Digi Power X Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Index to Financial Statements Audited Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm (Davidson & Company LLP, Vancouver, British Columbia, Canada, PCAOB ID 731 ) F-3 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025 and 2024 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-6 Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2025 and 2024 F-7 Notes to Consolidated Financial Statements F-8 F- 1 DIGI POWER X INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (EXPRESSED IN UNITED STATES DOLLARS) F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Directors of Digi Power X Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Digi Power X Inc. (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of comprehensive income (loss), cash flows, and changes in shareholders’ equity for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 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 audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2024. /s/ DAVIDSON & COMPANY LLP Chartered Professional Accountants Vancouver, Canada March 31, 2026 DAVIDSON & COMPANY LLP 1200 - 609 Granville Street 604 687 0947 PO BOX 10372, Pacific Centre davidson-co.com Vancouver, BC V7Y 1G6 F- 3 Digi Power X Inc. Consolidated Balance Sheets (Expressed in United States Dollars) As at December 31, 2025 As at December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 78,478,759 $ 1,703,896 Digital currencies 14,814,180 4,525,416 Current portion of amounts receivable and other assets 1,576,272 384,939 Other receivable 44,000 44,000 Total current assets 94,913,211 6,658,251 Property, plant and equipment, net 23,005,900 23,643,743 Operating lease right-of-use assets - 117,205 Intangible asset 926,339 1,055,569 Amounts receivable and other assets, net of current portion 13,724,798 1,942,476 Investment 1,543,331 900,844 Total assets $ 134,113,579 $ 34,318,088 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $ 6,350,923 $ 6,579,948 Current portion of operating lease liabilities - 51,112 Current portion of loans payable - 77,564 Warrant liabilities 2,297,930 3,040,494 Total current liabilities 8,648,853 9,749,118 Deposits payable 2,203,526 2,203,526 Lease liabilities, net of current portion - 75,685 Total liabilities 10,852,379 12,028,329 Shareholders’ equity Subordinate voting shares, no par value, unlimited shares authorized; 69,427,788 shares and 33,011,600 shares issued and outstanding at December 31, 2025 and 2024, respectively - - Proportionate voting shares, no par value, unlimited shares authorized; 3,333 shares and 3,333 shares issued and outstanding at December 31, 2025 and 2024, respectively - - Additional paid-in capital 216,409,130 90,011,906 Accumulated deficit ( 88,870,607 ) ( 60,514,384 ) Accumulated other comprehensive income (loss), net ( 4,277,323 ) ( 7,487,193 ) Total shareholders’ equity attributable to shareholders 123,261,200 22,010,329 Non-controlling interest - 279,430 Total shareholders’ equity 123,261,200 22,289,759 Total liabilities and shareholders’ equity $ 134,113,579 $ 34,318,088 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Digi Power X Inc. Consolidated Statements of Comprehensive Income (Loss) (Expressed in United States Dollars) Year Ended December 31, 2025 2024 Revenue Digital currency mining and staking $ 3,523,378 $ 10,318,500 Colocation services 17,468,899 15,790,179 Sale of electricity - 6,283,028 Sale of energy 13,195,949 4,610,556 Total revenue 34,188,226 37,002,263 Cost of revenue Cost of revenue ( 30,450,962 ) ( 32,711,567 ) Depreciation and amortization ( 6,953,827 ) ( 15,637,616 ) Gross loss ( 3,216,563 ) ( 11,346,920 ) Operating expenses General and administrative expenses ( 16,335,135 ) ( 7,276,564 ) Foreign exchange gain (loss) ( 3,498,836 ) 5,227,038 Gain on sale of digital currencies 1,029,017 1,558,772 Change in fair value of loan and salaries payable ( 171,325 ) ( 793,606 ) Gain (loss) on revaluation of digital currencies ( 4,109,276 ) 898,691 Total operating expenses ( 23,085,555 ) ( 385,669 ) Other income (expenses) Other income 750 13,784 Change in fair value of investment 642,487 50,159 Loss on settlement of debt ( 153,200 ) - Net financial expenses 285,873 877 Gain (loss) from change in fair value of warrant liability ( 3,110,015 ) ( 723,529 ) Gain on sale of property, plant and equipment 280,000 - Total other income (expenses) ( 2,054,105 ) ( 658,709 ) Net loss for the year attributable to common shareholders ( 28,356,223 ) ( 12,391,298 ) Foreign currency translation adjustment 3,209,870 ( 5,258,746 ) Comprehensive loss for the year attributable to common shareholders $ ( 25,146,353 ) $ ( 17,650,044 ) Net loss attributable to: Common shareholders of the Corporation ( 28,356,223 ) ( 12,391,298 ) Non-controlling interests - - Comprehensive loss for the period attributable to: Common shareholders of the Corporation ( 25,146,353 ) ( 17,650,044 ) Non-controlling interests - - Net loss per common share: Basic and diluted $ ( 0.64 ) $ ( 0.40 ) Weighted average number of common shares outstanding: Basic and diluted 44,457,316 30,704,548 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Digi Power X Inc. Consolidated Statements of Cash Flows (Expressed in United States Dollars) Year Ended December 31, 2025 2024 Operating activities Net loss for the year $ ( 28,356,223 ) $ ( 12,391,298 ) Adjustments for: Digital currencies items ( 15,103,264 ) ( 22,483,518 ) Gain on sale of property, plant and equipment ( 280,000 ) - Depreciation of right-of-use assets 29,303 102,197 Depreciation and amortization 6,953,826 15,585,651 Interest on lease liabilities 5,742 24,707 Share based compensation 8,031,276 2,547,123 Gain (loss) from change in fair value of warrant liability 3,110,015 723,529 Lease modification ( 9,637 ) - Loss on settlement of debt 153,200 - Change in fair value of loan and salaries payable 171,325 793,606 Change in fair value of investment ( 642,487 ) ( 50,159 ) Accretion on liability 566 38,413 Foreign exchange loss (gain) 3,466,624 ( 5,581,069 ) RSUs settled in cash ( 1,049,682 ) - Working capital items ( 2,015,710 ) 3,158,474 Net cash used in operating activities ( 25,535,126 ) ( 17,532,344 ) Investing activities Purchases and deposits on property, plant and equipment ( 17,297,576 ) ( 3,790,777 ) Proceeds from sale of property, plant and equipment 280,000 - Acquisition of digital currencies ( 6,157,514 ) - Digital currencies traded for cash 10,972,014 18,507,626 Net cash (used in) provided by investing activities ( 12,203,076 ) 14,716,849 Financing activities Proceeds from pre-funded warrants 2,487,377 - Proceeds of shares issued for cash, net of issuance costs 104,679,906 4,006,157 Proceeds from exercise of warrants and options 8,458,912 - Return of proceeds to non-controlling interest ( 1,000,000 ) 1,000,000 Repayment of mortgage - ( 400,500 ) Repayment of loans payable ( 78,130 ) ( 317,559 ) Lease payments ( 35,000 ) ( 109,980 ) Net cash provided by financing activities 114,513,065 4,178,118 Net change in cash 76,774,863 1,362,623 Cash and cash equivalents, beginning of year 1,703,896 341,273 Cash and cash equivalents, end of year $ 78,478,759 $ 1,703,896 The accompanying notes are an integral part of these consolidated financial statements. F- 6 Digi Power X Inc. Consolidated Statement of Changes in Shareholders’ Equity (Expressed in United States Dollars) Number of shares (note 12) Accumulated Subordinate Voting Shares Proportionate Voting Shares Additional paid-in capital Accumulated Deficit Other Comprehensive Income Non- Controlling Interest Total Balance as of December 31, 2023 28,878,740 3,333 $ 85,055,021 $ ( 48,123,086 ) $ ( 2,228,447 ) $ - $ 34,703,488 Restricted share units converted to common shares 492,897 - - - - - - Shares issued for cash 3,639,963 - 1,688,492 - - - 1,688,492 Share based compensation - - 2,547,123 - - - 2,547,123 Non-controlling interest shareholders’ contribution - - 721,270 - - 279,430 1,000,700 Net loss for the year - - - ( 12,391,298 ) - - ( 12,391,298 ) Other comprehensive loss for the year - - - - ( 5,258,746 ) - ( 5,258,746 ) Balance as of December 31, 2024 33,011,600 3,333 90,011,906 ( 60,514,384 ) ( 7,487,193 ) 279,430 22,289,759 Shares issued for cash 30,587,858 - 108,170,207 - - - 108,170,207 Issuance of pre-funded warrants - - 2,487,377 - - - 2,487,377 Cost of issue - cash - - ( 5,377,149 ) - - - ( 5,377,149 ) Cost of issue - broker warrants - - ( 728,804 ) - - - ( 728,804 ) Cost of issue - obligation to issue warrants - - ( 599,603 ) - - - ( 599,603 ) Restricted share units converted to common shares 971,494 - - - - - - Restricted share units settled for cash - - ( 1,049,682 ) - - - ( 1,049,682 ) Shares issued for exercise of warrants and options 4,747,159 - 15,783,500 - - - 15,783,500 Shares issued to settle payable 109,677 - 401,372 - - - 401,372 Share based compensation - - 8,031,276 - - - 8,031,276 Dissolution of non-controlling interest - - ( 721,270 ) - - ( 279,430 ) ( 1,000,700 ) Net loss for the year - - - ( 28,356,223 ) - - ( 28,356,223 ) Other comprehensive loss for the year - - - - 3,209,870 - 3,209,870 Balance as of December 31, 2025 69,427,788 3,333 $ 216,409,130 $ ( 88,870,607 ) $ ( 4,277,323 ) $ - $ 123,261,200 The accompanying notes are an integral part of these consolidated financial statements. F- 7 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 1. Nature of operations Digi Power X Inc. (the “Corporation” or “Digi Power” including, where the context requires, and its subsidiaries--Digihost International, Inc., DGX Holding, LLC, World Generation X, LLC, and US Data Centers, Inc.) is an innovative energy infrastructure company that develops data centers to drive the expansion of sustainable energy assets. On March 6, 2025, the Corporation changed its name to Digi Power X Inc. The Corporation was incorporated in British Columbia, Canada, on February 18, 2017 . The Corporation’s subordinate voting shares were listed on the TSX Venture Exchange until February 26, 2026. The Corporation’s subordinate voting shares were uplisted to Cboe Canada on February 27, 2026. The Corporation’s subordinate voting shares are listed on Cboe Canada and Nasdaq where they trade under the trading symbols DGX and DGXX, respectively. The head office of the Corporation is located at 218 NW 24th Street, 2nd Floor, Miami, Florida 33127. These consolidated financial statements of the Corporation were reviewed, approved and authorized for issue by the Board of Directors on March 30, 2026. 2. Basis of Presentation and Summary of Significant Accounting Policies (a) Statement of compliance These consolidated financial statements have been presented in United States dollars and are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Prior to January 1, 2026, the Corporation was a foreign private issuer reporting its financial statements under IFRS Accounting Standards as issued by the Internation Accounting Standards Boards. These consolidated financial statements, for all periods, are presented in accordance with U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative guidance found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”). These consolidated financial statements have been prepared on a going concern basis, meaning that the Corporation will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. (b) Basis of consolidation These consolidated financial statements include the accounts of Digi Power and its wholly owned subsidiaries: Digihost International, Inc., DGX Holdings, LLC, World Generation X, and US Data Centers, Inc. Subsequent to December 31, 2025, the Corporation divested 49 % of US Data Centers, Inc., refer to note 24. Subsidiaries are consolidated from the date of acquisition, being the date on which the Corporation obtains control, and continues to be consolidated until the date that such control ceases. Control is achieved when an investor has power over an investee to direct its activities, exposure to variable returns from an investee, and the ability to use the power to affect the investor’s returns. All intercompany transactions and balances have been eliminated upon consolidation. Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment nature are included in foreign exchange gain (loss). Net earnings or loss and each component of other comprehensive income are attributed to the shareholders of the Corporation and to the non-controlling interests. Total comprehensive income is attributed to the shareholders of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance on consolidation. F- 8 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (c) Use of estimates The preparation of these financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Corporation evaluates the estimates used, which include but are not limited to the: estimates in the determination of the fair value of assets acquired and liabilities assumed in connection with acquisitions; measurement of non-cash consideration received; discount rate in determining lease liabilities; valuation of long-lived assets and their associated useful lives; the realization of tax assets, estimates of tax liabilities, and valuation of deferred taxes; valuation of derivative instruments. These estimates, judgments, and assumptions are reviewed periodically, and the impact of any revisions are reflected in the financial statements in the period in which such revisions are made. Actual results could differ from those estimates, judgments, or assumptions, and such differences could be material to the Corporation’s consolidated financial statements. (d) Cash and cash equivalents Cash and cash equivalents may include cash on hand, demand deposits and short-term highly liquid investments that are readily convertible into known amounts of cash, with maturities of 90 days or less when acquired. As of December 31, 2025, the Corporation classified $ 63,209,972 of mutual funds in a money market account as cash equivalents (2024 - $ nil ). (e) Functional and presentation currency These financial statements are presented in United States Dollars. The functional currency of Digi Power is the Canadian dollar and the functional currency of Digihost International, Inc., DGX Holding, LLC, World Generation X and US Data Centers, Inc. is the United States Dollar. All financial information is expressed in United States Dollars, unless otherwise stated. (f) Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated to the respective functional currency at exchange rates in effect at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates at the respective transaction dates. Revenue and expenses are translated at the rate of exchange at each transaction date. Gains or losses on translation are included in foreign exchange expense. The results and financial position of an entity whose functional currency are translated into a different presentation currency are treated as follows: ● assets and liabilities are translated at the closing rate at the reporting date; ● income and expenses for each income statement are translated at average exchange rates at the dates of the period; and ● all resulting exchange differences are recognized in other comprehensive income (loss) as cumulative translation adjustments. F- 9 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (g) Revenue recognition The Corporation recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). To determine revenue recognition for contracts with customers, the Corporation performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Corporation satisfies the performance obligation. The Corporation recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Corporation expects to be entitled in such exchange. In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: ● Variable consideration ● Constraining estimates of variable consideration ● The existence of a significant financing component in the contract ● Non-cash consideration ● Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Digital currency mining: The Corporation’s revenue is derived from providing computing power (hashrate) to mining pools. The Corporation has entered into arrangements, as amended from time to time, with mining pool operators to provide computing power to the mining pools. The provision of computing power to mining pools is an output of the Corporation’s ordinary activities. The Corporation has the right to decide the point in time and duration for which it will provide computing power. As a result, the Corporation’s enforceable right to compensation only begins when, and continues as long as, the Corporation provides computing power to the mining pool. The contracts can be terminated at any time by either party without substantive compensation to the other party for such termination. Upon termination, the mining pool operator (i.e., the customer) is required to pay the Corporation any amount due related to previously satisfied performance obligations. Therefore, the Corporation has determined that the duration of the contract is less than 24 hours and that the contract continuously renews throughout the day. The Corporation has determined that this renewal right is not a material right as the terms, conditions, and compensation amounts are at then market rates. There is no significant financing component in these transactions. F- 10 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (g) Revenue recognition (continued) In exchange for providing computing power, which represents the Corporation’s only performance obligation, the Corporation is entitled to non-cash consideration in the form of cryptocurrency, calculated under one of two payout methods, depending on the mining pool. The payout method used by the mining pool in which the Corporation participated is the Full Pay Per Share (“FPPS”). This payout method contains three components, (i) a fractional share of the fixed cryptocurrency award from the mining pool operator (referred to as a “block reward”), (ii) transaction fees generated from (paid by) blockchain users to execute transactions and distributed (paid out) to individual miners by the mining pool operator, and (iii) mining pool operating fees retained by the mining pool operator for operating the mining pool. The Corporation’s total compensation is the sum of the Corporation’s share of (a) block rewards and (b) transaction fees, less (c) mining pool operating fees. ● Block rewards are calculated as follows under the FPPS method. The block reward earned by the Corporation is calculated by the mining pool operator based on the proportion of hashrate the Corporation contributed to the mining pool to the total network hashrate used in solving the current algorithm. The Corporation is entitled to its relative share of consideration even if a block is not successfully added to the blockchain by the mining pool. ● Transaction fees refer to the total fees paid by users of the network to execute transactions. Under FPPS, the Corporation is entitled to a pro-rata share of the total network transaction fees. The transaction fees paid out by the mining pool operator to the Corporation is based on the proportion of hashrate the Corporation contributed to the mining pool to the total network hashrate. The Corporation is entitled to its relative share of consideration even if a block is not successfully added to the blockchain by the mining pool. ● Mining pool operating fees are charged by the mining pool operator for operating the mining pool as set forth in a rate schedule to the mining pool contract. The mining pool operating fees reduce the total amount of compensation the Corporation receives and are only incurred to the extent that the Corporation has generated mining revenue pursuant to the mining pool operators’ payout calculation. Because the consideration to which the Corporation expects to be entitled for providing computing power is entirely variable (block rewards, transaction fees and pool operating fees), as well as being non-cash consideration, the Corporation assesses the estimated amount of the variable non-cash consideration to which it expects to be entitled for providing computing power at contract inception and subsequently, to determine when and to what extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved. For each contract under the FPPS payout method, the Corporation recognizes the non-cash consideration on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as the contract inception. For the contract under the FPPS payout method, the Corporation measures non-cash consideration at the cryptocurrency average price on the date of contract inception, as determined by the Corporation’s principal market, which is Gemini. ○ Colocation services: The Corporation recognizes revenue from its colocation services when it satisfies performance obligations by transferring the control of services, which include power provision and space rental, to customers. Revenue is recognized monthly in an amount that reflects actual power consumption, as per contractual terms, and any fixed maintenance fees are recognized over time as services are rendered to customers, aligning the recognition of revenue with the delivery of services. The transaction price for colocation services includes both fixed fees and variable considerations, which are incorporated only if a significant reversal in the future is deemed unlikely. F- 11 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2 . Basis of Presentation and Summary of Significant Accounting Policies (Continued) (g) Revenue recognition (continued) ○ Sale of electricity: The Corporation recognizes revenue from the sale of electricity when it has satisfied its performance obligation, which occurs as the electricity is provided to the customer. The Corporation supplies the requisite power and ancillary operational functions in order for the digital currency mining equipment on its property to run efficiently outside of its facilities. Revenue is recorded monthly based on the actual consumption of energy by the customer, at the price determined by the contract. This reflects the Corporation’s performance and the customer’s consumption benefits, with variable consideration being recognized in the period it is due. The transaction price for sale of electricity includes both fixed fees and variable considerations, which are incorporated only if a significant reversal in the future is deemed unlikely. ○ Sale of energy: The Corporation recognizes revenue from sale of energy is recorded upon the satisfaction of the performance obligation, specifically at the point when control of the energy is transferred to the end customer. This key moment reflects the Corporation’s fulfillment of its contractual duties. (h) Digital currencies Digital currencies consist of Bitcoin and Ethereum. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other— Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets to be measured at fair value in the balance sheets, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Corporation adopted this guidance effective on the Corporation’s inception on a prospective basis. Digital currencies meet the definition of in-scope crypto assets as they are identifiable non-monetary assets without physical substance, they do not provide the asset holder with enforceable rights to or claims on underlying goods, services, or other assets, they are created or reside on blockchain technology, they are secured through cryptography, they are fungible, and they are not created or issued by the reporting entity or its related parties. Digital currencies are measured at fair value using the quoted price on the Gemini Exchange. Gemini serves as the principal market. Management considers this fair value to be a Level 1 input under ASC 820 Fair Value Measurement fair value hierarchy as the price on this source represents a quote of the currency on an active market. The Corporation uses the “weighted average” method to determine the cost basis for its Digital assets held. (i) Property, plant and equipment Details as to the Corporation’s policies for property, plant and equipment are as follows: Asset Amortization method Amortization period Buildings Straight-line 120 months Data miners Straight-line 12 - 36 months Equipment Straight-line 36 and 120 months Leasehold improvement Straight-line 120 months Powerplant in use Straight-line 240 - 480 months Property, plant and equipment are recorded at cost less accumulated depreciation and impairment. Cost includes all expenditures incurred to bring assets to the location and condition necessary for them to be operated in the manner intended by management. Material residual value estimates and estimates of useful life are updated as required, but at least annually. F- 12 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (i) Property, plant and equipment (continued) Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognized. All other repairs and maintenance are charged to profit or loss during the fiscal year in which they are incurred. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss. (j) Intangible assets Intangible assets are accounted for using the cost model based off the fair value attributed to a right of use of an electric power facility which is depreciated over 13 years. When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognized in profit or loss. Amortization of intangible assets has been included in depreciation and amortization in the consolidated statement of comprehensive loss. (k) Impairment of non-financial assets The Corporation reviews the carrying amounts of its non-financial assets, including property, plant and equipment, right of use assets and intangible assets when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimates the recoverable amount of the asset group to which the asset belongs. Assets carried at fair value, such as digital currencies, are excluded from impairment analysis. Asset groups to which goodwill has been allocated are tested for impairment annually. (l) Leases and right-of-use assets The Corporation’s leased assets consist of warehouses. The Corporation determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the lease term is assessed based on the date when the underlying asset is made available by the lessor for the Corporation’s use. The Corporation’s assessment of the lease term reflects the non-cancellable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Corporation is reasonably certain not to exercise, as well as periods covered by renewal options which the Corporation is reasonably certain to exercise. The Corporation determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of comprehensive loss and statements of cash flows over the lease term. For leases with a term exceeding 12 months, a lease liability is recorded on the Corporation’s consolidated balance sheets at lease commencement reflecting the present value of the fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. F- 13 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (l) Leases and right-of-use assets (continued) For purposes of measuring the present value of the Corporation’s fixed payment obligations for a given lease, the Corporation uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in the underlying leasing arrangements are typically not readily determinable. The Corporation’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the terms and economic environment surrounding the associated lease. For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the consolidated balance sheets. Variable lease costs for both operating and finance leases, if any are recognized as incurred and such costs are excluded from lease balances recorded on the consolidated balance sheets. When the Corporation revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortized over the remaining (revised) lease term or recorded in profit or loss if the right-of-use asset is reduced to zero . (m) Investment Investments in equity securities that have readily determinable fair values are initially and subsequently measured at fair value with changes recognized through the consolidated statement of comprehensive loss. (n) Segment reporting The reporting segments are identified on the basis of information that is reviewed by the chief executive officer to make decisions about resources to be allocated and assess its performance. Accordingly, for management purposes, the Corporation has four reporting segments namely, cryptocurrency mining, sales of energy, colocation services, and AI data centers. Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”), which is comprised of the Corporation’s President and the CEO. The CODM uses segment gross profit (loss), working capital, and EBITDA to assess the performance of, manage the operations of, and allocate capital and operational resources to the Corporation’s four reportable segments. EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization. (o) Financial instruments The Corporation’s financial instruments include cash and cash equivalents, accounts receivable, deposits, investments, accounts payable and accrued liabilities, deposits payable, loans payable, warrant liabilities, and obligations to issue warrants. Financial instruments are recognized when the Corporation becomes a party to the contractual provisions of the instrument and are initially measured at fair value. Financial assets and financial liabilities are classified at initial recognition based on the characteristics of the contractual cash flows and the Corporation’s accounting elections under U.S. GAAP. Financial assets are subsequently measured either at amortized cost or at fair value. Financial assets are measured at amortized cost when the asset represents a contractual right to receive cash and the Corporation expects to collect substantially all contractual cash flows. Cash and cash equivalents, accounts receivable, and deposits are measured at amortized cost. F- 14 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (o) Financial instruments (continued) Financial assets that do not meet the criteria for amortized cost measurement are measured at fair value, with changes in fair value recognized in earnings unless otherwise required by U.S. GAAP. The Corporation does not have any financial assets classified as available-for-sale. Financial assets Financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. The primary measurement categories for financial assets are measured at amortized cost, fair value through other comprehensive income (loss) (“FVTOCI”) and fair value through profit and loss (“FVTPL”). Financial assets are classified as either financial assets at FVTPL, amortized cost, or FVTOCI. The Corporation determines the classification of its financial assets at initial recognition. The Corporation does not have any financial assets categorized as FVTOCI. ● Amortized cost Financial assets are classified as measured at amortized cost if both of the following criteria are met: 1) the object of the Corporation’s business model for these financial assets is to collect their contractual cash flows; and 2) the asset’s contractual cash flows represent “solely payments of principal and interest”. After initial recognition, these are measured at amortized cost using the effective interest rate method. Discounting is omitted where the effect of discounting is immaterial. The Corporation’s cash, amounts receivable and deposits are classified as financial assets and measured at amortized cost. Revenues from these financial assets are recognized in financial revenues, if any. Financial liabilities Financial liabilities include accounts payable and accrued liabilities, deposits payable, loans payable, warrant liabilities, and obligations to issue warrants. Financial liabilities are initially recorded at fair value and subsequently measured at amortized cost unless the liability is required to be measured at fair value under U.S. GAAP. Liability-classified warrants and obligations to issue warrants are classified as financial liabilities and measured at fair value, with changes in fair value recognized in earnings each reporting period, as these instruments do not meet the criteria for equity classification. All other financial liabilities are measured at amortized cost using the effective interest method. Fair Value Financial instruments recorded at fair value on the balance sheets are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: ● Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; ● Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and ● Level 3 – inputs for the assets or liability that are not based on observable market data (unobservable inputs). F- 15 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (p) Loss per share The Corporation presents basic and diluted loss per share data for its subordinate voting shares, calculated by dividing the loss attributable to common shareholders of the Corporation by the weighted average number of subordinate voting shares and proportionate voting shares outstanding during the period. Diluted loss per share is determined by adjusting the weighted average number of subordinate voting shares and proportionate voting shares outstanding to assume conversion of all dilutive potential subordinate voting shares. The Corporation has excluded other potentially dilutive shares, which include warrants to purchase common shares, outstanding stock options, and convertible debt from the number of common shares outstanding as their inclusion in the computation for all periods would be anti-dilutive due to net losses incurred. (q) Share-based compensation The Corporation issues equity awards including stock options and restricted share units to certain of its employees, directors, officers, and consultants. The Corporation measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period on a straight-line basis. The Corporation has elected to account for forfeitures of awards as they occur. The Corporation utilizes the Black-Scholes method to estimate the fair value of stock options. The use of Black-Scholes method requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. (r) Non-controlling interest Non-controlling interest represents the minority shareholders’ interest in the Corporation’s less than wholly-owned subsidiary. On initial recognition, non-controlling interest is measured at its proportionate share of the acquisition-date fair value of identifiable net assets of the related subsidiary acquired by the Corporation. Subsequent to the acquisition date, adjustments are made to the carrying amount of non-controlling interest for the minority shareholders’ share of changes to the subsidiary’s equity. Changes in the Corporation’s ownership interest that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests shall be adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received shall be recognized directly in equity and attributed to the owners of the parent. (s) Income taxes Income taxes are recorded in accordance with ASC 740, Income Taxes, which provides for deferred taxes using an asset and liability approach. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Tax benefits claimed or expected to be claimed on a tax return are recorded in the Corporation’s consolidated financial statements. A tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Uncertain tax positions have had no impact on the Corporation’s consolidated financial condition, results of comprehensive loss or cash flows. F- 16 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (t) Warrants The Corporation accounts for warrants by first assessing whether the warrants meet all of the requirements for equity classification, including whether the warrants are indexed to the Corporation’s own subordinate voting shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Corporation’s control, among other conditions for equity classification. This assessment is conducted at the time of issuance of the warrants and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that do not meet all the criteria for equity classification, such warrants are required to be as a liability initially at their fair value on the date of issuance and subsequently remeasured to fair value on each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized on the consolidated statements of comprehensive loss in the period of change. (u) Recently announced accounting pronouncements not yet adopted The Corporation continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement may affect the Corporation’s financial reporting, the Corporation undertakes an analysis to determine any required changes to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Corporation’s Consolidated Financial Statements properly reflect the change. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires additional disclosures of certain expenses in the notes of the financial statements, to provide enhanced transparency into the expense captions presented on the Consolidated Statements of Operations. Additionally, in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), to clarify the effective date of ASU 2024-03. The new standard is effective for the Corporation for its annual periods beginning January 1, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted. The Corporation is currently evaluating the impact of adopting the standard. There were no other significant updates to the recently issued accounting standards which may be applicable to the Corporation. Although there are several other new accounting pronouncements issued or proposed by the FASB, the Corporation does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results. (v) Critical accounting judgements, estimates and assumptions The preparation of these financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the year in which the estimate is revised and future years if the revision affects both current and future years. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances. F- 17 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (v) Critical accounting judgements, estimates and assumptions (continued) Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: Significant judgements (i) Income from digital currency mining The Corporation recognizes income from digital currency mining from the provision of transaction verification services within digital currency networks, commonly termed “cryptocurrency mining”. As consideration for these services, the Corporation receives digital currency from each specific network in which it participates (“coins”). Income from digital currency mining is measured based on the fair value of the coins received. The fair value is determined using the average price of the coin on the date of contract inception. The coins are recorded on the consolidated balance sheets, as digital currencies, at their fair value less costs to sell and re- measured at each reporting date. Revaluation gains or losses, as well as gains or losses on the sale of coins for traditional (fiat) currencies are included in profit or loss in accordance with the Corporation’s treatment of its digital currencies as a traded commodity. (ii) Income, value added, withholding and other taxes The Corporation is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Corporation’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Corporation recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Corporation’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Corporation’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the asset can be utilized. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Developments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods. We recognize the tax benefit from an uncertain tax position in accordance with ASC 740, Income Taxes, only if it is more likely than not that the tax position will be sustained on examination by the applicable taxing authority, including resolution of the appeals or litigation processes, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit for each such position that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Many factors are considered when evaluating and estimating the tax positions and tax benefits. Such estimates involve interpretations of regulations, rulings, case law, etc. and are inherently complex. Our estimates may require periodic adjustments and may not accurately anticipate actual outcomes as resolution of income tax treatments in individual jurisdictions typically would not be known for several years after completion of any fiscal year. We believe the judgments and estimates discussed above are reasonable. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. F- 18 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 2. Basis of Presentation and Summary of Significant Accounting Policies (Continued) (v) Critical accounting judgements, estimates and assumptions (continued) (iii) Impairment of property, plant and equipment Management applies judgment in assessing whether indicators of impairment exist for property, plant and equipment, including assets under construction. The Corporation reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. This assessment requires consideration of internal and external factors such as changes in the expected use of assets, operating performance, market conditions, and strategic plans. As at December 31, 2025, management concluded that no impairment indicators existed for the Corporation’s property, plant and equipment. Significant estimates (i) Useful lives of property, plant and equipment Depreciation of data miners and equipment are an estimate of its expected life. In order to determine the useful life of computing equipment, assumptions are required about a range of computing industry market and economic factors, including required hashrates, technological changes, availability of hardware and other inputs, and production costs. (ii) Warrant liability The Corporation uses the Black-Scholes method to determine the fair value of the warrant liability. The Black-Scholes method requires significant judgement in determining the fair value such as volatility and risk-free rate. A change in these inputs could lead to significant change in the fair value of the warrant liability. F- 19 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 3. Digital currencies The Corporation’s holdings of digital currencies consist of the following: As at December 31, 2025 As at December 31, 2024 Bitcoin $ 11,812,321 $ 4,525,416 Ethereum 3,001,859 - $ 14,814,180 $ 4,525,416 The continuity of digital currencies was as follows: Number of Ethereum Amount Number of Bitcoin Amount Total Balance, December 31, 2023 - $ - 19 $ 822,884 $ 822,884 Digital currencies mined - - 188 10,318,500 10,318,500 Digital currencies received from colocation services - - 126 9,377,476 9,377,476 Digital currencies received for electricity sales - - 33 2,003,106 2,003,106 Digital currencies traded for cash - - ( 286 ) ( 18,507,626 ) ( 18,507,626 ) Digital currencies paid for services - - ( 26 ) ( 1,773,027 ) ( 1,773,027 ) Digital currencies for loan repayment - - ( 6 ) ( 273,360 ) ( 273,360 ) Gain on sale of digital currencies - - - 1,658,772 1,658,772 Revaluation adjustment - - - 898,691 898,691 Balance, December 31, 2024 - - 48 4,525,416 4,525,416 Digital currencies mined and staked (1) 7 27,128 34 3,496,250 3,523,378 Digital currencies received from colocation services - - 156 15,649,009 15,649,009 Acquisition of digital currencies 1,002 4,245,883 16 1,911,631 6,157,514 Digital currencies paid for services - - ( 9 ) ( 843,665 ) ( 843,665 ) Digital currencies traded for cash - - ( 111 ) ( 10,972,014 ) ( 10,972,014 ) Digital currencies remitted as per Miner agreement - - ( 1 ) ( 145,199 ) ( 145,199 ) Gain on sale of digital currencies - - - 1,029,017 1,029,017 Revaluation adjustment - ( 1,271,152 ) - ( 2,838,124 ) ( 4,109,276 ) Balance, December 31, 2025 1,009 $ 3,001,859 133 $ 11,812,321 $ 14,814,180 (1) During the year ended December 31, 2025, the Corporation staked 7 Ethereum. The cost bases of the Corporation’s holdings of digital currencies consist of: As at As at December 31, December 31, 2025 2024 Bitcoin $ 14,301,245 $ 3,878,178 Ethereum 4,273,011 - $ 18,574,256 $ 3,878,178 F- 20 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 4. Amounts receivable and other assets As at As at December 31, December 31, 2025 2024 Utility deposits $ 5,228,270 $ 1,942,476 Equipment deposit 8,496,528 Prepaid expenses 56,585 142,066 Accounts receivable 1,136,972 1,836 Other receivable 382,715 169,037 Interest receivable - 72,000 15,301,070 2,327,415 Long-term deposits and prepaid expenses ( 13,724,798 ) ( 1,942,476 ) $ 1,576,272 $ 384,939 The Corporation uses the single expected credit loss impairment model, which is based on changes in credit quality since initial application. The Corporation assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Corporation considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Corporation in full or when the financial asset is more than 90 days past due. The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Corporation determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. 5. Property, plant and equipment Land and buildings (1) Data miners Equipment (1) Leasehold improvement Power plant in use (2) Total Cost December 31, 2023 $ 7,094,339 $ 31,895,779 $ 21,392,207 $ 1,079,542 $ 4,643,800 $ 66,105,667 Additions - - 3,200,000 - 590,777 3,790,777 December 31, 2024 7,094,339 31,895,779 24,592,207 1,079,542 5,234,577 69,896,444 Additions 1,718,524 1,100,550 1,962,022 - 1,405,657 6,186,753 Disposal - ( 14,041,665 ) - - - ( 14,041,665 ) December 31, 2025 $ 8,812,863 $ 18,954,664 $ 26,554,229 $ 1,079,542 $ 6,640,234 $ 62,041,532 Accumulated depreciation December 31, 2023 $ 103,928 $ 22,763,032 $ 7,148,323 $ 401,582 $ 327,447 $ 30,744,312 Depreciation 387,290 8,733,406 5,913,455 105,318 368,920 15,508,389 December 31, 2024 491,218 31,496,438 13,061,778 506,900 696,367 46,252,701 Depreciation 403,233 399,341 5,469,650 105,318 447,054 6,824,596 Disposal - ( 14,041,665 ) - - - ( 14,041,665 ) December 31, 2025 $ 894,451 $ 17,854,114 $ 18,531,428 $ 612,218 $ 1,143,421 $ 39,035,632 Net carrying value As at December 31, 2024 $ 6,603,121 $ 399,341 $ 11,530,429 $ 572,642 $ 4,538,210 $ 23,643,743 As at December 31, 2025 $ 7,918,412 $ 1,100,550 $ 8,022,801 $ 467,324 $ 5,496,813 $ 23,005,900 (1) During the year ended December 31, 2025, the Corporation made capital investments related to the development of its Tier III AI data centers segment (refer to note 20) and are included within property, plant and equipment. Depreciation is not recognized on the AI data center assets that are not yet available for their intended use. The carrying amount of these assets is $ 1,386,547 . (2) At December 31, 2024, the Corporation had plant and equipment with a carrying amount of $ 4,538,210 that was temporarily idle due to maintenance and repairs. The Power Plant was brought back into service during January 2025. F- 21 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 6. Right-of-use assets and lease liabilities The Corporation entered into a lease agreement dated April 1, 2022, with TXMA International LLC, a company controlled by the chief executive officer. The present value of the lease liability as at December 31, 2025 was $ nil (December 31, 2024 - $ 126,797 ). Payments made during the year ended December 31, 2025, totaled $ 35,000 (December 31, 2024 - $ 109,980 ). On July 31, 2025, the lease was terminated resulting in the derecognition of the operating right-of-use asset and operating lease liability. During the year ended December 31, 2022 the Corporation entered a lease for a warehouse facility. The lease was prepaid resulting in a right-of-use asset and no corresponding lease liability. The lease is classified as a finance lease. The finance lease right-of-use asset is included in property, plant and equipment on the consolidated balance sheets. The lease agreements do not contain any material residual value guarantees or material restrictive covenants. The following table summarizes the operating lease liabilities recorded within the Corporation’s consolidated financial statements as of December 31, 2025 and 2024: As at December 31, As at December 31, 2025 2024 Balance, beginning of period $ 126,797 $ 447,514 Interest 5,742 13,271 Lease payments ( 35,000 ) ( 109,980 ) Modification of lease ( 97,539 ) ( 224,008 ) Balance, end of period $ - $ 126,797 Current portion $ - $ 51,112 Non-current portion - 75,685 Total lease liabilities $ - $ 126,797 The following table summarizes the operating right-of-use assets recorded within the Corporation’s consolidated financial statements as of December 31, 2025 and 2024: As at December 31, As at December 31, 2025 2024 Balance, beginning of period $ 117,205 $ 391,444 Depreciation ( 29,303 ) ( 50,231 ) Modification of lease ( 87,902 ) ( 224,008 ) Balance, end of period $ - $ 117,205 F- 22 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 6. Right-of-use assets and lease liabilities (Continued) The components of lease cost for the years ended December 31, 2025 and 2024 are as follows: Year Ended December 31, 2025 2024 Finance lease cost Amortization of right-of-use asset $ 51,965 $ 51,966 Interest on lease liability - - Operating lease cost 33,705 57,780 Variable lease cost - - Short-term lease cost - - Total lease cost $ 85,670 $ 109,746 Other information: Operating lease Weighted average remaining lease term (in years) - 2.25 Weighted average discount rate 9.00 % 9.00 % Operating cash flows - operating leases 35,000 60,000 There are no future lease payments as at December 31, 2025. 7. Intangible asset Intangible asset relates to the right-of-use of an electric power facility for a period of 156 months. As at December 31, 2025, there were 84 months remaining of the amortization period. As at December 31, As at December 31, 2025 2024 Cost $ 1,680,000 $ 1,680,000 Accumulated amortization ( 753,661 ) ( 624,431 ) Intangible assets, net $ 926,339 $ 1,055,569 During the year ended December 31, 2025 and 2024 the Corporation recognized amortization expense of $ 129,230 and $ 129,229 , respectively, related to intangible assets. F- 23 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 8. Investment In December 2021, the Corporation entered into an agreement for a Secured Convertible Promissory Note (“Note”) with principal of $ 800,000 . The Note accrued interest at a rate of 6 % per annum, with 3 % payable in cash every calendar quarter and 3 % payable in notes (note 4). The Note was converted into Series C Preferred Stock (“Shares”) of the issuer effective October 1, 2023, with 8,000 warrants issued to the Corporation. The Shares are secured by the assets of the issuer. As at December 31, 2025, the fair value of the Shares and warrants was estimated to be $ 1,543,331 . As at December 31, As at December 31, 2025 2024 Balance, beginning of period $ 900,844 $ 850,685 Change in fair value of investment 642,487 50,159 Balance, end of period $ 1,543,331 $ 900,844 9. Loans payable As at As at December 31, December 31, 2025 2024 Balance, beginning of the period $ 77,564 $ 610,340 Repayment of loans ( 78,130 ) ( 590,919 ) Interest 566 38,413 Change in fair value of loans payable - 19,730 Balance, end of the period $ - $ 77,564 On February 7, 2023, the Corporation completed the acquisition of a 60 MW power plant in North Tonawanda, New York. The Corporation assumed a loan agreement with Niagara Mohawk Power Corporation dated September 1, 2020 in connection with a business combination. The Corporation is required to make minimum payments of $ 2,500 per month, with the outstanding balance of $ nil and $ 77,564 as at December 31, 2025 and 2024, respectively. 10. Mortgage payable In June 2022, the Corporation’s incremental borrowing rate applied was estimated to be 7 % per annum. The mortgage does not bear interest, is repayable by monthly instalments of $ 44,500 and matured in September 2024. The mortgage was secured by the powerplant. As at As at December 31, December 31, 2025 2024 Balance, beginning of period $ - $ 389,064 Interest - 11,436 Payments - ( 400,500 ) Balance, end of period $ - $ - F- 24 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 11. Warrant liabilities The Corporation has warrants classified as financial liabilities as they are not considered to be indexed to the common shares of the Corporation, due to the exercise price of the warrants being denominated in a currency other than the Corporation’s functional currency. Therefore the Corporation records these warrants as financial liabilities measured at fair value upon initial recognition. At each subsequent reporting date, the warrants are re-measured at fair value and the change in fair value is recognized through profit or loss. Upon warrant exercise, the fair value previously recognized in warrant liabilities is transferred from warrant liabilities to additional paid-in capital. The following table summarizes the changes in the warrant liabilities for the Corporation’s warrants for the years ending December 31, 2025 and December 31, 2024: Number of warrants Amount Balance, December 31, 2023 - $ - Warrants issued 3,636,363 2,316,965 Revaluation of warrant liabilities - 723,529 Balance, December 31, 2024 3,636,363 3,040,494 Warrants issued 1,492,190 3,215,255 Warrants exercised ( 3,653,410 ) ( 7,324,588 ) Revaluation of warrant liabilities - 3,110,015 Foreign currency translation - 256,754 Balance, December 31, 2025 1,475,143 $ 2,297,930 The fair value of the Corporation’s warrants has been determined using the Black-Scholes method and the following weighted average assumptions: As at December 31, As at December 31, 2025 2024 Spot price (in CAD$) $ 3.50 $ 2.16 Risk-free interest rate 2.64 % 2.80 % Expected annual volatility 121 % 104 % Expected life (years) 2.48 2.62 Dividend nil nil The following table reflects the Corporation’s warrants classified as liabilities outstanding and exercisable as at December 31, 2025. Expiry date Warrants outstanding and exercisable Exercise price August 15, 2027 522,727 US$ 2.00 February 7, 2028 712,031 US$ 3.66 July 21, 2030 240,385 US$ 3.59 1,475,143 The following table reflects the Corporation’s warrants classified as liabilities outstanding and exercisable as at December 31, 2024: Expiry date Warrants outstanding and exercisable Exercise price August 15, 2027 3,636,363 US$ 2.00 F- 25 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 12. Share capital a) Authorized share capital Unlimited subordinate voting shares without par value and conferring 1 vote per share. Unlimited proportionate voting shares without par value, conferring 200 votes per share, convertible at the holder’s option into subordinate voting shares on a basis of 200 subordinate voting shares for 1 proportionate voting shares. b) Subordinate voting shares and proportionate voting shares issued Year ended December 31, 2025 (i) On February 7, 2025, the Corporation completed a private placement consisting of 2,503,601 units of the Corporation at a purchase price of $ 2.64 per unit for gross proceeds of $ 6,609,500 . Each unit is comprised of one subordinate voting share of the Corporation and one half warrant, with each warrant entitling the holder to purchase one additional share. The warrants have an exercise price of $ 3.66 per share and an exercise period of three years from the issuance date. The warrants were determined to be freestanding financial instruments and classified as warrant liabilities, based on their estimated fair value at issuance, with the remaining proceeds allocated to shareholders’ additional paid-in capital. (ii) On July 23, 2025, the Corporation completed a registered direct offering of 4,005,807 subordinate voting shares at an offering price of US$ 3.12 per share resulting in gross proceeds of $ 12,498,118 and 801,889 pre-funded warrants at a price of US$ 3.119 for gross proceeds of $ 2,501,092 . Each pre-funded warrant entitles the holder to acquire one subordinate voting share of the Corporation at a nominal exercise price of $ 0.001 per share. The Corporation paid a 7 % cash commission and issuance costs of $ 1,463,596 and issued 240,385 broker warrants, with each warrant exercisable for one share at a price of US$ 3.588 per share commencing on January 17, 2026 and expiring on July 21, 2030 . The 240,385 broker warrants were assigned a value of CAD$ 4.126 per warrant on the date of grant with the following assumptions and inputs: share price of CAD$ 4.75 ; exercise price of US$ 3.588 ; expected dividend yield of 0 %; expected volatility of 132 % which is based the Corporation’s historical data; risk-free interest rate of 3.10 %; and an expected average life of five years . On December 19, 2025, the Corporation entered into a settlement agreement with a broker relating to this financing. The settlement agreement relates to a dispute concerning the compensation owed to that broker relating to the July 2025 financing. As part of the settlement agreement, the Corporation paid $ 840,000 in cash and was obligated to issue a warrant exercisable for up to 269,231 subordinate voting shares with a per share exercise price of US$ 2.85 and a term of five years. The obligation to issue warrant is valued using the Black-Scholes method at $ 599,603 . The cash payment and obligation to issue the warrant were capitalized into additional paid-in capital as share issuance costs relating to the July 23, 2025 offering. The warrant was issued on February 20, 2026. (iii) On May 30, 2025, the Corporation entered into an at-the-market sales agreement with A.G.P./Alliance Global Partners (the “Agent”), pursuant to which the Corporation may issue and sell through the Agent from time to time such number of subordinate voting shares of the Corporation having an aggregate offering price of up to US$ 100 million. By a prospectus supplement that the Corporation filed in November 2025, the at-the-market offering program was upsized to allow the Corporation to sell through Agent subordinate voting shares having an aggregate offering price of up to US$ 200 million. The Agent is entitled to a cash commission of up to 3 % on the aggregate gross proceeds raised. During the year ended December 31, 2025, the Corporation issued 24,078,450 subordinate voting shares at an average share price of $ 3.80 for a total aggregate of $ 91,549,033 pursuant to the at-the-market equity program. F- 26 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 12. Share capital (Continued) Year ended December 31, 2024 (iv) On August 15, 2024, the Corporation completed a private placement consisting of 3,636,363 units of the Corporation at a purchase price of $ 1.10 per unit for gross proceeds of $ 4 million Each unit is comprised of one subordinate voting share of the Corporation and one warrant, with each warrant entitling the holder to purchase one additional share. The warrants have an exercise price of $ 2.00 per share and an exercise period of three years from the issuance date. No securities were offered or sold to Canadian residents in connection with the private placement. (v) During the year ended December 31, 2024, the Corporation issued 3,600 subordinate voting shares at an average share price of $ 1.52 for a total aggregate of $ 5,457 pursuant to the at-the-market equity program. 13. Warrants Classified as Equity Number of Warrants Weighted Average Exercise Price (CAD$) Balance, December 31, 2023 10,124,330 7.12 Expired ( 4,427,903 ) 7.70 Balance, December 31, 2024 5,696,427 6.67 Issued 801,889 0.001 Exercised ( 801,889 ) 0.001 Expired ( 5,696,427 ) 6.67 Balance, December 31, 2025 - - As of December 31, 2025, no equity-classified warrants are outstanding. The following table reflects the warrants issued and outstanding as of December 31, 2024: Number of Weighted Average Warrants Outstanding Exercise Price (CAD$) Contractual Life (years) Expiry Date 311,526 8.03 0.27 April 9, 2025 (1) 2,112,773 7.11 0.27 April 9, 2025 242,380 6.25 0.69 September 9, 2025 (1) 3,029,748 6.25 0.69 September 9, 2025 5,696,427 6.67 0.51 (1) Broker warrants. F- 27 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 14. Stock options and restricted share units The following table presents share based compensation expense by instrument type: Year Ended December 31, 2025 2024 Stock options $ 6,282,203 $ - Restricted share units 1,749,073 2,547,123 $ 8,031,276 $ 2,547,123 (a) Stock options The Corporation has a stock option plan whereby the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10 % of the Corporation’s issued and outstanding shares. The exercise price shall be no less than the discount market price as determined in accordance with relevant exchange policies. These option awards generally vest immediately or up to 1 year of continuous service. The following table reflects the continuity of stock options for the periods presented below: Number of Stock Options Weighted Average Exercise Price (CAD$) Balance, December 31, 2023 692,170 5.09 Expired / cancelled ( 209,216 ) - Balance, December 31, 2024 482,954 4.60 Granted 3,012,500 3.42 Exercised ( 291,860 ) 2.31 Expired / cancelled ( 259,801 ) 3.27 Balance, December 31, 2025 2,943,793 3.74 The fair value of options granted for the year ended December 31, 2025 and 2024 was $ 6,406,903 and $ nil , respectively. The fair value of the Corporation’s options has been determined using the Black-Scholes method and the following weighted average assumptions: Granted in Granted in 2025 2024 Spot price (in CAD$) $ 3.43 $ nil Risk-free interest rate 2.84 % nil % Expected annual volatility 131 % nil % Expected life (years) 5.00 nil Dividend nil nil Fair vale of option $ 2.13 $ nil The aggregate intrinsic value of stock options outstanding and exercisable as at December 31, 2025 is $ 1,314,721 . As of December 31, 2025, there was $ 124,366 of total unrecognized compensation cost related to nonvested options granted to be recognized over the next 0.5 years. F- 28 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 14. Stock options and restricted share units (Continued) The following table reflects the stock options issued and outstanding as of December 31, 2025: Expiry Date Exercise Price (CAD$) Weighted Average Remaining Contractual Life (years) Number of Options Outstanding Number of Options Vested (exercisable) Number of Options Unvested January 5, 2026 3.75 0.01 49,999 49,999 - March 25, 2026 7.47 0.23 93,664 93,664 - May 17, 2026 7.35 0.38 35,131 35,131 - June 22, 2026 4.20 0.47 19,999 19,999 - March 5, 2030 US$ 1.25 4.18 200,000 200,000 - June 6, 2030 2.09 4.43 1,040,000 1,040,000 - August 18, 2030 3.23 4.63 25,000 - 25,000 August 27, 2030 US$ 2.25 4.66 50,000 - 50,000 November 19, 2030 4.90 4.89 1,430,000 1,430,000 - 3.74 4.36 2,943,793 2,868,793 75,000 The following table reflects the stock options issued and outstanding as of December 31, 2024: Expiry Date Exercise Price (CAD$) Weighted Average Remaining Contractual Life (years) Number of Options Outstanding Number of Options Vested (exercisable) Number of Options Unvested February 14, 2025 2.88 0.12 158,333 158,333 - January 5, 2026 3.75 1.01 150,828 150,828 - March 25, 2026 7.47 1.23 101,997 101,997 - May 17, 2026 7.35 1.38 43,464 43,464 - June 22, 2026 4.20 1.47 28,332 28,332 - 4.60 0.83 482,954 482,954 - (b) Restricted share units The Corporation has an RSU plan whereby there is a fixed cap of shares that can be granted under the plan. The exercise price shall be no less than the discount market price as determined in accordance with relevant exchange policies. The following table reflects the continuity of RSUs for the periods presented below: Number of RSUs Balance, December 31, 2023 1,036,900 Granted (i) 2,444,000 Cancelled ( 159,667 ) Converted ( 492,897 ) Balance, December 31, 2024 2,828,336 Granted (ii) 745,000 Converted ( 971,494 ) Repurchased ( 266,666 ) Cancelled ( 51,233 ) Balance, December 31, 2025 2,283,943 (i) During the year ended December 31, 2024, the Corporation granted 2,444,000 RSUs to officers, directors, employees and advisors. These RSUs vest one-third on each of the first, second and third anniversaries of the date of grant. The grant date fair value of the RSUs was $ 4,880,453 , which was measured based on the quoted price of the Corporation’s shares on the date of grant. (ii) During the year ended December 31, 2025, the Corporation granted 745,000 RSUs to consultants. These RSUs vest one-third on each of the first, second and third anniversaries of the date of grant. The grant date fair value of the RSUs was $ 2,510,317 , which was measured based on the quoted price of the Corporation’s shares on the date of grant. F- 29 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 14. Stock options and restricted share units (Continued) The aggregate intrinsic value of RSUs outstanding as at December 31, 2025 is $ 5,824,055 . As of December 31, 2025, there was $ 4,823,421 of total unrecognized compensation cost related to nonvested RSUs granted to be recognized over the next 2.25 years. The fair value of RSUs is generally measured as the grant date price of the Corporation’s shares. For the year ended December 31, 2025, the Corporation recorded share based compensation of $ 1,749,073 related to vesting of RSUs, (year ended December 31, 2024 - $ 2,547,123 ). 15. General and administrative expenses General and administrative expenses are comprised of: Year Ended December 31, 2025 2024 Office and administrative expenses $ 5,225,144 $ 2,410,310 Professional fees 2,769,790 2,233,333 Regulatory fees 308,925 85,798 Share based compensation 8,031,276 2,547,123 $ 16,335,135 $ 7,276,564 16. Loss per share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of subordinate voting shares outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of subordinate voting shares during the period, plus common stock equivalents, outstanding during the period. If the Corporation reports a net loss, the computation of diluted loss per share excludes the effect of dilutive subordinate voting share equivalents, as their effect would be anti-dilutive. The following table sets forth the computation of basic and diluted loss per share attributable to subordinate voting shareholders: Year Ended December 31, 2025 2024 Numerator Net loss for the year $ ( 28,356,223 ) $ ( 12,391,298 ) Less: Net loss attributable to non-controlling interest - - Net loss attributable to common shareholders - basic and diluted $ ( 28,356,223 ) $ ( 12,391,298 ) Denominator Weighted average shares used in computing net loss per share attributable to common shareholders - basic and diluted 44,457,316 30,704,548 Net loss per share attributable to common shareholders - basic and diluted $ ( 0.64 ) $ ( 0.40 ) F- 30 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 16. Loss per share (Continued) In periods with a reported net loss, the effects of stock options, warrants, unvested restricted share units, are excluded and diluted loss per share is equal to basic loss per share. The following is a summary of the subordinate voting share equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share: Year Ended December 31, 2025 2024 Liability-classified warrants outstanding 1,475,143 3,636,363 Equity-classified warrants outstanding - 5,696,427 Stock options outstanding 2,943,793 482,954 Unvested restricted share units 2,283,943 2,828,336 6,702,879 12,644,080 17. Related party transactions Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount, being the amount agreed to between the related parties. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Corporation, directly or indirectly. Key management personnel include the Corporation’s executive officers and members of the Board of Directors. Remuneration of key management personnel of the Corporation was as follows: Year Ended December 31, 2025 2024 Professional fees (1) $ 195,000 $ 136,081 Salaries (1) 2,683,973 858,479 Directors fees 99,529 - Share based compensation (2) 6,756,814 1,564,208 $ 9,735,316 $ 2,558,768 (1) Represents the professional fees and salaries paid to officers and directors in cash and BTC. During the year ended December 31, 2025 the Corporation paid 9 BTC (year ended December 31, 2024 - 26 BTC) as compensation for the services provided in by officers and directors with a fair value of $ 843,665 (year ended December 31, 2024 - $ 1,773,027 ). (2) Represents the share-based compensation for officers and directors. F- 31 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 18. Cash flow supplemental information Year Ended December 31, 2025 2024 Digital currencies items Digital currencies mined and staked $ ( 3,523,378 ) $ ( 10,318,500 ) Bitcoin received from colocation services ( 15,649,009 ) ( 9,377,476 ) Bitcoin received for electricity sales - ( 2,003,106 ) Services paid in digital currencies 843,665 1,773,027 Gain on sale of digital currencies ( 1,029,017 ) ( 1,658,772 ) Digital currencies remitted as per Miner agreement 145,199 - Gain on revaluation of digital currencies 4,109,276 ( 898,691 ) $ ( 15,103,264 ) $ ( 22,483,518 ) Working capital items Amounts receivable and prepaid expenses $ ( 1,863,532 ) $ 699,156 Accounts payable and accrued liabilities ( 152,178 ) 1,617,639 Income tax receivable - 124,337 Deposit payable - 717,342 $ ( 2,015,710 ) $ 3,158,474 Other supplemental information Interest paid $ - $ - Taxes paid $ - $ - 19. Non-controlling interest The Corporation incorporated US Data Centers Inc., as a subsidiary on September 20, 2024. Subsequent to December 31, 2024, the Corporation dissolved that subsidiary, and funds of approximately $ 1,000,000 were distributed back to the original shareholders upon dissolution. During the year ended December 31, 2025, the Corporation incorporated a new subsidiary with the same name. F- 32 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 20. Segmented reporting The Corporation has four operating segments being cryptocurrency mining, sales of energy and electricity, colocation services, and Tier III AI data centers located in the United States. During the year ended December 31, 2025, the Corporation added a new operating segment related to Tier III AI data center operations. The AI data center segment is in the development phase and has not yet commenced commercial operations as of December 31, 2025. As a result, this segment did not generate revenue during the year ended December 31, 2025. The Corporation’s CODM evaluates segment performance and allocates resources based on segment revenue, net loss, and total assets. Accordingly, the Tier III AI data center segment has been included as a reportable segment for the year ended December 31, 2025. Year Ended December 31, 2025 Cryptocurrency mining Sales of energy and electricity Colocation services Tier III AI project Total Revenue $ 3,523,378 $ 13,195,949 $ 17,468,899 $ - $ 34,188,226 Cost of revenue ( 2,026,237 ) ( 18,378,656 ) ( 10,046,069 ) - ( 30,450,962 ) Depreciation and amortization ( 6,506,773 ) ( 447,054 ) - - ( 6,953,827 ) Net loss ( 7,549,460 ) ( 14,196,255 ) ( 6,610,508 ) - ( 28,356,223 ) EBITDA ( 1,328,562 ) ( 13,749,201 ) ( 6,610,508 ) - ( 21,688,271 ) Total assets 50,707,889 10,387,735 61,994,641 11,023,314 134,113,579 Sales of Cryptocurrency energy and Colocation Tier III Year Ended December 31, 2024 mining electricity services AI project Total Revenue $ 10,318,500 $ 10,893,584 $ 15,790,179 $ - $ 37,002,263 Cost of revenue ( 7,192,288 ) ( 14,513,076 ) ( 11,006,203 ) - ( 32,711,567 ) Depreciation and amortization ( 15,268,695 ) ( 368,921 ) - - ( 15,637,616 ) Net loss ( 13,186,861 ) ( 3,988,413 ) 4,783,976 - ( 12,391,298 ) EBITDA 2,081,834 ( 3,619,492 ) 4,783,976 - 3,246,318 Total assets 28,168,234 6,149,854 - - 34,318,088 21. Financial instruments and risk management Risks Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Corporation’s primary exposure to credit risk is on its cash and amounts receivable. The cash is held in multiple accounts which are FDIC insured up to $ 3 million each. Although the Corporation’s cash balances may at times exceed insured limits, management monitors the financial condition of the institutions where cash is held and believes the Corporation’s exposure to credit risk is not significant. The Corporation believes no impairment is necessary in respect of amounts receivable, deposits and promissory note receivable as balances are monitored on a regular basis with the result that exposure to bad debt is insignificant. F- 33 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 21. Financial instruments and risk management (Continued) Liquidity risk Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk by maintaining cash balances to ensure that it is able to meet its short-term and long-term obligations as and when they fall due. The Corporation manages cash projections and regularly updates projections for changes in business and fluctuations caused in digital currency prices and exchange rates. The following table summarizes the expected maturity of the Corporation’s significant financial liabilities and other liabilities based on the remaining period from the balance sheet date to the contractual maturity date: Payments by period As at December 31, 2025 Less than 1 year 1-3 years 4-5 years More than 5 years Total Carrying Value Accounts payable and accrued liabilities $ 6,350,923 $ - $ - $ - $ 6,350,923 $ 6,350,923 Deposit payable - 2,203,526 - - 2,203,526 2,203,526 $ 6,350,923 $ 2,203,526 $ - $ - $ 8,554,449 $ 8,554,449 Payments by period As at December 31, 2024 Less than 1 year 1-3 years 4-5 years More than 5 years Total Carrying Value Accounts payable and accrued liabilities $ 6,579,948 $ - $ - $ - $ 6,579,948 $ 6,579,948 Deposit payable - 2,203,526 - - 2,203,526 2,203,526 Lease liabilities 60,000 80,000 - - 140,000 126,797 Loan payable· 77,564 - - - 77,564 77,564 $ 6,717,512 $ 2,283,526 $ - $ - $ 9,001,038 $ 8,987,835 Foreign currency risk Currency risk relates to the risk that the fair values or future cash flows of the Corporation’s financial instruments will fluctuate because of changes in foreign exchange rates. Exchange rate fluctuations affect the costs that the Corporation incurs in its operations. As the Corporation operates in an international environment, some of the Corporation’s financial instruments and transactions are denominated in currencies other than an entity’s functional currency. The fluctuation of the Canadian dollar in relation to the US dollar will consequently impact the profitability of the Corporation and may also affect the value of the Corporation’s assets and liabilities and the amount of shareholders’ equity. As at December 31, 2025 and December 31, 2024, the foreign currency risk was considered minimal. F- 34 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 21. Financial instruments and risk management (Continued) Digital currency risk Digital currency prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the global political and economic conditions. The profitability of the Corporation is directly related to the current and future market price of digital currencies; in addition, the Corporation may not be able liquidate its holdings of digital currencies at its desired price if required. A decline in the market prices for digital currencies could negatively impact the Corporation’s future operations. The Corporation has not hedged the conversion of any of its sales of digital currencies. Digital currencies have a limited history and the fair value historically has been very volatile. Historical performance of digital currencies is not indicative of their future price performance. The Corporation’s digital currencies currently consist of Bitcoin and Ethereum. At December 31, 2025, had the market price of the Corporation’s holdings of Bitcoin increased or decreased by 10 % with all other variables held constant, the corresponding asset value increase or decrease respectively would amount to $ 1,181,232 (December 31, 2024 - $ 452,542 ). At December 31, 2025, had the market price of the Corporation’s holdings of Ethereum increased or decreased by 10 % with all other variables held constant, the corresponding asset value increase or decrease respectively would amount to $ 300,186 (December 31, 2024 - $ nil ). Financial Instrument The Corporation measures certain financial and non-financial assets and liabilities at fair value on a recurring or non-recurring basis. The fair values of investments were measured using the cost, market or income approaches. The fair value of the Corporation’s financial instruments, including cash, current portion of amounts receivable, investment, and accounts payable and accrued liabilities approximates their carrying value due to their short-term nature. Deposit payable is due to arm’s length third parties, the fair values of this payable is measured using relevant market input (Level 3). The fair value of deposit payable was calculated using actualized cash flows using market rates in effect at the balance sheet date. Reasonable changes to key assumptions would not have a significant impact. Investment is measured using a market-based valuation approach, utilizing relevant Level 3 market inputs. Digital currencies are measured at fair value using the quoted price on Gemini Exchange (Level 1). Warrant liabilities are measured at fair value using the Black-Scholes method (Level 2). The following tables present information about the Corporation’s assets and liabilities measured at fair value on a recurring basis and the Corporation’s estimated level within the fair value hierarchy for each of those assets and liabilities as of December 31, 2025 and 2024, respectively: As at December 31, 2025 As at December 31, 2024 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Cash $ 78,478,759 $ - $ - $ 1,703,896 $ - $ - Digital currencies $ 14,814,180 $ - $ - $ 4,525,416 $ - $ - Investments $ - $ - $ 1,543,331 $ - $ - $ 900,844 Liabilities Warrant liability $ - $ 2,297,930 $ - $ - $ 3,040,494 $ - Obligation to issue warrants $ - $ 599,603 $ - $ - $ - $ - There were no transfers among Levels 1, 2 or 3 during the years ended December 31, 2025 and 2024. F- 35 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 22. Income taxes For financial reporting purposes, income before taxes includes the following components: Year ended December 31, 2025 2025 2024 United States $ ( 11,364,445 ) $ ( 13,500,171 ) Foreign (Canada) ( 16,991,778 ) 1,108,873 Total $ ( 28,356,223 ) $ ( 12,391,298 ) Income tax expense included in the accompanying Consolidated Statements of Comprehensive Income for the years presented below: Year ended December 31, 2025 2025 2024 Current: Federal $ - $ - Foreign - - State and local $ - - Total $ - $ - Deferred: Federal $ - $ - Foreign - - State and local - - Total $ - $ - Total $ - $ - The Corporation adopted ASC 2023-09 during the year ended December 31, 2025 retrospectively. The reconciliation of the federal statutory rate on the income before income taxes to the effective income tax rate after the adoption of ASU 2023-09 on a retrospective basis is as follows: Year Ended December 31, 2025 Year Ended December 31, 2024 Amount Percent Amount Percent Canadian federal statutory income tax rate $ ( 4,301,694 ) 15.00 % $ ( 1,858,695 ) 15.00 % Domestic Federal Non-taxable and non-deductible items - Canada Statutory income tax differential 1,933,606 ( 6.70 )% ( 740,467 ) 6.00 % Valuation allowance - Federal ( 1,933,606 ) 6.70 % 740,467 ( 6.00 )% Foreign tax effects United States Non-deductible and other expenses 4,374 0.00 % 202,587 ( 1.60 )% Meals and entertainment 8,181 0.00 % 4,670 0.00 % Warrants 653,103 ( 2.30 )% 151,941 1.20 % Valuation allowance - United States 5,407,278 ( 18.90 )% 2,893,001 ( 23.30 )% Statutory income tax differential ( 1,720,677 ) 6.00 % ( 743,478 ) 6.00 % Other ( 50,565 ) 0.20 % ( 21,489 ) 0.20 % Foreign state and local income taxes, net of federal effect - 0.00 % ( 628,537 ) 5.10 % Total $ - 0.00 % $ - 0.00 % F- 36 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 22. Income taxes (Continued) Significant components of the Corporation’s deferred tax assets and liabilities as of December 31 were as follows: As at December 31, As at December 31, 2025 2024 Deferred tax assets: Share issuance costs - Canada $ 1,017,496 $ 320,469 Net operating loss carryforwards - Canada 3,433,079 940,009 Net operating loss carryforwards - United States 12,334,695 8,261,043 Stock based compensation 1,708,123 593,434 Digital currency loan - unrealized gain / (loss) 339,317 293,738 Revaluation of digital currency 1,093,218 - Depreciation 1,801,448 1,976,017 Amortization 257,169 299,735 Lease liabilities - 33,733 Capital loss carryover 2,238,369 2,764,887 Other 72,509 72,509 Total deferred tax assets 24,295,423 15,555,574 Less: Valuation allowance for deferred tax assets ( 22,348,671 ) ( 12,420,466 ) Net deferred tax assets $ 1,946,752 $ 3,135,108 Deferred tax liabilities: Amortization $ ( 246,440 ) $ ( 280,820 ) Right-of-use assets ( 521,071 ) ( 542,691 ) Revaluation of digital currency - ( 239,085 ) Other ( 1,179,241 ) ( 2,072,512 ) Total deferred tax assets $ ( 1,946,752 ) $ ( 3,135,108 ) Net deferred tax assets (liabilities) $ - $ - The Corporation is treated as a United States corporation for United States federal income tax purposes under section 7874 of the U.S. Tax Code and is subject to United States federal income tax. However, for Canadian tax purposes, the Corporation is expected, regardless of any application of section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Income Tax Act (Canada) (the “ITA”) for Canadian income tax purposes. As a result, the Corporation will be subject to taxation both in Canada and the United States. The Corporation has a valuation allowance on all of its deferred tax assets at December 31, 2025 and 2024, which based on the judgement of management is not more-likely than-not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that all or some portion of the deferred assets will not be realized. This ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those deductible temporary differences become deductible. Based on the Corporation’s history of losses and projections for future taxable income, management believes that it is not more-likely than-not that the Corporation will realize the benefits of these deductible temporary differences. The Corporation has gross Canadian operating tax loss carryforwards of $ 15,664,342 . To the extent that the operating tax loss carryforwards are not used, they begin to expire in 2041. As of December 31, 2025, the Corporation has $ 45,820,361 of federal net operating loss carryforwards available, and has state net operating losses of approximately $ 48,043,510 which began to expire in 2041. The Corporation has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. The total amount of unrecognized tax benefits, that is the aggregate tax effect of differences between tax return positions and the benefits recognized in the Corporation’s financial statements, as of December 31, 2025 and 2024 of $ nil and $ nil , respectively. F- 37 Digi Power X Inc. Notes to Consolidated Financial Statements Years Ended December 31, 2025 and 2024 (Expressed in United States Dollars) 22. Income taxes (Continued) The Corporation recognizes accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. During the years ended December 31, 2025 and 2024, the Corporation did not recognize any net interest expense. The Corporation files income tax returns with Canada and its provinces and territories and is generally subject to routine examinations by the Canada Revenue Agency (“CRA”). Income tax returns filed with various provincial jurisdictions are generally open to examination for periods of four to five years subsequent to the filing of the respective returns. The Corporation also files income tax returns in the United States and various state tax jurisdictions. These tax returns are generally open to examination by the relevant tax authorities for three to four years from the date they are filed. The tax filings relating to the Corporation’s U.S. federal and state taxes are currently open to examination for tax years 2022 through 2024. There are no other audits or examinations in process at this time. A summary of income taxes paid, net of refunds received, is as follows: Year ended December 31, 2025 2025 2024 Canadian $ - $ - US Federal, state and local Alabama - - New York - - Federal - - Foreign - - Total $ - $ - 23. Commitment During the year ended December 31, 2025, the Company entered into a contract with a supplier for the purchase of various high-performance computers in connection with the Company’s Tier III AI project. Under the terms of the agreement, payments are due upon shipment of the equipment. The Company expects shipment to occur within one year from the date of the financial statements, at which time $ 5,320,312 will become payable. As of December 31, 2025, no liability was recorded related to this commitment, as the goods had not yet been received and the payment was not yet due. Subsequent to year end, the Company made a payment of $ 4,520,312 under that agreement. 24. Subsequent events (i) Pursuant to a settlement agreement with a broker (note 12(ii)), Digi Power issued a warrant exercisable for up to an aggregate of 269,231 of the Corporation’s subordinate voting shares at an exercise price of $ 2.85 per share for a period of five years from the date of issuance. The warrant was issued on February 20, 2026. (ii) On February 27, 2026, the Corporation completed the uplisting of its subordinate voting shares to Cboe Canada effective at market open on February 27, 2026. Following the uplisting from the TSX Venture Exchange to Cboe Canada, the Corporation’s subordinate voting shares continue to trade under the symbol “DGX” on Cboe Canada and trade on Nasdaq under the symbol “DGXX”. The Corporation remains a “reporting issuer” under applicable Canadian securities laws through the transition from the TSX Venture Exchange to Cboe Canada. Following the uplisting to Choe Canada, the shares no longer trade on the TSX Venture Exchange and were voluntarily delisted from the TSX Venture Exchange effective as of close of market on February 26, 2026. (iii) Subsequent to December 31, 2025, the Corporation announced a restructuring and clarification of its relationship with US Data Centers, Inc., confirming that it retains a majority controlling equity interest and that USDC’s operations are limited to the manufacturing and distribution of modular data center equipment, with no ownership interest or participation in the Corporation’s data center assets or revenues. (iv) Subsequent to December 31, 2025, the Corporation issued 379,664 subordinate voting shares to settle vested RSUs and issued 1,000,000 RSUs to a new Advisory Board member. (v) On March 23, 2026, the Company issued a total of 50,000 stock options and 50,000 RSUs to an officer of the Company in accordance with the Company’s stock option plan and restricted share unit plan, respectively. Each stock option is exercisable for a subordinate voting share of the Company at a price of $ 2.39 for a period of five years from the date of grant. The stock options vest fully on the date of grant and are subject to the terms and conditions of the Company’s stock option plan and applicable securities laws. Each RSU entitles the holder to acquire one subordinate voting share of the Company on vesting. One-third (1/3) of the RSUs will vest on March 23, 2027, and the remaining two-thirds (2/3) will vest quarterly over the two years following March 23, 2027. (vi) Subsequent to December 31, 2025, 143,663 stock options with a weighted average exercise price of CAD$ 6.18 expired unexercised. F- 38 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. Not required.