Quarterly Report for Quarter Ending June 30, 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, unless the context requires otherwise, references to the "Company," "RENX," "we," "us," and "our" refer to RenX Enterprises Corp. 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 for the years ended December 31, 2025 and 2024 and the accompanying notes, which are included in our Annual Report for the year ended December 31, 2025 filed with the Securities and Exchange Commission on April 1, 2026 (the "2025 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 Form10-Q. You should review the disclosure under the heading "Risk Factors" in this Quarterly Report on Form 10-Q and the 2025 10-K for a discussion for 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 Quarterly Report on Form 10-Q 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. We caution 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. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, those discussed in the section titled "Risk Factors" included under Part II, Item 1A below and those discussed in the section titled "Risk Factors" included under Part I, Item 1A in the 2025 Form 10-K. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statement.

Although we believe that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans of ours will be achieved. Investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date on which such statements are made. Any forward-looking statements made by us or on our behalf speak only as of the date they are made, and we do not undertake to update any forward-looking statement that may be made from time to time on our behalf.

Overview

We are a vertically integrated, full-service operator in the engineered soils and organic recycling industry, operating through Resource Group US Holdings LLC ("Resource Group"), which we acquired in June 2025 in a transaction that marked a significant strategic shift in our core business. Resource Group, through its subsidiaries, centers its operations on the transformation of targeted organic green waste materials into environmentally friendly soil and mulch products. Through our subsidiary, Zimmer Equipment Inc. ("ZEI"), we provide comprehensive waste logistics and collection services for our own products as well as for products of third parties through ZEI's owned fleet of high-capacity transportation equipment and third-party contractors engaged by us. ZEI offers year-round collection and disposal services through high-capacity grapple trucks, open-top walking floor trailers, and variable-sized containers serving green waste generators, landscaping companies, golf courses, communities, and municipalities. Resource Group works with ZEI to streamline operations by internalizing certain transportation services, reducing over-the-road mileage, lowering disposal costs, and maximizing efficiency.

In addition to our organics processing and logistics operations, we are in the process of implementing the Microtec UTM 1200 Turbo Mill system at our Myakka City facility. The UTM 1200 is a high-efficiency milling and processing technology designed to enhance the throughput and output quality of our existing organics processing operations, including the production of engineered soils and mulch products. The mill shipped from Germany in August 2026 and is in transit to the United States, with arrival expected in the third quarter of 2026 and commissioning targeted for the second half of 2026, and site preparation at Myakka City, including foundations and utility infrastructure, is substantially advanced. Phase 1 deployment is targeted for 2026 and is expected to meaningfully expand processing capacity at Myakka City. There can be no assurance that the UTM 1200 system will be deployed on the anticipated timeline or that it will perform as expected upon installation.

We currently operate in three segments: compost sales, logistics, and real estate development. For the quarter ended June 30, 2026, we operated in three segments and generated $4,255,906 in revenue, of which approximately $3,207,133 was generated from our logistics business and $1,048,773 was generated from our compost sales business. While our logistics business operated by our subsidiary, ZEI, and our compost sales business operated by our subsidiary, Resource Group, are expected to serve as our primary operational focuses going forward, we also currently intend to continue to try to monetize our legacy real estate assets and joint venture interests.

Market Opportunity and Growth Strategy

We believe the market backdrop for organics recycling provides a durable tailwind for our business. State and local governments are increasingly adopting organics-diversion requirements and restrictions on the landfilling of green waste, expanding the feedstock available to permitted processors, while demand for engineered soils, mulch, compost and organic growing media continues to grow across agricultural, commercial, landscaping and infrastructure end markets. In particular, domestically produced, waste-derived substrates are increasingly preferred by commercial and municipal buyers over imported and mined alternatives, such as Canadian sphagnum peat, virgin topsoil and imported bark products, reflecting supply-chain disruptions, rising import costs and tariffs on imported inputs, and procurement mandates favoring recycled-content materials.

With that in mind, we are developing our permitted Myakka City, Florida facility into what we believe will be a differentiated organic substrate production platform. The planned deployment of the UTM 1200 system described above is designed to move our output beyond bulk mulch and compost into consistent, specification-grade engineered soils and organic growing substrates, including growing media formulated to serve as a domestically produced replacement for imported sphagnum peat-based products. Permitted organics processing facilities face significant barriers to entry, including capital intensity, land requirements and regulatory complexity, and our platform combines the permitted site and approximately 9 million tons of entitled sand reserves acquired in connection with the Resource Group acquisition with ZEI's collection and logistics network, which helps secure feedstock supply and internalize transportation costs, allowing us to source raw organic material, process it and deliver finished products within a single vertically integrated system.

Our two primary operating segments, compost sales and logistics, carry complementary margin profiles: for the six months ended June 30, 2026, our compost sales segment generated a gross margin of approximately 64%, while our logistics segment generated a gross margin of approximately 23%. As our compost sales and substrate production business grows relative to our logistics business, we believe this segment mix has the potential to expand our consolidated gross margin over time. Revenue for the quarter ended June 30, 2026 of $4,255,906 represented an increase of approximately 7.5% over revenue of $3,958,124 for the quarter ended March 31, 2026, with sequential growth in both our logistics and compost sales segments. Our growth strategy contemplates organic expansion, including increased processing throughput and new substrate products at Myakka City and expanded collection and logistics services, and we may from time to time evaluate acquisitions or investments that complement our vertically integrated platform. Any such expansion will require additional capital and is subject to the risks described under "Item 1A. Risk Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2025.

Company History

We were formed as a Delaware corporation in 2021 under the name SGB Development Corp. and, prior to our June 2025 acquisition of Resource Group, focused primarily on residential real property development and related real estate investments. In December 2025, we changed our name to RenX Enterprises Corp. to reflect our new strategic direction. See Note 1 - Description of Business for additional background.

Recent Developments

Nasdaq Minimum Bid Price Deficiency

On January 26, 2026, we received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq") notifying us that our common stock had failed to maintain the minimum $1.00 closing bid price required by Nasdaq Listing Rule 5550(a)(2) for the preceding 30 consecutive business days. On April 10, 2026, we received written notice that we had regained compliance with that rule, resolving the deficiency.

February 2026 Private Placement

On February 12, 2026, we entered into a securities purchase agreement (the "February 2026 Purchase Agreement") with certain institutional investors (the "February 2026 Purchasers") for the sale in a private placement transaction (the "February 2026 Private Placement") of senior convertible notes (the "February 2026 Notes") in the aggregate principal amount of $6,042,985.39. The February 2026 Notes bear interest at 12% per annum, mature 13 months from issuance, are payable in ten monthly installments equal to 110% of one-tenth of the principal amount plus accrued interest (the first of which payments became due and payable on July 14, 2026), and are convertible into shares of Company common stock, par value $0.001 per share ("Common Stock"), at a conversion price of $5.62 per share. In connection with the February 2026 Private Placement, we also issued the February 2026 warrants (collectively, the "February 2026 Warrants") to purchase an aggregate of 1,937,599 shares of Common Stock, at an exercise price of $3.1188 per share, of which (i) warrants to purchase 1,075,264 shares of Common Stock (the "First February Warrants") were exercisable immediately upon issuance and (ii) warrants to purchase 862,335 shares of Common Stock (the "Second February Warrants") became exercisable upon receipt of stockholder approval of the exercise thereof, which was obtained at our 2026 Annual Meeting held on June 12, 2026. The February 2026 Private Placement closed on February 17, 2026, and we received net proceeds of approximately $5.4 million after deducting placement agent fees and offering expenses. See Note 7 - Notes Payable and Notes Payable - Related Party for a complete description of the February 2026 Private Placement.

March 2026 Reverse Stock Split

On March 25, 2026, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-20 reverse stock split of our common stock (the "Reverse Stock Split"), which became effective at 12:01 a.m. Eastern Time on March 26, 2026. Our common stock began trading on a split-adjusted basis on The Nasdaq Capital Market on March 26, 2026 under a new CUSIP number 78637J 402. The Reverse Stock Split reduced the number of our outstanding shares of common stock from approximately 50,000,000 shares to approximately 2,507,537 shares. Proportional adjustments were made to the number of shares of common stock issuable upon exercise or conversion of our outstanding equity awards and warrants, as well as the applicable exercise and conversion prices. Except as otherwise indicated, all share and per share amounts in this Quarterly Report on Form 10-Q have been retroactively adjusted to give effect to the Reverse Stock Split.

April 2026 Private Placement

On April 30, 2026, we entered into a securities purchase agreement (the "April 2026 Purchase Agreement") with certain institutional investors providing for a tranched private placement transaction (the "April 2026 Private Placement") of senior convertible notes (the "April 2026 Notes") and warrants ("April 2026 Warrants") to purchase shares of Common Stock, consisting of: (i) April 2026 Notes in the aggregate principal amount of $6,300,000 (the "Initial April 2026 Notes") and April 2026 Warrants to purchase 3,917,099 shares of Common Stock (the "Initial April 2026 Warrants"), issued at the initial closing on May 4, 2026 (the "Initial Closing"), for net proceeds of approximately $5.7 million; (ii) April 2026 Notes in the aggregate principal amount of $6,700,000 (the "Second April 2026 Notes") and April 2026 Warrants to purchase 4,165,805 shares of Common Stock (the "Second April 2026 Warrants"), to be issued in a second closing (the "Second Closing") promptly following effectiveness of a registration statement (the "Initial April 2026 Registration Statement") registering the shares of Common Stock issuable upon conversion of the Initial April 2026 Notes and the Second April 2026 Notes, in each case calculated based on the initial conversion price of $2.895, and the shares of Common Stock issuable upon exercise of the Initial April 2026 Warrants and the Second April 2026 Warrants, with expected net proceeds of approximately $6.4 million, which we have agreed to apply to the repayment of the February 2026 Notes at 110% of their outstanding principal amount; and (iii) up to $87,000,000 of additional April 2026 Notes and related warrants at additional closings ("Additional Closings"), subject to mutual consent and certain conditions, as to which no assurance can be given.

The April 2026 Notes are initially convertible, at the option of the holder, at any time after the date of issuance, into that number of shares of Common Stock equal to the principal amount of the April 2026 Notes, plus all accrued and unpaid interest and late charges and any other unpaid amounts, at the Initial April 2026 Conversion Price of $2.895 per share, subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events. Subject to the receipt of stockholder approval, which was obtained at our 2026 Annual Meeting on June 12, 2026, the holders of the April 2026 Notes shall have the right, at any time after the later of (i) the date of the receipt of the stockholder approval and (ii) 120 calendar days following the Initial Closing Date, to convert their April 2026 Notes or any portion thereof into shares of Common Stock (an "Alternate Conversion") at a conversion price equal to the greater of (x) a floor price of $0.534 (which is equal to 20% of the Nasdaq Minimum Price applicable to the Initial Notes) (the "April 2026 Note Floor Price") and (y) 92% of the lowest volume weighted average price in the ten trading days prior to the date of such Alternate Conversion. See Note 7 - Notes Payable and Notes Payable - Related Party for a complete description of the April 2026 Private Placement.

The Initial Closing of the April 2026 Private Placement occurred on May 4, 2026 (the "Initial Closing Date"). The net proceeds to us from the Initial Closing were approximately $5.7 million, after deducting placement agent fees and the payment of other offering expenses associated with the offering that were payable by us. The April 2026 Purchase Agreement provided that Second Closing should occur promptly after effectiveness of the Initial April 2026 Registration Statement registering the Initial April 2026 Conversion Shares and the Second April 2026 Conversion Shares, in each case calculated based on the Initial April 2026 Conversion Price, and the Initial April 2026 Warrant Shares and the Second April 2026 Warrant Shares. Pursuant to the April 2026 Purchase Agreement, we agreed to use the net proceeds from the Second Closing, expected to be approximately $6.4 million, for the repayment of February 2026 Notes, in an amount equal to 110% of the outstanding aggregate principal amount of such February 2026 Notes. Subject to the satisfaction of certain closing conditions, including the mutual agreement of the purchasers and us, Additional Closings for an aggregate of up to $87,000,000 may occur from time to time after the Second Closing. There can be no assurance that any Additional Closings will occur.

At the 2026 Annual Meeting, our stockholders approved, pursuant to Nasdaq Listing Rule 5635(d), the issuance of up to 26,779,029 shares of Common Stock upon conversion of the Initial April 2026 Notes and the Second April 2026 Notes and of up to an additional 179,213,485 shares of Common Stock upon conversion of Additional April 2026 Notes (in each case assuming that such notes accrue interest at 10% for a period of 12 months and that the conversion price is reduced to the floor price provided for in the April 2026 Notes). As a result of such approvals, commencing 120 calendar days following the date that the Initial April 2026 Notes were issued (September 1, 2026), the holders of outstanding Initial April 2026 Notes shall have the right to complete an Alternate Conversion at the Alternate Conversion Price equal to the greater of (x) the April 2026 Note Floor Price and (y) 92% of the lowest VWAP in the ten trading days prior to the date of such Alternate Conversion.

We filed the Initial April 2026 Registration Statement with the SEC on May 15, 2026, and amended it on each of June 22, 2026 and July 13, 2026, in which amendment we removed shares of Common Stock issuable upon conversion of the Second April 2026 Notes and Second April 2026 Warrants in response to comments received from the SEC. The Initial April 2026 Registration Statement was declared effective by the SEC on August 5, 2026; however, as of the date of this Quarterly Report, neither the Second Closing nor any Additional Closing has occurred, and no February 2026 Notes have been repaid with the proceeds of the April 2026 Private Placement.

June 2026 Related Party Debt Exchange

On June 11, 2026, we entered into an exchange agreement with Index Equity US, LLC, a related party (the "Debtholder"), which was amended on June 15, 2026 (as amended, the "Exchange Agreement"), pursuant to which we exchanged $7,169,072.79 of principal and accrued interest outstanding (the "Outstanding Debt") under an Amended and Restated Promissory Note, dated January 1, 2025, originally issued by us to MCS Lending, LLC, a related party, and assigned to the Debtholder on June 9, 2026, for (i) 7,169 shares of a newly designated series of Series C Convertible Preferred Stock, par value $0.001 per share ("Series C Preferred Stock"), and with a stated value of $1,000.00 per share, initially convertible, at the option of the holder, into an aggregate of 2,476,338 shares of Common Stock at an initial conversion price of $2.895 per share, and (ii) a common stock purchase warrant to purchase up to 619,084 shares of Common Stock at an initial exercise price of $2.895 per share, in each case subject to adjustment, stockholder approval (to the extent required under the applicable rules of Nasdaq) and certain beneficial ownership limitations. On June 11, 2026, we issued the shares of Series C Preferred Stock and such warrant to the Debtholder, and the Outstanding Debt was cancelled. Bjarne Borg, a member of our Board of Directors, is the manager of the Debtholder.

The terms of the Series C Preferred Stock are set forth in a Certificate of Designation filed with the Secretary of State of the State of Delaware on June 10, 2026. The conversion price of the Series C Preferred Stock is subject to proportional adjustment for stock dividends, stock splits and similar events, and to full-ratchet adjustment in connection with certain dilutive issuances, in each case subject to a floor price of $1.50 per share (with a cash true-up payable if a holder converts following a dilutive issuance that would otherwise have reduced the conversion price below such floor price). If the Series C Preferred Stock were converted in full at the floor price, we would issue up to 4,779,333 shares of Common Stock, not taking into account any dividends that may be paid in additional shares of Series C Preferred Stock. Dividends accrue on the Series C Preferred Stock at a rate of 8% per annum, compounding quarterly (increasing to 9% per annum if not paid in cash), and may be paid in cash, in additional shares of Series C Preferred Stock or by an increase in the stated value of the Series C Preferred Stock. Holders of the Series C Preferred Stock may not convert shares of Series C Preferred Stock to the extent that, after giving effect to such conversion, the holder, together with its affiliates, would beneficially own in excess of 4.99% (or, upon at least 61 days' prior notice to us, up to 19.99%) of our outstanding Common Stock. See Part I, Item 1. Financial Statements Note 10 - Stockholder's Equity included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the terms of the Series C Preferred Stock.

Results of Operations for the Three Months Ended June 30, 2026 and Three Months Ended June 30, 2025

The following table sets forth, for the periods indicated, the dollar value represented by certain items in our Statements of Operations:

		For the Three Months Ended June 30, 2026				For the Three Months Ended June 30, 2025
Revenues		$	4,255,906			$	1,402,511
Cost of revenue			2,898,411				857,556
Total payroll and related expenses			1,011,733				685,974
Total general and administrative expenses			1,916,390				1,429,935
Total professional and consulting fees			667,206				181,614
Total marketing and business development expenses			758,143				156,778
Total bad debt expense			-				3,025,000
Operating loss			(2,995,977	)			(4,934,346	)
Interest expense			(2,809,439	)			(830,196	)
Interest income			-				23,984
Loss on exchange transaction			(2,215,127	)			-
Other income			1,327				16,603
Net loss		$	(8,019,216	)		$	(5,723,955	)

Revenues

During the three months ended June 30, 2026 and 2025, we generated revenues of $4,255,906 and $1,402,511, respectively, primarily from logistics, collection, processing and disposal services provided by our subsidiary ZEI ($3,207,133 for the 2026 period), and from the sale of materials, including compost, engineered soils, and mulch, by Resource Group ($1,048,773 for the 2026 period). Revenues also included proceeds from converting a portion of collected waste into saleable materials. This increase of $2,853,395 resulted from a full three months of revenue from Resource Group, which we acquired on June 2, 2025, in the 2026 period versus approximately one month in the 2025 period, and the resulting change of focus in our core business.

Cost of Revenues

Cost of revenue for the three months ended June 30, 2026, were $2,898,411 compared to $857,556 for the three months ended June 30, 2025. This increase of $2,040,855 in costs resulted primarily from additional revenues generated as a result from the acquisition of Resource Group and the resulting change of focus in our core business. Gross profit for the three months ended June 30, 2026 was $1,357,495, representing a gross margin of approximately 31.9%.

Payroll and Related Expenses

Payroll and related expenses for the three months ended June 30, 2026 were $1,011,733 compared to $685,974 for the three months ended June 30, 2025. This increase of $325,759 in expenses resulted primarily from additional employees hired to support the growth of our logistics and compost sales operations following the acquisition of Resource Group.

Marketing and Business Development Expenses

Marketing and business development expenses for three months ended June 30, 2026 were $758,143 compared to $156,778 for the three months ended June 30, 2025. This increase resulted from additional spending on marketing related activities during the three months ended June 30, 2026.

General And Administrative Expenses

General and administrative expenses for three months ended June 30, 2026 were $1,916,390 compared to $1,429,935 for the three months ended June 30, 2025. This increase of $486,455 resulted primarily from a full quarter of Resource Group and ZEI operating overhead, including insurance, facility and vehicle-related costs, and from the increased costs of operating as a public company.

Professional and Consulting Fees

Professional and consulting fees for three months ended June 30, 2026 were $667,206 compared to $181,614 for the three months ended June 30, 2025. This increase of $485,592 resulted primarily from the increased cost of professional fees in relation of being a public company, including increased audit and accounting fees, legal fees associated with our financing transactions and registration statements, and consulting fees supporting the integration of Resource Group.

Interest Expense

During the three months ended June 30, 2026 and 2025, we incurred $2,809,439 and $830,196 of interest expense. This increase of $1,979,243 resulted from an increase in the balance of our notes payable.

Interest Income

During the three months ended June 30, 2026 and 2025, we earned $0 and $23,984 of interest income. This decrease of $23,984 resulted from a decrease in notes receivable balance during the three months ended June 30, 2026.

Loss on Exchange Transaction

During the three months ended June 30, 2026 and 2025, we recognized a loss on exchange transactions of $2,215,127 and $0, respectively.

Results of Operations for the Six Months Ended June 30, 2026 and Six Months Ended June 30, 2025

The following table sets forth, for the periods indicated, the dollar value represented by certain items in our Statements of Operations:

		For the Six Months Ended June 30, 2026				For the Six Months Ended June 30, 2025
Revenues		$	8,214,030			$	1,420,681
Cost of revenue			5,524,079				869,356
Total payroll and related expenses			2,065,693				1,137,426
Total general and administrative expenses			3,337,811				1,879,489
Total professional and consulting fees			1,753,481				467,180
Total marketing and business development expenses			1,297,870				240,439
Total bad debt expense			-				3,025,000
Operating loss			(5,764,904	)			(6,198,209	)
Interest expense			(4,141,183	)			(1,784,845	)
Change in fair value of derivative liability			(1,268,162	)			-
Loss on settlement of derivative liability			(3,881,922	)			-
Interest income			-				47,672
Loss on sale of equipment			(80,289	)			-
Loss on exchange transaction			(2,215,127	)			-
Other income			3,370				31,432
Net loss		$	(17,348,217	)		$	(7,903,950	)

Revenues

During the six months ended June 30, 2026 and 2025, we generated revenues of $8,214,030 and $1,420,681, respectively, primarily from logistics, collection, processing and disposal services provided by our subsidiary ZEI ($6,217,295 for the 2026 period), and from the sale of materials, including compost, engineered soils, and mulch, by Resource Group ($1,996,735 for the 2026 period). Revenues also included proceeds from the conversion of a portion of collected waste into saleable materials. For the six months ended June 30, 2025, we generated revenues from commissions on residential real estate purchases and sale transactions amounting to $18,170. This increase of $6,793,349 resulted from the acquisition of Resource Group during 2025 and the resulting change of focus in our core business.

Cost of Revenues

Cost of revenue for the six months ended June 30, 2026, were $5,524,079 compared to $869,356 for the six months ended June 30, 2025. This increase of $4,654,723 in costs resulted primarily from additional revenues generated as a result from the acquisition of Resource Group and the resulting change of focus in our core business. Gross profit for the six months ended June 30, 2026 was $2,689,951, representing a gross margin of approximately 32.7%.

Payroll and Related Expenses

Payroll and related expenses for the six months ended June 30, 2026 were $2,065,693 compared to $1,137,426 for the six months ended June 30, 2025. This increase of $928,267 in expenses resulted primarily from additional employees hired to support the growth of our logistics and compost sales operations following the acquisition of Resource Group.

Marketing and Business Development Expenses

Marketing and business development expenses for six months ended June 30, 2026 were $1,297,870 compared to $240,439 for the six months ended June 30, 2025. This increase resulted from additional spending on marketing related activities during the six months ended June 30, 2026.

General And Administrative Expenses

General and administrative expenses for six months ended June 30, 2026 were $3,337,811 compared to $1,879,489 for the six months ended June 30, 2025. This increase of $1,458,322 resulted primarily from a full six months of Resource Group and ZEI operating overhead, including insurance, facility and vehicle-related costs, and from the increased costs of operating as a public company.

Professional and Consulting Fees

Professional and consulting fees for six months ended June 30, 2026 were $1,753,481 compared to $467,180 for the six months ended June 30, 2025. This increase of $1,286,301 resulted primarily from the increased cost of professional fees in relation of being a public company, including increased audit and accounting fees, legal fees associated with our financing transactions and registration statements, and consulting fees supporting the integration of Resource Group.

Interest Expense

During the six months ended June 30, 2026 and 2025, we incurred interest expense of $4,141,183 and $1,784,845, respectively. This increase of $2,356,338 resulted from an increase in the balance of our notes payable.

Change in fair value of derivative liability

During the six months ended June 30, 2026 and 2025, we incurred $1,268,162 and $0 of change in fair value. This increase of $1,268,162 resulted from a derivative liability balance during the six months ended June 30, 2026.

Loss on settlement of derivative liability

During the six months ended June 30, 2026 and 2025, we incurred $3,881,922 and $0 of loss on settlement. This increase of $3,881,922 resulted from the settlement of derivative liability balance during the six months ended June 30, 2026.

Interest Income

During the six months ended June 30, 2026 and 2025, we earned $0 and $47,672 of interest income. This decrease of $47,672 resulted from a decrease in notes receivable balance during the six months ended June 30, 2026.

Loss on Exchange Transaction

During the six months ended June 30, 2026 and 2025, we recognized a loss on exchange transactions of $2,215,127 and $0, respectively.

Income Tax Provision

A 100% valuation allowance was provided against the deferred tax asset consisting of available net operating loss carry forwards and, accordingly, no income tax benefit was provided.

Liquidity and Capital Resources

We have generated limited revenue and have incurred significant net losses in each year since inception. For the six months ended June 30, 2026, we incurred a net loss of $17,348,217 as compared to a net loss of $7,903,950 for the six months ended June 30, 2025. We expect to incur increasing losses in the future. As of June 30, 2026 and December 31, 2025, we had cash of $2,160,288 and $54,066, respectively. Since becoming a public company, we have funded our operations through note financings, project level financings, and the issuance of our equity and debt securities. See Part I, Item 1. Financial Statements; Note 7- Notes Payable and Notes Payable- Related Party, Note 10 - Stockholder's Equity and Note 16-Subsequent Events. We intend to continue to finance our operations and finance Resource Group's expansion if needed from the proceeds of future financings, proceeds from the sale of properties, and future revenues from operations. As of the date of the filing of this Quarterly Report on Form 10-Q, we do not have any committed sources of financing other than the use of the funding of the Second April 2026 Notes to repay the balance of the February 2026 Notes if the conditions to funding are met and the Second Closing is completed. As of the date of this Quarterly Report on Form 10-Q, the Second Closing has not been completed, and no assurances can be provided that the Second Closing will be completed. In addition, although the April 2026 Purchase Agreement provides for the funding of an additional $87,000,000, such funding is subject to the Purchasers' discretion and our ability to meet certain conditions and there can be no assurance that we will be able to access such funding. Additional financing will be required to continue operations, which may not be available at acceptable terms, if at all. There is no guarantee we will be successful in raising capital outside of our current sources. In addition, under the purchase agreements from our recent private placement offerings, we are subject to certain restrictive covenants that may make it difficult for us to procure additional financing. Our current cash is anticipated to be sufficient to fund operations through December 2026. We expect that we will need additional future financing which may not be available on acceptable terms, if at all. These and other factors raise substantial doubt about our ability to continue as a going concern. The report of our independent registered public accounting firm includes an explanatory paragraph that our auditors have expressed substantial doubt that we will be able to continue as a going concern.

Financing Activities

The following table represents our financing activities during the six months ending June 30, 2026. See Part I, Item 1. Financial Statements Note 7- Notes Payable and Notes Payable- Related Party, Note 10 -Stockholder's Equity to the financial statements included elsewhere in this Quarterly Report for additional information regarding our financing activities.

		Balance as of December 31, 2025				Additions				Payments or Conversions				Balance as of June 30, 2026
LV Note		$	1,000,000			$	-			$	-			$	1,000,000
2nd Lien Note			1,000,000				-				-				1,000,000
New BCV Loan Agreement			2,000,000				1,583,400				-				3,583,400
1800 Diagonal Notes			478,610				332,910				(443,427	)			368,093
Cedar Cash Advances			427,000				85,000				(132,633	)			379,367
Boot Capital			87,750				-				(67,755	)			19,995
Sixth Borough			250,000				-				(250,000	)			-
Member Note			480,000				-				-				480,000
Peak One			-				310,000				(310,000	)			-
Anson East Master Fund LP			-				2,574,375				-				2,574,375
Anson Investment Master Fund LP			-				7,723,125				-				7,723,125
Alto Opportunity Master Fund, SPC			-				2,675,485				-				2,675,485
Acquisition Related Notes and Additional Equipment Loan and Cash Advances *			15,788,293				1,758,697				(7,138,635	)			10,408,355
		$	21,511,653			$	17,042,992			$	(8,342,450	)		$	30,212,195

*

Includes notes payable amounts acquired in connection with the Resource Group acquisition, as well as additional financing needs of our Resource and ZEI activities.

Cash Flow Summary

		For the Six Months Ended June 30, 2026				For the Six Months Ended June 30, 2025
Net cash provided by (used in):
Operating activities		$	(5,103,907	)		$	313,418
Investing activities			(1,743,096	)			358,795
Financing activities			8,953,225				(496,893	)
Net change in cash and cash equivalents		$	2,106,222			$	175,320

Operating activities used net cash of $5,103,907 during the six months ended June 30, 2026, and provided net cash of $313,418 during the six months ended June 30, 2025. Cash used in operating activities increased by $5,417,325 due to an increase of net loss of $9,444,267, partially offset by a $5,150,084 increase in the change in fair value of and loss on settlement derivative liabilities as well as $2,215,127 in loss on exchange transaction. Additional factors impacting operating cash flows included an increase in depreciation expense of $964,528, an increase in amortization of debt issuance costs of $1,122,734, and a decrease in stock-based compensation of $177,011, as well as common stock issued for services of $178,558 in 2026 compared to no such issuance in 2025. Changes in operating assets and liabilities also contributed to the increase in cash used, which amounted to $1,024,710 during 2026 compared to $2,762,313 during 2025.

Investing activities used net cash of $1,743,096 during the six months ended June 30, 2026, and provided net cash of $358,795 during the six months ended June 30, 2025, which is an increase in cash used of $2,101,891. This change results from an increase in proceeds from sale of property and equipment of $25,000, decrease in intangible assets of $7,778, increase in the purchase of property and equipment of $1,746,796, an increase in additions to equity based investments $21,300.

Cash provided from financing activities was $8,953,225 during the six months ended June 30, 2026, which resulted from $2,068,717 in debt issuance costs paid, $90,640 in finance lease payments, increased by $16,323,308 proceeds from short-term note payable, $2,441,537 in repayments of short-term notes payable and $2,769,189 of cash payments on derivative liabilities. Cash used in financing activities was $496,893 during the six months ended June 30, 2025, which resulted from $361,477 debt issuance costs paid, increased by $1,041,800 proceeds from short-term note payable, $1,139,993 in repayments of short-term notes payable, $13,620 payments on finance lease and $58 from payment related to stock splits.

Off-Balance Sheet Arrangements

As of June 30, 2026 and December 31, 2025, we had no material off-balance sheet arrangements to which we are a party.

Critical Accounting Estimates

Our financial statements have been prepared using generally accepted accounting principles in the United States of America ("GAAP"). In connection with the preparation of the financial statements, we are required to make assumptions and estimates and apply judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that we believe to be relevant at the time the financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in "Note 2- Summary of Significant Accounting Policies" of the notes to our financial statements for the six months ended June 30, 2026 and the year ended December 31, 2025 included elsewhere in this Form 10-Q. We believe that the following accounting policies are the most critical in fully understanding and evaluating our reported financial results.

Investment Entities - The Company obtained a 50% membership interest in Norman Berry. The purpose of the investment in Norman Berry is to develop and provide affordable housing in the Atlanta, Georgia metropolitan area. The Company has determined it is not the primary beneficiary of Norman Berry and thus does not consolidate the activities in its financial statements. The Company uses the equity method to report the activities as an investment in its condensed consolidated financial statements. As of June 30, 2026 the Company continued to hold a 50% interest in Norman Berry. The Norman Berry partnership recently obtained final city council and entitlement approval for the project. The next step involves completing the consolidation of the various lots into a single parcel, and the Company's development team and surveyors are preparing the required documentation and submittals for city review and approval. Survey documents reflecting the approved M-I zoning designation are expected to be submitted to the city's Planning Department for administrative review to obtain final parcel-map approval.

During the six months ended June 30, 2026 and 2025, Norman Berry did not have any material earnings or losses as the investments are in development. In addition, management believes there was no impairment as of June 30, 2026 and December 31, 2025.

Property, plant 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. Repairs and maintenance are charged to expense when incurred. Included in property, plant and equipment, are recoverable reserves acquired in connection with the Resource acquisition described below. Such reserves represent the approximately 9 million tons of entitled sand reserves on the land obtained in connection with the Resource acquisition as well. The estimated amount was based on third-party engineering and appraisal reports. Cost depletion on these depletable reserves is based upon units-of-production.

Intangible assets - Intangible assets consist of $22,210 of website costs that will be amortized over 5 years, $5,458,400 of trade name that will be amortized over 15 years, and $6,368,100 of a license agreement that will be amortized over 10 years which is the life of the license.

Project Development Costs - Project development costs are stated at cost. At June 30, 2026 and December 31, 2025, the Company's project development costs are expenses incurred related to development costs on various projects that are capitalized during the period the project is under development.

JOBS Act

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected to avail ourselves of the extended transition period for complying with new or revised financial accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act, (b) in which we have total annual revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which generally means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year's second fiscal quarter; and (2) the date on which we have issued more than $1 billion in non-convertible debt securities during the prior three-year period.