SAFE & GREEN HOLDINGS CORP.
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
OLOX$0.70+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-17.
0001213900-24-044497
ITEM 2. Management's Discussion and Analysis of Financial Condition and Result of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001213900-24-069089
ITEM 2. Management's Discussion and Analysis of Financial Condition and Result of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 105 previous paragraphs and 90 current paragraphs.
56 unchanged; 19 reworded; 12 added; 29 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
On June 4, 2024, we received an expanded contract value in excess of $1,000,000, to construct an additional 11 container modules and related services for a government contractor to be used by an undisclosed major U.S. government agency, bringing the total container modules ordered and delivered to 26 units. On June 25, 2024, we received an expansion of an agreement to manufacture seven additional container-based electrical distribution centers as part of a multi-unit order for a client serving the big box retailer market, bringing the total units ordered to 11.
Current report
On July 25, 2024, we received an extension of time, through November 12, 2024, to regain compliance with Nasdaq’s Listing Rule 5550(b), which requires a minimum of $2,500,000 stockholders’ equity. We expect to regain full compliance with the minimum stockholders’ equity requirement as a result of the recent private placement, cost-cutting initiatives aimed at achieving positive cash flow in 2024, ongoing debt reduction, and other strategic initiatives underway.
Current report
Six Months Ended June 30, 2024 and 2023:
Current report
During thesix months ended June 30, 2024, we derived revenue from our construction segment and development segment Total revenue for thesix months ended June 30, 2024 was $2,271,347 compared to $10,600,990 for thesix months ended June 30, 2023. This decrease of $8,329,643 or approximately 79% was mainly driven by a decrease in revenues from construction services due to less jobs in progress.
Current report
Payroll and related expenses for thesix months ended June 30, 2024 were $4,997,798 compared to $5,498,819 for thesix months ended June 30, 2023. This decrease was primarily caused by a decrease in the vesting of restricted stock units during thesix months ended June 30, 2024 as compared to the prior period.
Current report
Revenue
Current report
Cost of revenue was $1,094,249 for thethree months ended June 30, 2024, compared to $5,063,425 for thethree months ended June 30, 2023. Theincrease of $3,969,176 or a decrease of approximately 78%, is primarily related to the decrease in construction services during thethree months ended June 30, 2024.
Current report
Gross profit was $159,167 and $33,630 for thethree months ended June 30, 2024 and 2023, respectively.
Current report
Operating Expenses
Current report
Payroll and related expenses for thethree months ended June 30, 2024 were $1,729,729 compared to $4,184,429 for thethree months ended June 30, 2023. This decrease was primarily caused by a decrease in the vesting of restricted stock units during thethree months ended June 30, 2024 as compared to the prior year period.
Current report
Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for thethree months ended June 30, 2024 were $1,223,245 compared to $1,460,059 for thethree months ended June 30, 2023. This decrease was due to an overall decrease in operating expenses spend during 2024.
Current report
Other Income (Expense)
Removed paragraphs (29)
Previous report
During April 2024, the Company issued 178,571 shares of common stock (8,928 as adjusted for the May Stock Split) to a consultant for services performed.
Previous report
On April 19, 2024, we received a delinquency letter (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”) notifying that we were not in compliance with the continued listing requirements set forth in Nasdaq Listing Rule 5250(c)(1) (the “Rule”), which requires timely filing of periodic reports with the Securities and Exchange Commission (the “SEC”) for continued listing. Nasdaq rules require public announcement to disclose the Company’s receipt of the Notice within four business days of receipt.
Previous report
On May 7, 2024, we received a letter from Nasdaq stating that we now comply with the Rule.
Previous report
Payroll and related expenses for the three months ended March 31, 2024 were $3,268,069 compared to $1,314,390 for the three months ended March 31, 2023. This increase was primarily caused by stock-based compensation being recognized by SG DevCorp during the three months ended March 31, 2024.
Previous report
On January 5, 2024, SG Building Blocks and SG Echo, together with SG Building Blocks, the (“Merchants”), entered into a Cash Advance Agreement (“January Cash Advance Agreement”) with Maison Capital Group (“Maison”) pursuant to which the Merchants sold to Maison $300,000 of their future receivables for a purchase price of $200,000, less underwriting fees and expenses paid, for net funds provided of $190,000.
Previous report
Pursuant to the January Cash Advance Agreement, Maison is expected to withdraw $12,500 a week directly from the Merchants’ bank account until the $300,000 due to Maison under the January Cash Advance Agreement is paid. In the event of a default (as defined in the January Cash Advance Agreement), Maison, among other remedies, can demand payment in full of all amounts remaining due under the January Cash Advance Agreement. The Merchants’ obligations under the January Cash Advance Agreement are secured by a security interest in all accounts, including without limitation, all deposit accounts, accounts-receivable, and other receivables, chattel paper, documents, equipment, general intangibles, instruments, and inventory, as those terms are defined by Article 9 of the Uniform Commercial Code, now or hereafter owned or acquired by any of them. In addition, SG Building Blocks’ obligations under the January Cash Advance Agreement have been guaranteed by SG Echo, and SG Echo’s obligations under the January Cash Advance Agreement have been guaranteed by SG Building Blocks. The amounts outstanding under the January Cash Advance Agreement may be prepaid by the Merchants at any time without penalty.
Previous report
On January 11, 2024, we entered into a Securities Purchase Agreement (the “January Purchase Agreement”) with Peak One, pursuant to which we agreed to issue, in a private placement offering (the “January Offering”), upon the satisfaction of certain conditions specified in the January Purchase Agreement, two debentures to Peak One in the aggregate principal amount of $1,300,000.
Previous report
The closing of the first tranche was consummated on January 12, 2024 and we issued an 8% convertible debenture in the principal amount of Six Hundred Fifty Thousand Dollars ($650,000) (the “Holdings Debenture”) to Peak One and a warrant (the “Warrant”) to purchase up to Three Hundred Seventy-Five Thousand (375,000) shares of our common stock (18,750 as adjusted for the May Stock Split), par value $0.01 per share (the “common stock”) to Peak One’s designee, as described in the Purchase Agreement. The Holdings Debenture was sold to Peak One for a purchase price of $585,000, representing an original issue discount of ten percent (10%). In connection with the January Offering, we paid $17,500 as a non-accountable fee to Peak One to cover its accounting fees, legal fees and other transactional costs incurred in connection with the transactions contemplated by the Purchase Agreement and issued to Peak One and its designee an aggregate of 300,000 shares of its restricted common stock (the “Commitment Shares”) (15,000 as adjusted for the May Stock Split) as provided in the January Purchase Agreement.
Previous report
The Holdings Debenture matures twelve months from its date of issuance and bears interest at a rate of 8% per annum payable on the maturity date. The Debenture is convertible, at the option of the holder, at any time, into such number of shares of common stock equal to the principal amount of the Holdings Debenture, plus all accrued and unpaid interest, at a conversion price equal to $ 0.46 (the “Conversion Price”) ($9.20 as adjusted for the May Stock Split), subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Holdings Debenture.
Previous report
The Holdings Debenture is redeemable by us at a redemption price equal to 110% of the sum of the principal amount to be redeemed plus accrued interest, if any. While the Holdings Debenture is outstanding, if we receives cash proceeds of more than $1,500,000.00 (the “Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, weshall, within two (2) business days of our receipt of such proceeds, inform Peak One of such receipt, following which Peak One shall have the right, in its sole discretion, to require us to immediately apply up to 50% of all proceeds received by us(from any source except with respect to proceeds from the issuance of equity ordebt to officers and directors of us) after the Minimum Threshold is reached to repay the outstanding amounts owed under the Debenture. During the three months ended March 31, 2024, Peak One converted $300,000 of its principal balance into 57,627 shares of common stock. Such conversion was within the terms of the agreement with no gains or losses recognized on the transactions.
Previous report
The Warrant expires five years from its date of issuance. The Warrant is exercisable, at the option of the holder, at any time, for up to 375,000 of shares of common stock (18,750 as adjusted for the May Stock Split) at an exercise price equal to $0.53 (the “Exercise Price”) ($10.60 as adjusted for the May Stock Split), subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Warrant. The Warrant provides for cashless exercise under certain circumstances.
Previous report
Maxim Group LLC (“Maxim”) acted as placement agent in the Offering. In connection with the closing of the first tranche of the Offering, we paid a placement fee of $40,950 to Maxim. Assuming the second tranche is closed, a placement fee in an amount equal to $40,950 will be payable by us to Maxim upon closing of the second tranche of the Offering.
Previous report
On February 15, 2024, SG DevCo, entered into an amendment (the “Amendment”) to the Securities Purchase Agreement, dated November 30, 2023 (the “Purchase Agreement”) with Peak One pursuant to which SG DevCo agreed to issue, in a private placement offering (the “Offering”) upon the satisfaction of certain conditions specified in the Purchase Agreement, two Debentures to Peak One in the aggregate principal amount of $1,200,000. The closing of the first tranche was consummated on November 30, 2023.
Previous report
The Purchase Agreement provided that at any time after January 29, 2024, a second tranche closing could occur subject to the mutual written agreement of Peak One and SG DevCo and satisfaction of the closing conditions set forth in the Purchase Agreement, upon which SG DevCo would issue and sell to Peak One on the same terms and conditions a second 8% convertible debenture in the principal amount of $500,000.
Previous report
The Amendment provides that the second tranche be separated into two tranches (the second and third tranche) wherein which SG DevCo would issue in each tranche an 8% convertible debenture in the principal amount of $250,000 at a purchase price of $225,000. In addition, the Amendment provides that SG DevCo will issue (i) 35,000 shares of SG DevCo’s common stock on the closing of each of the second tranche and the third tranche as follows: 17,500 shares of common stock to Peak One’s designee as described in the Amendment and 17,500 shares of common stock to Peak One, as a commitment fee in connection with the issuance of the second debenture and the third debenture, respectively; (ii) a common stock purchase warrant to Peak One’s designee as described in the Amendment for the purchase of 125,000 shares of common stock on the closing of each of the second tranche and the third tranche; and (iii) pay $6,500 of Peak One’s non-accountable fees in connection with each of the second tranche and the third tranche.
Previous report
The closing of the second tranche was consummated on February 16, 2024 and SG DevCo issued an 8% convertible debenture in the principal amount of $250,000 (the “Second Debenture”) to Peak One and a warrant (the “Second Warrant”) to purchase up to 125,000 shares of SG DevCo’s common stock to Peak One’s designee as described in the Amendment. The Second Debenture was sold to Peak One for a purchase price of $225,000, representing an original issue discount of ten percent (10%). In connection with the closing of the second tranche, SG DevCo paid $6,500 as a non-accountable fee to Peak One to cover its accounting fees, legal fees and other transactional costs incurred in connection with the second tranche and issued to Peak One and its designee an aggregate total of 35,000 shares of SG DevCo’s restricted common stock as described in the Amendment.
Previous report
The Second Debenture matures twelve months from its date of issuance and bears interest at a rate of 8% per annum payable on the maturity date. The Second Debenture is convertible, at the option of the holder, at any time, into such number of shares of common stock of SG DevCo equal to the principal amount of the Second Debenture plus all accrued and unpaid interest at a conversion price equal to $2.14, subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Second Debenture.
Previous report
The Second Debenture is redeemable by SG DevCo at a redemption price equal to 110% of the sum of the principal amount to be redeemed plus accrued interest, if any. While the Second Debenture is outstanding, if SG DevCo receives cash proceeds of more than $1,500,000.00 (“Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, SG DevCo shall, within two business days of SG DevCo’s receipt of such proceeds, inform the holder of such receipt, following which the holder shall have the right in its sole discretion to require SG DevCo to immediately apply up to 50% of all proceeds received by SG DevCo (from any source except with respect to proceeds from the issuance of equity or debt to officers and directors of SG DevCo) after the Minimum Threshold is reached to repay the outstanding amounts owed under the Second Debenture.
Previous report
The Second Debenture contains customary events of default. If an event of default occurs, until it is cured, Peak One may increase the interest rate applicable to the Second Debenture to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law and accelerate the full indebtedness under the Second Debenture, in an amount equal to 110% of the outstanding principal amount and accrued and unpaid interest. The Second Debenture prohibits SG DevCo from entering into a Variable Rate Transaction (as defined in the Second Debenture) until the Second Debenture is paid in full.
Previous report
The Second Warrant expires five years from its date of issuance. The Second Warrant is exercisable, at the option of the holder, at any time, for up to 125,000 shares of common stock of SG DevCo at an exercise price equal to $2.53, subject to adjustment for any stock splits, stock dividends, recapitalizations, and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Second Warrant. The Second Warrant provides for cashless exercise under certain circumstances.
Previous report
Under the Amendment, a closing of the third tranche may occur subject to the mutual written agreement of Peak One and SG DevCo and satisfaction of the closing conditions set forth in the Purchase Agreement at any time after April 16, 2024.
Previous report
Maxim acted as placement agent in connection with the Offering. In connection with the closing of the second tranche, SG DevCo paid a placement fee of $13,500 to Maxim. Assuming the third tranche is closed, a placement fee in an amount equal to $13,500 will be payable by SG DevCo to Maxim upon closing of the third tranche.
Previous report
On February 23, 2024, the Merchants entered into a Cash Advance Agreement (“February Cash Advance Agreement”) with Bridgecap Advance LLC (“Bridgecap”) pursuant to which the Merchants sold to Bridgecap $224,850 of their future receivables for a purchase price of $150,000, less underwriting fees and expenses paid, for net funds provided of $135,000.
Previous report
Pursuant to the February Cash Advance Agreement, Bridgecap is expected to withdraw $2,248.50 a day directly from the Merchants’ bank account until the $224,850 due to Bridgecap under the February Cash Advance Agreement is paid. In the event of a default (as defined in the February Cash Advance Agreement), Bridgecap, among other remedies (including penalties and fees) can demand payment in full of all amounts remaining due under the February Cash Advance Agreement. The Merchants’ obligations under the February Cash Advance Agreement are secured by a security interest in all accounts, including without limitation, all deposit accounts, accounts-receivable, other receivables, and proceeds therefrom, as those terms are defined by Article 9 of the Uniform Commercial Code, now or hereafter owned or acquired by any of them. The amounts outstanding under the February Cash Advance Agreement may be prepaid by the Merchants at any time without penalty.
Previous report
On March 1, 2024, SG DevCorp entered into a credit agreement with the Bryan Leighton Revocable Trust Dated December 13th, 2023 (the “Lender”) pursuant to which the Lender agreed to provide SG DevCorp with a line of credit facility (the “Line of Credit”) up to the maximum amount of $250,000 from which SG DevCorp may draw down, at any time and from time to time, during the term of the Line of Credit. The “Maturity Date “of the Line of Credit is September 1, 2024. At any time prior to the Maturity Date, upon mutual written consent of SG DevCorp and the Lender, the Maturity Date may be extended for up to an additional six-month period. The advanced and unpaid principal of the Line of Credit from time to time outstanding will bear interest at a fixed rate per annum equal to 12.0% (the “Fixed Rate”). On the first day of each month, SG DevCorp will pay to the Lender interest, in arrears, on the aggregate outstanding principal indebtedness of the Line of Credit at the Fixed Rate. The entire principal indebtedness of the Line of Credit and any accrued interest thereon will be due and payable on the Maturity Date. In consideration for the extension of the Line of Credit, SG DevCorp issued 154,320 shares of SG DevCorp restricted common stock to Lender. The fair value of the shares issued to Lender amounted to $125,000 and has been recorded as a debt discount and will be amortized over the effective rate method. During the three months ended March 31, 2024, SG DevCorp drew down $100,000 from the Line of Credit.
Previous report
On March 5, 2024, we issued a Promissory Note (“Note”) in favor of 1800 Diagonal Lending LLC (the “Lender”) in the aggregate principal amount of $149,500 (the “Principal”), and an accompanying Securities Purchase Agreement, dated March 5, 2024 (the “SPA”).
Previous report
The Note was purchased by the Lender for a purchase price of $130,000, representing an original issue discount of $19,500. A one-time interest charge of ten percent (10%) (the “Interest Rate”) will be applied on the issuance date to the Principal. Under the terms of the Note, beginning on April 15, 2024, we are required to make nine monthly payments of accrued, unpaid interest and outstanding principal, subject to adjustment, in the amount of $18,272,23. We shall have a five business day grace period with respect to each payment. Any amount of principal or interest on this Note which is not paid when due will bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). We have the right to accelerate payments or prepay in full at any time with no prepayment penalty.
Previous report
Among other things, an event of default (“Event of Default”) will be deemed to have occurred if we fails to pay the principal or interest when due on the Note, whether at maturity, upon acceleration or otherwise, if bankruptcy or insolvency proceedings are instituted by or against us or if we fail to maintain the listing of its common stock on The Nasdaq Stock Market. Upon the occurrence of an Event of Default, the Note will become immediately due and payable and we will be obligated to pay to the Investor, in satisfaction of its obligations under the Note, an amount equal to 200% times the sum of the then outstanding principal amount of the Note plus accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment plus Default Interest, if any.
Previous report
After an Event of Default, at any time following the six month anniversary of the Note, the Lender will have the right, to convert all or any part of the outstanding and unpaid amount of the Note into shares of the our common stock at a conversion price equal to the greater of $0.08 or 65% multiplied by the lowest closing bid price during the 10 trading days prior to the conversion date (representing a discount rate of 35%). The Note may not be converted into shares of our common stock if the conversion would result in the Lender and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock. In addition, unless we obtain shareholder approval of such issuance, we shall not issue a number of shares of its common stock under Note, which when aggregated with all other securities that are required to be aggregated for purposes of Nasdaq Rule 5635(d), would exceed 19.99% of the shares of our common stock outstanding as of the date of definitive agreement with respect to the first of such aggregated transactions (the “Conversion Limitation”). Upon the occurrence of an Event of Default as a result of us being delisted from Nasdaq, the Conversion Limitation shall no longer apply.
Reworded paragraphs (19)
Previous wording
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21 E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements contained in this Quarterly Report on Form 10-Q may use forward-looking terminology, such as "anticipates," "believes," "could," "would," "estimates," "may," "might," "plan," "expect," "intend," "should," "will," or other variations on these terms or their negatives. All statements other than statements of historical facts are statements that could potentially be forward-looking. The Company cautions that forward-looking statements involve risks and uncertainties and actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate or prediction is realized. Factors that could cause or contribute to such differences include, but are not limited to: general economic, political and financial conditions, including inflation, both in the United States and internationally; our ability to continue as a going concern; our ability to obtain additional financing on acceptable terms, if at all, or to obtain additional capital in other ways; our ability to increase sales, generate income, effectively manage our growth and realize our backlog; competition in the markets in which we operate, including the consolidation of our industry, our ability to expand into and compete in new geographic markets and our ability to compete by protecting our proprietary manufacturing process; a disruption or cybersecurity breach in our or third-party suppliers' information technology systems; our ability to adapt our products and services to industry standards and consumer preferences and obtain general market acceptance of our products; product shortages and the availability of raw materials, and potential loss of relationships with key vendors, suppliers or subcontractors; the seasonality of the construction industry in general, and the commercial and residential construction markets in particular; a disruption or limited availability with our third party transportation vendors; the loss or potential loss of any significant customers; exposure to product liability, including the possibility that our liability for estimated warranties may be inadequate, and various other claims and litigation; our ability to attract and retain key employees; our ability to attract private investment for sales of product; the credit risk from our customers and our customers' ability to obtaining third-party financing if and as needed; an impairment of goodwill; the imp…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21 E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements contained in this Quarterly Report on Form 10-Q may use forward-looking terminology, such as "anticipates," "believes," "could," "would," "estimates," "may," "might," "plan," "expect," "intend," "should," "will," or other variations on these terms or their negatives. All statements other than statements of historical facts are statements that could potentially be forward-looking. The Company cautions that forward-looking statements involve risks and uncertainties and actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate or prediction is realized. Factors that could cause or contribute to such differences include, but are not limited to: our ability to continue as a going concern; our ability to obtain additional financing on acceptable terms, if at all, or to obtain additional capital in other ways ; general economic, political and financial conditions, including inflation, both in the United States and internationally; our ability to increase sales, generate income, effectively manage our growth and realize our backlog; competition in the markets in which we operate, including the consolidation of our industry, our ability to expand into and compete in new geographic markets and our ability to compete by protecting our proprietary manufacturing process; a disruption or cybersecurity breach in our or third-party suppliers' information technology systems; our ability to adapt our products and services to industry standards and consumer preferences and obtain general market acceptance of our products; product shortages and the availability of raw materials, and potential loss of relationships with key vendors, suppliers or subcontractors; the seasonality of the construction industry in general, and the commercial and residential construction markets in particular; a disruption or limited availability with our third party transportation vendors; the loss or potential loss of any significant customers; exposure to product liability, including the possibility that our liability for estimated warranties may be inadequate, and various other claims and litigation; our ability to attract and retain key employees; our ability to attract private investment for sales of product; the credit risk from our customers and our customers' ability to obtaining third-party financing if and as needed; an impairment of goodwill; the im…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
On May 1, 2024, we filed an amendment (the “Amendment”) to our Amended and Restated Certificate of Incorporation (the “Restated Certificate”) with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, par value $0.01 (the “Common Stock”), at a ratio of 1-for-20 (the “Reverse Stock Split”), with an effective time of 12:01 a.m. Eastern Time on May 2, 2024 (the “Effective Time”). Upon the opening of trading on May 2, 2024, the Common Stock will begin trading under the existing trading symbol “SGBX”on a split-adjusted basis under a new CUSIP number, 78418A604.
Current wording
On May 1, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, par value $0.01 (the “Common Stock”), at a ratio of 1-for-20, with an effective time of 12:01 a.m. Eastern Time on May 2, 2024. Upon the opening of trading on May 2, 2024, the Common Stock began trading under the existing trading symbol “SGBX” on a split-adjusted basis under a new CUSIP number, 78418A604.
Previous wording
Cost of revenue was $644,983 for the three months ended March 31, 2024, compared to $5,573,407 for the three months ended March 31, 2023. The decrease of $4,928,424 or anincrease of approximately 88%, is primarily related to the decrease in construction services during the three months ended March 31, 2024.
Current wording
Cost of revenue was $1,739,232 for thesix months ended June 30, 2024, compared to $10,636,832 for thesix months ended June 30, 2023. The decrease of $8,897,600 or adecrease of approximately 84%, is primarily related to the decrease in construction services during thesix months ended June 30, 2024.
Previous wording
Gross profit (loss) was$372,948 and $(69,472) for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Gross profit (loss) was$532,115 and $(35,842) for thesix months ended June 30, 2024 and 2023, respectively.
Previous wording
Gross profit (loss) margin percentage increased to 37% for the three months ended March 31, 2024 compared to (1)% for the three months ended March 31, 2023 primarily due to the recognition of losses on construction services recognized during the year ended December 31, 2023.
Current wording
Gross profit (loss) margin percentage increased to 23% for thesix months ended June 30, 2024 compared to 0% for thesix months ended June 30, 2023 primarily due to the recognition of losses on construction services recognized during thesix months ended June 30, 2023.
Previous wording
Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for the three months ended March 31, 2024 were $1,137,338 compared to $1,876,207 for the three months ended March 31, 2023.
Current wording
Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for thesix months ended June 30, 2024 were $2,360,583 compared to $3,336,266 for thesix months ended June 30, 2023. This decrease was due to an overall decrease in operating expenses spend during 2024.
Previous wording
Interest income for the three months ended March 31, 2024 was $9,570 mainly derived from bank interest and interest associated with an outstanding note receivable. There was $9,362 of interest income for the three months ended March 31, 2023. There was $48,617 and $18,639 of other income for the three months ended March 31, 2024 and 2023. Interest expense for the three months ended March 31, 2024 and 2023 was$1,282,756 and $287,372, respectively. The increase in interest expense resulted from an increase in notes payable balances during 2024.
Current wording
Interest income for thesix months ended June 30, 2024 was $9,570 mainly derived from bank interest and interest associated with an outstanding note receivable. There was $18,816 of interest income for thesix months ended June 30, 2023. There was $183,982 and $588,490 of other income for thesix months ended June 30, 2024 and 2023, respectively. Interest expense for thesix months ended June 30, 2024 and 2023 was$3,172,084 and $811,343, respectively. The increase in interest expense resulted from an increase in notes payable balances during 2024.
Previous wording
During the three months ended March 31, 2024, we derived revenue from our construction segment. as well as sales from SG DevCorp’s new revenue stream. Total revenue for thethree months ended March 31, 2024 was $1,017,931 compared to $5,503,935 for the three months ended March 31, 2023. This decrease of $4,486,004 or approximately 82% was mainly driven by a decrease in construction services.
Current wording
During thethree months ended June 30, 2024, we derived revenue primarily from our construction segment. Total revenue for thethree months ended June 30, 2024 was $1,253,416 compared to $5,097,055 for thethree months ended June 30, 2023. This decrease of $3,843,639 or approximately 75% was mainly driven by a decrease in construction services due to less job in progress.
Previous wording
Our operations for thethree months ended March 31, 2024 and 2023 may not be indicative of our future operations.
Current wording
Our operations for thesix months ended June 30, 2024 and 2023 may not be indicative of our future operations.
Previous wording
As of March 31, 2024 and December 31, 2023, we had an aggregate of $739,787 and $17,448, respectively, of cash and cash equivalentsand short-term investments.
Current wording
As of June 30, 2024 and December 31, 2023, we had an aggregate of $1,016,784 and $17,448, respectively, of cash and cash equivalentsand short-term investments.
Previous wording
We have negative operating cash flows, which has raised substantial doubt about our ability to continue as a going concern.
Current wording
We have negative operating cash flows, which has raised substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements in this Quarterly Report on Form 10-Q are issued.
Previous wording
Pursuant to the Second Cash Advance Agreement, Cedar is expected to withdraw $49,150 a week directly from SG Building Blocks’ bank account until the $1,733,420 due to Cedar under the Second Cash Advance Agreement is paid. In the event of a default (as defined in the Second Cash Advance Agreement), Cedar, among other remedies, can demand payment in full of all amounts remaining due under the Second Cash Advance Agreement. SG Building Blocks’ obligations under the Cash Advance Agreement have been guaranteed by SG Echo.
Current wording
On July 31, 2024, SG Building Blocks, Inc. (“SG Building”), a wholly owned subsidiary of the Company, entered into a Cash Advance Agreement (the “Fifth Cedar Cash Advance Agreement”) with Cedar Advance LLC (“Cedar”), pursuant to which SG Building sold to Cedar $1,957,150 of its future receivables for a purchase price of $1,350,000, less underwriting fees and expenses paid and the repayment of prior amounts due to Cedar, for net proceeds to SG Building of $285,180. Cedar is expected to withdraw $49,150 a week directly from SG Building until the $1,957,150 due to Cedar is paid in full. In the event of a default (as defined in the Fifth Cedar Cash Advance Agreement), Cedar, among other remedies, can demand payment in full of all amounts remaining due under the Fifth Cash Advance Agreement. SG Building’s obligations under the Fifth Cash Advance Agreement have been guaranteed by SG Echo, LLC, a wholly owned subsidiary of the Company.
Previous wording
We continue to generate losses from operations. As of March 31, 2024, our stockholders’ equity was $6,637,478, compared to $6,334,859 as of December 31, 2023, and we had an accumulated deficit of $79,930,088, compared to $75,930,805 as of December 31, 2023. Our net loss attributable to our common stockholders for the three months ended March 31, 2024 was $4,670,164 and net cash used in operating activities was $923,847.
Current wording
We continue to generate losses from operations. As of June 30, 2024, our stockholders’ equity was $(4,789,275), compared to $(6,334,859) as of December 31, 2023, and we had an accumulated deficit of$83,033,136, compared to $75,930,805 as of December 31, 2023. Our net loss attributable to our common stockholders for thesix months ended June 30, 2024 was $8,528,857 and net cash used in operating activities was $4,076,229.
Previous wording
We will need to generate additional revenues or secure additional financing sources, such as debt or equity capital, to fund future growth, which financing may not be available on favorable terms or at all. We are in the process of securing funding, which we believe will provide the needed working capital until we are cash flow positive[, which we believe will be in the first half of 2024]. If we are unable to raise the necessary capital at the times we require such funding, we may need to materially change our business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether.
Current wording
We will need to generate additional revenues or secure additional financing sources, such as debt or equity capital, to fund future growth, which financing may not be available on favorable terms or at all. We are in the process of securing funding, which we believe will provide the needed working capital until we are cash flow positive, which we believe will be in the second half of 2024. If we are unable to raise the necessary capital at the times we require such funding, we may need to materially change our business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether.
Previous wording
Operating activities used net cash of $923,847 during thethree months ended March 31, 2024, and used net cash of $1,378,685 during thethree months ended March 31, 2023. Generally, our net operating cash flows fluctuate primarily based on changes in our profitability and working capital. Cash used in operating activities decreased by approximately $454,838.
Current wording
Operating activities used net cash of $4,618,283 during thesix months ended June 30, 2024, and used net cash of $3,039,177 during thesix months ended June 30, 2023. Generally, our net operating cash flows fluctuate primarily based on changes in our profitability and working capital. Cash used in operating activities increase by approximately $1,579,106.
Previous wording
Investing activities used net cash of $257,186 during thethree months ended March 31, 2024, and $638,348 netcash during thethree months ended March 31, 2023 adecrease in cash used of $381,162. This amount resulted from$31,841 in purchases of propertyan equipment, $1,082 received from our business combination and $226,425 in project development costs.
Current wording
Investing activities used net cash of $192,138 during thesix months ended June 30, 2024, and $669,006 netcash during thesix months ended June 30, 2023 aincrease in cash used of $476,868. This amount resulted from$8,229 in purchases of propertyan equipment, $1,082 received from our business combination and $184,990 in project development costs.
Previous wording
Financing activities provided net cash of $1,903,372 during thethree months ended March 31, 2024. Financing activities used $2,886,758 net cash during thethree months ended March 31, 2023. This amount resulted from $885,485 in repayments of short-term notes payable, proceeds of $2,293,644 from theissuances ofshort-term notes payable and $494,213 received from a warrant inducment transaction.
Current wording
Financing activities provided net cash of $5,809,757 during thesix months ended June 30, 2024. Financing activities provided $4,726,738 net cash during thesix months ended June 30, 2023. This amount resulted from $1,588,001 in repayments of short-term notes payable, proceeds of $2,741,867 from the issuances of short-term notes payable, $494,213 received from a warrant inducement transaction, $15 from prefunded warrant exercise, and $3,619,253 from proceed from issuance of stock.
Previous wording
Goodwill –The Company performs its impairment test of goodwill at the reporting unit level each fiscal year, or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting unit below its carrying values. The Company performs a goodwill impairment test by comparing the fair value of the reporting unit with its carrying value and recognizes an impairment charge for the amount by which the carrying value exceeds the fair value, not to exceed the total amount of goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. There were no impairments during the three months ended March 31, 2024 or 2023.
Current wording
Goodwill –The Company performs its impairment test of goodwill at the reporting unit level each fiscal year, or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting unit below its carrying values. The Company performs a goodwill impairment test by comparing the fair value of the reporting unit with its carrying value and recognizes an impairment charge for the amount by which the carrying value exceeds the fair value, not to exceed the total amount of goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. There were no impairments during the six months ended June 30, 2024 or 2023.
Previous wording
Intangible assets*** ****–*Intangible assets consist of $2,766,000 of proprietary knowledge and technology, which is being amortized over 20 years. In addition, included in intangible assets is $68,344 of trademarks, and $238,422 of website costs that are being amortized over 5 years. The Company evaluated intangible assets for impairment during the year ended December 31, 2023 and determined that there was an $1,880,547 impairment loss for the year ended December 31, 2023. The amortization expense for the three months ended March 31, 2024 and 2023 was $3,417 and $46,119, respectively. The accumulated amortization as of March 31, 2024 and December 31, 2023 was $2,921,272 and $2,852,929, respectively. The remaining balance of the Company’ intangible assets is comprised of website cost which are not yet placed in service.
Current wording
Intangible assets*** ****–*Intangible assets consist of $68,344 of trademarks, and $27,510 of website costs that are being amortized over 5 years. The Company evaluated intangible assets for impairment during the year ended December 31, 2023 and determined that there was an $1,880,547 impairment loss for the year ended December 31, 2023 relating to intangible assets of proprietary knowledge and technology. The amortization expense for the six months ended June 30, 2024 and 2023 was $6,834 and $47,291, respectively. The accumulated amortization as of June 30, 2024 and December 31, 2023 was $56,558 and $2,852,929, respectively. The remaining balance of the Company’ intangible assets is comprised of software development costs which are not yet placed in service.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Cost of Revenue and Gross Profit
Current report — wording carried from elsewhere
Gross profit margin percentage increased to 13% for thethree months ended June 30, 2024 compared to 1% for thethree months ended June 30, 2023 primarilydue to the recognition of losses on construction services recognized during the three months ended June 30, 2023.
Current report — wording carried from elsewhere
There was $9,454 of interest income for thethree months ended June 30, 2023. There was $135,365 and $569,851 of other income for thethree months ended June 30, 2024 and 2023, respectively. Interest expense for thethree months ended June 30, 2024 and 2023 was $1,889,328 and $523,971, respectively. The increase in interest expense resulted from an increase in notes payable balances during 2024.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On January 29, 2024, SG Building Blocks, Inc., entered into a Cash Advance Agreement (“Second Cash Advance Agreement”) with Cedar Advance LLC (“Cedar”) pursuant to which SG Building Blocks sold to Cedar $1,733,420 of its future receivables for a purchase price of $1,180,000, less underwriting fees and expenses paid and the repayment of prior amounts due Cedar, for net funds provided of $215,575.