Safe & Green(SGBX) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Safe & Green Holdings Corp. and its subsidiaries for Q1 2024 and 2023 Condensed Consolidated Balance Sheets Total assets increased to $19.96 million while total liabilities rose to $26.59 million, resulting in a $6.64 million stockholders' deficit as of March 31, 2024 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Total Current Assets | 6,116,891 | 5,340,598 | | Total Assets | 19,955,096 | 17,211,275 | | Total Current Liabilities | 22,717,095 | 20,549,429 | | Total Liabilities | 26,592,574 | 23,546,134 | | Total Stockholders' Equity | (6,637,478) | (6,334,859) | Condensed Consolidated Statements of Operations Total revenue significantly decreased to $1.02 million in Q1 2024 from $5.50 million in Q1 2023, widening the net loss to $4.67 million Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Total Revenue | 1,017,931 | 5,503,935 | | Gross Profit (Loss) | 372,948 | (69,472) | | Operating Loss | (4,032,459) | (3,260,069) | | Net Loss | (5,257,028) | (3,519,440) | | Net Loss Attributable to Common Stockholders | (4,670,164) | (3,519,440) | | Net Loss Per Share (Basic and Diluted) | (4.93) | (5.00) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity deficit widened to $6.64 million by March 31, 2024, primarily due to a $5.26 million net loss, partially offset by equity transactions - Total stockholders' equity decreased from a deficit of $6,334,859 at the end of 2023 to a deficit of $6,637,478 at the end of Q1 2024[12] - Key activities impacting equity in Q1 2024 include a net loss of $5.26 million, SG DevCorp equity transactions of $3.73 million, and stock-based compensation of $179,029[12] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $0.92 million in Q1 2024, with a net increase in cash and cash equivalents of $0.72 million for the period Cash Flow Summary (Unaudited) | Activity | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (923,847) | (1,378,685) | | Net Cash Used in Investing Activities | (257,186) | (638,348) | | Net Cash Provided by Financing Activities | 1,903,372 | 2,886,758 | | Net Increase in Cash | 722,339 | 869,725 | | Cash and Cash Equivalents - End of Period | 739,787 | 1,452,501 | Notes to Condensed Consolidated Financial Statements The notes detail business segments, accounting policies, liquidity, financing, legal proceedings, and subsequent events, including a going concern warning and a reverse stock split - The company operates in four segments: manufacturing & construction services, medical, real estate development, and environmental[17] - On May 2, 2024, the company effected a 1-for-20 reverse stock split of its common stock, with all share and per-share amounts retroactively restated[26] - The company has incurred losses since inception, has negative working capital of $15.5 million, and negative operating cash flows, raising substantial doubt about its ability to continue as a going concern[29] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant decrease in Q1 2024 revenue, widening net loss, ongoing liquidity challenges, and a going concern warning, alongside recent financing activities and non-GAAP reconciliation Q1 2024 vs Q1 2023 Results of Operations | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Total Revenue | 1,017,931 | 5,503,935 | | Gross Profit (Loss) | 372,948 | (69,472) | | Operating Loss | (4,032,459) | (3,260,069) | | Net Loss Attributable to Common Stockholders | (4,670,164) | (3,519,440) | - Total revenue for Q1 2024 decreased by $4.5 million (82%) compared to Q1 2023, mainly due to a decrease in construction services[291] - The company has negative operating cash flows and incurred losses since inception, raising substantial doubt about its ability to continue as a going concern, with plans to meet capital needs through revenue, cost containment, and additional financing[301][302] Non-GAAP Reconciliation: Net Loss to Adjusted EBITDA | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | | :--- | :--- | :--- | | Net loss attributable to common stockholders | (4,670,164) | (3,519,440) | | EBITDA (non-GAAP) | (3,320,591) | (3,103,118) | | Adjusted EBITDA (non-GAAP) | (2,075,575) | (1,992,063) | Quantitative and Qualitative Disclosures About Market Risk The company has indicated that quantitative and qualitative disclosures about market risk are not applicable - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[362] Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to deficiencies in timely information processing for SEC reports - Management concluded that as of the Evaluation Date (end of Q1 2024), the company's disclosure controls and procedures were not effective[363] - Despite the ineffectiveness of controls, management believes the financial statements in this report present fairly, in all material respects, the company's financial condition and results of operations[364] PART II. OTHER INFORMATION Legal Proceedings The company is subject to various legal proceedings in the normal course of business, with detailed information referenced in Note 18 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 18 - Commitments and Contingencies in the financial statements[367] Risk Factors Key risks include substantial doubt about going concern, potential financing needs, high customer concentration, backlog uncertainty, and Nasdaq listing non-compliance - The company's recurring losses, negative working capital of $16.6 million as of March 31, 2024, and negative operating cash flows have raised substantial doubt about its ability to continue as a going concern[369][371][372] - A significant portion of revenue is concentrated with a few customers, with approximately 86% of Q1 2024 revenue generated from a single customer[373] - The company's construction backlog decreased from $1.9 million to $0.9 million between December 31, 2023, and March 31, 2024, and is not a guaranteed indicator of future revenues or profits[374] - The company received a deficiency notice from Nasdaq for failing to meet the minimum stockholders' equity requirement of $2.5 million, posing a delisting risk[382] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during Q1 2024, beyond previously disclosed SEC filings - No unregistered sales of equity securities occurred during Q1 2024, other than those previously reported[383] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[384] Mine Safety Disclosures This item is noted as not applicable for the company - Not applicable[385] Other Information This section details recent Nasdaq notifications, including regaining minimum bid price compliance but receiving a deficiency notice for failing to meet the $2.5 million stockholders' equity requirement - On May 16, 2024, Nasdaq confirmed the company regained compliance with the minimum bid price requirement (Rule 5550(a)(2))[387] - On May 16, 2024, Nasdaq notified the company of non-compliance with the minimum stockholders' equity requirement of $2.5 million (Rule 5550(b)(1))[389] - The company intends to submit a plan to regain compliance with the stockholders' equity rule to Nasdaq by June 30, 2024[391][393] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, securities agreements, and CEO/CFO certifications - The exhibit index lists various agreements and certifications, including the Separation and Distribution Agreement, amendments to the Certificate of Incorporation, forms of warrants, and Sarbanes-Oxley Act certifications[395][396]