FTCO 10-K & 10-Q changes, risk factors and insider trading

During 2024,2025, the price of gold, as measured by the London P.M. fix, fluctuated from a low of $1,985$2,633 per ounce to a high of $2,778$4,481 per ounce while the price of silver fluctuated from a low of $22.09$29.41 per ounce to a high of $34.51$74.84 per ounce. As of FebruaryMarch 24,2, 2025,2026, gold and silver prices were $2,932$5,314 per ounce and $32.51$94.62 per ounce, respectively. The volatility in gold and silver prices is illustrated by the following table, which sets forth for each of the past five calendar years, the high, low, and average annual market prices in U.S. dollars per ounce of gold and silver based on the daily London P.M. fix:

We may not continue to be profitable. During the fiscal year ended December 31, 2024,2025, we reported a net lossincome of $2.0$0.4 million. Precious metal prices, specifically gold, have a significant impact on our profit margin and there is no assurance that we will be profitable in the future. Unexpected interruptions in our mining business may cause us to incur losses, or the revenue that we generate from production may not be sufficient to fund continuing operations including exploration and mine construction costs. Our failure to generate future profits may adversely affect the price of our common stock and shareholders may lose all or part of their investment.

Competition in the mining industry is intense, and we have limited financial and personnel resources with which to compete. Competition in the mining industry for desirable properties, investment capital, and experienced industry personnel is intense. Numerous companies headquartered in the United States (“U.S.”) and elsewhere throughout the world compete for properties and personnel on a global basis. We are a small participant in the precious metal mining industry due to our limited financial and personnel resources. We presently operate with a limited number of personnel and we anticipate operating in the same manner going forward. We compete with other companies in our industry to hire qualified personnel when needed to successfully discover depositsdeposits, construct projects, and operate our mine and processing facility. We may be unable to attract the necessary investment capital or personnel to fully explore and, if warranted, develop and operate our properties and we may be unable to acquire other desirable properties. We believe that competition for acquiring mineral properties, as well as the competition to attract and retain qualified personnel, is likely to continue to be intense in the future.

Our ability to recognize the benefits of net losses is dependent on future cash flows and taxable income. We recognize deferred tax assets when the tax benefit is considered to be more likely than not of being realized; otherwise, a valuation allowance is applied against deferred tax assets. Assessing the recoverability of deferred tax assets requires management to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, our ability to realize the deferred tax assets could be impacted. Additionally, future changes in tax laws could limit our ability to obtain the future tax benefits represented by our deferred tax assets. As of December 31, 2025 and 2024, we recorded a valuation allowance of $4.2 million and $3.8 millionmillion, respectively, for our net deferred tax assets.

Estimates of proven and probable reserves and measured and indicated resources are uncertain and the volume and grade of ore recovered may vary from our estimates. There has been no material change to our proven and probable reserves from December 31, 2022 to December 31, 2024,2025, other than the changes from mining in 20232023, 2024 and 2024.2025. Estimates of proven and probable reserves and measured and indicated resources are subject to considerable uncertainty. Such estimates are, to a large extent, based on the market prices of gold and silver, as well as interpretations of geologic data obtained from drill holes and other exploration techniques. These prices and interpretations are subject to change. If we determine that certain of our estimated reserves or resources have become uneconomic, we may be forced to reduce our estimates. Actual production may be significantly less than we expect.

Any material changes in mineral resource and reserve estimates may affect the economic viability of our current operations, our decision to place a new property into production and/or such property’s return on capital. There can be no assurance that mineral recoveries in small scale laboratory tests will be duplicated in a large-scale on-site operation in a production environment. Extended declines in market prices for gold or silver may render portions of our mineralization estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of one or more of our properties. Any material reductions in estimates of mineralization, or of our ability to obtain additional mine permits and/or extract gold or silver, could have a material adverse effect on our results of operations, financial condition, and stock price.

If we are unable to achieve anticipated gold and silver production levels, our financial condition and results of operations will be adversely affected. We continue the processing of ore from the Isabella Pearl mine, based on estimates from our 2022 Proven and Probable Reserve report. However, risks related to reserve estimates, metallurgy, and/or mining dilution are inherent when working with extractable minerals. Future revenue from sales of gold and silver will be less than anticipated if the mined material’s ultimate metallurgic recovery of the run of mine (ROM) ore or crushed ore are different than lab results and estimates, or if the mined material does not contain the concentration of gold and silver predicted by our geological exploration, studies, models, and reports. If revenue from sales of gold and silver are less than anticipated, we may not be able to recover our investment in our properties and our operations may be adversely affected. Our inability to realize production based on quarterly or annual projections may also adversely affect the price of our common stock. Our ability to secure additional mine permits may also affect operations and the price of our common stock.

Substantial expenditures are required to establish proven and probable reserves and measured and indicated resources through detailed drilling and analysis, to develop metallurgical processes to extract metal and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade, metallurgy, rock competency, waste rock overburden, and proximity to infrastructure such as power, water and roads; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. We may invest significant capital and resources in exploration activities and abandon such projects if we are unable to identify commercially exploitable mineral reserves or resources and/or obtain the necessary regulatory permits for production. The decision to abandon a project may have an adverse effect on the market value of our common stock and our ability to raise future financing.

To the extent that we seek to expand our operations and increase our reserves through acquisitions, we may experience issues in executing acquisitions, permitting, mine development and construction or integrating acquired operations. From time to time, we examine opportunities to make selective acquisitions in order to provide increased returns to our shareholders and to expand our operations and reported reserves and resources and, potentially, generate synergies. The success of any acquisition depends on a number of factors, including, but not limited to:

Increased operating and capital costs could adversely affect our results of operations. Costs at any particular mining location are subject to fluctuation due to a number of factors, such as variable ore grade, changing metallurgy, and revisions to mine plans in response to the physical shape and location of the mineralization or ore body, as well as the age and utilization rates for the mining and processing related facilities and equipment. In addition, costs are affected by the price and availability of input commodities, such as fuel, electricity, labor, chemical reagents, explosives, steel, concrete and mining and processing related equipment and facilities. Commodity costs are, at times, subject to volatile price movements, including increases that could make production at certain operations less profitable. Further, changes in laws and regulations can affect commodity prices, uses and transport. Reported costs may also be affected by changes in accounting standards. A material increase in costs could have a significant effect on our results of operation and operating cash flow. We could have significant increases in capital and operating costs over the next several years in connection with the development of new projects and in sustaining and/or the expansion of existing mining and processing operations. Costs associated with capital expenditures may increase in the future as a result of factors beyond our control. Increased capital expenditures may have an adverse effect on the results of operation and cash flow generated from existing operations, as well as the economic returns anticipated from a new project.

Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures, potential revenues, permits and targeted production dates. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write down of our investment in those interests and losses with respect to past or future expenses.interests.

Issuances of our stock in the future could dilute existing shareholders and adversely affect the market price of our common stock. Our Directors have the authority to issue up to 200,000,000 shares of common stock, 20,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our common stock without shareholder approval. As of FebruaryMarch 24,2, 2025,2026, there were 24,173,20926,895,415 outstanding shares of common stock, 172,000160,000 options issued and outstanding, no outstanding shares of preferred stock and no outstanding warrants. Future issuances of our securities could be at prices substantially below the price paid for our common stock by our current shareholders. The issuance of a significant amount of our common stock may have a disproportionately large impact on our share price compared to larger companies.

Our directors and officers may be protected from certain types of lawsuits. The laws of Colorado provide that our directors will not be liable to us or our shareholders for monetary damages for all but certainmost types of conduct as directors of the company. Our bylaws permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions of these items may have the effect of preventing shareholders from recovering damages against our directors caused by their negligence, poor judgment, or other circumstances. The indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

We may issue shares of preferred stock that wouldmay havenot abe liquidation preferencebeneficial to the owners of our common stock. Our Articles of Incorporation currently authorize the issuance of 20,000,000 shares of preferred stock. Our board of directors has the power to issue these shares without shareholder approval, and such shares can be issued with such rights, preferences, and limitations as may be determined by our board of directors. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of any holders of preferred stock that may be issued in the future. As of FebruaryMarch 24,2, 2025,2026, there was no preferred stock outstanding.

We are dependent upon information technology systems, which are subject to disruption, damage, failure, and risks associated with implementation and integration. We are dependent upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage, or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters, and defects in design. Cybersecurity incidents, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data. Various measures have been implemented to manage our risks related to information technology systems and network disruptions. However, given the unpredictability of the timing, naturenature, and scope of information technology disruptions, we could potentially be subject to production downtimes, operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.

Gold production in 20252026 and beyond is dependentdepends on the Company’s ability to execute its original long-term plan, which includedcontemplated buildingthe development and operatingoperation severalof multiple mines, appropriate mine sequencing, abilityand tothe completecompletion of mining at the Isabella Pearl deposit, whilesupplemented coupled withby residual leaching of the ore currently on the heap leach pad. The permitpermitting backlog causedat bythe BLM during the Biden/Harris administration’sadministration BLM deraileddisrupted the original timingtimeline of thefor new mine permits andand, thereforeconsequently, negatively impacted the timingconstruction of new minemines. builds.Excessive Duepermitting to excessive wait timesdelays in 2024 and 2025—specifically for permitting the deep Pearl zones,zones as well as the future permitand approval to mine County Line ore for addingprocessing it toat the Isabella Pearl processingfacility—have facility,significantly theincreased moreuncertainty difficultaround itforecasting is to forecast 20252026 production. AbsentProduction thein permit approval for County Line, 2025 production2026 is expected to be predominantlyprimarily sourced from theCounty remainingLine, lowerIsabella grade ore permitted in the existing mine planPearl, and residual leaching onfrom the Isabella Pearl heap leach pad’s estimated 43,000 recoverable ounces at December 31, 2024; ounces are expected to be recovered in future years.pad. All areas of the heap leach pad are expected to be placedreturned back underto rotational leachleaching at various times.times Untilas the Company receives all the regulatory approvals to begin mining County Line, and some transparency on permits for Scarlet North and Golden Mile, the Company does not plan to forecast a 2025 production outlook due to the difficulty of not adding originally planned freshnew ore fromis those aforementioned sources, primarily County Line.placed.

General and administrative. For the year ended December 31, 2024,2025, general and administrative expenses totaled $5.9$4.9 million as compared to $5.0$5.9 million for the same period in 2023.2024. The increasedecrease is primarily attributable to ana increasedecrease in stock-basedemployee compensation.

MiningFacilities and incomemine tax expense.construction. For the year ended December 31, 2024,2025, miningfacilities and incomemine taxconstruction expensetotaled was $3.4$0.6 million as compared to $4.0 millionnil for the same period in 2023.2024. The decreaseincrease is theprimarily resultattributable ofto ourroad lower income before incomeconstruction and mining taxes,preparation partiallyat offsetCounty by a valuation allowance on our deferred tax asset. See Note 6 in Item 8. Financial Statements and Supplementary Data.Line.

Net income (loss) income.. For the year ended December 31, 20242025 we recorded a net lossincome of $2.0$0.4 million as compared to net incomeloss of $17.0$2.0 million for the prior year. The decreasechange is due to the changes in our consolidated results of operations as discussed above.

Net cash used in operating activities for the year ended December 31, 20242025 was $6.6$13.0 million, compared to $23.0$6.6 million net cash provided by operating activitiesfor the year ended December 31, 2023.2024. The decreasechange is primarily due to lower net income and changesincreases in inventory, depreciationother non-current assets and amortization,decreases in income and mining taxes payable and accounts payable.

Net cash used in investing activities for the year ended December 31, 20242025 was $3.4$1.9 million compared to $6.9$3.4 million during the same period in 2023.2024. The decrease is primarily due to less capital expenditures and purchases of gold and silver rounds/bullion.expenditures.

Net cash used in financing activities was $7.5 million for the year ended December 31, 2025, compared to $11.5 million for the year ended December 31, 2024, compared to $12.5 million for the year ended December 31, 2023.2024. The decrease is primarily dueattributable to lower shareholder dividends in 2024 due to the specialdecreased dividend paidbeginning in May 2023.2025, partially offset by higher finance lease payments.

As of December 31, 2024,2025, the Company had a $16.5$28.1 million off-balance sheet arrangement for a surety bond.bonds for its Isabella Pearl Mine and County Line projects. This bond is offset by a $9.9$10.9 million asset retirement obligation for future reclamation at the Company’s Isabella Pearl Mine.Mine and County Line project.

Our mining and exploration activities are subject to various laws and regulations, including legal and contractual obligations to reclaim, remediate, or otherwise restore properties at the time the property is removed from service. Accounting for reclamation and remediation obligations requires management to make estimates of the future costs that we will incur to complete the work required to comply with existing laws and regulations. Actual costs may differ from the amounts estimated. ReclamationFor costsprojects arewith allocatedproven toand expenseprobable mineral reserves, the asset retirement cost is capitalized as part of the asset’s carrying value and amortized over the life of the related assetsasset. For projects without proven and probable mineral reserves, the asset retirement costs are expensed as incurred. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and remediation costs. Also, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required.

We are a Colorado corporation and our subsidiaries are GRC Nevada Inc. (“GRCN”), Walker Lane Minerals Corp. (“WLMC”), County Line Holdings Inc. (“CLH”), County Line Minerals Corp. (“CLMC”), Golden Mile Minerals Corp. (“GMMC”), and East Camp Douglas, LLC (“ECD, LLC”). WLMC, CLH, CLMC and GMMC are wholly-owned subsidiaries of GRCN and ECD, LLC is a 60% owned joint venture. We are a mining company which pursues gold and silver projects that are expected to have both low operating costs and high returns on capital. We are presently focused on mineral production from our Isabella Pearl Mine, including Scarlet South, and County Line Mine, all in Nevada. The oremineralized material mined at the Isabella Pearl and County Line mines are processed on site at our Isabella Pearl processing facilities and sold to a refiner as doré, which contains precious metals of gold and silver. We also continue exploration and evaluation work on our portfolio of other precious metal properties in Nevada and continue to evaluate other properties for possible acquisition.

The following discussion summarizes our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025. It also analyzes our financial condition at MarchJune 31,30, 2026. This discussion should be read in conjunction with the management’s discussion and analysis and the audited consolidated financial statements and footnotes for the year ended December 31, 2025 contained in our annual report on Form 10-K for the year ended December 31, 2025.

FirstSecond Quarter 2026 Financial Results and Highlights

During the three months ended MarchJune 31,30, 2026 and 2025, we produced a total of 6882,133 and 1,7801,500 ounces of gold, respectively. This decreaseincrease was primarily driven by lowerdue leachto padhigher recoveries,mining resultingand recoveries from the timingIsabella of material placement on the padPearl and the start-up of operations from County Line and Isabella Pearl’s Scarlet South.Mines.

Consolidated Results of Operations – Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Sales, net. For the three months ended MarchJune 31,30, 2026, consolidated sales, net were $3.2$8.2 million as compared to $6.5$4.9 million for the same period in 2025. The decreaseincrease is mainly attributable to lowerhigher sales volumes,volumes partially offset byand higher average sales price. FirstSecond quarter 2026 gold sales volumes decreasedincreased 71%,20% while theand average realized price for gold increased 65%,39%, from the same period in 2025.

LowerHigher sales volumes during the three months ended MarchJune 31,30, 2026, were the result of decreasedincreased production which was primarily due to lowerhigher leachmining padand recoveries duefrom to overall lower-grade ore mined atthe Isabella Pearl.Pearl This was partially offset with new higher-grade ore fromand County Line.Line Mines.

Mine cost of sales. For the three months ended MarchJune 31,30, 2026, mine cost of sales totaled $1.0$2.8 million compared to $3.2$2.2 million for the same period in 2025. The change is mainly attributable to lowerhigher production costs and depreciation and amortization expenses due to aan decreaseincrease in sales volumes, as discussed above.

Mine gross profit. For the three months ended MarchJune 31,30, 2026, we recorded $2.2$5.4 million mine gross profit compared to $3.3$2.7 million mine gross profit for the same period in 2025. The decreaseincrease is primarily attributable to lowerhigher sales, as discussed above, and increased cost per ounce due to lower-grade ore mined.above.

General and administrative. For the three months ended MarchJune 31,30, 2026, general and administrative expenses wereof $2.2$1.2 million asdid comparednot tomaterially $1.3change million infrom the same period in 2025. The increase is primarily attributable to placement agent fees and offering expenses for the Private Placement and an increase in stock compensation.

Exploration expenses. For the three months ending MarchJune 31,30, 2026, we recorded property exploration expenses of $1.7$4.7 million as compared to $1.4$1.3 million for the same period of 2025. The increase is primarily due to commencementdrilling and increased exploration activities at East Camp Douglas as part of drillingthe programsnewly atentered IsabellaJoint Pearl and County Line.Venture.

NetFacilities (loss)and incomemine attributable to Fortitude Shareholders.construction. For the three months ended MarchJune 31,30, 2026, we recorded afacilities netand lossmine construction expenses of $1.6$0.1 million as compared to netnil incomefor the same period of $1.22025. millionThese expenses relate to our County Line Mine which began operation in the corresponding period for 2025. The change is due to the changes in our consolidated results of operations as discussed above.2026.

Revenue generated from the sale of silver is considered a by-product of our gold production for the purpose of our total cash cost after by-product credits for our Isabella Pearl Mine.and County Line Mines. We periodically review our revenues to ensure that our reporting of primary products and by-products is appropriate. Because we consider silver to be a by-product of our gold production, the value of silver continues to be applied as a reduction to total cash costs in our calculation of total cash cost after by-product credits per precious metal gold equivalent ounce sold. Likewise, we believe the identification of silver as by-product credits is appropriate because of its lower individual economic value compared to gold and since gold is the primary product we produce.

The following table provides a reconciliation of total cash cost after by-product credits to total mine cost of sales (a U.S. GAAP measure) as presented in the Condensed Consolidated Statements of Operations:

As of MarchJune 31,30, 2026, we had a cash position of $10.0$13.5 million compared to $4.7 million at December 31, 2025. The change is primarily due to cash received for the Private PlacementPlacements which was partially offset by decreased cash from operations, exploration spending and dividends paid.

As of MarchJune 31,30, 2026, we had working capital of $31.3$35.4 million compared to $29.5 million at December 31, 2025. Our working capital balance fluctuates as we use cash to fund our operations, financing and investing activities, including exploration, mine development and income taxes. Based on our working capital balance as of December 31, 2025, and considering projected cash burn, the Company did not have sufficient liquidity and capital resources to fund its operating, exploration, capital expenditure, and corporate requirements for the next twelve months. Ongoing permitting delays at County Line and Scarlet extended the timeline for introducing fresh material to the processing facility, which increased cash burn during the period and contributed to the Company’s liquidity constraints. These impacts were further compounded by the capital deployed for the waste stripping program at the Pearl Deep project in 2025, undertaken to access deeper gold mineralization targeted for 2026.mineralization. Accordingly, in the first quarter of 2026, the Company completed a private placement of common stock, pursuant to which it issued 2,520,206 shares for gross proceeds of $12.0 million, resulting in net proceeds of $11.7 million after placement agent fees and offering expenses. Additionally, to help fund our heap leach expansion, the Company completed a second private placement of common stock during the second quarter of 2026, pursuant to which it issued 1,150,000 shares for total proceeds of $5.5 million as there were no placement or offering expenses. The net proceeds from the private placementplacements are expected to support ongoing operationsoperations, andcapital expenditures, reengagement of its exploration activities and to address the Company’s short-term liquidity needs.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 was $3.4$7.7 million, compared to $2.4$4.6 million for three months ended MarchJune 31,30, 2025.2026. The change is primarily due to increases in net loss, inventory, partially offset by decreasesincreases in and accounts payable.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, was $0.5$1.2 million compared to $0.4$0.9 million during the same period in 2025. The increase is primarily due to increased capital expenditures.expenditures for our connection to grid power and the commissioning of the new crusher at Isabella Pearl.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 was $9.3$17.9 million, compared to a net cash use of $2.9$4.3 million during the same period in 2025. The increase was primarily attributable to proceeds from the Private PlacementPlacements and lower dividend payments following the dividend reduction implemented in May 2025, partially offset by payments on finance leases.

Golden Mile property: Material characterization and hydrogeological studies continued through the firstsecond quarter of 2026 to meet the requirements of NDEP.Nevada A five-hole air track drill program was completed that supplied additional volcanic materials for testing. In addition, interpretationDivision of theEnvironmental hydrogeological results was advanced.Protection. The Golden Mile Project continues to be included on the FAST-41 Transparency Dashboard for a mine permit. The Fast-41 program increases transparency through the publication of project-estimated timetables with completion dates for federal authorizations and environmental reviews.