Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 March 31, 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.

Overview

We are a vertically integrated energy company operating across multiple business lines, including oil and gas, energy services, and energy technologies. We are focused on acquiring, optimizing, and scaling energy-related infrastructure and operating assets across key U.S. markets. We operate in the following three segments: (i) construction; (ii) oil and gas; and (iii) SaaS.

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:

Name Change. On January 7, 2026, we changed our name from Safe & Green Holdings Corp. to Olenox Industries Inc. by filing a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. In connection with the name change, our common stock began trading under the symbol "OLOX."

Series C Preferred Stock Financing. During the three months ended March 31, 2026, we sold 1,800 shares of Series C Convertible Preferred Stock for aggregate net proceeds of $1,547,800, and holders of Series C Preferred Stock converted 1,711 shares of Series C Preferred Stock into 122,990 shares of common stock.

Debt Settlements. During the three months ended March 31, 2026, we issued an aggregate of 147,281 shares of common stock in settlement of approximately $2.1 million of notes payable and amounts due to affiliates, recognizing a gain on debt extinguishment of $1,197,449 and a loss on debt extinguishment of $613,723.

Subsequent to March 31, 2026:

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, the Company completed its acquisition of CS Digital Ventures LLC ("CS Digital"), a provider of digital infrastructure solutions, including bitcoin mining operations. The acquisition expanded the Company's technology segment and is expected to enhance its digital infrastructure and energy-related capabilities. The transaction is being accounted for as a business combination under ASC 805, Business Combinations. The purchase price allocation is preliminary and remains subject to the completion of the valuation of certain acquired assets and assumed liabilities.

Psylinks Neurotech Corp Acquisition. On July 3, 2026, the Company acquired 100% of the outstanding shares of Psylinks Neurotech Corp. in exchange for 104,166 restricted shares of the Company's common stock, valued at approximately $500,000. The Company is evaluating the accounting for the acquisition under ASC 805, Business Combinations, and the purchase price allocation is preliminary.

Results of Operations

Three Months Ended March 31, 2026 and 2025:

		For the Three Months Ended March 31,
		2026				2025
Total revenue		$	285,313			$	566,354
Total cost of revenue			(486,146	)			(890,109	)
Total payroll and related expenses			(692,380	)			(555,738	)
Total other operating expenses			(1,989,901	)			(952,489	)
Total operating loss			(2,883,114	)			(1,831,982	)
Total other income (expense)			217,390				(914,686	)
Total loss before income tax			(2,665,724	)			(2,746,668	)
Deemed dividend for preferred shareholders			(395,967	)			-
Net loss attributable to common stockholders		$	(3,061,691	)		$	(2,746,668	)

Revenue

During the three months ended March 31, 2026, we derived revenue from our construction services, oil and gas operations and industrial IoT (SaaS) operations. Total revenue for the three months ended March 31, 2026 was $285,313 compared to $566,354 for the three months ended March 31, 2025. Total revenue decreased by $281,041, or 50%, primarily due to less revenue being generated from construction services while revenue generated from our oil and gas and SaaS operations increased following our expansion into those business lines.

Cost of Revenue and Gross Profit

Cost of revenue was $486,146 for the three months ended March 31, 2026, compared to $890,109 for the three months ended March 31, 2025. The decrease of $403,963, or approximately 45%, primarily reflects lower construction costs and the absence of losses recognized on certain construction projects during the prior-year period.

Gross loss was $(200,833) for the three months ended March 31, 2026 compared to a gross loss of $(323,755) for the three months ended March 31, 2025.

Gross loss margin percentage increased to (70)% for the three months ended March 31, 2026 compared to (57)% for the three months ended March 31, 2025, primarily due to the addition of oil and gas production revenue during the three months ended March 31, 2026.

Operating Expenses

Payroll and related expenses for the three months ended March 31, 2026 were $692,380 compared to $555,738 for the three months ended March 31, 2025. The increase primarily reflects additional personnel associated with businesses acquired during the fourth quarter of 2025 together with increased stock-based compensation expense.

Other operating expenses (general and administrative expenses and marketing and business development expenses) for the three months ended March 31, 2026 were $1,989,901 compared to $952,489 for the three months ended March 31, 2025. This increase primarily reflects higher professional fees and increased general and administrative expenses associated with the Company's expanded operations, including integration activities related to acquisitions.

Other Income (Expense)

Other income totaled $217,390 during the three months ended March 31, 2026, compared to other expense of $914,686 during the March 31, 2025. The improvement primarily resulted from gains recognized on the extinguishment of debt of $1,197,449 through settlements involving the issuance of common stock, partially offset by losses recognized on other debt settlements of $613,723. Interest expense decreased to $365,757 from $603,126 due primarily to lower average outstanding debt balances and reduced amortization of debt issuance costs.

Our operations for the three months ended March 31, 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 financings and debt financings. As of March 31, 2026 and December 31, 2025, the Company had cash and cash equivalents of $30,883 and $427,866, respectively.

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 March 31, 2026, stockholders' equity was $8,187,156 compared to $7,589,746 as of December 31, 2025. The Company had an accumulated deficit of $120,017,997 as of March 31, 2026, compared to $117,352,273 as of December 31, 2025. Net loss attributable to common stockholders for the three months ended March 31, 2026 was $3,061,691, and net cash used in operating activities was $1,909,521.

Cash Flow Summary

		Three Months Ended March 31,
		2026				2025
Net cash provided by (used in):
Operating activities		$	(1,909,521	)		$	(1,308,920	)
Investing activities			(31,643	)			(182,663	)
Financing activities			1,544,181				1,346,219
Net decrease in cash and cash equivalents		$	(396,983	)		$	(145,364	)

Operating activities used net cash of $1,909,521 during the three months ended March 31, 2026, and used net cash of $1,308,920 during the three months ended March 31, 2025. Generally, our net operating cash flows fluctuate primarily based on changes in our profitability and working capital. Cash used in operating activities increased by approximately $440,601, primarily due to changes in working capital and the timing of operating receipts and disbursements.

Investing activities used net cash of $31,643 during the three months ended March 31, 2026, and $182,663 during the three months ended March 31, 2025. The amount for the three months ended March 31, 2026 resulted from $31,643 in purchases of property, plant and equipment.

Financing activities provided net cash of $1,544,181 and $1,346,219 during the three months ended March 31, 2026 and 2025, respectively. The amount for the three months ended March 31, 2026 resulted from $1,547,800 of proceeds from the sale of common and preferred stock, partially offset by $3,619 in repayments of short-term notes payable.

There can be no assurance that our customers will decide to and/or be able to proceed with these construction projects, or that we will ultimately recognize revenue from these projects in a timely manner or at all.

Off-Balance Sheet Arrangements

As of March 31, 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 March 31, 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

See Note 3 to the accompanying condensed consolidated financial statements for all recently adopted and new accounting pronouncements.