Zcash miner buys 9.4% of merger target that warns failed deal could end in liquidation

Fortitude Mining, Digital Currency Group's Zcash-focused miner, bought a 9.4% stake in Nasdaq-listed HeartSciences for about $1 million, giving its proposed merger partner cash for operating expenses while shareholder approval remains pending.

The Aug. 12 private placement covered 411,522 HeartSciences common shares at $2.43 each. A beneficial ownership filing put Fortitude's exact cash outlay at $999,998.46 and its post-purchase stake at approximately 9.4%.

HeartSciences said the price represented a 22% premium to its closing share price on the purchase date. The target said it would use the net proceeds for operating expenses before the proposed combination closes, making the transaction a cash equity placement rather than a loan.

The investment does not change the exchange ratio, and Fortitude's equity holders will not receive additional closing shares for the $1 million injection, according to an SEC-filed company release.

Buying ordinary shares gives the Zcash miner a direct stake in HeartSciences before shareholders decide the corporate combination. Because the placement sits outside the exchange-ratio formula, the cash buys target-company equity without increasing the merger consideration payable to Fortitude's existing owners.

The proposed structure would give DCG about 95% of the combined company's voting interests, according to HeartSciences' preliminary proxy. Existing HeartSciences equityholders would retain about 5% of its voting and economic interests, subject to the final capitalization and exchange-ratio mechanics.

As of Aug. 20, the preliminary proxy still contained blank fields for the special meeting and record date, while later placement materials continued to list shareholder approval as outstanding. The companies expect the transaction to close in the second half of 2026, but that is a target window.

The proxy also warns that if the merger fails, HeartSciences may have limited ability to continue operating and could need another strategic transaction. If no viable alternative is available, the company may liquidate, with no assurance that cash would remain for shareholders.

Fortitude reported $8.5 million of adjusted EBITDA, a non-GAAP measure, while its GAAP financials showed a $9.5 million net loss that included a $10.3 million mining-equipment impairment. Adjusted EBITDA excludes selected expenses that remain reflected in the accounting loss.

For HeartSciences shareholders, the next state-changing disclosure is a definitive proxy that sets the vote date. Until then, Fortitude's equity injection supports the target's operations but does not remove the deal's approval or execution risk.