olox-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-38037

OLENOX INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Delaware		95-4463937
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1207 N. FM 3083 Bldg. C Conroe, Texas		77304
(Address of principal executive offices)		(Zip Code)

(936) 323-6332

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and formal 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
Common Stock, par value $0.01 per share		OLOX		The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐
Non-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 July 30, 2026, the issuer had a total of 1,413,901 shares of the registrant’s common stock, $0.01 par value, outstanding.

OLENOX INDUSTRIES INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page Number
PART I. FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Result of Operations	22
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27
ITEM 4.	Controls and Procedures	27
PART II. OTHER INFORMATION		28
ITEM 1.	Legal Proceedings	28
ITEM 1A.	Risk Factors	28
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
ITEM 3.	Defaults Upon Senior Securities	28
ITEM 4.	Mine Safety Disclosures	28
ITEM 5.	Other Information	28
ITEM 6.	Exhibits	29
SIGNATURES		39

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

OLENOX INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2026			December 31, 2025
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	30,883		$	427,866
Accounts receivable, net		305,282			317,242
Contract assets		103,736			—
Inventories		329,978			329,978
Prepaid expenses and other current assets		447,039			383,439
Total current assets		1,216,918			1,458,525

Non-current assets:
Oil and gas assets, on the basis of full cost accounting, net		3,923,164			4,004,589
Property, plant and equipment, net		4,672,024			4,730,505
Project development costs and other non-current assets		340,744			349,348
Right of use assets, net		218,934			309,013
Intangible assets, net		5,579,563			5,734,298
Goodwill		17,449,429			17,449,429
Certificate of deposit		2,000,000			2,000,000
Total non-current assets		34,183,858			34,577,182
Total Assets	$	35,400,776		$	36,035,707

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	12,750,723		$	12,068,509
Contract liabilities and deferred revenues		945,964			924,076
Lease liability, current maturities		179,476			138,217
Due to affiliates		1,242,772			1,498,205
Lines of credit		2,001,667			2,001,667
Derivative liabilities		72,157			70,802
Convertible notes payable		1,125,000			1,035,581
Current portion of long-term debt		4,866,664			4,866,664
Short-term notes payable, net		1,464,612			3,204,175
Total current liabilities		24,649,035			25,807,896

Long-term liabilities:
Long-term notes payable, net		636,904			610,336
Right-of-use liability		56,501			179,649
Asset retirement obligations		1,871,180			1,848,080
Total long-term liabilities		2,564,585			2,638,065
Total liabilities		27,213,620			28,445,961

Commitments and contingencies (Note 11)

Stockholders’ equity:
Series A Preferred stock, $1.00 par value, 5,405,010 shares authorized; 3,809,640 and 3,848,640 issued and outstanding at March 31, 2026 and December 31, 2025, respectively		3,809,640			3,848,640
Series B Preferred stock, $1.00 par value, 60,000 shares authorized; 2,084 and 2,084 issued and outstanding at March 31, 2026 and December 31, 2025, respectively		2,084			2,084
Series C Preferred stock, $1.00 par value, 50,000 shares authorized; 4,589 and 4,500 issued and outstanding at March 31, 2026 and December 31, 2025, respectively		4,589			4,500
Common stock, $0.01 par value, 75,000,000 shares authorized; 1,000,352 issued and 1,000,347 outstanding as of March 31, 2026 and 646,796 issued and 646,791 outstanding as of December 31, 2025, respectively		10,002			6,467
Additional paid-in capital		124,471,234			121,172,724
Treasury stock, at cost, 5 shares as of March 31, 2026 and December 31, 2025		(92,396	)		(92,396	)
Accumulated deficit		(120,017,997	)		(117,352,273	)
Total stockholders’ equity		8,187,156			7,589,746
Total Liabilities and Stockholders’ Equity	$	35,400,776		$	36,035,707

The accompanying notes are an integral part of these condensed consolidated financial statements.

OLENOX INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(UNAUDITED)

	2026			2025

Revenues, net	$	285,313		$	566,354
Cost of revenues		486,146			890,109
Gross loss		(200,833	)		(323,755	)

Operating expenses:
Payroll and related expenses		692,380			555,738
General and administrative expenses		1,908,492			945,573
Marketing and business development expenses		81,409			6,916
Total operating expenses		2,682,281			1,508,227

Operating loss		(2,883,114	)		(1,831,982	)

Other income (expense):
Interest expense, net		(365,757	)		(603,126	)
Loss on debt extinguishment		(613,723	)		—
Gain on debt extinguishment		1,197,449			—
Change in fair value of derivatives		(1,355	)		—
Change in fair value of equity-based investment		—			(311,560	)
Other income		776			—
Total		217,390			(914,686	)

Loss before income taxes		(2,665,724	)		(2,746,668	)
Income tax expense		—			—
Net loss		(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	)

Net loss per share - basic and diluted	$	(4.38	)	$	(286.83	)
Weighted average shares outstanding - basic and diluted		698,387			9,576

The accompanying notes are an integral part of these condensed consolidated financial statements.

OLENOX INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(UNAUDITED)

					Preferred Stock																Additional
	Common Stock				Series A						Series B				Series C						Paid in		Treasury			Accumulated
	Shares		Amount		Shares			Amount			Shares		Amount		Shares			Amount			Capital		Stock			Deficit			Total
Balance at December 31, 2025		646,791	$	6,467		3,848,640		$	3,848,640			2,084	$	2,084		4,500		$	4,500		$	121,172,724	$	(92,396	)	$	(117,352,273	)	$	7,589,746
Stock-based compensation		24,790		248		—			—			—		—		—			—			221,818		—			—			222,066
Settlement of short-term notes payable		84,948		849		—			—			—		—		—			—			875,206		—			—			876,055
Shares issued for settlement of due to affiliates		62,333		623		—			—			—		—		—			—			616,590		—			—			617,213
Exchange of Series A preferred stock for common stock		58,500		585		(39,000	)		(39,000	)		—		—		—			—			38,415		—			—			—
Sale of preferred stock		—		—		—			—			—		—		1,800			1,800			1,546,000		—			—			1,547,800
Conversion of preferred stock		122,990		1,230		—			—			—		—		(1,711	)		(1,711	)		481		—			—			—
Net loss		—		—		—			—			—		—		—			—			—		—			(2,665,724	)		(2,665,724	)
Balance at March 31, 2026		1,000,352	$	10,002		3,809,640		$	3,809,640			2,084	$	2,084		4,589		$	4,589		$	124,471,234	$	(92,396	)	$	(120,017,997	)	$	8,187,156

					Preferred Stock												Additional
	Common Stock				Series A				Series B				Series C				Paid in		Treasury			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Stock			Deficit			Total
Balance at December 31, 2024		9,435	$	94		—	$	—		—	$	—		—	$	—	$	86,164,077	$	(92,396	)	$	(98,532,083	)	$	(12,460,308	)
Stock-based compensation		89		1		—		—		—		—		—		—		106,297		—			—			106,298
Issuance of stock in connection with acquisition, as restated (Note 3)		—		—		4,000,000		4,000,000		—		—		—		—		14,800,000		—			—			18,800,000
Forgiveness of related party debt		—		—		—		—		—		—		—		—		1,275,416		—			—			1,275,416
Issuance of common stock in connection with debt issuance		459		5		—		—		—		—		—		—		332,044		—			—			332,049
Net loss		—		—		—		—		—		—		—		—		—		—			(2,746,668	)		(2,746,668	)
Balance at March 31, 2025, as restated (Note 3)		9,983	$	100		4,000,000	$	4,000,000		—	$	—		—	$	—	$	102,677,834	$	(92,396	)	$	(101,278,751	)	$	5,306,787

The accompanying notes are an integral part of these condensed consolidated financial statements.

OLENOX INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Unaudited)

	2026			2025
Cash flows from operating activities:
Net loss	$	(2,665,724	)	$	(2,746,668	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		171,549			92,117
Amortization of intangible assets		154,735			15,058
Amortization of debt issuance costs		117,487			344,763
Accretion of asset retirement obligations		23,100			—
Loss on debt extinguishment		613,723			—
Gain on debt extinguishment		(1,197,449	)		—
Change in fair value of derivatives		1,355			—
Change in right of use asset and lease liability		8,190			(66,821	)
Stock-based compensation		222,066			106,298
Change in fair value of equity-based investment		—			311,560
Changes in operating assets and liabilities:
Accounts receivable		11,960			12,751
Contract assets		(103,736	)		2,536
Inventories		—			(20,181	)
Prepaid expenses and other current assets		(63,600	)		97,795
Project development and other assets		8,604			(28,439	)
Accounts payable and accrued expenses		766,331			1,072,116
Contract liabilities and deferred revenues		21,888			(427,219	)
Due to affiliates		—			(74,586	)
Net cash used in operating activities		(1,909,521	)		(1,308,920	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(31,643	)		(73,676	)
Cash received in business combination		—			77,013
Investment in equity method investment		—			(186,000	)
Net cash used in investing activities		(31,643	)		(182,663	)

Cash flows from financing activities:
Proceeds from short-term notes payable and warrants, net of debt issuance costs		—			1,681,592
Payment of short-term notes payable		(3,619	)		(335,373	)
Cash received from sale of common and preferred stock		1,547,800			—
Net cash provided by financing activities		1,544,181			1,346,219

Net decrease in cash and cash equivalents		(396,983	)		(145,364	)

Cash and cash equivalents - beginning of period		427,866			375,873

Cash and cash equivalents - end of period	$	30,883		$	230,509

Supplemental disclosure of cash flow information:
Interest paid	$	137,424		$	—
Income taxes paid	$	—		$	—

Supplemental disclosure of non-cash investing and financing activities:
					(as revised)
Forgiveness of related party debt and investment	$	—		$	1,275,416
Common stock and warrants issued for debt issuance	$	—		$	332,049
Shares issued for settlement of short-term notes payable	$	1,738,323		$	—
Settlement of due to affiliates and accrued interest	$	339,550		$	—
Exchange of Series A preferred stock for common stock	$	39,000		$	—
Conversion of preferred stock	$	1,711		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

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 (4,000,000) shares of Series A non-voting convertible preferred shares of the Company, par value $1.00 (the “Series A Preferred Shares”), to NAHD’s shareholders, with each Series A Preferred Share having the right to convert into 640 shares of common stock of the Company, provided, however, that any such conversion is subject to the approval by the Company’s common stockholders. The Merger Agreement contained conditions to the completion of the Merger, including the filing of the articles of incorporation and/or organization for the merger subsidiaries, and the adoption of board resolutions and/or sole member resolutions by the merger subsidiaries approving the Merger. On February 13, 2025, all of the closing conditions to the Merger Agreement were satisfied or waived, the Preferred Shares were issued to NAHD’s shareholders, and the transactions set forth in the Merger Agreement have been fully completed and closed.

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.

2. LIQUIDITY AND GOING CONCERN

The Company has incurred losses since its inception, has negative working capital of approximately $23.4 million and has negative operating cash flows, which raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

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 March 31, 2026, and its results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 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.

Restatement of Previously Issued Financial Statements

In February 2025, the Company completed the Merger with NAHD. As consideration for the Merger, the Company issued 4,000,000 shares of its Series A Preferred Stock. The Company initially recorded the consideration transferred at a fair value of $34,569,600. During the finalization of the Company’s December 31, 2025, financial statements, the acquisition-date fair value of the 4,000,000 shares of Series A Preferred Stock issued as consideration was restated down to $18,800,000.

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 $15,769,600 difference between the amount originally recorded and the acquisition-date fair value therefore represents an error in measurement in previously issued financial statements within the meaning of ASC 250, Accounting Changes and Error Corrections.

Because the identifiable assets acquired and liabilities assumed in the Merger were unchanged, the correction reduces the consideration transferred, and correspondingly goodwill, by $15,769,600, and reduces by the same amount the value recorded in stockholders’ equity for the Series A Preferred Stock issued as consideration. The correction does not change the number of shares of Series A Preferred Stock issued or outstanding, the rights and preferences of those shares, or the Company’s net loss, net loss per share, cash flows, or working capital for any period presented. The correction to the March 31, 2025 financial statements is contained in the March 31, 2025 financial statements included herein. Management is in the process of determining if the corrected financial statements for the three months ended March 31, 2025 will be filed in an additional filing.

The Merger was completed during the three months ended March 31, 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 March 31, 2025, June 30, 2025, and September 30, 2025. The following table presents the effect of the revision on the affected line items of the condensed consolidated statement of changes in stockholders’ equity and condensed consolidated statement of cash flows for the three months ended March 31, 2025:

Line Item	As Reported		Revision			As Restated
Total consideration transferred (4,000,000 shares of Series A Preferred Stock)	$	34,569,600	$	(15,769,600	)	$	18,800,000
Goodwill	$	38,160,202	$	(15,769,600	)	$	22,390,602
Series A Preferred Stock consideration recorded in stockholders’ equity	$	34,569,600	$	(15,769,600	)	$	18,800,000
Supplemental disclosure of non-cash investing and financing activities: Goodwill	$	38,160,202	$	(15,769,600	)	$	22,390,602

In addition, the Company reclassified $6.8 million from goodwill to identifiable assets and liabilities for the year ended December 31, 2025, which is related to the finalization of the Company’s December 31, 2025 acquisition-date fair value of the 4,000,000 shares of Series A Preferred Stock. This was not a correction of an error, as the purchase price allocation was provisional until that point and the amortization of said identifiable intangible assets was trued up.

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.

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.

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.

The following tables provide further disaggregation of the Company’s revenues by performance obligations:

	Three Months Ended March 31,
	2026		2025
Performance obligations satisfied over time	$	126,020	$	566,354
Performance obligations satisfied at a point in time		159,293		—
Total Revenue	$	285,313	$	566,354

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).

Transfer 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. The Company does not have any financial instruments categorized within Level 1 or Level 2.

	Fair value measured as of March 31, 2026
	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities
Derivative liabilities	$	72,157	$	—	$	—	$	72,157

	Fair value measured as of December 31, 2025
	Total		(Level 1)		(Level 2)		(Level 3)
Liabilities
Derivative liabilities	$	70,802	$	—	$	—	$	70,802

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 three months ended March 31, 2026:

	Derivative liabilities
Balance at December 31, 2025	$	70,802
Issuances		—
Settlements		—
Change in fair value included in earnings		1,355
Transfers into (out of) Level 3		—
Balance at March 31, 2026	$	72,157

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.

There have been no material changes to the Company’s significant accounting policies or recent accounting pronouncements adopted during the three months ended March 31, 2026, from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted