OLOX 10-Q
Olenox Industries Inc. (OLOX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of August 18, 2026, the issuer had a total of
EXPLANATORY NOTE
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, all references to “the Company,” “we,” “our”, “us” and “Olenox” refer to Olenox Industries, Inc., a Delaware corporation.
At the commencement of trading on May 8, 2026, we completed a 1-for-10 reverse split of our outstanding shares of common stock (the “Reverse Stock Split”). No fractional shares of the Company’s common stock were issued as a result of the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share. Unless otherwise noted, the share and per share information in this Quarterly Report on Form 10-Q has been adjusted to reflect the Reverse Stock Split, including the financial statements and notes thereto.
The Company is timely filing this Quarterly Report on Form 10-Q on or before August 19, 2026 in accordance with the automatic five day extension granted under a timely filed Rule 12b-25 extension notice.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that present our current expectations or forecasts of future events. These statements do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties and include statements regarding, among other things, our projected revenue growth and profitability, our growth strategies and opportunity, anticipated trends in our market and our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under the sections entitled “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this Quarterly Report on Form 10-Q generally. In particular, these include statements relating to future actions, prospective products, market acceptance, future performance or results of current and anticipated products, sales efforts, expenses, and the outcome of contingencies such as legal proceedings and financial results.
Examples of forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, our expectations regarding our business strategy, business prospects, operating results, operating expenses, working capital, liquidity and capital expenditure requirements. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products and services, the cost, terms and availability of components, pricing levels, the timing and cost of capital expenditures, competitive conditions and general economic conditions. These statements are based on our management’s expectations, beliefs and assumptions concerning future events affecting us, which in turn are based on currently available information. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect.
Important factors that could cause actual results to differ materially from the results and events anticipated or implied by such forward-looking statements include, but are not limited to:
| ● | changes in the market acceptance of our products and services; | |
| ● | increased levels of competition; | |
| ● | changes in political, economic or regulatory conditions generally and in the markets in which we operate; | |
| ● | our relationships with our key customers; | |
| ● | adverse conditions in the industries in which our customers operate; | |
| ● | our ability to retain and attract senior management and other key employees; | |
| ● | our ability to quickly and effectively respond to new technological developments; | |
| ● | our ability to protect our trade secrets or other proprietary rights, operate without infringing upon the proprietary rights of others and prevent others from infringing on the proprietary rights of the Company; and | |
| ● | other risks, including those described in the “Risk Factors” discussion of this Quarterly Report on Form 10-Q, as well as our most recent Annual Report on Form 10-K. |
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this Quarterly Report on Form 10-Q are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.
OLENOX INDUSTRIES INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
| i |
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
OLENOX INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2026 |
December 31, 2025 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Cryptocurrency holdings | ||||||||
| Contract assets | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Oil and gas assets, on the basis of full cost accounting, net | ||||||||
| Property, plant and equipment, net | ||||||||
| Project development costs and other non-current assets | ||||||||
| Right of use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Certificate of deposit | ||||||||
| Co-location hosting security deposits | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Contract liabilities and deferred revenues | ||||||||
| Lease liability, current maturities | ||||||||
| Due to affiliates | ||||||||
| Lines of credit | ||||||||
| Derivative liabilities | ||||||||
| Convertible notes payable | ||||||||
| Current portion of long-term debt | ||||||||
| Short-term notes payable, net | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Long-term notes payable, net | ||||||||
| Lease liability | ||||||||
| Asset retirement obligations | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity: | ||||||||
| Series A Preferred stock, $ | ||||||||
| Series B Preferred stock, $ | ||||||||
| Series C Preferred stock, $ | ||||||||
| Series E Preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost, | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
OLENOX INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(UNAUDITED)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues, excluding crypto-mining depreciation | ||||||||||||||||
| Depreciation, crypto-mining operations | ||||||||||||||||
| Total cost of revenues | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Payroll and related expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Marketing and business development expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on debt extinguishment | ( | ) | ||||||||||||||
| Gain on debt extinguishment | ||||||||||||||||
| Change in fair value of derivatives | ||||||||||||||||
| Change in fair value of equity-based investment | ( | ) | ||||||||||||||
| Other income | ||||||||||||||||
| Total | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deemed dividend for preferred shareholders | ( | ) | ||||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
OLENOX INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(UNAUDITED)
Preferred Stock |
Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Series A |
Series B | Series C |
Series E | Paid in |
Treasury |
Accumulated |
|||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Stock | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Settlement of short-term notes payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for settlement of due to affiliates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of Series A preferred stock for common stock | ( | ) | ( | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Sale of preferred stock | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock | — | — | ( | ) | ( | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series E preferred stock for acquisition of CS Digital Ventures, LLC | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||
Preferred Stock |
Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock | Series A |
Series B | Series C |
Series E | Paid in |
Treasury |
Accumulated |
|||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Stock | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock in connection with acquisition, as restated (Note 3) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forgiveness of related party debt | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in connection with debt issuance | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025, as restated (Note 3) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of issuance costs | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of stock for accrued interest | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series A preferred stock into common stock | ( | ) | ( | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025, as restated (Note 3) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
OLENOX INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation, depletion and amortization | ||||||||
| Amortization of debt issuance costs | ||||||||
| Accretion of asset retirement obligations | ||||||||
| Loss on debt extinguishment | ||||||||
| Gain on debt extinguishment | ( | ) | ||||||
| Change in fair value of derivatives | ( | ) | ||||||
| Change in right of use asset and lease liability | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Change in fair value of equity-based investment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Cryptocurrency holdings | ||||||||
| Contract assets | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Project development and other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Contract liabilities and deferred revenues | ( | ) | ( | ) | ||||
| Due to affiliates | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Purchase of oil and gas assets | ( | ) | ||||||
| Cash received in business combination | ||||||||
| Investment in equity method investment | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from short-term notes payable, net of debt issuance costs | ||||||||
| Payment of short-term notes payable | ( | ) | ( | ) | ||||
| Cash received from sale of common and preferred stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents - end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| (as revised) | ||||||||
| Forgiveness of related party debt and investment | $ | $ | ||||||
| Common stock and warrants issued for debt issuance | $ | $ | ||||||
| Shares issued for settlement of short-term notes payable | $ | $ | ||||||
| Settlement of due to affiliates and accrued interest | $ | $ | ||||||
| Exchange of Series A preferred stock for common stock | $ | $ | ||||||
| Conversion of preferred stock to common stock | $ | $ | ||||||
| Issuance of Series E preferred stock for acquisition | $ | $ | ||||||
| Issuance of notes payable for acquisition | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
OLENOX INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Olenox Industries Inc., previously known as Safe & Green Holdings Corp., (collectively with its subsidiaries, the “Company,” “we”, “us” or “our”) is a vertically integrated energy company operating across multiple business lines, including oil and gas, energy services, and energy technologies. The Company is focused on acquiring, optimizing, and scaling energy-related infrastructure and operating assets across key U.S. markets.
On February 2, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and between the Company and New Asia Holdings, Inc., a Nevada corporation (“NAHD”), pursuant to which NAHD was merged into a subsidiary of the Company (the “Merger”). Following the Merger, NAHD and its operating subsidiaries became indirect, wholly owned subsidiaries of the Company. As merger consideration, the Company issued four million (
On January 7, 2026, the Company changed its name from Safe & Green Holdings Corp. to Olenox Industries Inc. by filing a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
The Company operates in the following industries:
Construction
The Company creates purpose built, prefabricated modules from wood, steel, and shipping containers into new structures. Olenox enables developers, architects, builders and owners to achieve greener construction, faster execution and stronger buildings of higher value and extended life.
Oil and Gas
The Company specializes in acquiring and revitalizing underdeveloped energy assets, leveraging proprietary plasma pulse and ultrasonic cleaning tools to enhance production efficiency while reducing environmental impact. Olenox’s strategic focus on distressed oil and gas fields in Texas, Oklahoma, and Kansas has resulted in significant production growth, positioning it for long-term success in the energy sector.
SaaS
The Company is a provider of industrial IoT solutions, specialized in secure, low-power edge-to-cloud connectivity and edge computing for critical infrastructure and industrial operations. The Company delivers an integrated hardware and software ecosystem; including its core Machfu Gateway, MACHREACTOR protocol translation engine, and fully managed, turnkey Industrial IoT Service that enables the seamless collection, translation, and transmission of data between legacy industrial controllers, sensors, and modern cloud environments. Utilizing extended-range communication technologies like LoRa, alongside bandwidth-conserving protocols such as MQTT/SparkPlug B, the Company’s solutions allow utility, energy, and oil and gas operators to implement bi-directional monitoring and real-time data intelligence. These services are designed to lower operating and connectivity costs, minimize operational downtime, and assist enterprise customers in meeting regulatory compliance and environmental, social, and governance (ESG) standards.
| 5 |
Cryptocurrency Mining
The Company operates a bitcoin mining business through CS Digital Ventures, LLC, which it acquired in May 2026. The Company owns and operates application-specific integrated circuit (“ASIC”) mining equipment and provides hash computation services through third-party mining pools. The Company’s mining equipment contributes computing power to third party mining pools, and the Company receives consideration in bitcoin based on the computational power contributed pursuant to the applicable mining pool arrangements. Electricity is the principal operating cost of mining, and results in this segment therefore depend primarily on the price of bitcoin, network mining difficulty and hash rate, and the Company’s cost of power.
2. LIQUIDITY AND GOING CONCERN
The Company has incurred losses since its inception, has negative working capital of approximately $
On April 28, 2026, SG Echo LLC (“SG Echo”), a wholly owned subsidiary of the Company and an operating entity of the Construction segment, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Oklahoma. SG Echo continues to operate its business as a debtor-in-possession while pursuing a court-supervised reorganization. The Chapter 11 proceeding is limited to SG Echo and does not include the Company or its other subsidiaries. The filing triggered an event of default under certain SG Echo debt agreements, including approximately $
The Company intends to address these conditions by increasing revenues from operations, containing costs, pursuing strategic alliances, and obtaining additional debt or equity financing as necessary. There can be no assurance the Company will be successful in meeting its capital requirements. The Company does not have any additional sources secured for future funding, and if it is unable to raise the necessary capital at the times it requires such funding, it may be required to delay, reduce or eliminate planned business activities.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of June 30, 2026, and its results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full fiscal year or any other period.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on June 30, 2026. The condensed consolidated balance sheet as of December 31, 2025 was derived from the audited financial statements as of that date but does not include all disclosures required by U.S. GAAP. There have been no material changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the year ended December 31, 2025.
| 6 |
Reverse Stock Split. On May 8, 2026, the Company effected a
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform with the current year presentation.
Restatement of Previously Issued Financial Statements
In February 2025, the Company completed the Merger with NAHD. As consideration for the Merger, the Company issued
Accounting Standards Codification (“ASC 805”), Business Combinations, requires the consideration transferred in a business combination, including equity interests issued by the acquirer, to be measured at fair value as of the acquisition date. The $
Because the identifiable assets acquired and liabilities assumed in the Merger were unchanged, the correction reduces the consideration transferred, and correspondingly goodwill, by $
The Merger was completed during the six months ended June 30, 2025. Accordingly, the restatement has no effect on total stockholders’ equity as of December 31, 2024, and affects only the line items within the condensed consolidated statement of changes in stockholders’ equity and the condensed consolidated statement of cash flows reflecting the issuance of Series A Preferred Stock as consideration for the Merger, and the resulting balance as of June 30, 2025, and September 30, 2025.
| Line Item | As Reported | Revision | As Restated | |||||||||
| Total consideration transferred ( | $ | $ | ( | ) | $ | |||||||
| Goodwill | $ | $ | ( | ) | $ | |||||||
| Series A Preferred Stock consideration recorded in stockholders’ equity | $ | $ | ( | ) | $ | |||||||
| Supplemental disclosure of non-cash investing and financing activities: Goodwill | $ | $ | ( | ) | $ | |||||||
In addition, the Company reclassified $
Accounting estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period, together with amounts disclosed in the related notes to the financial statements. The Company’s estimates used in these condensed consolidated financial statements include, but are not limited to, revenue recognition, stock-based compensation, accounts receivable reserves, inventory valuations, embedded derivatives, the valuation allowance related to the Company’s deferred tax assets, the carrying amount of goodwill and intangible assets, right of use assets, oil and gas reserve estimates and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
| 7 |
Revenue recognition
The Company determines, at contract inception, whether it will transfer control of a promised good or service over time or at a point in time, regardless of the length of contract or other factors. The recognition of revenue aligns with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps in accordance with its revenue policy:
| (1) | Identify the contract with a customer |
| (2) | Identify the performance obligations in the contract |
| (3) | Determine the transaction price |
| (4) | Allocate the transaction price to performance obligations in the contract |
| (5) | Recognize revenue as performance obligations are satisfied |
Construction Services
The Company applies recognition of revenue over time. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations satisfied over time, the Company uses a cost-to-cost input method to recognize revenue with any changes in total estimated costs, and related progress toward complete satisfaction of the performance obligation being recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. The Company believes the cost-to-cost input method faithfully depicts the transfer of control to the customer because the costs incurred (principally labor, materials, and subcontractor costs) are incurred as the Company satisfies the performance obligation and are directly proportionate to the Company’s progress in transferring control of the promised goods or services to the customer. As costs are incurred, control of the work in process - and the resulting asset or service - passes to the customer, so the ratio of costs incurred to total estimated costs reasonably represents the extent to which the performance obligation has been satisfied. When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.
Contract assets include unbilled amounts from construction services when revenue recognized under the cost-to-cost measure of progress exceeds the amounts invoiced to customers, as the amounts cannot be billed under the related contract terms. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract.
Contract liabilities from construction and engineering contracts occur when amounts invoiced to customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from customers on certain contracts. Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation.
Although the Company believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. The Company periodically evaluates and revises its estimates and makes adjustments as considered necessary.
Industrial Connectivity and Monitoring Service
The Company has concluded that the hardware, embedded and hosted software, post-contract customer support, and related engineering and consulting services promised in its customer arrangements are not distinct within the context of the contract. The goods and services are highly interdependent and interrelated, with the Company providing a significant integration service that combines them into a single, customer-specific industrial IoT solution. Accordingly, the Company accounts for these services as a single performance obligation.
The Company recognizes these revenues over time with respect to this combined performance obligation, as the Company’s performance creates or enhances an asset that the customer controls and the Company’s performance does not create an asset with an alternative use to the Company together with an enforceable right to payment for performance completed to date. Because the combined solution is delivered as a continuous service, the Company has determined that a time-elapsed output method faithfully depicts the transfer of control to the customer. Revenue is therefore recognized ratably over the service period, commencing on the date the solution is made available to the customer and continuing through the term of the arrangement.
| 8 |
Oil and Gas Sales
The Company recognizes revenue from its interests in oil and gas properties when control of the commodity transfers to the purchaser, which typically occurs at the delivery point designated in the sales contract. Revenue is derived from the Company’s proportionate share of oil and gas production under lease agreements. The Company’s other revenue is related to subscription services, of which revenue is recognized over time as services are provided.
Crypto mining revenue
The Company operates bitcoin mining equipment that it owns and participates in third-party mining pools under contractual arrangements whereby its mining equipment contributes computing power to the Bitcoin network in exchange for bitcoin rewards. Revenue from mining activities is accounted for in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s performance obligation is satisfied as hash computation services are provided to the mining pool operators. Revenue is recognized when the Company has the right to receive consideration, which generally occurs when the mining pool operators determine the Company’s share of mining rewards based on the computational power contributed. The bitcoin received is measured at fair value on the date the mining rewards are earned using the quoted market price in the Company’s principal market. Electricity and depreciation of mining equipment are recorded in cost of revenues.
The following tables provide further disaggregation of the Company’s revenues by performance obligations:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Performance obligations satisfied over time | $ | $ | $ | $ | ||||||||||||
| Performance obligations satisfied at a point in time | ||||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
Cryptocurrency holdings
The Company’s crypto assets consist of bitcoin generated by its cryptocurrency mining operations. These assets are measured at fair value at each reporting date, with changes in fair value recognized in operations in the period in which they occur. Fair value is determined using the quoted price in the Company’s principal market at the measurement date and is classified within Level 1 of the fair value hierarchy. Crypto assets are presented separately from other intangible assets in the condensed consolidated balance sheets and are classified as current, as the Company generally converts them to cash within one year. The Company held no crypto assets subject to contractual sale restrictions at June 30, 2026.
The Company holds substantially all of its bitcoin in self-custody wallets. Mining rewards are paid by the pool operators directly into those wallets. Bitcoin is transferred to the Company’s account at the third-party custodian only when the Company requires funds, in order to be sold; the sale proceeds are then remitted to the Company’s bank account. The account is used to execute sales and is not used to hold bitcoin over time, and the amount and timing of transfers are therefore determined by the Company’s cash requirements rather than by a fixed schedule
For the self-custody wallets, the private keys are held on hardware devices controlled by the Company. Signing authority is limited to named officers and no third party holds or has access to the keys. The wallets are not insured, and the Company bears the risk of loss, theft or unauthorized access; there is no equivalent of deposit insurance for digital assets held in this way.
Under the custody agreement, digital assets delivered to the custodian are held in trust for the Company, the custodian has no right, interest or title in them, they do not form part of the custodian’s balance sheet, and in the event of the custodian’s insolvency or receivership they pass to the Company. The agreement also provides that assets held there are not protected by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation, that they may not be segregated from the assets of other customers of the custodian, and that the custodian’s liability for loss is limited other than in cases of gross negligence, fraud or willful misconduct. Given that bitcoin is held at the custodian only transiently and that the balance at each reporting date was immaterial, the Company does not consider its exposure to the custodian to be significant.
The Company has not pledged any of its bitcoin as collateral and no bitcoin is subject to lending, staking or similar arrangements.
| 9 |
Property and equipment
Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated lives of each asset.
| Asset | Useful life | |
| Furniture and office equipment | ||
| Machinery and equipment | ||
| Building and improvements | ||
| Crypto-mining equipment |
Co-location hosting security deposits
Security deposits consist of refundable amounts paid to Genesis Digital Assets pursuant to co-location hosting agreements. These deposits are refundable upon termination of the respective hosting agreement and are classified as non-current assets.
Fair value measurements
The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.
The Company uses three levels of inputs that may be used to measure fair value:
| Level 1 | Quoted prices in active markets for identical assets or liabilities. | |
| Level 2 | Quoted prices for similar assets and liabilities in active markets or inputs that are observable. | |
| Level 3 | Inputs that are unobservable (for example, cash flow modelling inputs based on assumptions). |
Transfers into and transfers out of the hierarchy levels are recognized as if they had taken place at the end of the reporting period. There have been no changes in Level 1, Level 2, and Level 3 categorizations and no changes in valuation techniques. The Company’s derivative liabilities are measured at fair value using Level 3 inputs.
| Fair value measured as of June 30, 2026 | ||||||||||||||||
| Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Assets | ||||||||||||||||
| Cryptocurrency holdings | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Fair value measured as of December 31, 2025 | ||||||||||||||||
| Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Liabilities | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| 10 |
The following table presents the roll forward of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2026:
| Derivative liabilities | ||||
| Balance at December 31, 2025 | $ | |||
| Issuances | ||||
| Settlements | ||||
| Change in fair value included in earnings | ( | ) | ||
| Transfers into (out of) Level 3 | ||||
| Balance at June 30, 2026 | $ | |||
All changes in the fair value of the embedded derivative conversion features are recorded within “Change in fair value of derivatives” on the condensed consolidated statements of operations. There were no transfers into or out of Level 3 during either period.
Accounting Standards Recently Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.
The Company adopted Accounting Standards Update (“ASU”) 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, effective January 1, 2025. The Company held no crypto assets on that date, and accordingly no cumulative-effect adjustment to accumulated deficit was recorded on adoption. The Company first applied the guidance during the second quarter of 2026, when it acquired crypto assets and commenced cryptocurrency mining operations in connection with the acquisition of CS Digital Ventures, LLC described in Note 4.
In connection with those operations, the Company established accounting policies for crypto assets and for cryptocurrency mining revenue, which are described above. The initial adoption of an accounting policy for transactions that had not previously occurred is not a change in accounting principle, and no prior period amounts have been restated. Other than as described above, there have been no material changes to the Company’s significant accounting policies, or to recent accounting pronouncements adopted, from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact of this new guidance to its condensed consolidated financial statements.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed consolidated financial statements.
4. BUSINESS COMBINATIONS
CS Digital Ventures, LLC
On May 26, 2026, the Company acquired
The upfront preliminary purchase consideration of $
| 11 |
The results of operations of CS Digital are included in the Company’s condensed consolidated financial statements from May 26, 2026 through the end of the period presented. For the period from the acquisition date through June 30, 2026, CS Digital contributed revenue of $
The following table summarizes the preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed at the acquisition date:
| Preliminary | ||||
| Cash and cash equivalents | $ | |||
| Prepaid expenses | ||||
| Cryptocurrency holdings | ||||
| Property and equipment | ||||
| Co-location hosting security deposits | ||||
| Liabilities assumed | ( | ) | ||
| Net identifiable assets acquired | ||||
| Preliminary excess of net identifiable assets over consideration transferred | ||||
| Total preliminary consideration transferred | $ | |||
The purchase price allocation and consideration transferred is preliminary and subject to change as the Company completes its valuation of the assets acquired and liabilities assumed, including property and equipment, intangible assets, the Series E Preferred stock, the warrants and the contingent consideration issued to the sellers at closing. Accordingly, the preliminary excess of net identifiable assets over consideration transferred reflected above is subject to adjustment upon completion of these valuations. The Company expects to finalize the allocation within the measurement period, which will not exceed one year from the acquisition date.
Supplemental unaudited pro forma revenue and earnings information presenting the combined results as if the acquisition had occurred as of January 1, 2025, is as follows:
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
5. ACCOUNTS RECEIVABLE
At June 30, 2026 and December 31, 2025, the Company’s accounts receivable, net consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Billed Construction services | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Total net receivables | $ | $ | ||||||
| 12 |
Changes in the Company’s allowance for credit losses for the six months ended June 30, 2026 and the year ended December 31, 2025 consisted of the following:
| Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Recoveries of credit losses | ( | ) | ||||||
| Additional credit losses recognized | ||||||||
| Total allowance for credit losses | $ | $ | ||||||
6. CONTRACT ASSETS AND CONTRACT LIABILITIES
Costs and estimated earnings on uncompleted contracts, which represent contract assets and contract liabilities, consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Costs incurred on uncompleted contracts | $ | $ | ||||||
| Estimated earnings to date on uncompleted contracts | ||||||||
| Gross contract assets | ||||||||
| Less: billings to date | ( | ) | ( | ) | ||||
| Net contract assets and liabilities on uncompleted contracts | $ | $ | ( | ) | ||||
Although management believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. The Company periodically evaluates and revises its estimates and makes adjustments when they are considered necessary. As of June 30, 2025, the Company has contract assets of $
7. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and amortization and are depreciated using the straight-line method over their useful lives. At June 30, 2026 and December 31, 2025,
| Description | 2026 | 2025 | ||||||
| Furniture and office equipment | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Building and improvements | ||||||||
| Crypto-mining equipment | ||||||||
| Gross property, plant and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net property, plant and equipment | $ | $ | ||||||
Depreciation expense for the six months ended June 30, 2026 and 2025 amounted to $
| 13 |
8. BORROWINGS
There have been no material changes to the Company’s outstanding debt or the terms thereof from those disclosed in Note 8 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, except as described below:
Cedar Advance LLC (“Cedar”)
In February 2026, the Company issued
Acquisition Note Settlement
In February 2026, the Company issued
Due to Affiliates Settlement
In February 2026, the Company issued
CS Digital Acquisition Notes
In connection with the acquisition of CS Digital Ventures, LLC on May 26, 2026 (see Note 4), the Company issued seven notes payable with an aggregate principal balance of $
9. CONSTRUCTION BACKLOG
The following represents the backlog of signed construction and engineering contracts in existence at June 30, 2026 and December 31, 2025, which represents the amount of revenue the Company expects to realize from work to be performed on uncompleted contracts in progress and from contractual agreements in effect at such dates on which work has not yet begun:
| Six Months Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||
| Balance - beginning of period | $ | $ | ||||||
| New contracts and change orders during the period | ||||||||
| Subtotal | ||||||||
| Less: contract revenue earned during the period | ( | ) | ( | ) | ||||
| Balance - end of period | $ | $ | ||||||
The Company’s remaining backlog as of June 30, 2026 represents the remaining transaction price of firm contracts for which work has not been performed and excludes unexercised contract options.
| 14 |
The Company expects to satisfy its backlog, which represents the remaining unsatisfied performance obligation on contracts as of June 30, 2026, within one year. The Company has elected the practical expedient that allows it to omit disclosure of remaining performance obligations for contracts with an original expected duration of one year or less.
Although backlog reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. Backlog is adjusted to reflect any known project cancellations, revisions to project scope and cost and project deferrals, as appropriate.
10. SEGMENT REPORTING
The Company allocates to segment results certain operating expenses, including payroll and related expenses, general and administrative expenses, marketing and business development expenses, and pre-project costs, based on usage, which is generally reflected in the segment in which the costs are incurred. These segments reflect the way the CODM evaluates the Company’s business performance and manages its operations.
The Construction segment includes the Company’s manufacturing unit and other modular projects. The SaaS segment consists primarily of Machfu and its related industrial IoT products and services. The Oil and Gas segment reflects the operations of Olenox Corp. The Crypto Mining segment consists of the digital infrastructure and cryptocurrency mining operations of CS Digital Ventures, LLC, acquired on May 26, 2026 (see Note 4), and its results are included from the acquisition date.
Corporate consists of general corporate expenses such as the Company’s executive office; corporate finance, accounting, tax, human resources, risk management, information technology, marketing and legal functions; corporate overhead; and other items not allocated to any of the Company’s segments. From time to time, the Company revises the measurement of each segment’s cost of revenue and operating expenses, including any corporate overhead allocations, based on the information regularly reviewed by the CODM. The CODM regularly reviews a monthly statement of operations separated by segment, along with an analysis of the significant segment expenses described below.
| Construction | SaaS | Oil and Gas | Crypto Mining | Consolidated | ||||||||||||||||
| Three Months Ended June 30, 2026 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Significant segment expenses: | ||||||||||||||||||||
| Costs of revenue: | ||||||||||||||||||||
| Materials and labor | ( | ) | ( | ) | ||||||||||||||||
| Crypto-mining costs, excluding depreciation | ||||||||||||||||||||
| Oil and gas direct operating costs | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Total costs of revenue | ( | ) | ||||||||||||||||||
| Gross margin | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| 15 |
| Construction | SaaS | Oil and Gas | Crypto Mining | Consolidated | ||||||||||||||||
| Three Months Ended June 30, 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Significant segment expenses: | ||||||||||||||||||||
| Costs of revenue: | ||||||||||||||||||||
| Materials and labor | ||||||||||||||||||||
| Crypto-mining costs, excluding depreciation | ||||||||||||||||||||
| Oil and gas direct operating costs | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Total costs of revenue | ||||||||||||||||||||
| Gross margin | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
| Construction | SaaS | Oil and Gas | Crypto Mining | Consolidated | ||||||||||||||||
| Six Months Ended June 30, 2026 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Significant segment expenses: | ||||||||||||||||||||
| Costs of revenue: | ||||||||||||||||||||
| Materials and labor | ||||||||||||||||||||
| Crypto-mining costs, excluding depreciation | ||||||||||||||||||||
| Oil and gas direct operating costs | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Total costs of revenue | ||||||||||||||||||||
| Gross margin | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
| Construction | SaaS | Oil and Gas | Crypto Mining | Consolidated | ||||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | $ | |||||||||||||||
| Significant segment expenses: | ||||||||||||||||||||
| Costs of revenue: | ||||||||||||||||||||
| Materials and labor | ||||||||||||||||||||
| Crypto-mining costs, excluding depreciation | ||||||||||||||||||||
| Oil and gas direct operating costs | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Total costs of revenue | ||||||||||||||||||||
| Gross margin | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
| 16 |
11. EARNINGS PER SHARE
Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of the common shares issuable upon the exercise of stock options and warrants. Potentially dilutive common shares are excluded from the calculation if their effect is antidilutive.
Because the Company had a net loss for the six months ended June 30, 2026, potentially dilutive common shares were excluded from the computation of diluted loss per share because their effect would be antidilutive. Accordingly, the Company has used the same number of shares outstanding to calculate both the basic and diluted loss per share.
| June 30, 2026 | June 30, 2025 | |||||||
| Common stock options | ||||||||
| Restricted common stock units | ||||||||
| Common stock warrants | ||||||||
| Preferred stock | ||||||||
| Convertible notes payable | ||||||||
| Total potentially dilutive securities | ||||||||
12. STOCKHOLDERS’ EQUITY
Sale of Series C Preferred Stock
During the six months ended June 30, 2026, the Company sold
Conversions of Series C Preferred Stock
During the six months ended June 30, 2026, holders of the Company’s Series C Convertible Preferred Stock converted an aggregate of
Exchange of Series A Preferred Stock
In February 2026, the Company issued
Series E Preferred Stock
On June 17, 2026, the Company designated
| 17 |
Issuance of Series E Preferred Stock
In June 2026, in connection with the acquisition of CS Digital Ventures, LLC, the Company issued
Conversions of Series E Preferred Stock
During the six months ended June 30, 2026, holders of the Company’s Series E Convertible Preferred Stock converted an aggregate of
Settlement of Notes Payable and Due to Affiliates
As described in Note 8, during the six months ended June 30, 2026, the Company issued an aggregate of
Stock-Based Compensation
During the six months ended June 30, 2026 and 2025, the Company recognized stock-based compensation expense of $
13. COMMITMENTS AND CONTINGENCIES
Co-location hosting services
The Company is a party to two agreements for co-location hosting services entered into during 2024. The agreements have an initial term of three years and are usage-based: the Company reimburses the actual all-in cost of the power consumed by its equipment and pays an operations and maintenance charge of $
Under the agreements, revenue generated by the hosted equipment is shared
Each agreement required a refundable security deposit equal to approximately two months of the estimated hosting fee. Accordingly, other than those deposits, the Company is not subject to minimum payment obligations or minimum energy or hosting commitments under these arrangements.
Legal Proceedings
The Company is subject to certain claims and lawsuits arising in the normal course of business. The Company assesses liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its condensed consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. Based on information currently available, advice of counsel, and available insurance coverage, the Company believes that the established accruals are adequate and the liabilities arising from the legal proceedings will not have a material adverse effect on its consolidated financial condition, results of operations and cash flows. However, that in light of the inherent uncertainty in legal proceedings there can be no assurance that the ultimate resolution of a matter will not exceed established accruals. As a result, the outcome of a particular matter or a combination of matters may be material to the results of operations and cash flows for a particular period, depending upon the size of the loss or the income for that particular period.
| 18 |
Pizzarotti Litigation
On or about August 10, 2018, Pizzarotti, LLC (“Pizzarotti”) filed a complaint against the Company and Mahesh Shetty, the Company’s former President and CFO, and others, seeking unspecified damages for an alleged breach of contract by the Company and another entity named Phipps & Co. (“Phipps”). The lawsuit was filed as Pizzarotti, LLC. v. Phipps & Co., et al., Index No. 653996/2018 and commenced in the Supreme Court of the State of New York for the County of New York. On or about April 1, 2019, Phipps filed cross-claims against the Company and Mr. Shetty asserting claims for indemnification, contribution, fraud, negligence, negligent misrepresentation, and breach of contract. SG Blocks has likewise cross claimed against Phipps for indemnification and contribution, claiming that any damages to the Plaintiff were the result of the acts or omissions of Phipps and its principals.
Pizzarotti’s suit arose from a contract dated April 3, 2018 that it executed with Phipps whereby Pizzarotti, a construction manager, engaged Phipps to perform stone procuring and tile work at a construction project located at 161 Maiden Lane, New York 10038. Pizzarotti’s claims against the Company arise from a purported assignment agreement dated August 10, 2018, whereby Pizzarotti claims that the Company agreed to assume certain obligations of Phipps under a certain trade contract between Pizzarotti and Phipps. Phipps claims against the Company arise from a purported Assignment Agreement, dated as of May 30, 2018, between Pizzarotti, Phipps and the Company (the “Assignment Agreement”), pursuant to which, it is alleged, that the Company agreed to provide a letter of credit in connection with the sub-contracted work to be provided by Phipps to Pizzarotti.
The Company believes that the Assignment Agreement was void for lack of consideration and moved to dismiss the case on those and other grounds. On June 17, 2020, the New York Supreme Court entered an order dismissing certain claims against the Company brought by cross claimant Phipps. Specifically, the court dismissed Phipps claims for indemnification, contribution, fraud, negligence and negligent misrepresentation. However, the court did not dismiss Phipps claim for breach of the Assignment Agreement. The issue of the validity of the Assignment Agreement, and the Company’s defenses to the claims brought by the plaintiff Pizzarotti and cross claimant Phipps, are being litigated. The Company maintains that the Assignment Agreement, to the extent valid and enforceable, was properly terminated and/or there are no damages, and, consequently, that the claims brought against the Company are without merit. The Company intends to continue to vigorously defend the litigation. The matter is currently adjourned until January 13, 2027. Litigation is subject to many uncertainties, and the outcome of this action is not predicted with assurance. The Company is currently unable to predict the outcome or possible recovery or loss or range of loss, if any, associated with the resolution of this litigation, and, accordingly, the Company has made no provision related to this matter in the accompanying condensed consolidated financial statements.
CPF GP 2019-1, LLC Litigation
In September 2023, a suit was filed in the form of a declaratory judgment to say CPF GP did not owe certain monies to the Company. The Company filed counterclaims for the amounts owed. The case settled in February 2024 in exchange for mutual dismissals and monthly payments of the balance due, which is $
| 19 |
Farnam Litigation
In October 2023, Farnam Street Financial, Inc. (“Farnam”) filed suit against the Company in the United States District Court for the District of Minnesota (Case No. 23-CV-3212) alleging breaches by the Company under a certain lease agreement between Farnam and the Company dated as of October 13, 2021. Farnam sought monies owed under such lease agreement. On August 1, 2024, the Company, SG Echo and SG Environmental Solutions Corp. (“SG Environmental”), a wholly owned subsidiary of the Company, entered into a settlement agreement (the “Settlement”) with Farnam to resolve the pending litigation. Simultaneously with the execution of the Settlement, (i) the Company, SG Environmental and Farnam entered into an assignment and assumption agreement, pursuant to which SG Environmental was substituted for the Company as the lessee under the lease agreement, and (ii) SG Environmental and Farnam executed a new Lease Schedule No. 001R (Schedule 1R), which replaced the prior schedule in its entirety. The terms of the Settlement included the following: (i) SG Environmental will be the signatory as the Lessee under the lease; (ii) the initial term (the Initial Term) of Schedule 1R is 18 months; (iii) the Commencement Date of Schedule 1R is August 1, 2024; (iv) the original cost of the equipment subject to Schedule 1R is $
American Express Litigation
In December 2023, American Express Travel Related Services Company, Inc. (AMEX) filed suit against the Company in the Supreme Court of the State of New York, County of New York (Case No. 162231/2023) alleging breaches of a commercial credit card agreement between AMEX and the Company, dated as of November 8, 2022. AMEX sought monies owed under the commercial credit card agreement, with a balance of $
Choctaw Litigation
In March 2024, the Choctaw Nation of Oklahoma (“Choctaw Nation”) filed suit against SG Echo and the Company in the District Court of Bryan County, State of Oklahoma (Case No. CJ-2024-41) alleging: (a) breaches by SG Echo under a certain commercial lease agreement between SG Echo and the Choctaw Nation related to commercial property located at 2917 Big Lots Road, Durant, Oklahoma 74701; and (b) declaratory and injunctive relief relating to certain cranes, declaring the Choctaw Nation to be the owner of the cranes and not SG Echo. The Company disputes the Choctaw Nations allegations. As of June 30, 2026, the case remains pending. As of June 30, 2026, the estimated potential loss to the Company is approximately $
Durant Industrial Authority Litigation
In November 2024, the filed suit against the Company, SG Echo, and among others, alleging breaches by the Company and SG Echo under a certain forgivable promissory note executed between SG Echo as the borrower and the Authority as the lender in the principal sum of $
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Rulien Litigation
In March 2024, Rulien Advisors, LLC (“Rulien”) filed a lawsuit against the Company in the Supreme Court of the State of New York, Commercial Division, Kings County (Case No. 506426/2024), alleging breaches of a consulting agreement dated December 17, 2018 (the “Consulting Agreement”), pursuant to which the Company engaged Rulien as a non-exclusive independent sales representative to promote the sale of, and solicit orders for, the Company’s products and services. Rulien alleges that it is entitled to commissions totaling $
On June 24, 2026, the court entered a default judgment against the Company. The Company has retained litigation counsel and will shortly file a motion to vacate the default judgment. The Company disputes Rulien’s claims and intends to vigorously defend the matter.
At this time, the Company is unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter. Accordingly, no liability has been recorded in the accompanying condensed consolidated financial statements.
Caliber Litigation
In June 2024, Caliber Corporate Advisers, LLC (“Caliber”) filed suit against the Company in the Supreme Court of the State of New York, County of New York (Case No. 652893/2024) alleging breaches of a Consulting Services Agreement between Caliber and the Company (the “Services Agreement”), alleging a balance owed of $
MDisrupt Litigation
In August 2024, MDisrupt, Inc. (“MDisrupt”) filed suit against Safe and Green Medical Corporation (“SG Medco”) and the Company in the 353rd District Court of Travis County, Texas (Case No. D-1-GN-24-003213) alleging breaches of a consulting services agreement between SG Medco and MDisrupt entered into on or about September 20, 2023 (the “MDisrupt Services Agreement”), alleging a balanced owed of $
Prakash Chakravarthi Arbitration
In April 2026, Prakash Chakravarthi (“Prakash”) filed a complaint and demand for arbitration against NAHD, Olenox, and the Company in Dallas, Texas alleging breaches of the Plan and Agreement of Reorganization (“PAR Agreement”), dated November 8, 2024, by and among NAHD and the shareholders of Machfu, alleging unpaid bank loans and a credit card of Machfu of approximately $
Machfu Employees Litigation
In April 2026, Prakash Chakravarthi, Minakshisundaran Anand, Bharath Kishan, Ajinkya Wakhale, Karen Shariati, and Stanislav Bobovych (collectively, the “Machfu Employees”) filed suit against Machfu, NAHD, Olenox., and the Company in the United States District Court for the District of Maryland (Case No. 26-cv-01614-PX) alleging unpaid wages, retaliatory termination, among others. The Company disputes the claims made by the Machfu Employees. The Company believes that Machfu has suffered significant harm as a direct result of the actions of Machfu Employees, resulting in lost revenues. The Company filed a motion to dismiss on June 12, 2026. The Machfu Employees filed an amended complaint on June 26, 2026. The estimated potential loss to the Company is $
Sara Garcia Litigation
In March 2026, Sara Garcia (“Ms Garcia”) filed a Statement of Claim against Giant and the Company in the Ontario Superior Court of Justice (Court File No. CV-26-00005478-000) alleging wrongful dismissal in the amount of $
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SG Blocks, Inc. v HOLA Community Partners, et. al.
On April 13, 2020, Plaintiff, SG Blocks, filed a Complaint against HOLA Community Partners (“HCP”), Heart of Los Angeles Youth, Inc. (“HOLA”) (HCP and HOLA are collectively referred to as the “HOLA Defendants”), and the City of Los Angeles (the “City”) in the United States District Court for the Central District of California, Case No. 2:20-cv-03432-ODW (“HOLA Action”). The Company asserted seven claims against the HOLA Defendants arising out of and related to the Heart of Los Angeles construction project in Los Angeles (the “HOLA Project”), to wit, for: (1) breach of contract; (2) conversion; (3) default and judicial foreclosure under the Agreement as a security agreement; (4) misappropriation of trade secrets under California Civil Code section 3426; (5) misappropriation of trade secrets under 18 U.S.C. 1836; and (6) intentional interference with contractual relations. On April 20, 2020, HOLA filed a separate action against the Company in the Los Angeles Superior Court arising out of the HOLA Project, asserting claims of (1) negligence; (2) strict products liability; (3) strict products liability, (4) breach of contract; (5) breach of express warranty; (6) violation of Business and Professions Code 7031(b); and (7) violation of California’s unfair competition law, Business and Professions Code section 17200 (UCL) (the “HOLA State Court Action”). The HOLA State Court Action was removed to the Central District of California and consolidated with the HOLA Action.
On January 22, 2021, the Company filed a Third-Party Complaint in the HOLA Action against Third-Party Defendants Teton Buildings, LLC, Avesi Construction, LLC (Avesi Construction), and American Home Building and Masonry Corp for indemnity and contribution with respect to HOLAs claims. The Company has also notified its general liability carrier, Sompo International (“Sompo”), regarding coverage concerning HOLAs claims On February 25, 2021, the court entered an order dismissing the Company’s claims for (1) breach of contract; (2) conversion; (3) default and judicial foreclosure under the Agreement as a security agreement; (4) misappropriation of trade secrets under California Civil Code section 3426; (5) misappropriation of trade secrets under 18 U.S.C. 1836; but denied dismissal of the Company’s claims for intentional interference with contractual relations. The Court also denied the Company’s motion to dismiss HOLAs claims.
On March 12, 2021, the HOLA Defendants filed an answer to the Company’s complaint against it denying liability and asserting affirmative defenses. On March 12, 2021, the Company filed an answer to the HOLA Defendants First Amended Consolidated Complaint against it, denying liability and asserting affirmative defenses.
On April 26, 2021, the Company and the HOLA Defendants filed a Joint Stipulation to Dismiss HOLA Community Partners Sixth Claim for Relief (violation of California Business and Professions Code 7031(b)), with prejudice, pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii).
On July 23, 2021, the Company filed a First Amended Third-Party Complaint adding the following additional third-party defendants seeking, inter alia, contractual indemnity, equitable indemnity; and contribution: American Home Building and Masonry Corp. (American Home), Anderson Air Conditioning, L.P. (Anderson), Broadway Glass and Mirror, Inc. (Broadway), Marne Construction, Inc. (Marne), The McIntyre Company (McIntyre), Dowell & Bradley Construction, Inc. dba J R Construction (JR Construction), Junior Steel Co. (Junior Steel), Saddleback Roofing, Inc. (Saddleback), Schindler Elevator Corporation (Schindler), U.S. Smoke & Fire Corp. (U.S. Smoke), and FirstForm, Inc. (FirstForm) (collectively the” Additional Third Party Defendants”).
On September 2, 2021, Schindler filed its answer to the First Amended Third-Party Complaint. On September 3, 2021, Junior Steel filed its answer to the First Amended Third-Party Complaint. On September 7, 2021, Anderson filed its answer to the First Amended Third-Party Complaint. On October 6, 2021, the McIntyre filed its answer to the First Amended Third-Party Complaint.
On February 7, 2022, the Company filed a request for entry of a clerks default against the following defendants: American Home, Avesi Construction, Marne, FirstForm, JR Construction, Saddleback, and US Smoke. On February 9, 2022, the court entered a clerks default pursuant to Federal Rule 55 against the following defendants: American Home, Avesi Construction, JR Construction, Saddleback and U.S. Smoke. The parties that have answered and appeared in the case are currently engaged in discovery.
The dispute between SG Blocks, HCP, and others in the above-described lawsuit settled, and a formal settlement agreement was executed in December 2022. In accordance with the settlement agreement, all funds to be paid were, in fact, paid. On February 27, 2023, the settling parties filed a Joint Stipulation to Dismiss All Causes of Action Against All Parties Except Avesi Construction and Saddleback. The claims against the settling parties, pursuant to the settlement, were to be dismissed and have since been dismissed. SG Blocks had taken defaults against Avesi Construction and Saddleback, and is continuing to pursue default judgments against same.
On February 17, 2025, the Company executed a Settlement Agreement and Release with Saddleback, to release all claims between the parties. As part of the settlement, Saddleback agreed to pay a settlement payment of $
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SG Blocks, Inc. v. EDI International, PC
On June 21, 2019, SG Blocks filed a lawsuit against EDI International, PC (“EDI”), a New Jersey corporation, in connection with the parties consulting agreement dated June 29, 2016, pursuant to which EDI was to provide, for a fee, certain architectural and design services for the original project between the Company and the HOLA Project. The lawsuit is styled SG Blocks, Inc. v. EDI et al., and was filed in California Superior Court, for the County of Los Angeles, case no. 19STCV21725. SG Blocks claims that EDI, tortiously interfered with SG Blocks economic relationship with HCP and HOLA. The complaint seeks in excess of $
Crescendo Communications Litigation
In December 2025, Crescendo Communications, LLC (“Crescendo”) filed suit against the Company in the Supreme Court of the State of New York, County of Nassau (Case No. 626903/2025) alleging breach of contract, dated as of March 8, 2023. On April 9, 2026, the court entered a default judgment dated January 30, 2026, in the amount of $
Enhanced Capital Litigation
On August 11, 2026, Enhanced Capital Oklahoma Rural Fund, LLC filed a lawsuit against the Company (Enhanced Capital Oklahoma Rural Fund, LLC v. Olenox Industries, Inc. f/k/a Safe and Green Holdings Corp., Case No. CJ-2026-03640) alleging breach of contract and unjust enrichment. According the Complaint, the plaintiff is alleging the Company is a guarantor under a certain promissory note issued by the Company’s subsidiary, SG Echo, and that SG Echo has failed to make payments under the promissory note. SG Echo filed for bankruptcy in April 2026. As a result, the plaintiff is seeking to collect the amounts owed from the Company. The plaintiffs allege $
14. RELATED PARTY TRANSACTIONS
As disclosed in Note 8, certain of the Company’s notes payable are held by related parties.
As disclosed in Notes 8 and 12, during the six months ended June 30, 2026, the Company issued
As of June 30, 2026 and December 31, 2025, $
As of June 30, 2026 and December 31, 2025, accounts payable and accrued expenses include $
15. SUBSEQUENT EVENTS
Psylinks Neurotech Corp Acquisition. On July 3, 2026, the Company acquired
Between August 3 and August 14, 2026, JAK Industrial Ventures I LLC converted an aggregate of
On August 4, 2026, the Company amended its Stock Purchase Agreement and Registration Rights Agreement with General Alpha Ltd. The amendment, among other changes, extended the term of the Stock Purchase Agreement through August 3, 2028, and modified certain anti-dilution, variable rate transaction and repayment provisions.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Introduction and Certain Cautionary Statements
As used in this Quarterly Report on Form 10-Q for the period ended June 30, 2026 (this “Quarterly Report on Form 10-Q”), unless the context requires otherwise, references to the “Company,” “we,” “us,” and “our” refer to Olenox Industries Inc. and its subsidiaries. The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and schedules included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes for the year ended December 31, 2025, which were included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2026 (the “2025 Form 10-K”). This discussion, particularly information with respect to our future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading “Special note regarding forward-looking statements” in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading “Risk Factors” in the 2025 Form 10-K and in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
Special note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements contained in this Quarterly Report on Form 10-Q may use forward-looking terminology, such as “anticipates,” “believes,” “could,” “would,” “estimates,” “may,” “might,” “plan,” “expect,” “intend,” “should,” “will,” or other variations on these terms or their negatives. All statements other than statements of historical facts are statements that could potentially be forward-looking. The Company cautions that forward-looking statements involve risks and uncertainties and actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate or prediction is realized. Factors that could cause or contribute to such differences include, but are not limited to: our ability to continue as a going concern; our ability to obtain additional financing on acceptable terms, if at all, or to obtain additional capital in other ways ; general economic, political and financial conditions, including inflation, both in the United States and internationally; our ability to increase sales, generate income, effectively manage our growth and realize our backlog; competition in the markets in which we operate, including the consolidation of our industry, our ability to expand into and compete in new geographic markets and our ability to compete by protecting our proprietary manufacturing process; a disruption or cybersecurity breach in our or third-party suppliers’ information technology systems; our ability to adapt our products and services to industry standards and consumer preferences and obtain general market acceptance of our products; product shortages and the availability of raw materials, and potential loss of relationships with key vendors, suppliers or subcontractors; the seasonality of the construction industry in general, and the commercial and residential construction markets in particular; a disruption or limited availability with our third party transportation vendors; the loss or potential loss of any significant customers; exposure to product liability, including the possibility that our liability for estimated warranties may be inadequate, and various other claims and litigation; our ability to attract and retain key employees; our ability to attract private investment for sales of product; the credit risk from our customers and our customers’ ability to obtaining third-party financing if and as needed; an impairment of goodwill; the impact of federal, state and local regulations, including changes to international trade and tariff policies, and the impact of any failure of any person acting on our behalf to comply with applicable regulations and guidelines; costs incurred relating to current and future legal proceedings or investigations; the cost of compliance with environmental, health and safety laws and other local building regulations; our ability to utilize our net operating loss carryforwards and the impact of changes in the United States’ tax rules and regulations; dangers inherent in our operations, such as natural or man-made disruptions to our facilities and project sites and other restrictions on business and commercial activity and the adequacy of our insurance coverage; our ability to comply with the requirements of being a public company; fluctuations in the price of our common stock, including decreases in price due to sales of significant amounts of stock; potential dilution of the ownership of our current stockholders due to, among other things, public offerings or private placements by the Company or issuances upon the exercise of outstanding options or warrants and the vesting of restricted stock units; the ability of our principal stockholders, management and directors to potentially exert control due to their ownership interest; any ability to pay dividends in the future; potential negative reports by securities or industry analysts regarding our business or the construction industry in general; Delaware law provisions discouraging, delaying or preventing a merger or acquisition at a premium price; our ability to remain listed on the Nasdaq Capital Market and the possibility that our stock will be subject to penny stock rules; our classification as a smaller reporting company resulting in, among other things, a potential reduction in active trading of our common stock or increased volatility in our stock price; and any factors discussed in “Part II - Item 1A. Risk Factors” to this Quarterly Report on Form 10-Q as well as “Part I - Item 1A. Risk Factors” in our 2025 Form 10-K, and other filings with the SEC. In addition, certain information presented below is based on unaudited financial information. There can be no assurance that there will be no changes to this information once audited financial information is available. As a result, readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of this report. The Company will not undertake to update any forward-looking statement herein or that may be made from time to time on behalf of the Company.
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Overview
We are a vertically integrated energy company and digital infrastructure operator with business lines spanning oil and gas, energy services, energy technologies and cryptocurrency mining. Following our acquisition of CS Digital Ventures, LLC on May 26, 2026, we report four segments: Construction, Software-as-a-Service (“SaaS”), Oil and Gas and Crypto Mining.
The construction segment creates purpose built, prefabricated modules from wood, steel, and shipping containers, through our manufacturing unit SG Echo and other module projects. The oil and gas segment reflects the operations of Olenox Corp., which specializes in acquiring and revitalizing underdeveloped energy assets in Texas, Oklahoma, and Kansas, leveraging proprietary plasma pulse and ultrasonic cleaning tools to enhance production efficiency while reducing environmental impact. The SaaS segment consists primarily of Machfu, Inc. and its related industrial IoT products and services, providing secure, low-power edge-to-cloud connectivity and edge computing for critical infrastructure and industrial operations.
Recent Developments
During the Quarter:
SG Echo Chapter 11 Filing. On April 28, 2026, SG Echo LLC, a wholly owned subsidiary of the Company, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Oklahoma. SG Echo continues to operate its business as a debtor-in-possession while pursuing a court-supervised reorganization. The Chapter 11 proceeding is limited to SG Echo and does not include the Company or its other subsidiaries. The Chapter 11 filing triggered an event of default under certain SG Echo debt agreements, including approximately $4.0 million owed to Enhanced Capital Oklahoma Rural Fund, LLC.
Reverse Stock Split. On May 8, 2026, the Company effected a 1-for-10 reverse stock split of its outstanding common stock. All share and per share amounts in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the reverse stock split.
CS Digital Acquisition. On May 26, 2026, we completed the acquisition of 100% of the membership interests of CS Digital Ventures, LLC, a provider of digital infrastructure and cryptocurrency mining services, for upfront consideration of $30.0 million consisting of $14.0 million of preferred stock and a $16.0 million unsecured promissory note, together with warrants and contingent consideration of up to $20.0 million. The acquisition established our Crypto Mining segment, which generated revenue of $1,452,752 from the acquisition date through June 30, 2026.
Subsequent to June 30, 2026:
Psylinks Neurotech Corp Acquisition. On July 3, 2026, we acquired 100% of the outstanding shares of Psylinks Neurotech Corp. in exchange for 104,166 restricted shares of our common stock, valued at approximately $500,000. The son of our Chief Executive Officer was a 50% owner of Psylinks Neurotech Corp. and therefore this transaction represents a related party transaction.
Results of Operations
Three and Six Months Ended June 30, 2026 and 2025:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total revenue | $ | 2,118,355 | $ | 721,351 | $ | 2,403,668 | $ | 1,287,705 | ||||||||
| Total cost of revenue | (1,870,832 | ) | (1,715,819 | ) | (2,262,984 | ) | (2,605,928 | ) | ||||||||
| Total payroll and related expenses | (961,279 | ) | (737,794 | ) | (1,653,659 | ) | (1,293,532 | ) | ||||||||
| Total other operating expenses | (2,223,894 | ) | (1,955,518 | ) | (4,307,789 | ) | (2,908,007 | ) | ||||||||
| Total operating loss | (2,937,650 | ) | (3,687,780 | ) | (5,820,764 | ) | (5,519,762 | ) | ||||||||
| Total other income (expense) | (305,650 | ) | (886,090 | ) | (88,260 | ) | (1,800,776 | ) | ||||||||
| Total loss before income tax | (3,243,300 | ) | (4,573,870 | ) | (5,909,024 | ) | (7,320,538 | ) | ||||||||
| Deemed dividend for preferred shareholders | — | — | (395,967 | ) | — | |||||||||||
| Net loss attributable to common stockholders | $ | (3,243,300 | ) | $ | (4,573,870 | ) | $ | (6,304,991 | ) | $ | (7,320,538 | ) | ||||
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Revenue
During the three and six months ended June 30, 2026, we derived revenue from our construction services, oil and gas operations, industrial IoT (SaaS) operations and, beginning May 26, 2026, our cryptocurrency mining operations. Total revenue was $2,118,355 for the three months ended June 30, 2026 compared to $721,351 for the three months ended June 30, 2025, an increase of $1,397,004, or 193.7%. Total revenue was $2,403,668 for the six months ended June 30, 2026 compared to $1,287,705 for the six months ended June 30, 2025, an increase of $1,115,963, or 86.7%. The increase in both periods was driven by $1,452,752 of cryptocurrency mining revenue generated following the CS Digital acquisition, together with an increase in oil and gas revenue to $112,761 and $272,054 for the three and six months ended June 30, 2026, respectively, from $61,638 in each of the corresponding 2025 periods. These increases were partially offset by lower construction services revenue of $488,039 and $588,511 for the three and six months ended June 30, 2026, respectively, compared to $523,558 and $1,019,637 for the corresponding 2025 periods, reflecting reduced production at SG Echo and the effect of its Chapter 11 filing, and by lower SaaS revenue of $64,803 and $90,351 for the three and six months ended June 30, 2026, respectively, compared to $136,155 and $206,430 for the corresponding 2025 periods.
Cost of Revenue and Gross Profit
Cost of revenue was $1,870,832 for the three months ended June 30, 2026, compared to $1,715,819 for the three months ended June 30, 2025, an increase of $155,013, or 9.03%. For the six months ended June 30, 2026, cost of revenue was $2,262,984 compared to $2,605,928 for the six months ended June 30, 2025, a decrease of $342,944, or 19.99%. The increase in the three-month period reflects $1,226,031 of depreciation on cryptocurrency mining equipment and other mining costs incurred following the CS Digital acquisition, offset by lower construction costs as construction activity declined.
Gross profit was $247,523 for the three months ended June 30, 2026 compared to a gross loss of $(994,468) for the three months ended June 30, 2025. For the six months ended June 30, 2026, gross profit was $140,684 compared to $(1,318,223) for the six months ended June 30, 2025.
Gross margin was 11.68% for the three months ended June 30, 2026 compared to (137.9)% for the three months ended June 30, 2025, and 5.85% for the six months ended June 30, 2026 compared to (102.4)% for the six months ended June 30, 2025. The change in gross margin reflects the addition of cryptocurrency mining operations following the CS Digital acquisition and a reduced proportion of construction activity.
Operating Expenses
Payroll and related expenses were $961,279 for the three months ended June 30, 2026 compared to $737,794 for the three months ended June 30, 2025, an increase of $223,485, or 30.3%. For the six months ended June 30, 2026, payroll and related expenses were $1,653,659 compared to $1,293,532 for the six months ended June 30, 2025, an increase of $360,127, or 27.8%. The increases reflect headcount added through the CS Digital acquisition and higher stock-based compensation.
Other operating expenses (general and administrative expenses and marketing and business development expenses) were $2,223,894 for the three months ended June 30, 2026 compared to $1,955,518 for the three months ended June 30, 2025, an increase of $268,376, or 13.72%. For the six months ended June 30, 2026, other operating expenses were $4,307,789 compared to $2,908,007 for the six months ended June 30, 2025, an increase of $1,399,782, or 48,14%. The increases in both periods were driven primarily by professional fees and other transaction-related costs associated with the Company’s acquisition and financing activity.
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Other Income (Expense)
Other expense totaled $(305,650) during the three months ended June 30, 2026, compared to other expense of $(886,090) during the three months ended June 30, 2025. For the six months ended June 30, 2026, other expense totaled $(88,260) compared to $(1,800,776) for the six months ended June 30, 2025. The improvement in both periods reflects a $1,197,449 gain on debt extinguishment, net of a $613,723 loss on debt extinguishment, recognized in the first quarter of 2026, together with lower interest expense, net, of $316,540 and $682,297 for the three and six months ended June 30, 2026, respectively, compared to $935,963 and $1,539,089 for the corresponding 2025 periods, as a result of debt settled through the issuance of common stock.
Net loss was $(3,243,300) and $(5,909,024) for the three and six months ended June 30, 2026, respectively, compared to $(4,573,870) and $(7,320,538) for the corresponding 2025 periods. Our operations for the three and six months ended June 30, 2026 and 2025 may not be indicative of our future operations.
Liquidity and Capital Resources
Historically, the Company has funded its operations through a combination of operating revenues, equity and debt financings. As of June 30, 2026, the Company had cash and cash equivalents of $1,210,965, compared to $427,866 as of December 31, 2025, and a working capital deficit of approximately $22.9 million.
The Company has incurred recurring operating losses and negative operating cash flows, which raise substantial doubt about its ability to continue as a going concern. See Note 2, Liquidity and Going Concern, to the condensed consolidated financial statements for additional information.
Management intends to meet the Company’s capital needs through revenue generated from operations, cost containment initiatives, strategic alliances and, as necessary, additional debt or equity financings. There can be no assurance the Company will be successful in meeting its capital requirements prior to becoming cash flow positive. The Company does not currently have committed sources of additional financing, and if it is unable to obtain the capital required when needed, it may be required to materially modify its business plan, including delaying or curtailing planned activities.
As of June 30, 2026, stockholders’ equity was $19,361,967 compared to $7,589,746 as of December 31, 2025. The increase is primarily attributable to the $14,000,000 of Series E Preferred Stock issued as consideration for the CS Digital acquisition and $1,547,800 of net proceeds from the sale of Series C Preferred Stock, partially offset by the net loss for the period. The Company had an accumulated deficit of $123,261,297 as of June 30, 2026.
Cash Flow Summary
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | $ | (1,112,399 | ) | $ | (3,179,546 | ) | ||
| Investing activities | 351,519 | (2,473,834 | ) | |||||
| Financing activities | 1,543,979 | 8,044,717 | ||||||
| Net increase in cash and cash equivalents | $ | 783,099 | $ | 2,391,337 | ||||
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Operating activities used net cash of $1,112,399 during the six months ended June 30, 2026, and used net cash of $3,179,546 during the six months ended June 30, 2025. The decrease in cash used reflects a lower net loss and favorable movements in accounts payable and accrued expenses and cryptocurrency holdings.
Investing activities provided net cash of $351,519 during the six months ended June 30, 2026, and used net cash of $2,473,834 during the six months ended June 30, 2025. The 2026 amount reflects $514,751 of cash acquired in the CS Digital business combination, partially offset by $163,232 of purchases of property and equipment. The 2025 amount reflects $2,000,000 of oil and gas asset purchases and $364,847 of purchases of property, plant and equipment.
Financing activities provided net cash of $1,543,979 and $8,044,717 during the six months ended June 30, 2026 and 2025, respectively. The amount for the six months ended June 30, 2026 consists of $1,547,800 of net proceeds from the sale of common and preferred stock, partially offset by $3,821 of payments on short-term notes payable. The 2025 amount reflects $6,635,294 of net proceeds from the sale of common stock and $3,044,232 of proceeds from short-term notes, partially offset by $1,634,809 of repayments.
Off-Balance Sheet Arrangements
As of June 30, 2026 and December 31, 2025, the Company had no material off-balance sheet arrangements to which we are a party.
In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions which, in our judgment, are normal and customary for companies in our industry sector. These agreements are typically with consultants and certain vendors. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to actions taken or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions as of June 30, 2026.
Critical Accounting Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
There have been no material changes to the critical accounting estimates disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
New Accounting Pronouncements
Accounting Standards Recently Adopted
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.
The Company adopted ASU 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, effective January 1, 2025. The Company held no crypto assets on that date, and accordingly no cumulative-effect adjustment to accumulated deficit was recorded on adoption. The Company first applied the guidance during the second quarter of 2026, when it acquired crypto assets and commenced cryptocurrency mining operations in connection with the acquisition of CS Digital Ventures, LLC described in Note 4.
In connection with those operations, the Company established accounting policies for crypto assets and for cryptocurrency mining revenue, which are described above. The initial adoption of an accounting policy for transactions that had not previously occurred is not a change in accounting principle, and no prior period amounts have been restated. Other than as described above, there have been no material changes to the Company’s significant accounting policies, or to recent accounting pronouncements adopted, from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This guidance will require additional disclosures and disaggregation of certain costs and expenses presented on the face of the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating the impact of this new guidance to its condensed consolidated financial statements.
The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying condensed consolidated financial statements.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.
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ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Principal Executive Officer and Principal Financial Officer concluded that, as of June 30, 2026, the Company’s disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As a result of these material weaknesses, there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.
Notwithstanding the identified material weaknesses, management believes that the condensed consolidated financial statements and other financial information included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows in conformity with U.S. GAAP.
Previously Reported Material Weaknesses
As disclosed in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, management identified material weaknesses in the Company’s internal control over financial reporting. One of those material weaknesses included to the Company’s controls over the estimation of the acquisition-date fair value estimates. The Company did not design and maintain effective controls over the determination of fair value estimates, and as a result the fair value of shares issued as consideration in a business combination was not appropriately recorded in the Company’s condensed consolidated financial statements for the interim periods ended interim periods ended March 31, 2025, June 30, 2025 and September 30, 2025.. Refer to Note 3 - Restatement of Previously Issued Financial Statements to our condensed consolidated financial statements.
Remediation
Management, with the oversight of the Audit Committee, is implementing measures designed to remediate the material weaknesses, including:
| 1. | enhancing the Company’s period-end financial reporting process for accounting estimates, including specific procedures over the determination of the acquisition-date fair value of equity consideration issued in a business combination; |
| 2. | engaging third-party consultants with technical U.S. GAAP and SEC reporting expertise to assist in the evaluation and review of complex and non-routine transactions; and |
| 3. | strengthening the Company’s accounting and financial reporting resources, including the appointment of a new Chief Financial Officer. |
The measures described above were implemented during the six months ended June 30, 2026.
The material weaknesses will not be considered remediated until the applicable controls have been designed and implemented, have operated for a sufficient period of time, and management has concluded, through testing, that those controls are operating effectively. Management is unable to predict when remediation will be complete.
Changes in Internal Control over Financial Reporting
During the six months ended June 30, 2026, the Company completed the remediation efforts described above. These changes are reasonably likely to materially affect the Company’s internal control over financial reporting. There were no other changes in the Company’s internal control over financial reporting during the six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believe these deficiencies create a reasonable possibility that material misstatements of the financial statements may not be prevented or detected on a timely basis. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is subject to certain claims and lawsuits arising in the normal course of business. The Company assesses liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its condensed consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. Based on information currently available, advice of counsel, and available insurance coverage, the Company believes that the established accruals are adequate and the liabilities arising from the legal proceedings will not have a material adverse effect on its consolidated financial condition, results of operations and cash flows. However, that in light of the inherent uncertainty in legal proceedings there can be no assurance that the ultimate resolution of a matter will not exceed established accruals. As a result, the outcome of a particular matter or a combination of matters may be material to the results of operations and cash flows for a particular period, depending upon the size of the loss or the income for that particular period.
Pizzarotti Litigation
On or about August 10, 2018, Pizzarotti, LLC (“Pizzarotti”) filed a complaint against the Company and Mahesh Shetty, the Company’s former President and CFO, and others, seeking unspecified damages for an alleged breach of contract by the Company and another entity named Phipps & Co. (“Phipps”). The lawsuit was filed as Pizzarotti, LLC. v. Phipps & Co., et al., Index No. 653996/2018 and commenced in the Supreme Court of the State of New York for the County of New York. On or about April 1, 2019, Phipps filed cross-claims against the Company and Mr. Shetty asserting claims for indemnification, contribution, fraud, negligence, negligent misrepresentation, and breach of contract. SG Blocks has likewise cross claimed against Phipps for indemnification and contribution, claiming that any damages to the Plaintiff were the result of the acts or omissions of Phipps and its principals.
Pizzarotti’s suit arose from a contract dated April 3, 2018 that it executed with Phipps whereby Pizzarotti, a construction manager, engaged Phipps to perform stone procuring and tile work at a construction project located at 161 Maiden Lane, New York 10038. Pizzarotti’s claims against the Company arise from a purported assignment agreement dated August 10, 2018, whereby Pizzarotti claims that the Company agreed to assume certain obligations of Phipps under a certain trade contract between Pizzarotti and Phipps. Phipps claims against the Company arise from a purported Assignment Agreement, dated as of May 30, 2018, between Pizzarotti, Phipps and the Company (the “Assignment Agreement”), pursuant to which, it is alleged, that the Company agreed to provide a letter of credit in connection with the sub-contracted work to be provided by Phipps to Pizzarotti.
The Company believes that the Assignment Agreement was void for lack of consideration and moved to dismiss the case on those and other grounds. On June 17, 2020, the New York Supreme Court entered an order dismissing certain claims against the Company brought by cross claimant Phipps. Specifically, the court dismissed Phipps claims for indemnification, contribution, fraud, negligence and negligent misrepresentation. However, the court did not dismiss Phipps claim for breach of the Assignment Agreement. The issue of the validity of the Assignment Agreement, and the Company’s defenses to the claims brought by the plaintiff Pizzarotti and cross claimant Phipps, are being litigated. The Company maintains that the Assignment Agreement, to the extent valid and enforceable, was properly terminated and/or there are no damages, and, consequently, that the claims brought against the Company are without merit. The Company intends to continue to vigorously defend the litigation. The parties have engaged in written discovery but no depositions have been conducted as of yet. By motion dated February 24, 2021, Pizzarotti moved to stay the entire action pending the outcome of a separate litigation captioned Pizzarotti, LLC v. FPG Maiden Lane, LLC et. al., Index No. 651697/2019, involving some of the same parties (but excluding the Company). Phipps cross moved to consolidate the two actions. The Company opposed both motions. On April 26, 2021, the court denied both motions and directed the parties to meet and confer concerning the scheduling of depositions. On May 10, 2021, the parties jointly filed with the court a proposed order providing the completion of depositions of all parties and non-parties by September 30, 2021. On April 4, 2024, the court entered an order setting forth the following dates for the completion of the parties depositions: (1) deposition of plaintiff shall occur by May 31, 2024, (2) deposition of Phipps shall occur by June 30, 2024, (3) deposition of the Company shall occur by July 20, 2024, (4) deposition of Mr. Shetty shall occur by August 9, 2024, (5) deposition of FPG Maiden Lane, & J. Landau shall occur by August 30, 2024, and (6) depositions of non-parties shall occur by September 30, 2024. Litigation is subject to many uncertainties, and the outcome of this action is not predicted with assurance. The Company is currently unable to predict the outcome or possible recovery or loss or range of loss, if any, associated with the resolution of this litigation, and, accordingly, the Company has made no provision related to this matter in the accompanying condensed consolidated financial statements.
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CPF GP 2019-1, LLC Litigation
In September 2023, a suit was filed in the form of a declaratory judgment to say CPF GP did not owe certain monies to the Company. The Company filed counterclaims for the amounts owed. The case settled in February 2024 in exchange for mutual dismissals and monthly payments of the balance due, which is $745,000 in total to the Company from CPF GP. To date, the Company has not received monthly payments and has not recorded this gain.
Farnam Litigation
In October 2023, Farnam Street Financial, Inc. (“Farnam”) filed suit against the Company in the United States District Court for the District of Minnesota (Case No. 23-CV-3212) alleging breaches by the Company under a certain lease agreement between Farnam and the Company dated as of October 13, 2021. Farnam sought monies owed under such lease agreement. On August 1, 2024, the Company, SG Echo and SG Environmental Solutions Corp. (“SG Environmental”), a wholly owned subsidiary of the Company, entered into a settlement agreement (the “Settlement”) with Farnam to resolve the pending litigation. Simultaneously with the execution of the Settlement, (i) the Company, SG Environmental and Farnam entered into an assignment and assumption agreement, pursuant to which SG Environmental was substituted for the Company as the lessee under the lease agreement, and (ii) SG Environmental and Farnam executed a new Lease Schedule No. 001R (Schedule 1R), which replaced the prior schedule in its entirety. The terms of the Settlement included the following: (i) SG Environmental will be the signatory as the Lessee under the lease; (ii) the initial term (the Initial Term) of Schedule 1R is 18 months; (iii) the Commencement Date of Schedule 1R is August 1, 2024; (iv) the original cost of the equipment subject to Schedule 1R is $1,556,163.00; (v) so long as there has been no default under the lease and Schedule 1R, SG Environmental shall have the option to purchase the equipment at the end of the Initial Term for thirty-five percent (35%) of the original cost of the equipment, or $544,657.05, plus applicable taxes; (vi) the Monthly Lease Charge under Schedule 1R is $65,880.95, plus applicable taxes; and (vii) SG Environmental shall provide a new security deposit under Schedule 1R in the amount of $167,056.00, which shall be paid on or before August 1, 2024. Simultaneously with the execution of the Settlement, the Company and SG Echo executed a guaranty, whereby each of the Company and SG Echo jointly and severally guarantee SG Environmentals’ full and prompt payment and performance under the lease and Schedule 1R. Per the Settlement, Farnam shall retain as income all prior payments from the Company (or any Company affiliate) under the lease, the prior schedule, or any other agreement with the Company or its affiliates, including all monthly lease charges, interim rent, taxes, interest, fees, late charges, and any security deposits, including the deposit under the prior schedule. Under the terms of the Settlement, Farnam and the Company each agree to waive and release any and all claims against the other, except with respect to each party’s performance under the Settlement and each partys future obligations under the lease, Schedule 1R and guaranty agreements. The case remains ongoing as disputes have arisen post-Settlement between the Company and Farnam. As of June 30, 2026, the Company cannot estimate any potential loss, besides the original amounts of approximately $1.5 million which are included in accounts payable and accrued expenses on accompanying condensed consolidated balance sheets.
American Express Litigation
In December 2023, American Express Travel Related Services Company, Inc. (AMEX) filed suit against the Company in the Supreme Court of the State of New York, County of New York (Case No. 162231/2023) alleging breaches of a commercial credit card agreement between AMEX and the Company, dated as of November 8, 2022. AMEX sought monies owed under the commercial credit card agreement, with a balance of $232,218.94 as of the commencement of the action. In August 2024, AMEX filed a Motion for Default Judgment, which was granted by the court on or about September 19, 2024, for the amount of damages requested in AMEXs motion. As of June 30, 2026, the estimated potential loss to the Company is approximately $232,000 which is included in accounts payable and accrued expenses on accompanying condensed consolidated balance sheets.
Choctaw Litigation
In March 2024, the Choctaw Nation of Oklahoma (“Choctaw Nation”) filed suit against SG Echo and the Company in the District Court of Bryan County, State of Oklahoma (Case No. CJ-2024-41) alleging: (a) breaches by SG Echo under a certain commercial lease agreement between SG Echo and the Choctaw Nation related to commercial property located at 2917 Big Lots Road, Durant, Oklahoma 74701; and (b) declaratory and injunctive relief relating to certain cranes, declaring the Choctaw Nation to be the owner of the cranes and not SG Echo. The Company disputes the Choctaw Nations allegations. As of June 30, 2026, the case remains pending. As of June 30, 2026, the estimated potential loss to the Company is approximately $138,000 which is included in accounts payable and accrued expenses on accompanying condensed consolidated balance sheets.
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Durant Industrial Authority Litigation
In November 2024, the filed suit against the Company, SG Echo, and among others, alleging breaches by the Company and SG Echo under a certain forgivable promissory note executed between SG Echo as the borrower and the Authority as the lender in the principal sum of $750,000, the Forgivable Note. The indebtedness under the Forgivable Note would be forgiven in three separate phases based upon the schedule set forth in the Forgivable Note. The Authority’s allegations include, among others, that due to SG Echos’ alleged breaches, the Forgivable Note is no longer forgivable and has been accelerated and is due in full. The Company and SG Echo dispute the Authority’s allegations. As of June 30, 2026, the case remains pending. As of June 30, 2026, the Company cannot estimate any additional potential loss, however as of June 30, 2026, the $750,000 is included in short-term notes payable on the accompanying condensed consolidated balance sheets.
Rulien Litigation
In March 2024, Rulien Advisors, LLC (“Rulien”) filed a lawsuit against the Company in the Supreme Court of the State of New York, Commercial Division, Kings County (Case No. 506426/2024), alleging breaches of a consulting agreement dated December 17, 2018 (the “Consulting Agreement”), pursuant to which the Company engaged Rulien as a non-exclusive independent sales representative to promote the sale of, and solicit orders for, the Company’s products and services. Rulien alleges that it is entitled to commissions totaling $1,373,750 in connection with (i) the alleged sale of property located at 1900 American Drive, Lago Vista, Texas, and (ii) the Company’s spin-off of its wholly owned subsidiary, Safe and Green Development Corporation, into a separately publicly traded company.
On June 24, 2026, the court entered a default judgment against the Company. The Company has retained litigation counsel and will shortly file a motion to vacate the default judgment. The Company disputes Rulien’s claims and intends to vigorously defend the matter.
At this time, the Company is unable to reasonably estimate the possible loss or range of loss, if any, associated with this matter. Accordingly, no liability has been recorded in the accompanying condensed consolidated financial statements.
Caliber Litigation
In June 2024, Caliber Corporate Advisers, LLC (“Caliber”) filed suit against the Company in the Supreme Court of the State of New York, County of New York (Case No. 652893/2024) alleging breaches of a Consulting Services Agreement between Caliber and the Company (the “Services Agreement”), alleging a balance owed of $46,350. The Company disputes Caliber’s claims, and claims that Caliber failed to provide meaningful services as set forth in the Services Agreement. As of June 30, 2026, the case remains pending. As of June 30, 2026, the Company cannot estimate any potential loss.
MDisrupt Litigation
In August 2024, MDisrupt, Inc. (“MDisrupt”) filed suit against Safe and Green Medical Corporation (“SG Medco”) and the Company in the 353rd District Court of Travis County, Texas (Case No. D-1-GN-24-003213) alleging breaches of a consulting services agreement between SG Medco and MDisrupt entered into on or about September 20, 2023 (the “MDisrupt Services Agreement”), alleging a balanced owed of $183,901. SG Medco and the Company dispute MDisrupt’s allegations. Further, the Company was not party to the MDisrupt Services Agreement. As of June 30, 2026, the case remains pending. As of June 30, 2026, the estimated potential loss to the Company is $183,901 which is included in accounts payable and accrued expenses on accompanying condensed consolidated balance sheets.
Prakash Chakravarthi Arbitration
In April 2026, Prakash Chakravarthi (“Prakash”) filed a complaint and demand for arbitration against NAHD, Olenox, and the Company in Dallas, Texas alleging breaches of the Plan and Agreement of Reorganization (“PAR Agreement”), dated November 8, 2024, by and among NAHD and the shareholders of Machfu, alleging unpaid bank loans and a credit card of Machfu of approximately $513,000, of which Prakash is the personal guarantor. The Company disputes Prakash’s claims and claims that Prakash breached the applicable representations and warranties set forth in the Agreement. As of June 30, 2026, the estimated potential loss to the Company is $513,000, which is included in accounts payable and accrued expenses on accompanying condensed consolidated balance sheets.
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Machfu Employees Litigation
In April 2026, Prakash Chakravarthi, Minakshisundaran Anand, Bharath Kishan, Ajinkya Wakhale, Karen Shariati, and Stanislav Bobovych (collectively, the “Machfu Employees”) filed suit against Machfu, NAHD, Olenox., and the Company in the United States District Court for the District of Maryland (Case No. 26-cv-01614-PX) alleging unpaid wages, retaliatory termination, among others. The Company disputes the claims made by the Machfu Employees. The Company believes that Machfu has suffered significant harm as a direct result of the actions of Machfu Employees, resulting in lost revenues. The Company is preparing its answer and counterclaims. The estimated potential loss to the Company is $107,783.57, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.
Sara Garcia Litigation
In March 2026, Sara Garcia (“Ms Garcia”) filed a Statement of Claim against Giant and the Company in the Ontario Superior Court of Justice (Court File No. CV-26-00005478-000) alleging wrongful dismissal in the amount of $186,666.67, breach of contract, accrued vacation pay, among others. The Company disputes Ms Garcia’s claims and shortly will be filing its statement of defence. The Company acquired Giant on or about December 18, 2025. Ms Garcia was an employee of Giant at the time of the acquisition. Ms. Garcia was terminated on February 3, 2026 due to Ms Garcia’s performance failures, failure to cooperate with superiors, failure to turn over access and control of Giant’s essential accounts to the Company, including Giant’s bank accounts, Giant’s internal software accounts, Giant’s external software accounts, Giant’s accounting software, among others. As of June 30, 2026, the Company cannot estimate any potential loss.
SG Blocks, Inc. v HOLA Community Partners, et. al.
On April 13, 2020, Plaintiff, SG Blocks, filed a Complaint against HOLA Community Partners (“HCP”), Heart of Los Angeles Youth, Inc. (“HOLA”) (HCP and HOLA are collectively referred to as the “HOLA Defendants”), and the City of Los Angeles (the “City”) in the United States District Court for the Central District of California, Case No. 2:20-cv-03432-ODW (“HOLA Action”). The Company asserted seven claims against the HOLA Defendants arising out of and related to the Heart of Los Angeles construction project in Los Angeles (the “HOLA Project”), to wit, for: (1) breach of contract; (2) conversion; (3) default and judicial foreclosure under the Agreement as a security agreement; (4) misappropriation of trade secrets under California Civil Code section 3426; (5) misappropriation of trade secrets under 18 U.S.C. 1836; and (6) intentional interference with contractual relations. On April 20, 2020, HOLA filed a separate action against the Company in the Los Angeles Superior Court arising out of the HOLA Project, asserting claims of (1) negligence; (2) strict products liability; (3) strict products liability, (4) breach of contract; (5) breach of express warranty; (6) violation of Business and Professions Code 7031(b); and (7) violation of California’s unfair competition law, Business and Professions Code section 17200 (UCL) (the “HOLA State Court Action”). The HOLA State Court Action was removed to the Central District of California and consolidated with the HOLA Action.
On January 22, 2021, the Company filed a Third-Party Complaint in the HOLA Action against Third-Party Defendants Teton Buildings, LLC, Avesi Construction, LLC (Avesi Construction), and American Home Building and Masonry Corp for indemnity and contribution with respect to HOLAs claims. The Company has also notified its general liability carrier, Sompo International (“Sompo”), regarding coverage concerning HOLAs claims On February 25, 2021, the court entered an order dismissing the Company’s claims for (1) breach of contract; (2) conversion; (3) default and judicial foreclosure under the Agreement as a security agreement; (4) misappropriation of trade secrets under California Civil Code section 3426; (5) misappropriation of trade secrets under 18 U.S.C. 1836; but denied dismissal of the Company’s claims for intentional interference with contractual relations. The Court also denied the Company’s motion to dismiss HOLAs claims.
On March 12, 2021, the HOLA Defendants filed an answer to the Company’s complaint against it denying liability and asserting affirmative defenses. On March 12, 2021, the Company filed an answer to the HOLA Defendants First Amended Consolidated Complaint against it, denying liability and asserting affirmative defenses.
On April 26, 2021, the Company and the HOLA Defendants filed a Joint Stipulation to Dismiss HOLA Community Partners Sixth Claim for Relief (violation of California Business and Professions Code 7031(b)), with prejudice, pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii).
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On July 23, 2021, the Company filed a First Amended Third-Party Complaint adding the following additional third-party defendants seeking, inter alia, contractual indemnity, equitable indemnity; and contribution: American Home Building and Masonry Corp. (American Home), Anderson Air Conditioning, L.P. (Anderson), Broadway Glass and Mirror, Inc. (Broadway), Marne Construction, Inc. (Marne), The McIntyre Company (McIntyre), Dowell & Bradley Construction, Inc. dba J R Construction (JR Construction), Junior Steel Co. (Junior Steel), Saddleback Roofing, Inc. (Saddleback), Schindler Elevator Corporation (Schindler), U.S. Smoke & Fire Corp. (U.S. Smoke), and FirstForm, Inc. (FirstForm) (collectively the” Additional Third Party Defendants”).
On September 2, 2021, Schindler filed its answer to the First Amended Third-Party Complaint. On September 3, 2021, Junior Steel filed its answer to the First Amended Third-Party Complaint. On September 7, 2021, Anderson filed its answer to the First Amended Third-Party Complaint. On October 6, 2021, the McIntyre filed its answer to the First Amended Third-Party Complaint.
On February 7, 2022, the Company filed a request for entry of a clerks default against the following defendants: American Home, Avesi Construction, Marne, FirstForm, JR Construction, Saddleback, and US Smoke. On February 9, 2022, the court entered a clerks default pursuant to Federal Rule 55 against the following defendants: American Home, Avesi Construction, JR Construction, Saddleback and U.S. Smoke. The parties that have answered and appeared in the case are currently engaged in discovery.
The dispute between SG Blocks, HCP, and others in the above-described lawsuit settled, and a formal settlement agreement was executed in December 2022. In accordance with the settlement agreement, all funds to be paid were, in fact, paid. On February 27, 2023, the settling parties filed a Joint Stipulation to Dismiss All Causes of Action Against All Parties Except Avesi Construction and Saddleback. The claims against the settling parties, pursuant to the settlement, were to be dismissed and have since been dismissed. SG Blocks had taken defaults against Avesi Construction and Saddleback, and is continuing to pursue default judgments against same.
On February 17, 2025, the Company executed a Settlement Agreement and Release with Saddleback, to release all claims between the parties. As part of the settlement, Saddleback agreed to pay a settlement payment of $400,000. All of the settlement proceeds were refunded to the Company’s insurer Sompo, based on monies already paid out by Sompo in the underlying matter. As the matter is now settled, the parties will shortly move the court to dismiss the Saddleback matter.
SG Blocks, Inc. v. EDI International, PC
On June 21, 2019, SG Blocks filed a lawsuit against EDI International, PC (“EDI”), a New Jersey corporation, in connection with the parties consulting agreement dated June 29, 2016, pursuant to which EDI was to provide, for a fee, certain architectural and design services for the original project between the Company and the HOLA Project. The lawsuit is styled SG Blocks, Inc. v. EDI et al., and was filed in California Superior Court, for the County of Los Angeles, case no. 19STCV21725. SG Blocks claims that EDI, tortiously interfered with SG Blocks economic relationship with HCP and HOLA. The complaint seeks in excess of $1,275,754 in damages. EDI, filed a cross-complaint for alleged unpaid fees and tortious interference with EDI contractual relationship with HCP and HOLA. EDI cross-complaint seeks in excess of $30,428.71 in damages. On July 8, 2020, SG Blocks added PVE LLC as a defendant in the lawsuit, claiming PVE LLC is liable to the same extent as EDI. In May 2021, the parties settled EDI affirmative claims, and its cross-complaint was dismissed with prejudice on August 23, 2021. On SG Blocks remaining claims, trial was set for October 2024. On or about November 15, 2024, the Company received a jury verdict in its favour in the amount of $1.274 million against EDI styled as SG Blocks, Inc. v EDI et al, case no. 19STCV21725, which has been secured to a judgment. The case is currently proceeding through post-judgment motions and filings. There remains uncertainty whether the Company will be able to collect on the judgment.
Crescendo Communications Litigation
In December 2025, Crescendo Communications, LLC (“Crescendo”) filed suit against the Company in the Supreme Court of the State of New York, County of Nassau (Case No. 626903/2025) alleging breach of contract, dated as of March 8, 2023. On April 9, 2026, the court entered a default judgment dated January 30, 2026, in the amount of $243,521.69. The Company has retained litigation counsel and will shortly file a motion to vacate the default judgment. The Company disputes Crescendo’s claims and intends to vigorously defend the matter. At this time, the Company is unable to reasonably estimate the potential loss or range of loss, if any, associated with this matter. Accordingly, no liability has been recorded in the accompanying condensed consolidated financial statements.
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Enhanced Capital Litigation
On August 11, 2026, Enhanced Capital Oklahoma Rural Fund, LLC filed a lawsuit against the Company (Enhanced Capital Oklahoma Rural Fund, LLC v. Olenox Industries, Inc. f/k/a Safe and Green Holdings Corp., Case No. CJ-2026-03640) alleging breach of contract and unjust enrichment. According the Complaint, the plaintiff is alleging the Company is a guarantor under a certain promissory note issued by the Company’s subsidiary, SG Echo, and that SD Echo has failed to make payments under the promissory note. SD Echo filed for bankruptcy in April 2026. As a result, the plaintiff is seeking to collect the amounts owed from the Company. The plaintiffs allege $4,674,947.07 is due under the promissory note. The Company is reviewing the Complaint and discussing its options, but plans to timely file a responsive pleading and vigorously contest the allegations in the lawsuit.
ITEM 1A. Risk Factors
Our business, financial condition, results of operations, and cash flows may be impacted by a number of factors, many of which are beyond our control, including those set forth in our most recent Annual Report on Form 10-K and in our other filings with the SEC, the occurrence of any one of which could have a material adverse effect on our actual results. There have been no material changes to the Risk Factors previously disclosed in our Annual Report on Form 10-K and our other filings with the SEC, except as follows:
On May 26, 2026, we closed the acquisition of CS Digital. We are in the process of integrating their operations and personnel with our own. If we are unable to complete this transition timely and effectively it could adversely affect our operations.
We are in the process of integrating the CS Digital personnel and operations into our operations since we closed the acquisition on May 26, 2026. Due to the size of the acquisition, and the fact CS Digital operates in the bitcoin mining business, we anticipate this transition will take some time. If we are not able to effectively and timely complete this transition it could adversely affect our operations and results.
The required final valuation for our acquisition of CS Digital has not been completed. We have also not completed the final purchase price accounting for the acquisition. Once these are completed, they may differ from our pre-closing expectations, which if they differ significantly could materially affect our financial results.
The CS Digital acquisition is subject to a final valuation report. As a result, if the results of that report differ significantly from our pre-closing expectations, it may materially impact our business and financial results.
The success of our CS Digital operations depends on external factors affecting the bitcoin industry.
The bitcoin industry has historically been subject to various asset-related risks that have negatively affected bitcoin’s market price. Ownership of bitcoin has traditionally been concentrated among a limited number of holders, whose large positions give them the ability to influence market prices. Although ownership has diversified in recent years, the large holders remain active in the market, and their trading behavior, such as selling substantial quantities of bitcoin, could adversely affect demand for, and the market price of, bitcoin. Any material decline in the price of bitcoin could adversely affect our business, financial condition, and results of operations. Although larger and increasingly regulated digital asset trading platforms have emerged, the bitcoin market remains nascent and relatively opaque compared to traditional financial markets. Trading venues for bitcoin may experience heightened operational issues and may be more susceptible to unethical, fraudulent, or illicit activities, including “wash trading,” than regulated securities exchanges. Digital asset trading platforms may also be vulnerable to “front-running,” in which market participants exploit technological or informational advantages to trade ahead of known or anticipated transactions for economic gain. Such practices are reported to be relatively common on both centralized and decentralized digital asset platforms. In addition, many bitcoin trading venues do not publicly disclose comprehensive information regarding their ownership structure, governance, corporate practices, or compliance with regulatory requirements. This lack of transparency limits the ability of market participants to assess the integrity or impartiality of these venues. The presence of large holders, combined with the bitcoin market’s limited transparency, susceptibility to manipulative trading practices, and comparatively low levels of regulatory oversight, may undermine public confidence in the integrity of bitcoin transactions and the reliability of bitcoin pricing. A resulting loss of confidence or decline in the market price of bitcoin, potentially significant, could adversely affect our business, financial condition, and results of operations.
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There is a finite supply of bitcoin, and the declining block reward over time presents a risk to our business.
We generate revenue from bitcoin mining operations primarily through the receipt of block rewards for successfully validating transactions and adding new blocks to the Bitcoin blockchain. The total supply of bitcoin is finite, permanently capped at 21.0 million coins, and the number of new bitcoin issued per block decreases approximately every four years pursuant to the bitcoin protocol, in an event commonly referred to as a “halving.” The final bitcoin is expected to be mined around the year 2140. As of December 31, 2025, approximately 20.0 million bitcoin had been mined and were in circulation. As the bitcoin supply approaches its maximum limit, the block reward will continue to decline. Once the final new bitcoin has been issued, miners will no longer receive block rewards and will instead rely solely on transaction fees associated with the blocks they validate. Historically, transaction fees have represented a relatively small portion of total mining revenue. Although transaction fees have increased at various times due to network usage and reduced new-bitcoin issuance, we cannot predict whether such fees will increase, or remain at levels, sufficient to offset the decline in block rewards over time. If transaction fees do not rise to levels that support profitable mining operations, or if the economic incentives to mine otherwise diminish, our ability to generate revenue from bitcoin mining could be materially and adversely affected. In such circumstances, our business, financial condition, and results of operations could suffer, and the market price of our securities could be adversely affected.
Bitcoin mining is a highly competitive market, and if we fail to grow our hash rate in a cost-effective manner we may be unable to compete.
A bitcoin miner’s likelihood of successfully validating a block and earning the associated block reward is directly correlated to the miner’s hash rate relative to the global network hash rate. As adoption of bitcoin has increased, demand for bitcoin has drawn additional mining participants into the industry, resulting in sustained growth of the global network hash rate. As more miners enter the market and more efficient mining equipment is deployed, the global network hash rate is expected to continue increasing. Consequently, unless we are able to grow our hash rate at a pace consistent with industry growth, our probability of earning block rewards will decline. To remain competitive, we believe we must continue to obtain and deploy more efficient and energy-effective miners, both to replace units that are lost to ordinary wear-and-tear and to expand our hash rate to keep pace with increases in the global network hash rate. These miners are highly specialized servers that are difficult to manufacture at scale. As a result, only a limited number of suppliers are capable of providing miners in the quantities and performance specifications required by large-scale operators. Demand for new miners typically increases in periods of elevated bitcoin prices, and we have observed corresponding increases in miner pricing during such periods. If we are unable to procure an adequate number of new miners on acceptable terms, or if we are unable to access sufficient capital to fund the acquisition and deployment of such miners, we may be unable to grow our hash rate or maintain our competitive position. Any inability to expand or maintain our hash rate could adversely affect our business, financial condition, and results of operations, and could negatively impact the market price of our securities.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Between August 3 and August 14, 2026, JAK Industrial Ventures I LLC converted an aggregate of 80 shares of Series C Convertible Preferred Stock of Olenox Industries Inc., with an aggregate stated value of $80,000, plus an aggregate of $5,561 in accrued and unpaid dividends, resulting in an aggregate conversion amount of $94,117 and the issuance of 94,117 shares of common stock at a conversion price of $1.00 per share. The issuances of the foregoing securities were exempt from registration pursuant to Section 4(a)(2) of the Securities Act promulgated thereunder as the holder is an accredited investor and familiar with our operations.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Rule 10b5-1 Trading Arrangements
During the six months ended June 30, 2026, no director or officer of the Company
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ITEM 6. Exhibits
EXHIBIT INDEX
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| * | Filed herewith. |
| ** | This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. |
| # | Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this Annual Report. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| OLENOX INDUSTRIES INC. | ||
| (Registrant) | ||
| By: | /s/ Michael McLaren | |
| Michael McLaren | ||
| Chairman of the Board and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 19, 2026 | ||
| By: | /s/ Kimberly Hawley | |
| Kimberly Hawley | ||
| Interim Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
| Date: August 19, 2026 | ||
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