When are gains recorded for Exit's digital assets, and how are they presented?

According to Exit's 2025 Franchise Disclosure Document, gains from the sale of digital assets are not recorded until they are realized upon sale. At that point, they are presented net of any impairment losses for the same digital assets held. This means that Exit waits until the actual sale of the digital assets to recognize any profit.

To determine the gain recognized upon sale, Exit calculates the difference between the sales price and the carrying value of the digital assets immediately before the sale. The carrying value reflects the original cost of the asset, less any impairment losses that have been previously recognized. This approach ensures that the recognized gain accurately reflects the actual profit earned on the sale, taking into account any prior losses in value.

For example, in 2024, Exit sold digital assets and recognized a gain from disposal of $2,125,033. This gain would have been calculated by subtracting the carrying value of the assets at the time of sale from the proceeds received, while also factoring in any impairment losses that had been previously recorded against those specific assets. This accounting method provides a clear and conservative view of Exit's financial performance related to its digital asset holdings.