Safe & Green(US:SGBX)2025-03-31 22:45Financial Performance - The company reported a net loss of $16,979,682 for the fiscal year ended December 31, 2024, compared to a net loss of $26,282,533 in 2023[72]. - Cash used in operations for the year ended December 31, 2024 was $10,898,755, primarily due to the net loss[74]. - The company has incurred losses since inception and is uncertain if revenue will grow sufficiently to outpace increasing expenses[111]. - As of December 31, 2024, the company had cash and cash equivalents totaling $375,873, a significant decrease from $14,212 in 2023[72]. Customer Concentration Risk - Revenue from three customers accounted for approximately 83% of total revenue for the year ended December 31, 2024, highlighting customer concentration risk[90]. - As of December 31, 2024, 100% of gross accounts receivable were due from three customers, indicating a high customer concentration risk[99]. Going Concern and Financing - The company faces substantial doubt about its ability to continue as a going concern due to ongoing cash losses and reliance on financing[78]. - The company may need to raise additional capital to fund operations, but there is no assurance that such capital will be available on acceptable terms[82]. - The company has used proceeds from short-term notes payables and warrants to finance operations during the fiscal year[74]. Operational Risks - The company has fully impaired its goodwill as of December 31, 2024, with a prior impairment of $1,309,330 in 2023[81]. - The company relies on a limited number of key personnel, and the loss of any executive could adversely affect operations[89]. - The company relies on key materials vendors for product supply, and any inability to obtain materials could adversely affect business operations[100]. - The company faces risks related to protecting proprietary manufacturing processes, which are crucial for maintaining competitive advantage[93]. - The company’s profitability is highly sensitive to changes in sales volume and production levels due to a fixed cost structure[96]. - The company may face challenges in managing growth effectively, which could strain resources and impact financial performance[104]. Legal and Regulatory Risks - The company is subject to potential legal proceedings that could negatively impact profitability and cash flows[92]. - The company is subject to various government regulations that could delay projects and increase expenses, negatively impacting operations[125]. - Environmental, health, and safety regulations could impose significant liabilities and operational costs on the company[109]. Market and Economic Conditions - The construction industry is highly cyclical and seasonal, which causes fluctuations in revenues and operating results, expected to continue in the future[118]. - The availability of financing for construction projects is critical, and reduced access to such financing could negatively impact the company's earnings[121]. - The company may face adverse economic conditions, including high inflation and geopolitical events, which could negatively impact financial condition and liquidity[117]. Stock and Compliance Issues - The Company received a deficiency letter from Nasdaq on November 7, 2023, indicating that its common stock did not maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days[127]. - As of December 31, 2023, the Company's stockholders' equity was reported at ($6,334,859), below the Nasdaq minimum requirement of $2.5 million[129]. - Nasdaq granted the Company an extension until November 12, 2024, to regain compliance with Rule 5550(b)(1)[129]. - The Company completed a reverse stock split on May 2, 2024, to comply with Nasdaq's Minimum Bid Requirement[133]. - Future delisting from Nasdaq could adversely affect the Company's ability to attract new investors and raise capital[131]. Shareholder and Trading Issues - The Company has outstanding options and warrants to purchase 341,220 and 5,809,799 shares of Common Stock, respectively, which may dilute existing stockholders' ownership[143]. - The Company does not expect to pay dividends in the foreseeable future, intending to retain earnings for business development and expansion[146]. - The company's common stock may be classified as penny stock if it trades below $5.00, which could hinder trading activity and make it difficult for shareholders to sell their shares[149]. - The common stock is occasionally thinly traded, leading to potential difficulties for shareholders in selling shares at desired prices[151]. - Trading activity in the company's shares may be minimal or non-existent for extended periods, affecting liquidity[151]. - The company is relatively unknown to stock analysts and institutional investors, which contributes to its thin trading volume[151]. Tax and Valuation - As of December 31, 2024, the company had tax net operating loss carryforwards totaling approximately $60.9 million, with $54 million available to offset up to 80% of future taxable income each year[116]. - The company had a valuation allowance of approximately $20 million related to net operating loss carryforwards that may not be utilized[116]. Competition and Workforce - Increased competition for qualified employees may lead to higher wage costs, adversely affecting financial condition[95]. - Increased competition in the construction industry may require the company to enhance selling incentives or reduce prices, adversely affecting profits[123]. - The company faces cybersecurity risks that could adversely affect its business, including potential breaches of sensitive data and operational disruptions[113]. - The company is subject to increased legal and financial compliance costs due to public company requirements, which may divert management's attention[138].