Business Context and Reporting Period
Company: Olenox Industries Inc. (Nasdaq: SGBX)
Filing Type: Form 8-K (Current Report)
Date of Report: May 26, 2026
Event: Entry into a Material Definitive Agreement and Completion of Acquisition.
On May 26, 2026, Olenox Industries Inc. completed the acquisition of 100% of the membership interests of CS Digital Ventures, LLC ("CS Digital"). CS Digital is a digital infrastructure company focused on energy-intensive data centers, including bitcoin mining and high-density compute deployments. As of the closing date, CS Digital operated approximately 35 megawatts of installed power capacity.
Key Financial Metrics and Transaction Structure
The aggregate consideration for the acquisition consists of the following components:
- Upfront Consideration ($30,000,000):
- Equity: $14,000,000 in newly issued Series D Preferred Stock (par value $1.00, stated value $1.00).
- Debt: $16,000,000 in an unsecured promissory note issued to the sellers ("Seller Note").
- Warrants: Rights to purchase 1,500,000 shares of Common Stock in three tranches of 500,000 shares each, with exercise prices of $5.00, $7.00, and $9.00 per share.
- Earnout: Up to an additional $20,000,000 in Series D Preferred Stock, contingent on achieving post-closing milestones for cumulative revenue and Adjusted EBITDA.
Liquidity and Debt: The transaction created a new direct financial obligation of $16,000,000 via the unsecured Seller Note. The filing does not provide specific details on the note's interest rate, maturity date, or prepayment terms, referring instead to the attached exhibit.
Material Changes and Conditions
Stockholder Approval Requirement: The Series D Preferred Stock and Warrants are not convertible or exercisable into Common Stock until the Company obtains stockholder approval as required by Nasdaq Listing Rule 5635. The Company must convene a meeting within 90 days of closing to seek this approval.
Beneficial Ownership Limitation: Conversion and exercise are subject to a cap preventing any holder from beneficially owning more than 19.9% of the outstanding Common Stock or voting power.
Registration Rights: The Company agreed to file a shelf registration statement within 60 days of obtaining stockholder approval to cover the resale of shares issuable upon conversion.
Restrictive Covenants: Principal sellers are subject to non-competition and non-solicitation covenants for two years post-closing.
Guidance, Risks, and Contingencies
Forward-Looking Statements: The filing contains forward-looking statements regarding the expected benefits of the acquisition, the scaling of off-grid gas-powered digital infrastructure, and future financial performance. These are subject to significant risks.
Key Risks and Contingencies:
- Integration Risk: Ability to integrate CS Digital's operations and realize anticipated benefits.
- Debt Service: Ability to service the $16,000,000 Seller Note.
- Regulatory/Listing Risk: Failure to obtain required stockholder approval for conversion/exercise.
- Operational Milestones: Uncertainty regarding CS Digital's ability to achieve the revenue and EBITDA targets required for the $20,000,000 earnout.
- Market Volatility: Exposure to commodity price volatility (natural gas, electricity) and variability in demand for compute services.
Indemnification: Claims based on breaches of representations and warranties are subject to an 18-month survival period, a $100,000 basket, and a $10 million cap.
Investor Verification Checklist
- Verify the specific terms of the $16,000,000 Seller Note (interest rate, maturity, covenants) in Exhibit 10.1.
- Confirm the timeline and outcome of the stockholder meeting required to approve the conversion of Series D Preferred Stock and Warrants.
- Review the specific revenue and Adjusted EBITDA milestones required to trigger the $20,000,000 earnout in the full Purchase Agreement (Exhibit 2.1).
- Assess the impact of the new debt and potential equity dilution on the Company's current liquidity and capital structure.
- Monitor the integration progress of CS Digital's 35 megawatts of power capacity into Olenox's operations.