Management to Host Conference Call Today at
4:30 p.m. ET
SG Blocks, Inc. (Nasdaq: SGBX) (“SG Blocks” or the “Company”), a
leading designer, innovator and fabricator of container-based
structures, reported its financial results for the second quarter
ended June 30, 2020.
Management Commentary
“Despite the challenges presented by the Covid 19 pandemic, in
the second quarter SG Blocks was able to advance its core mission,
raised a sufficient capital reserve for operations, and established
a supply chain for the fabrication and distribution of container
based medical laboratory services and diagnostic centers and the
sale of Covid-19 tests,” commented Paul Galvin, CEO of SG,
Blocks.
“The receipt of the final planning approval for Monticello Mews
is a significant milestone that will help launch SG Residential,
the Company’s licensee, which is also actively building in Puerto
Rico,” Galvin added. “These royalty streams represent recurring
revenue with the potential to earn substantial revenues from the
three phases of this 300+ unit project.”
Galvin continued, ”We continued to sign new business throughout
the year, the most notable of which was a $4 million manufacturing
contract in the south Florida hospitality market. This contract
alone potentially represents a 300% increase in revenue over the
trailing 4 quarters.”
“The Distribution agreement with OSANG healthcare for its Covid
19 test, our product lines in the education and medical sectors
with Grimshaw Architects and our ability to sell and distribute
OSANG’s Gene Finder tests throughout North America are all designed
to create recurring revenue for the Company,” Galvin continued.
“Having access to Grimshaw’s unparalleled global supply chain
greatly increases the number of addressable markets for our
products.”
Galvin concluded, “We expect the efforts and progress in Q2 will
serve as a catalyst for the rest of 2020 and into the new
year.”
Second Quarter 2020 Financial Highlights:
- Revenue of approximately $629,000, as compared to approximately
$728,000 in Q2 2019.
- Gross profit of approximately $374,000, as compared to
approximately $267,000 in Q2 2019.
- Net loss of approximately $838,000, or $(0.16) per basic and
diluted share, as compared to a net loss of approximately $972,000,
or $(4.02) per basic and diluted share, in Q2 2019.
- Adjusted EBITDA loss of approximately $533,000, as compared to
a loss of approximately $755,000 in Q2 2019. (See below for further
discussion about the presentation of Adjusted EBITDA, a non-GAAP
financial measurement).
- Completed a public offering of 440,000 shares of common stock
at an offering price of $4.25 per common share for aggregate net
proceeds of approximately $1.5 million after deducting underwriting
discounts and commissions and other expenses related to the
offering.
- Completed a public offering of 6,900,000 shares of common
stock, including the exercise of the over-allotment option, at an
offering price of $2.50 per common share for aggregate gross
proceeds of approximately $15.6 million after deducting
underwriting discounts and commissions and other expenses related
to the offering.
Second Quarter 2020 and Subsequent Operational
Highlights:
- Construction backlog decreased to approximately $17.3 million
as of June 30, 2020, as compared to $17.6 million as of December
31, 2019. The decrease in backlog is primarily attributable to work
in progress or completed contracts during the first six months of
2020.
- 12 projects under contract, performed activity on 12 projects
during Q2 2020.
- Awarded a contract of approximately $4.0 million to manufacture
a boutique, mixed-use hospitality project featuring 24 hospitality
units in South Florida, subsequent to Q2 2020.
- Monticello project received final site planning approval from
the Village of Monticello and is now poised to begin excavation on
the site. This project is expected to yield 302 units of workforce
housing once completed by our licensee.
- Entered into an agreement with Grimshaw Architects for the
design and deployment of a variety of medical modules to allow for
point-of-care testing, lab services and other medical
procedures.
- Completed US Customs import license and FDA registration
process related to COVID-19 test kits.
- Announced agreement with RhoHouse LLC, a technology-focused
housing start up, to bring well-designed, affordable houses to
market using RhoHouse’s CORE modules.
- Announced partnership with Grimshaw Architects to build
prefabricated modular based education facilities.
- Other business projects in process:
- Entered into agreement subsequent to Q2 2020 for completion of
40 office boxes in Puerto Rico under our license agreement.
- Executed purchase orders for two experiential pop-up containers
for the University of West Virginia, subsequent to Q2 2020.
- Executed a design contract for a restaurant expansion in
Georgia, subsequent to Q2 2020.
- “MoLiving” mobile hospitality prototype project for Arizona
Investissements is on track to be completed in Q3 2020.
- “Planet Smoothie” project to be completed in Q3 2020, the
project has reached its final construction phase, pending shipment
to final destination in Djibouti, Africa.
- Previously announced Verizon store was completed in Denver
area, subsequent to Q2 2020.
Second Quarter 2020 Financial Results
Revenue was approximately $629,000 compared to $728,000 in Q2
2019.
The Company’s backlog decreased to approximately $17.3 million
as of June 30, 2020, as compared to approximately $17.6 million at
December 31, 2019. The decrease in backlog is primarily
attributable to work in progress or completed contracts during the
first six months of 2020.
Gross profit was approximately $374,000 as compared to
approximately $267,000 in Q2 2019.
Operating expenses decreased by approximately $24,000 to
approximately $1.21 million in Q2 2020 compared to approximately
$1.24 million in Q2 2019. The decrease was driven by a reduction in
payroll and related expenses of approximately $253,000 and a
reduction in marketing and business development expense of
approximately $53,000, which was partially offset by an increase in
general and administrative expenses, primarily due to higher legal
fees and consulting expenses, of $260,000.
Net loss totaled approximately $838,000, or $(0.16) per basic
and diluted share, compared to a net loss of approximately
$972,000, or $(4.02) per basic and diluted share, in Q2 2019.
Adjusted EBITDA loss was approximately $533,000 compared to an
Adjusted EBITDA loss of approximately $755,000 in Q2 2019. See
below under the heading “Use of Non-GAAP Financial Information” for
a discussion of Adjusted EBITDA and a reconciliation of such
measure to the most comparable measure calculated under U.S.
generally accepted accounting principles ("GAAP").
Balance Sheet
Cash and cash equivalents at June 30, 2020 totaled approximately
$16.1 million, as compared to approximately $1.6 million at
December 31, 2019.
Further details about the Company’s results will be available in
its Quarterly Report on Form 10-Q, accessible in the investor
relations section of the Company’s website at www.sgblocks.com and
through the U.S. Securities and Exchange Commission’s website.
Conference Call Information
SG Blocks’ CEO, Paul Galvin, and Acting CFO, Gerald Sheeran,
will host a listen only conference call.
To access the call, please use the following information:
Date:
Thursday, August 13, 2020
Time:
4:30 p.m. ET, 1:30 p.m. PT
Toll-free dial-in number:
1-844-407-9716
International dial-in number:
1-201-493-6779
Conference ID:
13708167
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Hayden IR at (646) 755-7412 or
james@haydenir.com.
The conference call will be broadcast live and available for
replay at http://public.viavid.com/index.php?id=141187 and via the
investor relations section of the Company’s website at
www.sgblocks.com.
A replay of the conference call will be available on August 13,
2020, after 7:30 p.m. Eastern time, through August 27, 2020.
Toll-free replay number:
1-844-512-2921
International replay number:
1-412-317-6671
Replay ID:
13708167
Use of Non-GAAP Financial Information
In addition to its results under GAAP, the Company presents
EBITDA and Adjusted EBITDA for historical periods. EBITDA and
Adjusted EBITDA are non-GAAP financial measures and have been
presented as supplemental measures of financial performance that
are not required by, or presented in accordance with, GAAP. The
Company calculates EBITDA as net income (loss) before interest
expense, income tax benefit (expense), depreciation and
amortization. It calculates Adjusted EBITDA as EBITDA before
certain non-recurring adjustments such stock-based compensation
expense. EBITDA and Adjusted EBITDA are presented because they are
important metrics used by management as one of the means by which
it assesses the Company’s financial performance. EBITDA and
Adjusted EBITDA are also frequently used by analysts, investors and
other interested parties to evaluate companies in the Company’s
industry. These measures, when used in conjunction with related
GAAP financial measures, provide investors with an additional
financial analytical framework that may be useful in assessing the
Company and its results of operations.
EBITDA and Adjusted EBITDA have certain limitations. EBITDA and
Adjusted EBITDA should not be considered as alternatives to net
income (loss), or any other measures of financial performance
derived in accordance with GAAP. These measures also should not be
construed as an inference that the Company’s future results will be
unaffected by unusual or non-recurring items for which these
non-GAAP measures make adjustments. Additionally, EBITDA and
Adjusted EBITDA are not intended to be liquidity measures because
of certain limitations, including, but not limited to:
- They do not reflect the Company’s cash outlays for capital
expenditures;
- They do not reflect changes in, or cash requirements for,
working capital; and
- Although depreciation and amortization are non-cash charges,
the assets are being depreciated and amortized and may have to be
replaced in the future, and these non-GAAP measures do not reflect
cash requirements for such replacements.
The non-GAAP information should be read in conjunction with the
Company’s consolidated financial statements and related notes.
The following is a reconciliation of EBITDA and Adjusted EBITDA
to the nearest GAAP measure, net loss:
Three Months Ended June 30,
2020
Three Months Ended June 30,
2020
Six
Months Ended June 30,
2020
Six
Months Ended June 30,
2020
Net loss
$
(837,973
)
$
(971,709
)
$
(1,585,400
)
$
(1,462,444
)
Addback interest expense
3,452
-
6,263
-
Addback interest income
(6,233
)
-
(11,096
)
-
Addback depreciation and amortization
47,401
39,417
94,802
78,863
EBITDA (non-GAAP)
(793,353
)
(932,292
)
(1,495,431
)
(1,383,581
)
Addback Litigation Expense
131,102
-
267,840
-
Addback stock compensation expense
129,750
176,868
168,514
339,361
Adjusted EBITDA (non-GAAP)
$
(532,501
)
$
(755,424
)
$
(1,059,077
)
$
(1,044,220
)
About SG Blocks, Inc.
SG Blocks, Inc. is a premier innovator in advancing and
promoting the use of code-engineered cargo shipping containers for
safe and sustainable construction. The firm offers a product that
exceeds many standard building code requirements, and also supports
developers, architects, builders and owners in achieving greener
construction, faster execution, and stronger buildings of higher
value. Each project starts with GreenSteel™, the structural core
and shell of an SG Blocks building, and then customized to client
specifications. For more information, visit
www.sgblocks.com.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. In
some cases, forward-looking statements can be identified by
terminology such as "may," "should," "potential," "continue,"
"expects," "anticipates," "intends," "plans," "believes,"
"estimates," and similar expressions and includes statements such
as the potential to earn substantial revenues from the three phases
of the Monticello Mews 300+ unit project, the $4 million
manufacturing contract in the south Florida hospitality market
potentially representing a 300% increase in revenue over the
trailing 4 quarters, the efforts and progress in Q2 serving as a
catalyst for the rest of 2020 and into the new year, finishing
construction of the Planet Smoothie container-based structure in Q3
2020, and the “MoLiving” mobile hospitality prototype project for
Arizona Investissements being on track to be completed in Q3 2020.
These forward-looking statements are based on management's
expectations and assumptions as of the date of this press release
and are subject to a number of risks and uncertainties, many of
which are difficult to predict that could cause actual results to
differ materially from current expectations and assumptions from
those set forth or implied by any forward-looking statements.
Important factors that could cause actual results to differ
materially from current expectations include, among others, the
Company’s ability to generate revenues as expected from the three
phases of the Monticello Mews 300+ unit project, the Company’s
ability to generate revenues as expected from the $4 million
manufacturing contract in the south Florida hospitality market, the
Company’s ability to build on the efforts and progress in Q2 for
the rest of 2020 and into the new year, the Company’s ability to
complete construction of the Planet Smoothie container-based
structure as scheduled, the Company’s ability to complete
construction of the “MoLiving” mobile hospitality prototype project
for Arizona Investissements as scheduled, the Company’s ability to
achieve positive outcomes from the license of its residential
technology, the Company’s ability to successfully distribute and
generate revenue from the GeneFinder™ COVID-19 Plus RealAmp Kit™,
the Company’s ability to capitalize on new commercial and military
opportunities, the Company’s ability to maintain compliance with
the NASDAQ listing requirements, and the other factors discussed in
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 and the Company’s subsequent filings with the
SEC, including subsequent periodic reports on Forms 10-Q and 8-K.
The information in this release is provided only as of the date of
this release, and we undertake no obligation to update any
forward-looking statements contained in this release on account of
new information, future events, or otherwise, except as required by
law.
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
June 30,
2020
December 31,
2019
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
16,112,907
$
1,625,671
Accounts receivable, net
1,584,252
1,101,185
Contract assets
11,830
106,015
Prepaid expenses and other current
assets
277,034
73,938
Total current assets
17,986,023
2,906,809
Property, plant and equipment, net
9,899
11,747
Goodwill
1,223,520
1,223,520
Long-term note receivable
661,096
—
Intangible assets, net
2,226,244
2,298,805
Deferred contract costs, net
173,337
193,730
Total Assets
$
22,280,119
$
6,634,611
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued expenses
$
1,863,384
$
2,105,505
Contract liabilities
148,851
168,957
Total current liabilities
2,012,235
2,274,462
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $1.00 par value,
5,405,010 shares authorized; none issued or outstanding
—
—
Common stock, $0.01 par value, 25,000,000
shares authorized; 8,596,189 issued and outstanding as of June 30,
2020 and 1,157,890 issued and outstanding as of December 31,
2019
85,962
11,579
Additional paid-in capital
39,351,139
21,932,387
Accumulated deficit
(19,169,217
)
(17,583,817
)
Total stockholders’ equity
20,267,884
4,360,149
Total Liabilities and Stockholders’
Equity
$
22,280,119
$
6,634,611
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Operations
For the
Three Months Ended
June 30,
For the
Three Months Ended
June 30,
For the
Six Months Ended
June 30,
For the
Six Months Ended
June 30,
2020
2019
2020
2019
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue:
Construction services
$
534,526
$
675,170
$
623,867
$
2,333,244
Engineering services
94,423
52,738
203,838
129,788
Total
628,949
727,908
827,705
2,463,032
Cost of revenue:
Construction services
193,208
435,671
265,119
1,594,900
Engineering services
61,508
24,919
142,372
56,709
Total
254,716
460,590
407,491
1,651,609
Gross profit
374,233
267,318
420,214
811,423
Operating expenses:
Payroll and related expenses
392,338
645,627
664,146
1,284,177
General and administrative expenses
766,750
506,664
1,258,064
839,664
Marketing and business development
expense
30,899
84,216
63,237
131,575
Pre-project expenses
25,000
2,520
25,000
18,451
Total
1,214,987
1,239,027
2,010,447
2,273,867
Operating loss
(840,754
)
(971,709
)
(1,590,233
)
(1,462,444
)
Other income (expense):
Interest expense
(3,452
)
—
(6,263
)
—
Interest income
6,233
—
11,096
—
Total
2,781
—
4,833
—
Loss before income taxes
(837,973
)
(971,709
)
(1,585,400
)
(1,462,444
)
Income tax expense
—
—
—
—
Net loss
$
(837,973
)
$
(971,709
)
$
(1,585,400
)
$
(1,462,444
)
Net loss per share - basic and
diluted:
Basic and diluted
$
(0.16
)
$
(4.02
)
$
(0.48
)
$
(6.43
)
Weighted average shares outstanding:
Basic and diluted
5,369,132
241,881
3,278,913
227,602
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Changes in Stockholders’ Equity (Unaudited)
$0.01 Par Value
Common Stock
Additional
Paid-in
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Deficit
Equity
Balance at March 31, 2020
1,170,524
$
11,705
$
21,970,903
$
(18,331,244
)
$
3,651,364
Stock-based compensation
—
—
129,750
—
129,750
Conversion of restricted stock units to
common stock
12,000
120
(120
)
—
—
Conversion of debt exchange to common
stock
73,665
737
205,526
—
206,263
Issuance of common stock, net of issuance
costs
7,340,000
73,400
17,045,080
—
17,118,480
Net loss
—
—
—
(837,973
)
(837,973
)
Balance at June 30, 2020
8,596,189
$
85,962
$
39,351,139
$
(19,169,217
)
$
20,267,884
Balance at December 31, 2019
1,157,890
$
11,579
$
21,932,387
$
(17,583,817
)
$
4,360,149
Stock-based compensation
—
—
168,514
—
168,514
Conversion of restricted stock units to
common stock
24,672
246
(246
)
—
—
Reverse stock split settlement
(38
)
—
(122
)
—
(122
)
Conversion of debt exchange to common
stock
73,665
737
205,526
—
206,263
Issuance of common stock, net of issuance
costs
7,340,000
73,400
17,045,080
—
17,118,480
Net loss
—
—
—
(1,585,400
)
(1,585,400
)
Balance at June 30, 2020
8,596,189
$
85,962
$
39,351,139
$
(19,169,217
)
$
20,267,884
$0.01 Par Value
Common Stock
Additional
Paid-in
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Deficit
Equity
Balance at March 31, 2019
213,002
$
2,130
$
17,958,022
$
(11,154,012
)
$
6,806,140
Stock-based compensation
—
—
231,182
—
231,182
Issuance of common stock, net of issuance
costs
42,388
424
552,285
—
552,709
Net loss
—
—
—
(971,709
)
(971,709
)
Balance at June 30, 2019
255,390
$
2,554
$
18,741,489
$
(12,125,721
)
$
6,618,322
Balance at December 31, 2018
213,002
$
2,130
$
17,741,214
$
(10,663,277
)
$
7,080,067
Stock-based compensation
—
—
447,990
—
447,990
Issuance of common stock, net of issuance
costs
42,388
424
552,285
—
552,709
Net loss
—
—
—
(1,462,444
)
(1,462,444
)
Balance at June 30, 2019
255,390
$
2,554
$
18,741,489
$
(12,125,721
)
$
6,618,322
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
For the Six Months Ended
June 30, 2020
For the Six Months Ended
June 30, 2019
(Unaudited)
(Unaudited)
Cash flows from operating
activities:
Net loss
$
(1,585,400
)
$
(1,462,444
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation expense
1,848
6,301
Amortization of intangible assets
72,561
72,562
Amortization of deferred license costs
20,393
—
Bad debt expense (benefit)
—
(54,000
)
Interest income on long-term note
receivable
(11,096
)
—
Stock-based compensation
168,514
339,361
Changes in operating assets and
liabilities:
Accounts receivable
(483,067
)
351,820
Contract assets
94,185
239,524
Prepaid expenses and other current
assets
(203,096
)
756,393
Accounts payable and accrued expenses
(235,858
)
(846,261
)
Contract liabilities
(20,106
)
(1,150,458
)
Net cash used in operating activities
(2,181,122
)
(1,747,202
)
Cash flows provided by investing
activities:
Advances in note receivable
(650,000
)
—
Net cash used in investing activities
(650,000
)
—
Cash flows from financing
activities:
Proceeds from public stock offering, net
of issuance costs
17,118,480
552,709
Proceeds from long-term note payable
200,000
—
Settlement of common stock from reverse
stock split
(122
)
—
Net cash provided by financing
activities
17,318,358
552,709
Net increase (decrease) in cash and
cash equivalents
14,487,236
(1,194,493
)
Cash and cash equivalents - beginning
of period
1,625,671
1,368,395
Cash and cash equivalents - end of
period
$
16,112,907
$
173,902
Supplemental disclosure of non-cash
operating activities:
Non-cash conversion of long-term note
payable to common stock
$
200,000
$
—
Non-cash conversion of accrued interest of
long-term note payable to common stock
6,263
—
Non-cash conversion of accrued salary to
restricted stock units to common stock
—
108,629
Total non-cash operating activities
$
206,263
$
108,629
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200813005708/en/
Media Rubenstein Public Relations Christina Levin Account
Director 212-805-3029 clevin@rubensteinpr.com
or
James Carbonara Hayden IR (646) 755-7412
james@haydenir.com
Brett Maas Hayden IR (646) 536-7331
brett@haydenir.com
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