v3.26.1
Subsequent Events
12 Months Ended
Dec. 31, 2025
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

24. SUBSEQUENT EVENTS

 

Reverse Stock Split

 

On May 8, 2026, the Company effected a one-for-ten (1-for-10) reverse stock split of its issued and outstanding common stock pursuant to which every ten shares of common stock were combined into one share. No fractional shares were issued; stockholders otherwise entitled to a fractional share. Proportionate adjustments were made to the exercise prices and share amounts of all outstanding stock options, restricted stock units, warrants, and other equity-based awards, and to the shares reserved under the Company’s equity incentive plans.

 

All share and per-share amounts in the accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the Reverse Stock split as if it had occurred at the beginning of the earliest period presented.

 

Settlement Agreements

 

On February 10, 2026, the Company executed a mutual settlement and release agreement (the “Cedar Settlement”) with Cedar to resolve an outstanding balance of $1,732,500 (the “Balance”) owed by the Company under certain Standard Merchant Cash Advance Agreements between the Company and Cedar. Under the Cedar Settlement, the Company will issue Cedar up to 500,000 shares of the Company’s common stock (the “Initial Shares”), subject to a beneficial ownership limitation of 4.99% of the outstanding common stock at any given time. Following Cedar’s sale of the Initial Shares, the parties will perform a sales analysis to determine the gross proceeds Cedar received. If those proceeds are less than the Balance, the Company will issue additional restricted shares of common stock as a true-up, calculated by dividing the shortfall by the volume-weighted average price of the Company’s common stock for the ten trading days immediately preceding the calculation date, subject to the same beneficial ownership limitation. Cedar and the Company each agreed to waive and release any and all claims against the other, except with respect to performance under the Cedar Settlement. The Company has issued 44,000 shares under the terms of the Cedar Settlement.

 

On February 11, 2026, the Company executed a settlement agreement with Michael McLaren (in his capacity as note holder) to settle the outstanding balance owed under a convertible promissory note between Mr. McLaren and the Company’s subsidiary, Olenox. Under the settlement, the Company will issue 62,633 shares of its restricted common stock in settlement of accrued interest and principal totaling $338,670, and Mr. McLaren agreed to waive and release any and all claims against the Company relating to the note.

 

Also on February 11, 2026, the Company executed a separate settlement agreement with Michael McLaren (in his capacity as a shareholder) to resolve any and all actual or potential claims relating to his shares of the Company’s Series A Non-Voting Convertible Preferred Stock (the “Preferred Shares”). Under the settlement, the Company will issue 58,500 shares of restricted common stock, and Mr. McLaren will surrender to the Company 39,000 Series A Preferred Shares, in full release of any and all claims relating to the Preferred Shares.

 

Series C Preferred Stock - Second Closing

 

On March 12, 2026, pursuant to the Securities Purchase Agreement dated November 25, 2025 with an institutional investor (the “Institutional Investor”), the Company and the Institutional Investor mutually agreed to effect an additional closing (the “Second Closing”). At the Second Closing, the Company issued and sold to the Institutional Investor 900 shares of its Series C Preferred Stock, representing an aggregate stated value of $900,000, for an aggregate purchase price of $810,000. The additional shares have the same rights, preferences, and privileges as the Series C Preferred Stock issued at the initial closing and are convertible into shares of the Company’s common stock, at a conversion price subject to adjustment as set forth in the applicable Certificate of Designation. In connection with the Second Closing, the Company and the Institutional Investor entered into a registration rights agreement dated March 12, 2026, requiring the Company to file a resale registration statement with the SEC within 30 days of the Second Closing. The additional shares were sold in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D. The Company paid the placement agent, West Park Capital Inc., a commission equal to 7.0% of the gross proceeds. Net proceeds to the Company from the Second Closing were approximately $718,300, after deducting placement agent fees and other offering expenses.

 

Series C Preferred Stock Conversions

 

The Company has issued 167,683 shares of common stock subsequent to December 31, 2025, for the conversion of 1,711 shares of Series C Preferred Stock under contract terms.

 

Chapter 11 Filing of SG Echo, LLC and Acceleration of Debt

 

On April 28, 2026, SG Echo, a wholly owned subsidiary of the Company, commenced a voluntary case under Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Oklahoma (the “Bankruptcy Court”), seeking a court-administered reorganization pursuant to a plan of reorganization. The Chapter 11 case pertains solely to SG Echo and does not include the Company or any of its other subsidiaries or affiliates, which continue to operate normally. SG Echo continues to operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.

 

The commencement of the Chapter 11 case constitutes an event of default that accelerated the obligations of SG Echo under the Enhanced Loan Agreement between SG Echo and Enhanced dated September 20, 2024 under which approximately $4.0 million of principal, plus accrued and unpaid interest, became immediately due and payable. Any efforts to enforce the payment obligations under the Enhanced Loan Agreement are automatically stayed as a result of the Chapter 11 case, and the creditors’ enforcement rights are subject to the applicable provisions of the Bankruptcy Code. The Company is evaluating the impact of the Chapter 11 case on the carrying amounts and classification of SG Echo’s assets and liabilities and on the Company’s consolidated financial statements.

 

Acquisition of CS Digital Ventures, LLC

 

On May 26, 2026, the Company entered into a Membership Interest Purchase Agreement (the “CS Digital Purchase Agreement”) with CS Digital Ventures, LLC, a Delaware limited liability company (“CS Digital”), the members of CS Digital (collectively, the “Sellers”), and Bernardo Schucman, as seller representative. On the same date, the Company completed the acquisition of 100% of the issued and outstanding membership interests of CS Digital (the “CS Digital Acquisition”), and CS Digital became a wholly owned subsidiary of the Company. CS Digital is a digital infrastructure company focused on the development and operation of energy-intensive data centers, including bitcoin mining and high-density compute deployments, and had approximately 35 megawatts of installed power capacity in operation as of the closing date.

 

The aggregate consideration payable by the Company under the CS Digital Purchase Agreement consists of: (i) $30,000,000 in upfront consideration payable at closing, comprised of (a) $14,000,000 in newly issued shares of the Company’s Series D Preferred Stock, issued at a stated value of $1.00 per share, and (b) a $16,000,000 unsecured promissory note issued by the Company to the Sellers (the “Seller Note”); (ii) warrants to purchase an aggregate of 1,500,000 shares of the Company’s common stock, comprised of three equal tranches of 500,000 shares each, with exercise prices of $5.00, $7.00, and $9.00 per share, respectively (the “CS Warrants”); and (iii) up to an additional $20,000,000 in shares of the Series D Preferred Stock (the “Earnout Shares”), issuable upon the achievement of two post-closing milestones tied to the cumulative revenue and cumulative Adjusted EBITDA of CS Digital, as set forth in the CS Digital Purchase Agreement.

 

The Series D Preferred Stock and the CS Warrants are not convertible or exercisable into common stock prior to receipt of the requisite approval of the Company’s stockholders under applicable Nasdaq listing rules, including Listing Rule 5635 (the “CS Acquisition Stockholder Approval”). The Company has agreed to use its best efforts to convene a stockholder meeting to seek the CS Acquisition Stockholder Approval within 90 days after closing and, if not then obtained, every three months thereafter until obtained. Failure to obtain the CS Acquisition Stockholder Approval will not result in any increase in stated value, accrual of dividends or interest, redemption right, decrease in conversion price, or other economic consequence favorable to the holders. Conversion of the Series D Preferred Stock and exercise of the CS Warrants are further subject to a beneficial ownership limitation of 19.9% of the outstanding common stock or voting power of the Company. The conversion price of the Series D Preferred Stock is fixed at $1.00 per share, which the Company has determined equals or exceeds the “Minimum Price” under Nasdaq Listing Rule 5635(d)(1) as of the closing date, and the Series D Preferred Stock is non-voting (except as required by Delaware law) and is not subject to any redemption right, sinking fund, mandatory conversion right, or price-based anti-dilution protection.

 

The Series D Preferred Stock and the CS Warrants issued at closing, and any Earnout Shares issued in the future, were and will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D. In connection with the closing, the Company filed a Certificate of Designation of Series D Preferred Stock with the Secretary of State of the State of Delaware. The CS Digital Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions, as well as two-year non-competition and non-solicitation covenants applicable to the principal sellers. The Company is in the process of determining the acquisition-date fair values of the consideration transferred and of the assets acquired and liabilities assumed, and the related purchase price allocation, in accordance with ASC 805, Business Combinations. The initial accounting for the business combination was incomplete as of the date these consolidated financial statements were available to be issued.

 

Series D Preferred Stock Conversions

 

The Company has issued 216,000 shares of common stock subsequent to December 31, 2025, for the conversion of 216,000 shares of Series D Preferred Stock under contract terms.

 

Short-term Note Payable Settlement

 

The Company 34,948 shares of common stock with a fair value of $345,985 in settlement of note short-term note payable and accrued interest of approximately $10,800. The Company recognized a loss of approximately $335,000 as of result of this settlement.

 

Shares Issued for Services

 

Subsequent to December 31, 2025, the Company issued 62,487 shares of common stock with a fair value of $416,072 for services provided during 2026.