Safe & Green(SGBX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Safe & Green Holdings Corp. reported increased assets to $53.7 million from acquisitions, but faced a 43% revenue decline, a $1.3 million gross loss, and a $7.3 million net loss, raising going concern doubts Condensed Consolidated Balance Sheets Total assets surged to $53.7 million driven by acquisitions, while stockholders' equity improved to $23.7 million from a deficit due to stock issuances - Total assets increased dramatically from $6.1 million at the end of 2024 to $53.7 million as of June 30, 2025, primarily driven by the addition of $39.1 million in Goodwill and $5.1 million in Oil and Gas assets from recent acquisitions[9] - The company shifted from a stockholders' deficit of $(12.5) million at year-end 2024 to a stockholders' equity of $23.7 million at June 30, 2025, mainly due to the issuance of $3.8 million in Series A Preferred stock and a significant increase in additional paid-in capital from $86.1 million to $125.7 million related to acquisitions[9] Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $2,767 | $376 | | Total current assets | $4,089 | $1,160 | | Goodwill | $39,136 | $0 | | Oil and gas, net | $3,541 | $0 | | Total Assets | $53,744 | $6,072 | | Liabilities & Equity | | | | Total current liabilities | $24,851 | $13,810 | | Total liabilities | $30,005 | $18,532 | | Total stockholders' equity (deficit) | $23,739 | $(12,460) | | Total Liabilities and Stockholders' Equity (Deficit) | $53,744 | $6,072 | Condensed Consolidated Statements of Operations Q2 2025 revenue decreased by 40.5% to $721 thousand, resulting in a gross loss of $994 thousand and a widened operating loss of $3.7 million - Revenue for Q2 2025 decreased by 40.5% year-over-year to $721 thousand, primarily due to a drop in construction services revenue, resulting in a gross loss of $994 thousand from a prior year gross profit of $117 thousand[11] - Operating loss widened to $3.7 million in Q2 2025 from $1.9 million in Q2 2024, driven by the gross loss and higher general and administrative expenses[11] Consolidated Statements of Operations Summary (in thousands) | Metric | Q2 2025 (Unaudited) | Q2 2024 (Unaudited) | Six Months 2025 (Unaudited) | Six Months 2024 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $721 | $1,211 | $1,288 | $2,179 | | Gross (Loss) Profit | $(994) | $117 | $(1,318) | $440 | | Operating Loss | $(3,688) | $(1,891) | $(5,520) | $(3,422) | | Net Loss | $(4,574) | $(4,677) | $(7,321) | $(7,475) | | Net Loss Attributable to Common Stockholders | $(4,574) | $(4,677) | $(7,321) | $(9,113) | | Basic and Diluted EPS - Total | $(0.47) | $(3.31) | $(0.92) | $(7.73) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $3.2 million, while investing activities increased to $2.5 million due to acquisitions, and financing provided $8.0 million from stock issuance - Net cash used in operating activities for the first six months of 2025 was $3.2 million, an improvement from $4.4 million used in the same period of 2024[17] - Net cash used in investing activities increased significantly to $2.5 million in the first half of 2025, primarily due to $2.0 million in cash paid for business combinations[17] - Net cash provided by financing activities was $8.0 million for the six months ended June 30, 2025, largely from $6.6 million in proceeds from the issuance of common stock[17] Notes to Condensed Consolidated Financial Statements The notes detail corporate events including the NAHD merger, liquidity issues, a going concern warning, financing activities, legal proceedings, and efforts to maintain Nasdaq listing - The company operates in four segments: construction, medical, oil and gas, and environmental, with the oil and gas segment added in 2025 following the NAHD acquisition[23][30] - The company has incurred losses since inception, had negative working capital of $20.8 million as of June 30, 2025, and negative operating cash flows, raising substantial doubt about its ability to continue as a going concern[36] - On February 13, 2025, the company completed a merger with NAHD, issuing 4 million shares of Series A preferred stock, which primarily drove the increase in goodwill and the addition of the oil and gas segment[22][288] - The company is involved in numerous legal proceedings, both as plaintiff and defendant, related to contract disputes, alleged breaches, and other matters[242] - Subsequent to quarter end, on July 8, 2025, Nasdaq granted conditional continued listing, requiring a reverse stock split and a closing bid price of at least $1.00 for 10 consecutive days by August 28, 2025[303] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 43% revenue decrease to fewer construction jobs, resulting in a gross loss and increased operating expenses, while addressing going concern doubts and Nasdaq listing efforts Results of Operations Comparison (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,288 | $2,179 | -40.9% | | Gross (Loss) Profit | $(1,318) | $440 | N/A | | Operating Loss | $(5,520) | $(3,422) | +61.3% | | Net Loss Attributable to Common Stockholders | $(7,321) | $(9,113) | -19.7% | - The decrease in revenue for H1 2025 was mainly driven by a decrease in construction services due to fewer jobs in progress[354] - The company has negative operating cash flows and substantial doubt about its ability to continue as a going concern, with management planning to meet capital needs through operations, cost containment, and additional financing[371][372] - The company's backlog was approximately $1.2 million as of June 30, 2025, consistent with year-end 2024, though management cautions it is not necessarily indicative of future revenues or earnings[410] Quantitative and Qualitative Disclosures About Market Risk This disclosure is not required for the company as it qualifies as a smaller reporting company - The company, as a smaller reporting company, is not required to provide this disclosure[397] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, with no material changes to internal control over financial reporting identified - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective[398] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[400] PART II. OTHER INFORMATION Legal Proceedings The company is subject to various legal proceedings arising in the normal course of business, with detailed information incorporated by reference from Note 15 - Information regarding legal proceedings is detailed in Note 15 of the financial statements and incorporated by reference into this section[403] Risk Factors The company faces substantial doubt about its going concern ability, high customer concentration, backlog conversion risk, and potential Nasdaq delisting - The company's independent auditors expressed substantial doubt about its going concern ability due to recurring losses, negative working capital of $20.8 million, and negative operating cash flows[407][408] - Significant customer concentration risk exists, with one customer representing approximately 81% of total revenue for the six months ended June 30, 2025[409] - The company faces a risk of delisting from the Nasdaq Capital Market for failing to meet continued listing requirements, including minimum bid price and stockholders' equity[415][417] - The company's backlog of approximately $1.2 million is not necessarily indicative of future revenues or earnings, as contracts can be adjusted, canceled, or suspended by clients[410] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - None reported for the period[421] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported for the period[422] Mine Safety Disclosures This section is not applicable to the company - Not applicable[423] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[424] Exhibits This section provides an index of all exhibits filed with or incorporated by reference in the Form 10-Q, including corporate governance documents and certifications