. If the project financing is not completed, the deferred costs will be expensed in the period in which it becomes probable that the transaction will not be completed.
| F-25 |
The $22,137 ATM costs represent specific incremental costs directly attributable to the Company’s at-the-market offering. These costs are deferred in accordance with SEC Staff Accounting Bulletin Topic 5.A, Expenses of Offering, and will be charged against the gross proceeds of the offering when it is completed. If the offering is not completed, the deferred costs will be expensed in the period in which it becomes probable that the transaction will not be completed.
The Company evaluates the recoverability of deferred costs at each reporting period. As of July 31, 2026, no portion of the deferred costs has been charged to expense.
Note 5 – Asset Acquisition – T20 Mining Group LLC
On February 13, 2026, the Company acquired 100% of the equity interests of T20 Mining Group LLC for total consideration of approximately $33.5 million. The acquisition was funded by the proceeds from the issuance of Preferred Units (see Note 12 - Members’ Deficit). The Company accounted for the transaction as an asset acquisition under ASC 805-50 because the acquired assets and liabilities did not meet the definition of a business under ASC 805, Business Combinations. Management determined that the acquired set lacked substantive processes, including an organized workforce, active hosting arrangements, and integrated operational systems necessary to continue outputs on a stand-alone basis. The hosting arrangements that previously supported mining operations expired subsequent to the acquisition date and were not renewed by the Company.
Purchase Price Allocation
The total cost of the acquisition was $33,650,000, which consists of cash consideration paid to the sellers of $33,500,000 and capitalized transaction costs of $150,000. The following table presents the allocation of the total cost to the identifiable assets acquired based on their relative fair values:
| Asset (Liability) Category | Fair Value | % of Total Purchase Price | ||||||
| Buildings | $ | 285,315 | 0.85 | % | ||||
| Tools, machinery, and equipment | 438,327 | 1.30 | % | |||||
| Intangible - electric service agreement | 32,642,125 | 97.00 | % | |||||
| Operating lease ROU asset | 1,399,000 | 4.16 | % | |||||
| Lease liability | (1,399,000 | ) | -4.16 | % | ||||
| Other non-essential net assets | 284,233 | 0.85 | % | |||||
| Total purchase price allocation | $ | 33,650,000 | 100.00 | % | ||||
The $150,000 is added to the total fair value of the acquired assets and the allocated cost represents the capitalization of direct transaction costs (primarily legal fees) incurred in connection with the acquisition, in accordance with ASC 805-50.
Reconciliation of Acquisition Cost to Cost at Disposal
The following table reconciles the total acquisition cost of $33,650,000 to the assets transferred to 10X Digital DropCo LLC (“DropCo”) and the assets retained by the Company:
| Amount | ||||
| Total acquisition cost | $ | 33,650,000 | ||
| Assets transferred to DropCo (see Note 5): | ||||
| Buildings (after depreciation and impairment) | 248,000 | |||
| Tools, machinery, and equipment (after impairment) | 381,000 | |||
| Net non-essential net assets | 214,233 | |||
| Total non-essential net assets transferred to DropCo | $ | 843,233 | ||
| Less: Assets transferred to DropCo | (843,233 | ) | ||
| Less: Q1 2026 activities (net loss from discontinued operations) | (164,642 | ) | ||
| ESA Retained in Host Digital | $ | 32,642,125 | ||
| F-26 |
Intangible Asset – Electric Service Agreement (Indefinite Life)
The ESA is a long-term contract with a utility provider that secures power capacity for the Company’s planned data center operations. The fair value of the ESA was determined using an income approach (with-and-without method) and is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. The significant unobservable input used in the valuation was a discount rate of 11.9%, which represents the Company’s weighted-average cost of capital. The ESA has been determined to have an indefinite life because the contractual term is renewable without significant cost or modification, and the Company expects to renew it indefinitely. Accordingly, the ESA is not amortized. Instead, it will be tested for impairment annually (or more frequently if events or changes in circumstances indicate that its carrying amount may not be recoverable) in accordance with ASC 350, Intangibles — Goodwill and Other.
Fixed Assets
The fair value of the fixed assets acquired from T20 was determined using a cost approach. The valuation considered replacement cost less physical depreciation and obsolescence; the mining equipment was valued at its estimated salvage value. All fixed assets acquired from T20 (buildings, site improvements, and mining-related equipment) were held by the Company from the acquisition date (February 13, 2026) until February 26, 2026, when they were transferred to another legal entity under common ownership, DropCo.
During the holding period from February 13, 2026 through February 26, 2026, the Company recognized depreciation of $11,696 on these assets to record the decline in service potential over the 14-day period from acquisition to transfer.
Prior to the transfer, the Company concluded that the decision to dispose of the assets shortly after acquisition was an impairment indicator under ASC 360-10-35-21(f). Accordingly, the Company performed a recoverability test and determined that the carrying amount of the mining equipment was not recoverable. The building was written down to its estimated fair value of $248,000, resulting in an impairment loss of $25,619. The equipment was written down to its estimated fair value of $381,000, resulting in an impairment loss of $57,327. The total impairment loss of $82,946 is included in discontinued operations (see Note 6 — Discontinued Operations).
As
the transfer was to a commonly controlled entity without consideration, it was accounted for as a non-reciprocal transfer. In accordance
with ASC 805-50-30-5, the assets were transferred at their carrying amount (after impairment), and no gain or loss was recognized in
the
Operating Lease – Parking Lot
As part of the T20 acquisition, the Company assumed an operating lease for a parking lot facility (Fourth Amendment to Lease dated May 19, 2025). The lease has no purchase option and continues through June 30, 2034. The right-of-use asset and corresponding lease liability were recorded at $1,399,000 as of February 13, 2026. The Company uses an incremental borrowing rate of 10.45% for this lease. See Note 9 – Leases for further information.
Other Non-Essential Net Assets
Other non-essential net assets of $284,233 consist of various working capital items and liabilities acquired as part of the T20 transaction that management has determined are not essential to the Company’s core data center infrastructure operations. These items are not directly related to the Company’s primary strategic focus on developing and operating institutional-quality data centers supporting AI and HPC workloads. The Company determined these items to be non-essential based on their nature as short-term working capital items and their lack of strategic importance to the Company’s long-term data center strategy. These items primarily consist of cash of $810,860, accounts receivable of $735,427, accrued revenue of $300,723, crypto wallet of $116,619, prepaid insurance of $795, electric security deposit of $1,039,355, accounts payable of $959,551, accrued expenses of $510,640, loan payable (electric deposit) of $1,039,355, and hosting deposit of $210,000.
| F-27 |
Transaction Costs
Direct transaction costs (legal, valuation, and due diligence fees) incurred in connection with the acquisition were approximately $150,000. Under ASC 805-50, these costs were capitalized as part of the cost of the assets acquired. The total cost of the acquisition of $33,650,000 reflected in the purchase price allocation above consists of cash consideration to the sellers of $33,500,000 and capitalized transaction costs of $150,000.
Note 6 – Discontinued Operations
On February 13, 2026, the Company acquired 100% of the equity interests of T20 Mining Group LLC as part of an asset acquisition (see Note 5– Asset Acquisition – T20 Mining Group LLC). The acquisition included certain assets and liabilities related to cryptocurrency mining operations. Shortly thereafter, on February 26, 2026, the Company transferred the mining-related assets to 10X Digital DropCo LLC (“DropCo”), a legal entity under common ownership, through a non-reciprocal transfer without receipt of any consideration.
The transfer was made pursuant to an Intercompany Asset Transfer and Use Agreement and a Bill of Sale and Assignment and Assumption Agreement, effective as of February 26, 2026. Under these agreements, the Company transferred certain assets acquired from T20 to DropCo, and DropCo granted the Company a license to use certain assets owned or controlled by DropCo as are reasonably necessary for the Company to draw, receive, and utilize electrical power pursuant to its Electric Service Agreement and related arrangements. The transfer reflects management’s decision to separate non-essential mining-related assets from the Company’s core data center infrastructure operations.
The Company determined that the mining operations acquired from T20 constituted a component of the entity, as the operations and cash flows of the mining activity were clearly distinguishable from the Company’s core data center infrastructure operations. The Company further determined that the disposal of the mining component represented a strategic shift that has a major effect on the Company’s operations and financial results, as the mining activity accounted for substantially all of the Company’s revenue during the period and the Company is exiting the cryptocurrency mining business to focus on its core data center operations. Accordingly, the mining component is presented as a discontinued operation in accordance with ASC 205-20.
As disclosed in Note 5– Asset Acquisition – T20 Mining Group LLC, in a transfer of assets between entities under common control, the assets were transferred to DropCo at their carrying amount (after depreciation and impairment), and no gain or loss was recognized, in accordance with ASC 805-50-30-5, which requires that assets transferred between entities under common control be measured at their carrying amounts. ASC 845-10-30-10 further provides that nonmonetary assets distributed to owners in a spinoff are measured at their recorded amount (after reduction for impairment). Additionally, ASC 360-10-45-15 requires that long-lived assets to be distributed to owners in a spinoff continue to be classified as held and used until the distribution date, which supports the carrying amount measurement basis.
For the three months ended April 30, 2026, the loss from discontinued operations consisted of revenue from mining and hosting services of $487,819, cost of sales of $487,819, resulting in gross profit of $0, depreciation expense of $11,696, loss on crypto asset remeasurement of $70,000, and impairment loss on fixed assets of $82,946, resulting in a net loss from discontinued operations of $164,642. Revenue from the discontinued mining operation represents amounts earned from providing mining and hosting services to external customers. Cost of sales primarily represents utility costs incurred in connection with mining operations. During the holding period, the Company recognized depreciation of approximately $11,696 on these assets (see Note 5 — Asset Acquisition – T20 Mining Group LLC).
| F-28 |
The
net loss from discontinued operations of $164,642 is presented on the face of the
| Three Months Ended April 30, 2026 | ||||
| Revenue from mining and hosting services | $ | 487,819 | ||
| Cost of sales | (487,819 | ) | ||
| Depreciation expense | (11,696 | ) | ||
| Loss on crypto asset remeasurement | (70,000 | ) | ||
| Impairment loss on fixed assets | (82,946 | ) | ||
| Net loss from discontinued operations, net of tax | $ | (164,642 | ) | |
Note 7 – Related Party Transactions
The Company has identified the following material related party relationships and transactions:
| ● | Loan Payable – 10X LLC - The Company has an outstanding loan from 10X LLC, an entity wholly owned by Hans Thomas, a member and Manager of the Company. The loan is evidenced by an Amended Loan Agreement dated July 31, 2026, which formalizes and consolidates all prior advances made by 10X LLC to the Company. The loan bears interest at 8% per annum and matures on January 31, 2027. The principal balance as of January 31, 2026 was $1,372,067. During the six months ended July 31, 2026, the Company made a voluntary prepayment of $500,000 on February 13, 2026, and received a new advance of $375,000 on April 30, 2026 and $605,181 on July 31, 2026 to fund a portion of the T20 asset acquisition and operations. As of July 31, 2026, the outstanding principal balance was $1,852,248. The loan is classified as a current liability due to its maturity within one year. For the three and six months ended July 31, 2026, the Company recognized interest expense of approximately $25,000 and $45,000, respectively (see Note 8 — Debt). |
| ● | Transfer of Net Assets to DropCo (Commonly Controlled Entity) - On February 26, 2026, the Company transferred net assets with a carrying amount of $843,233 to DropCo, a commonly controlled entity, without consideration. The transfer was accounted for as a distribution to owners with no gain or loss recognized. (see Note 5 — Discontinued Operations). |
| ● | Lease Guarantee - The lease for the Company’s primary facility (see Note 9 — Leases) is held by 10X East Tulsa LLC, a wholly owned subsidiary of the Company, as tenant. The tenant’s obligations under the lease are guaranteed by 10X Capital Partners Fund, LP, an entity controlled by a key member of the Company. In accordance with ASC 850, Related Party Disclosures, this related-party transaction has been disclosed. As of July 31, 2026, management has determined that it is not probable that the Company will be required to make any payments under this guarantee. Consequently, no liability has been recorded. Had it been probable, a liability would have been recognized. |
| ● | Board Appointment Agreement — Shawn Matthews (Subsequent Event) - On August 26, 2026, subsequent to the balance sheet date, the Company entered into an Agreement for Board Appointment (the “Board Appointment Agreement”) with Shawn Matthews in connection with his expected appointment as Chairman of the Board upon consummation of the Merger with HCWC. Under the Board Appointment Agreement, Mr. Matthews will receive: (i) an annual cash retainer of $300,000; (ii) an initial equity award with a grant date target value of $7,500,000; (iii) an annual equity bonus with a target value of $7,500,000; and (iv) eligibility to earn additional equity awards upon achievement of specified market capitalization milestones. HCWC is not a party to the Board Appointment Agreement; however, HCWC expects to provide Mr. Matthews with the compensation set forth in the agreement following the consummation of the Merger. The Board Appointment Agreement is a related party transaction because Mr. Matthews will serve as Chairman of the Board of the combined company upon Merger closing. The agreement was entered into subsequent to the balance sheet date and is disclosed as a non-recognized subsequent event in accordance with ASC 855 (see Note 1 — Organization and Nature of Operations). |
| ● | Conflicts of Interest - The Company’s management is aware of its responsibility to ensure that all related-party transactions are conducted on terms that are fair and reasonable to the Company. In accordance with its operating agreement, certain related-party transactions may require approval by disinterested members or the board of managers. |
| F-29 |
Note 8 – Debt
Related Party Loan – 10X LLC
The Company has an outstanding loan from 10X LLC, an entity that is a related party due to common ownership with a member of the Company. The loan was originally evidenced by a loan agreement with a principal balance of $1,372,067 as of January 31, 2026. On July 31, 2026, the Company entered into an Amended Loan Agreement (the “Loan Agreement”), which formalizes and consolidates all prior advances made by 10X LLC to the Company. As of July 31, 2026, the principal amount outstanding under the Loan Agreement was $1,852,248.
The loan bears interest at 8% per annum, calculated on a 365-day basis for the actual number of days elapsed. Interest is payable at maturity.
The loan matures on January 31, 2027. Because the maturity date is within twelve months of the balance sheet date (July 31, 2026), the outstanding principal and accrued interest are classified as a current liability on the condensed consolidated balance sheet.
Loan Activity During the Period
The outstanding balance of the related party loan at January 31, 2026 was $1,372,067. During the six months ended July 31, 2026, the Company made a voluntary prepayment of $500,000 on February 13, 2026, and received a new advance of $375,000 on April 30, 2026 and $605,181 on July 31, 2026 from 10X LLC to fund a portion of the T20 operations. As a result, the outstanding balance at July 31, 2026 was $1,852,248.
Interest Expense for Related Party Loan
For the three and six months ended July 31, 2026, the Company recognized interest expense on this loan of approximately $25,000 and $45,000, respectively.
Note 9 – Leases
The Company leases operating facilities under non-cancelable lease agreements. Lease commencement occurs on the date the Company obtains control of the leased property.
Property Lease (Data Center Facility) – Finance Lease
Original Operating Lease
On November 25, 2025, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a commercial real estate lease for a data center facility in Tulsa, Oklahoma (the “Property Lease”). The Property Lease commenced on January 1, 2026, and originally had a five-year non-cancelable term (January 1, 2026 – December 31, 2030). The Property Lease contained a purchase option allowing the tenant to acquire the building for $23,500,000, exercisable with six months’ advance notice and closing required by October 1, 2026.
At commencement, management determined that exercise of the purchase option was not reasonably certain because the decision remained contingent on future operational developments (e.g., completion of the T20 Mining Group LLC acquisition, securing the power agreement, and tenant leasing prospects). Accordingly, the Property Lease was initially classified as an operating lease under ASC 842.
| F-30 |
Exercise of Purchase Option and Reclassification to Finance Lease
On March 26, 2026, the Company exercised a purchase option contained in the Property Lease to acquire the Property for a fixed price of $23.5 million. In accordance with ASC 842, the exercise of the purchase option triggered a reassessment of the lease classification and a remeasurement of the lease liability. Since the purchase option is reasonably certain to be exercised, the Property Lease was reclassified as a finance lease effective March 26, 2026.
At the remeasurement date, the lease liability was recalculated to include the present value of the $23.5 million purchase option, discounted at the Company’s incremental borrowing rate of 15.75%. The right-of-use (ROU) asset was increased by the same amount as the increase in the lease liability. The purchase of the Property is expected to close on or before October 1, 2026. As of July 31, 2026, the purchase had not yet closed; therefore, the building is not recorded as owned property and remains classified as a finance lease ROU asset on the condensed consolidated balance sheet. Upon closing, the building will be reclassified to property, plant and equipment.
Purchase and Sale Agreement
On June 23, 2026, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Purchase and Sale Agreement (the “PSA”) with 5555 Property Developers, LLC to acquire the Property, which includes both the data center facility (subject to the Property Lease) and the parking lot (subject to the Parking Lot Lease). The total purchase price under the PSA is $27,650,000 plus an amount equal to the aggregate of all payments that would otherwise become due and payable under the Property Lease from and after the Closing Date through the expiration of the term of the Property Lease. The closing is scheduled to occur on or before October 1, 2026, subject to the Company’s right to extend the Closing Date for up to two successive 30-day periods.
As of July 31, 2026, the purchase had not yet closed; therefore, the building is not recorded as owned property and remains classified as a finance lease ROU asset on the condensed consolidated balance sheet. Upon closing of the PSA, the finance lease will be terminated and the building will be reclassified to property, plant and equipment.
Parking Lot Lease – Operating Lease (Acquired in T20 Transaction)
Acquisition
In connection with the T20 Mining Group LLC asset acquisition (see Note 5 - Asset Acquisition – T20 Mining Group LLC), the Company acquired a lease for a parking lot facility (Fourth Amendment to Lease dated May 19, 2025). The lease has no purchase option and no transfer of ownership. It is classified as an operating lease. The lease term runs through June 30, 2034, with monthly payments escalating annually as specified in the Fourth Amendment.
As of the acquisition date (February 13, 2026), the Company recorded an ROU asset and corresponding lease liability at the present value of remaining lease payments, which was determined to be $1,399,000. The discount rate used was 10.45% (the Company’s incremental borrowing rate for this lease). The lease is being amortized on a straight-line basis over the remaining lease term.
Commitment
On June 23, 2026, the Company entered into a Purchase and Sale Agreement (the “PSA”) to acquire the underlying property, which includes the parking lot. The closing of the PSA is scheduled for October 1, 2026. Upon the closing of the PSA, the existing parking lot lease will be terminated.
As of July 31, 2026, the closing of the PSA has not yet occurred, and therefore the lease remains in effect with no modifications or termination recognized during the period. The Company continues to amortize the ROU assets in accordance with its original amortization schedule. Upon the anticipated closing in October 2026, the Company will derecognize the remaining ROU asset and lease liability and recognize a gain or loss on lease termination in the period in which the closing occurs.
| F-31 |
The following table summarizes the Company’s leases:
| Balance Sheet Classification | July 31, 2026 | January 31, 2026 | ||||||
| Operating lease right-of-use assets | $ | 1,347,182 | $ | 1,906,639 | ||||
| Finance lease right-of-use assets | 21,871,038 | - | ||||||
| Total right-of-use assets | $ | 23,218,220 | $ | 1,906,639 | ||||
| Operating lease liability, current | $ | 80,911 | $ | 22,246 | ||||
| Finance lease liability, current | 22,872,121 | - | ||||||
| Operating lease liability, net of current | 1,296,650 | 1,353,997 | ||||||
| Finance lease liability, net of current | - | - | ||||||
| Total lease liabilities | $ | 24,249,682 | $ | 1,376,243 | ||||
The amortization of the right-of-use assets of approximately $338,000 for the six months ended July 31, 2026 and was included in operating cash flows. The amortization of the right-of-use assets for three months ended July 31, 2026 was approximately $159,000.
The following table provides a summary of other information related to the leases at July 31, 2026 and January 31, 2026:
| Other Information | July 31, 2026 | January 31, 2026 | ||||||
| Weighted-average remaining lease term for operating leases | 7.8 years | 4.92 years | ||||||
| Weighted-average discount rate for operating leases | 10.45 | % | 15.75 | % | ||||
| Weighted-average remaining lease term for finance leases | 0.2 years | 0 years | ||||||
| Weighted-average discount rate for finance leases | 15.75 | % | -% | |||||
The components of lease expenses for the three and six months ended July 31, 2026 was as follows:
| Three Months Ended July 31, 2026 | Six Months Ended July 31, 2026 | |||||||
| Operating lease cost | $ | 113,098 | $ | 226,548 | ||||
| Finance lease cost - amortization of right-of-use assets | 141,713 | 236,188 | ||||||
| Finance lease cost - interest on lease liabilities | 884,480 | 1,212,209 | ||||||
| Total lease expense | $ | 1,139,291 | $ | 1,674,945 | ||||
The following table reconciles undiscounted cash flows to the present value of lease liabilities as of July 31, 2026:
| Maturity of Lease Liabilities by Fiscal Year | Operating Leases | Finance Leases | ||||||
| 2026 (remaining six months) | $ | 109,148 | $ | 23,500,000 | ||||
| 2027 | 224,662 | - | ||||||
| 2028 | 235,895 | - | ||||||
| 2029 | 247,690 | - | ||||||
| 2030 | 260,074 | - | ||||||
| Thereafter | 988,863 | - | ||||||
| Total gross operating lease payments | $ | 2,066,332 | $ | 23,500,000 | ||||
| Less: Imputed interest | (688,771 | ) | (627,879 | ) | ||||
| Present value of future minimum lease payments | $ | 1,377,561 | $ | 22,872,121 | ||||
The following table reconciles undiscounted cash flows to the present value of lease liabilities as of January 31, 2026:
| Operating Leases | ||||
| Twelve months ending: | ||||
| January 31, 2027 | $ | 42,537 | ||
| January 31, 2028 | 511,725 | |||
| January 31, 2029 | 527,076 | |||
| January 31, 2030 | 542,889 | |||
| January 31, 2031 | 511,298 | |||
| Total gross operating lease payments | 2,135,525 | |||
| Less: imputed interest | (759,282 | ) | ||
| Present value of future minimum lease payments | $ | 1,376,243 | ||
The following table presents supplemental cash flow information for the six-month period ended July 31, 2026:
| 2026 | ||||
| Cash paid for operating lease liability | $ | (87,491 | ) | |
| Cash paid for finance lease liability | $ | - | ||
| F-32 |
Note 10 – Segment Information
ASC 280, Segment Reporting, establishes standards for companies to report in their financial statement information about operating
segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for
which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker,
or group, in deciding how to allocate resources and assess performance.
The
Company operates in a single reportable segment: the development, ownership, and operation of institutional-quality data centers supporting
AI and HPC workloads. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who reviews
the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. The
CODM evaluates the Company’s performance primarily based on the consolidated net loss, as reported in the condensed consolidated
There have been no changes in the determination of our single operating segment or the measurement of segment loss during the period.
The following table presents the Company’s segment information for the three and six months ended July 31, 2026 and 2025, which is derived from the information regularly provided to the CODM:
| For Three Months July 31, 2026 | For the period from July 8, 2025 (Inception) through July 31, 2025 | For Six Months July 31, 2026 | For the period from July 8, 2025 (Inception) through July 31, 2025 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Legal fee | $ | 2,054,385 | $ | - | $ | 2,544,871 | $ | - | ||||||||
| Contractor and consulting fee | 246,436 | - | 351,481 | - | ||||||||||||
| Auditing fee | 213,855 | - | 213,855 | - | ||||||||||||
| Occupancy expense | 20,900 | - | 41,801 | - | ||||||||||||
| Lease expense | 113,098 | - | 226,548 | - | ||||||||||||
| Amortization expense — ROU asset | 141,713 | - | 236,188 | - | ||||||||||||
| Other miscellaneous fee | 3,210 | - | 3,210 | - | ||||||||||||
| Total operating expenses | 2,793,597 | - | 3,617,954 | - | ||||||||||||
| Interest expense | 909,626 | - | 1,256,800 | - | ||||||||||||
| Net loss from continuing operations before income taxes | $ | (3,703,223 | ) | $ | - | $ | (4,874,754 | ) | $ | - | ||||||
| Income tax benefit | - | - | - | - | ||||||||||||
| Net loss from continuing operations | $ | (3,703,223 | ) | $ | - | $ | (4,874,754 | ) | $ | - | ||||||
| Net loss from discontinued operations, net of tax | - | - | (164,642 | ) | - | |||||||||||
| Net loss | $ | (3,703,223 | ) | $ | - | $ | (5,039,396 | ) | $ | - | ||||||
The Company’s segment assets are measured on the same basis as consolidated total assets. As of July 31, 2026, segment assets were $56,908,285.
The Company operates primarily in the United States and all of its long-lived assets are located in the United States. Revenue from external customers will be derived primarily from customers located in the United States.
| F-33 |
Note 11 – Commitments and Contingencies
Preferred Units — Mandatory Redemption Feature
As discussed in Note 12 — Members’ Deficit, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd. for total cash consideration of $33,500,000. Pursuant to the Unit Purchase Agreement, the Company is required to contribute substantially all of its assets to a publicly traded company (the “Contribution”) within a specified period following the issuance of the Preferred Units, subject to extension for SEC and Nasdaq review delays. If the Contribution is not completed within the Contribution Period, each Investor has the right to require the Company to redeem all of its Preferred Units for cash at a price equal to 150% of its original capital contribution (i.e., $50,250,000 in the aggregate). The redemption obligation is senior to all other equity interests of the Company.
The Merger with HCWC is intended to satisfy the Contribution requirement. However, there can be no assurance that the Merger will be completed or that the Contribution will occur within the required timeframe. See Note 12 — Members’ Deficit for additional information.
Merger Agreement
On May 27, 2026, the Company entered into a Merger Agreement with HCWC, a Delaware corporation whose Class A common stock is listed on the NYSE American, and a wholly owned subsidiary of HCWC. Pursuant to the Merger Agreement, HCWC’s wholly owned subsidiary will merge with and into Host Digital, with Host Digital surviving as a wholly owned subsidiary of HCWC.
On August 27, 2026, HCWC stockholders approved all proposals required to complete the merger, satisfying a key closing condition. The companies currently expect to complete the merger during late September 2026, subject to the satisfaction or waiver of remaining closing conditions. The Merger remains subject to the satisfaction or waiver of the remaining closing conditions. There can be no assurance that the Merger will be completed. See Note 1 — Organization and Nature of Operations for additional information.
Purchase and Sale Agreement
On June 23, 2026, the Company, through its wholly owned subsidiary 10X East Tulsa LLC, entered into a Purchase and Sale Agreement (the “PSA”) with 5555 Property Developers, LLC to acquire approximately 14.10 acres of land and the improvements thereon (the “Property”) located in Tulsa, Oklahoma. The Property includes both the data center facility (subject to the Property Lease) and the parking lot (subject to the Parking Lot Lease).
The total purchase price under the PSA is $27,650,000 plus an amount equal to the aggregate of all payments that would otherwise become due and payable under the Property Lease from and after the Closing Date through the expiration of the term of the Property Lease. The PSA does not allocate the purchase price between the Property and the parking lot; such allocation will be performed at closing based on the relative fair values of the respective assets.
The closing is scheduled to occur on or before October 1, 2026, subject to the Company’s right to extend the Closing Date for up to two successive 30-day periods. There can be no assurance that the acquisition will be completed on the terms currently contemplated, or at all. See Note 1 — Organization and Nature of Operations for further discussion.
Tenant Lease (Subsequent Event)
On
August 7, 2026, subsequent to the balance sheet date, the Company secured a 15-year, take-or-pay lease
| F-34 |
The long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and covers 43 MW of critical IT load capacity at the Company’s currently energized facility. The lease includes annual rent escalators and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal options are exercised over a 30-year total term. Delivery to the tenant is expected in the first quarter of 2027.
This lease strengthens the Company’s ability to obtain project financing for the acquisition of the Property and supports management’s plans to address the going concern uncertainty (see Note 2 — Going Concern).
Lease Guarantee
The lease for the Company’s primary facility (see Note 9 — Leases) is guaranteed by 10X Capital Partners Fund, LP, an entity controlled by a key member of the Company. The guarantee is unconditional and covers all obligations of the tenant under the lease, including the payment of rent and other charges. As of July 31, 2026, management has determined that it is not probable that the guarantor will be required to make any payments under this guarantee. Accordingly, no liability has been recorded. If the guarantee were to be called, the maximum potential amount of future payments would be the remaining lease payments under the original lease term (which, however, will be superseded by the purchase option closing). The Company believes the likelihood of any material payment is remote.
Indemnification Obligations
In the ordinary course of business, the Company may enter into agreements that contain indemnification provisions, including indemnifications of directors, officers, and employees under the Company’s operating agreement. The Company may also indemnify counterparties in certain contracts, such as service providers or customers, for losses arising from the Company’s breach of contract, negligence, or intellectual property infringement. As of July 31, 2026, the Company is not aware of any pending or threatened claims that would require material payment under any indemnification provision, and no liability has been accrued.
Legal Proceedings
From time to time, the Company may be involved in legal proceedings or claims arising in the ordinary course of business. As of July 31, 2026, there are no pending or threatened legal proceedings against the Company that management believes would have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
Contractual Commitments for Power and Other Services
The Company, through its subsidiaries, has entered into two Electric Service Agreements with Public Service Company of Oklahoma to secure power capacity for its data center facility — a 20 MW agreement dated July 25, 2023, and a 25 MW agreement dated June 26, 2024. Each ESA included an initial 12-month term with minimum monthly billing requirements of $86,614 and $161,300 per month, respectively. As of July 31, 2026, both initial terms have expired, and the ESAs continue on a year-to-year basis with billing based on metered quantities and no minimum billing requirement. The Company’s only remaining enforceable minimum payment commitment under the ESAs is approximately $248,000, representing the 30-day termination notice period for each contract. The Company expects to pass through a substantial portion of its ongoing utility costs to future tenants under long-term lease arrangements, but such pass-through is not guaranteed.
| F-35 |
Note 12 – Members’ Deficit
Common Units
The Company’s authorized Common Units consist of 1,000 units, of which 1,000 were issued and outstanding as of July 31, 2026. Holders of Common Units are entitled to one vote per unit and participate in distributions as set forth in the Company’s Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”). As of July 31, 2026, the Common Units were held by Hans Thomas (45%), Harmol Samra (45%), and Alexander Monje (10%). No capital contributions have been made by the holders of Common Units.
Preferred Units
On February 13, 2026, the Company issued 1,000 Preferred Units to Graham Macro Strategic Ltd. and Graham Credit Opportunities Ltd. (collectively, the “Investors”) for total cash consideration of $33,500,000. The proceeds were used to fund the T20 Mining Group LLC asset acquisition (see Note 5 - Asset Acquisition – T20 Mining Group LLC). The Preferred Units have the following characteristics:
| ● | Liquidation Preference: The Preferred Units rank senior to Common Units with respect to distributions and payments upon any voluntary or involuntary liquidation, dissolution, or winding up of the Company. The liquidation preference is equal to the greater of (i) the original investment amount ($33,500,000) and (ii) the amount the Investors would have received had the Preferred Units been converted into Common Units immediately prior to such liquidation. | |
| ● | Dividends: The Preferred Units do not bear a stated dividend rate nor any preferential dividends. However, they participate in any distributions declared on Common Units on an as-converted basis. | |
| ● | Conversion: The Preferred Units are not automatically convertible. A conversion ratio of 1:1 is used solely for purposes of calculating as-converted entitlements and does not confer voting rights. | |
| ● | Voting Rights: Except for certain consent rights described in the LLC Agreement (e.g., approval of mergers, asset sales, debt incurrence, and other major transactions), the Preferred Units carry no voting rights. |
Mandatory Redemption Feature
Pursuant to the Unit Purchase Agreement, the Company is required to contribute substantially all of its assets to a publicly traded company (“Contribution”) within a specified period following the issuance of the Preferred Units (the “Contribution Period”), subject to extension for SEC and Nasdaq review delays. If the Contribution is not completed within the Contribution Period, each Investor has the right to require the Company to redeem all of its Preferred Units for cash at a price equal to 150% of its original capital contribution (i.e., $50,250,000 in the aggregate). The redemption obligation is senior to all other equity interests of the Company.
The Contribution Period was originally scheduled to expire on May 14, 2026, subject to a possible 60-day extension for delays primarily attributable to SEC review. As of July 31, 2026, the Contribution had not been completed. However, the Company and the Investors mutually agreed to extend the Contribution Period beyond July 31, 2026 to allow the Company to complete the Contribution through the proposed merger with HCWC. Because the Contribution Period had been extended by mutual agreement, the mandatory redemption feature was not exercisable by the Investors as of July 31, 2026. Accordingly, the Preferred Units remained classified as temporary equity on the condensed consolidated balance sheet as of July 31, 2026, and no reclassification to a liability was recorded.
The Merger with HCWC is intended to satisfy the Contribution requirement. On August 27, 2026, HCWC stockholders approved all proposals required to complete the merger, including the Stock Issuance Proposal, the Authorized Shares Proposal, and the Name Change Proposal. The companies currently expect to complete the merger during late September 2026, subject to the satisfaction or waiver of remaining closing conditions. There can be no assurance that the Merger will be completed or that the Contribution will occur within the required timeframe.
| F-36 |
Temporary Equity Classification
Because the mandatory redemption feature is not solely within the Company’s control (the Contribution is subject to regulatory approvals and other conditions), the Preferred Units are required to be classified as temporary equity (mezzanine equity) under ASC 480, Distinguishing Liabilities from Equity and related SEC guidance. As of July 31, 2026, the Preferred Units are presented outside of permanent equity on the condensed consolidated balance sheet with a carrying amount of $33,500,000.
The Contribution must be completed within 90 days of February 13, 2026 (the issuance date of the Preferred Units), subject to a possible 60-day extension for delays primarily attributable to SEC reviews. Management evaluates the probability of the Contribution’s completion at each reporting period. If it becomes probable that the Contribution will not be completed, the Preferred Units would be reclassified as a liability at their then-fair value (including the 150% redemption premium). As of July 31, 2026, no such reclassification has occurred.
Accumulated Deficit
The Company has incurred net losses since inception. As of July 31, 2026, accumulated deficit was approximately $5.6 million.
Note 13– Subsequent Events
Management has evaluated events and transactions occurring after July 31, 2026, through the date these financial statements were issued, and has identified the following material subsequent events requiring disclosure.
Merger with Healthy Choice Wellness Corp.
On August 27, 2026, HCWC stockholders approved all proposals required to complete the previously announced merger with HCWC, satisfying a key closing condition. HCWC filed the final voting results from the special stockholders meeting with the SEC on Form 8-K on August 27, 2026.
Subject to the satisfaction or waiver of the remaining closing conditions, the companies currently expect to complete the merger during late September 2026. At closing, Host Digital will become a wholly owned subsidiary of HCWC, and former Host Digital members are expected to own approximately 96% of HCWC’s outstanding Class A common stock. The combined company expects to continue trading on the NYSE American under the ticker symbol “HOST,” subject to exchange approval.
Reverse Stock Split
On August 27, 2026, HCWC stockholders approved an amendment to HCWC’s certificate of incorporation authorizing the Board of Directors, in its discretion, to effect a reverse stock split of HCWC’s Class A common stock at a ratio of up to and including 1-for-100. The Board subsequently approved a 1-for-35 reverse stock split (the “Reverse Stock Split”).
The Reverse Stock Split became effective on August 28, 2026 at 11:59 p.m., Eastern Time. HCWC’s Class A common stock began trading on a split-adjusted basis on the NYSE American under the symbol “HCWC” on Monday, August 31, 2026. The Reverse Stock Split is being effected in connection with the Merger and is intended to help the combined company satisfy the NYSE American’s minimum share price requirement of $4.00 for initial listing.
At the Effective Time of the Reverse Stock Split, every thirty-five shares of HCWC’s issued and outstanding Class A common stock were automatically converted into one issued and outstanding share of Class A common stock, without any change in the par value per share. No fractional shares were issued; stockholders who would otherwise be entitled to receive a fractional share had that fractional interest rounded up to the next whole share.
Tenant Lease
On August 7, 2026 (subsequent to the balance sheet date), Host Digital secured a 15-year, take-or-pay lease as a lessor with one of the world’s largest privately held cloud infrastructure companies. The lease is expected to be supported by a backstop from a U.S.-based, investment-grade global technology company.
The long-term, committed, take-or-pay agreement represents approximately $1.25 billion in contracted revenue over the 15-year base term and covers 43 MW of critical IT load capacity at Host Digital’s currently energized data center facility in northeast Oklahoma. The lease includes annual rent escalators and renewal options and represents approximately $3.2 billion in contracted revenue if all renewal options are exercised over a 30-year total term. Delivery to the tenant is expected in the first quarter of 2027.
This lease strengthens the Company’s ability to obtain project financing for the acquisition of the Property and supports management’s plans to address the going concern uncertainty (see Note 1 — Organization and Nature of Operations and Note 2 — Going Concern).
| F-37 |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The
following unaudited pro forma condensed combined financial information presents the combination of the financial statements of Host Digital
Inc. (f/k/a Healthy Choice Wellness Corp.) (“Parent”
In
connection with the Merger, all of the Common Units and Preferred Units of Host
The
Merger was accounted for as a reverse acquisition under U.S. generally accepted accounting principles (“GAAP”) in accordance
with Accounting Standards Codification Topic 805, Business Combinations. Host
The
consolidated financial statements of the combined company after the Merger represent a continuation of the financial statements of Host
The
unaudited pro forma condensed combined balance sheet as of June 30, 2026 combines the historical balance sheet of Parent as of that date
with the historical balance sheet of Host
The
unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2026 and for the year ended December
31, 2025 combine the historical results of Parent and Host
The Merger is presented in the unaudited pro forma condensed combined financial information; however, the Parent’s accounting analysis for certain aspects of the Merger is incomplete as of the date of this filing. The unaudited pro forma combined financial information does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Merger. Because the accounting for these items remains incomplete, the final pro forma adjustments may differ materially from those presented in this Current Report on Form 8-K. Parent will update the pro forma financial information in subsequent filings as the analyses are completed. See Note 2 – In-process Accounting Analysis. The pro forma information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or financial condition of the combined company would have been had the Merger occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial condition.
The
unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements of
Parent and Host
| F-38 |
| F-39 |
| F-40 |
| F-41 |
| F-42 |
December 31, 2025 | June 30, 2026 | |||||||
December 31, 2025 | June 30, 2026 | |||||||
December 31, 2025 |
June 30, 2026 |
|||||||
| F-43 |
| F-44 |
| F-45 |
| F-46 |
| F-47 |
| F-48 |
| F-49 |
Exhibit
HOST DIGITAL INC.
POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION
Introduction
The Board of Directors (the “Board”) of Host Digital Inc. (the “Company”) has adopted this Policy on Recoupment of Incentive Compensation (this “Policy”), which provides for the recoupment of compensation in certain circumstances in the event of a restatement of financial results by the Company. This Policy shall be interpreted to comply with the requirements of U.S. Securities and Exchange Commission rules and Section 811 of the NYSE American Company Guide implementing Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and, to the extent this Policy is in any manner deemed inconsistent with such rules, this Policy shall be treated as retroactively amended to be compliant with such rules.
Administration
This Policy shall be administered by the Compensation Committee. Any determinations made by the Compensation Committee shall be final and binding on all affected individuals. The Compensation Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy, in all cases consistent with the Dodd-Frank Act. The Board or the Compensation Committee may amend this Policy from time to time in its discretion.
Covered Executive Officers
This Policy applies to any current or former “executive officer,” within the meaning of Rule 10D-1 under the Securities Exchange Act of 1934, as amended, of the Company or a subsidiary of the Company (each such individual, an “Executive”). This Policy shall be binding and enforceable against all Executives and their beneficiaries, executors, administrators, and other legal representatives.
Recoupment Upon Financial Restatement
If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “Financial Restatement”), the Compensation Committee shall cause the Company to recoup from each Executive, as promptly as reasonably possible, any erroneously awarded Incentive-Based Compensation, as defined below.
No-Fault Recovery
Recoupment under this Policy shall be required regardless of whether the Executive or any other person was at fault or responsible for accounting errors that contributed to the need for the Financial Restatement or engaged in any misconduct.
Compensation Subject to Recovery; Enforcement
This Policy applies to all compensation granted, earned, or vested based wholly or in part upon the attainment of any financial reporting measure determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measures, whether or not presented within the Company’s financial statements or included in a filing with the U.S. Securities and Exchange Commission, including stock price and total shareholder return (“TSR”). Such compensation includes, but is not limited to, performance-based cash and stock, stock option, or other equity or equity-based awards paid or granted to the Executive (“Incentive-Based Compensation”). Compensation that is granted, vests or is earned based solely upon the occurrence of non-financial events is not subject to this Policy, such as base salary, restricted stock, options subject only to time-based vesting, and bonuses awarded solely at the discretion of the Board or Compensation Committee and not based on the attainment of any financial measure.
In the event of a Financial Restatement, the amount to be recovered will be the excess of (i) the Incentive-Based Compensation received by the Executive during the Recovery Period (as defined below), based on the erroneous data and calculated without regard to any taxes paid or withheld, over (ii) the Incentive-Based Compensation that would have been received by the Executive had it been calculated based on the restated financial information, as determined by the Compensation Committee. For purposes of this Policy, “Recovery Period” means the three completed fiscal years immediately preceding the date on which the Company is required to prepare the Financial Restatement, as determined in accordance with the last sentence of this paragraph, or any transition period that results from a change in the Company’s fiscal year (as set forth in Section 811(c)(1)(i)(D) of the NYSE American Company Guide). The date on which the Company is required to prepare a Financial Restatement is the earlier to occur of (A) the date the Board or a Board committee (or authorized officers of the Company if Board action is not required) concludes, or reasonably should have concluded, that the Company is required to prepare a Financial Restatement or (B) the date a court, regulator, or other legally authorized body directs the Company to prepare a Financial Restatement.
For Incentive-Based Compensation based on stock price or TSR, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in the Financial Restatement, the Compensation Committee shall determine the amount to be recovered based on a reasonable estimate of the effect of the Financial Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received, and the Company shall document the determination of that reasonable estimate and provide it to the NYSE American.
Incentive-Based Compensation is considered to have been received by an Executive in the fiscal year during which the applicable financial reporting measure was attained or purportedly attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of such period.
The Company may use any legal or equitable remedies that are available to the Company to recoup any erroneously awarded Incentive-Based Compensation, including but not limited to collecting from an Executive cash payments or shares of Company common stock or forfeiting any amounts that the Company owes to the Executive. Executives shall be solely responsible for any tax consequences to them that result from the recoupment or recovery of any amount pursuant to this Policy, and the Company shall have no obligation to administer the Policy in a manner that avoids or minimizes any such tax consequences.
No Indemnification
The Company shall not indemnify any Executive or pay or reimburse the premium for any insurance policy to cover any losses incurred by such Executive under this Policy or any claims relating to the Company’s enforcement of rights under this Policy.
| HOST DIGITAL INC. – POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION | 2 |
Exceptions
The compensation recouped under this Policy shall not include Incentive-Based Compensation received by an Executive (i) prior to beginning service as an Executive or (ii) at any time if the Executive did not serve as an Executive at any time during the performance period applicable to the Incentive-Based Compensation in question. The Compensation Committee (or a majority of independent directors serving on the Board) may determine not to seek recovery from an Executive in whole or in part to the extent it determines in its sole discretion that such recovery would be impracticable because (A) the direct expense paid to a third party to assist in enforcing recovery would exceed the recoverable amount (after having made a reasonable attempt to recover the erroneously awarded Incentive-Based Compensation and providing corresponding documentation of such attempt to the NYSE American), (B) recovery would violate any home country law that was adopted prior to November 28, 2022, as determined by an opinion of counsel licensed in the applicable jurisdiction that is acceptable to and provided to the NYSE American, or (C) recovery would likely cause the Company’s 401(k) plan or any other tax-qualified retirement plan to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
Other Remedies Not Precluded
The exercise by the Compensation Committee of any rights pursuant to this Policy shall be without prejudice to any other rights or remedies that the Company, the Board, or the Compensation Committee may have with respect to any Executive subject to this Policy, whether arising under applicable law or regulation (including Section 304 of the Sarbanes-Oxley Act of 2002) or pursuant to the terms of any other policy of the Company or any equity award, cash incentive award, or employment or other agreement applicable to an Executive. Notwithstanding the foregoing, there will be no duplication of recovery of the same Incentive-Based Compensation under this Policy and pursuant to any other such rights or remedies.
Acknowledgment
The Compensation Committee may require any Executive to sign and return to the Company the acknowledgement form attached hereto as Exhibit A, pursuant to which such Executive shall agree to be bound by the terms of, and comply with, this Policy. For the avoidance of doubt, each Executive shall be fully bound by, and must comply with, the Policy, whether or not such Executive has executed and returned such acknowledgment form to the Company.
Effective Date and Applicability
This
Policy has been adopted by the Board, effective as of September
| HOST DIGITAL INC. – POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION | 3 |
EXHIBIT A
HOST DIGITAL INC.
POLICY ON RECOUPMENT OF INCENTIVE COMPENSATION
ACKNOWLEDGEMENT FORM
Capitalized terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement Form”) have the meanings ascribed to such terms in the Policy.
By signing this Acknowledgement Form, the undersigned acknowledges, confirms and agrees that the undersigned: (i) has received and reviewed a copy of the Policy; (ii) is and will continue to be subject to the Policy, both during and after the undersigned’s employment with the Company; and (iii) will abide by the terms of the Policy, including, without limitation, by reasonably promptly returning any recoverable compensation to the Company as required by the Policy, as determined by the Compensation Committee in its sole discretion.
| Sign: | ||
| Name: | [Employee] | |
| Date: |