IDEAS. UNCONTAINED. SGBX Investor Presentation M a r c h 2 0 1 9 SG Blocks Apartment Rendering - Grimshaw SAFE HARBOR The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our condensed consolidated financial statements and related notes and schedules included elsewhere in this Quarterly Report on Form 10-Q. The unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with our aud ...

SG Blocks, Inc (NASDAQ:SGBX) Q4 2018 Earnings Conference Call March 28, 2019 4:30 PM ET Company Participants Chris Tyson - Managing Director, MZ North America Paul Galvin - Chairman & Chief Executive Officer Mahesh Shetty - President & Chief Financial Officer Conference Call Participants Gerry Sweeney - ROTH Capital Ashok Kumar - ThinkEquity Operator Good day, and welcome to the SG Blocks Fourth Quarter and Full Year 2018 Conference Call and Webcast. Today's conference call is being recorded. At this time, ...

PART I [Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) Forward-looking statements in this report are subject to risks and uncertainties that could materially alter actual results - The report contains forward-looking statements about future operations, plans, and objectives, which are subject to numerous risks and uncertainties[14](index=14&type=chunk)[16](index=16&type=chunk) - Factors that could cause actual results to differ include general economic, political, and financial conditions, ability to obtain financing, sales growth, competition, cybersecurity breaches, product adaptation, raw material availability, seasonality of construction, transportation disruptions, customer loss, product liability, employee retention, private investment attraction, goodwill impairment, regulatory impacts, legal proceedings, environmental costs, and tax rule changes[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, which are based on current expectations and assumptions that could prove inaccurate[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) [Business Overview](index=6&type=section&id=ITEM%201.%20BUSINESS.) SG Blocks, Inc. specializes in sustainable modular construction using repurposed shipping containers for diverse commercial, industrial, and residential markets - SG Blocks is a leading design and construction firm utilizing code-engineered cargo shipping containers (SGBlocks™) and purpose-built modular units (SGPBMs) for sustainable construction[20](index=20&type=chunk)[23](index=23&type=chunk) - **Core Product Offerings:** * GreenSteel™ modules: Structural core and shell, with SGB procuring containers, engineering openings, painting, and delivering for customer finish-out * Partially pre-fabricated containers: GreenSteel™ process plus installation of selected materials, finishes, and systems at SGB-licensed facilities * Completely fabricated and finished buildings: Turnkey solution including on-site erection and final steps, ready for occupancy - **Operating Model:** Combines product design with outsourcing of modifications and finish-out using proprietary algorithms, enabling economies of scale and high customer service - **Competitive Strengths:** Exclusive access to inventory, **ICC-ESR** certification, superior quality, lower cost, reduced construction time, hurricane/tornado/earthquake resistance, design flexibility, and experienced management team (130+ years combined experience) - **Key Certification:** Received **ICC-ESR** for SGBlocks™ structural building materials in April 2017, which is expected to expedite reviews and approvals by building departments and enhance market acceptance. Six of 18 facilities are currently approved to place the ICC-ES medallion[20](index=20&type=chunk)[27](index=27&type=chunk)[30](index=30&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[40](index=40&type=chunk) Customer Concentration (2017-2018) | Metric | 2018 | 2017 | | :----- | :--- | :--- | | Accounts Receivable from 2 customers | 76% | 81% | | Revenue from 2-3 customers | 66% | 80% | [History and Company Overview](index=6&type=section&id=History%20and%20Company%20Overview) [Description of Business](index=6&type=section&id=Description%20of%20Business) [ESR Approval](index=7&type=section&id=ESR%20Approval) [Target Markets](index=7&type=section&id=Target%20Markets) [Our Competitive Strengths](index=8&type=section&id=Our%20Competitive%20Strengths) [Our Customers](index=8&type=section&id=Our%20Customers) [Our Suppliers](index=8&type=section&id=Our%20Suppliers) [Our Emergence from Bankruptcy](index=8&type=section&id=Our%20Emergence%20from%20Bankruptcy) [Reverse Stock Split](index=9&type=section&id=Reverse%20Stock%20Split) [Public Offering of Common Stock](index=9&type=section&id=Public%20Offering%20of%20Common%20Stock) [Intellectual Property](index=10&type=section&id=Intellectual%20Property) [Government Regulation and Approval](index=10&type=section&id=Government%20Regulation%20and%20Approval) [Employees](index=10&type=section&id=Employees) [Available Information](index=11&type=section&id=Available%20Information) [Risk Factors](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section outlines significant company-specific, business, and stock-related risks, including profitability, financing, personnel, and market acceptance challenges - **Financial Risks:** Recurring **net losses** (**$4.84 million** in 2018, **$4.51 million** in 2017) and **negative operating cash flows** (**$3.45 million** used in 2018, **$1.24 million** used in 2017) raise substantial doubt about the company's ability to continue as a going concern without increased sales or additional financing[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[150](index=150&type=chunk)[165](index=165&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk) - **Operational Risks:** Dependence on key personnel, a few major customers (**66%** of 2018 revenue from three customers), and certain vendors for materials. Challenges in protecting proprietary manufacturing processes and managing growth effectively[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[150](index=150&type=chunk)[165](index=165&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[359](index=359&type=chunk)[361](index=361&type=chunk) - **Industry & Market Risks:** Cyclical and seasonal nature of the construction industry, reliance on private investment and third-party financing for customers, intense competition, and uncertainty regarding market acceptance and growth of modular construction techniques[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[96](index=96&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk)[107](index