Olenox Industries Inc 10-Q for FY2024 Q3
Olenox Industries Inc. (OLOX)
About this 10-Q
Olenox Industries Inc filed this 10-Q on November 27, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.75M
- down 55.8% from $3.97M a year earlier
- Net loss
- $3.72M
- compared with a net loss of $3.61M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
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incorporation or organization) |
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Identification No.) |
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(Address of principal executive offices) |
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(Former name, former address and formal fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
Accelerated filer ☐ |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of November 20, 2024 the issuer had a total of
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
| 1 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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September 30, 2024 |
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December 31, 2023 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Contract assets |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Intangible assets, net |
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| Deferred contract costs, net | ||||||||
| Investment in and advances to equity affiliates | ||||||||
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Total Assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Contract liabilities |
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| Lease liability, current maturities | ||||||||
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| Short-term notes payable, net | ||||||||
| Current liabilities of discontinued operations | ||||||||
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Total current liabilities |
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| Long-term notes payable, net | ||||||||
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| Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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| Treasury stock, at cost |
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Accumulated deficit |
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Non-controlling interest |
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| Total stockholders’ equity | ( |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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For the Three Months Ended September 30, |
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
For the Nine Months Ended September 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||
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(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
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Revenue: |
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| Construction services | $ | $ | $ | $ | |||||||||||
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Total |
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Cost of revenue: |
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Construction services |
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Total |
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Gross (loss) profit |
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Operating expenses: |
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Payroll and related expenses |
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General and administrative expenses |
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Marketing and business development expenses |
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Total |
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Operating loss |
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Other income (expense): |
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Interest expense |
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Interest income |
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| Loss on disposition of equity-based investment | ( |
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Change in fair value of equity-based investment |
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| Other income | |||||||||||||||
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Total |
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Loss before income taxes |
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Income tax expense |
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Net loss |
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| Common stock deemed dividend – reduction in conversion rate | ( |
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| Income (loss) from discontinued operations | ( |
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| Net loss attributable to common stockholders | $ | ( |
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Net loss per share |
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Basic and diluted – continued operations |
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| Basic and diluted – discontinued operations | $ | $ | ( |
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Weighted average shares outstanding: |
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Basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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$0.01 Par Value |
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Additional |
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Treasury |
Accumulated |
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Noncontrolling |
Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Stock |
Deficit |
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Interests |
Equity |
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Balance at June 30, 2024 |
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$ |
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| Fractional share adjustment | ( |
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| Issuance of stock for accounts payable settlement |
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| Stock-based compensation and issuance of RSU’s | — | — | — | ||||||||||||||||||||||||||
| Prefunded warrant exercise | ( |
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Net loss |
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| Balance at September 30, 2024 | $ | $ | $ | ( |
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Balance at December 31, 2023 |
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$ |
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| Stock-based compensation and issuance of RSU’s | — | — | — | ||||||||||||||||||||||||||
| Common stock deemed dividend – inducement | — | — | — | ( |
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| Common stock deemed dividend – reduction in conversion rate | — | — | — | ( |
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| Cashless warrant exercise | ( |
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| Prefunded warrant exercise | ( |
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| Issuance of stock upon inducement |
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| Issuance of common stock and warrants for debt issuance | — | — | — | ||||||||||||||||||||||||||
| Conversion of debt and interest | — | — | — | ||||||||||||||||||||||||||
| Factional share adjustment | ( |
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| Issuance of common stock under EP Agreement | — | — | — | ||||||||||||||||||||||||||
| Issuance of stock for accounts payable settlement | — | — | — | ||||||||||||||||||||||||||
| SG DevCorp equity transactions | — | — | — | — | |||||||||||||||||||||||||
| Deconsolidation of SG DevCorp | — | — | — | — | — | ( |
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| Issuance of common stock for cash | — | — | — | ||||||||||||||||||||||||||
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Net loss |
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Balance at September 30, 2024 |
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$ |
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$ |
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$ | ( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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$0.01 Par Value |
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Additional |
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Treasury |
Accumulated |
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Noncontrolling |
Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Stock |
Deficit |
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Interests |
Equity |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ | ( |
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$ |
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Distribution of SG DevCorp |
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| Conversion of short-term notes payable | — | — | — | |||||||||||||||||||||||||
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Net loss |
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| Balance at September 30, 2023 | $ | $ | $ | ( |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ | ( |
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| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of restricted common stock | — | — | — | |||||||||||||||||||||||||
| Issuance of restricted stock units | ( |
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| Common stock issued for services | — | — | — | |||||||||||||||||||||||||
| Issuance of warrants and restricted common stock | — | — | — | |||||||||||||||||||||||||
| Noncontrolling interest distribution | — | — | — | — | — | ( |
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| Treasury stock | — | — | — | ( |
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| Distribution of SG DevCorp | — | — | — | ( |
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| Conversion of short-term notes payable | — | — | — | |||||||||||||||||||||||||
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Net loss |
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Balance at September 30, 2023 |
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$ |
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$ |
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$ | ( |
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$ |
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SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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For the Nine Months Ended |
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For the Nine Months Ended |
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(Unaudited) |
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(Unaudited) |
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Cash flows from operating activities: |
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Net loss |
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$ |
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$ |
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| Income (loss) from discontinued operations | ( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation expense |
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Amortization of intangible assets |
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| Amortization of deferred license costs | ||||||||
| Amortization of debt issuance costs and debt discount | |
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| Amortization of right of use asset | ||||||||
| Gain on deconsolidation – SG DevCorp | ( |
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| Loss on disposition of equity-based investment | ||||||||
| Change in fair value of equity-based investment | ||||||||
| Common stock issued for services | ||||||||
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Interest income on long-term note receivable |
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Stock-based compensation |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Contract assets |
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| Inventories | ( |
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Prepaid expenses and other current assets |
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| Intangible assets | ( |
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Accounts payable and accrued expenses |
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Contract liabilities |
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| Lease liability | ( |
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| Assumed liability | ||||||||
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Net cash used in operating activities by continuing operations |
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| Net cash used in operating activities by discontinued operations | ( |
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Cash flows from investing activities: |
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| Purchase of property, plant and equipment | ( |
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| Cash received from sale of equity-based investment | ||||||||
| Project development costs | ( |
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| Investment in and advances to equity affiliates | ||||||||
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Net cash used in investing activities by continuing operations |
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| Net cash used in investing activities by discontinued operations | ( |
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Cash flows from financing activities: |
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| Repurchase of common stock | ( |
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| Repayment of short term notes payable | ( |
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| Proceeds from short-term notes payable and warrants, net of debt issuance costs | ||||||||
| Proceeds from long-term notes payable | ||||||||
| Proceeds from warrant inducement | ||||||||
| Prefunded warrant exercise | ||||||||
| Issuance of common stock for cash | ||||||||
| Issuance of common stock under EP Agreement | ||||||||
| Distribution paid to non-controlling interest | ( |
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Net cash provided by financing activities by continuing operations |
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| Net cash provided by financing activities by discontinued operations | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents - end of period | ||||||||
| Less: cash and cash equivalents – discontinued operations | |
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| $ | $ | |||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Assets and liabilities effected in deconsolidation | ||||||||
| Cash | $ | $ | ||||||
| Assets held for sale |
$ | $ | ||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
| Property and equipment, net | $ | $ | ||||||
| Project development costs and other assets | $ | $ | ||||||
| Goodwill | $ | $ | ||||||
| Intangible assets |
$ | $ | ||||||
| Investments in equity-based investments | $ | $ |
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| Accounts payable and accrued expenses | $ | $ |
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| Contingent consideration payable | $ | $ | ||||||
| Short-term notes payable | $ | $ | ||||||
| Cashless warrant exercise | $ | $ | ||||||
| Fractional common share adjustment | $ | $ | ||||||
| Common stock deemed dividend - inducement | $ | $ | ||||||
| Common stock deemed dividend – reduction in conversion price | $ | $ | ||||||
| Conversion of short-term notes payable to common stock | $ | $ | ||||||
| Fair value of warrants issued with debt | $ | $ | ||||||
| Common stock issuance for accounts payable settlement | $ | $ | ||||||
| Assets and liabilities acquired in business combination: | ||||||||
| Intangible assets | $ | $ | ||||||
| Goodwill | $ | $ | ||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Contingent consideration payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
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1. |
Description of Business |
Safe & Green Holdings Corp. (collectively with its subsidiaries, the “Company,” “we”, “us” or “our”) was previously known as SG Blocks, Inc. as well as CDSI Holdings, Inc., a Delaware corporation incorporated on December 29, 1993. On November 4, 2011, CDSI Merger Sub, Inc., the Company’s wholly-owned subsidiary, was merged with and into SG Building Blocks, Inc. (“SG Building,” formerly SG Blocks Inc.) (the “Merger”), with SG Building surviving the Merger and becoming a wholly-owned subsidiary of the Company. The Merger was a reverse merger that was accounted for as a recapitalization of SG Building, as SG Building was the accounting acquirer.
The Company operates in the following
The building products developed with the Company’s proprietary technology and design and engineering expertise are generally stronger, more durable, environmentally sensitive, and erected in less time than traditional construction methods. The use of the Company's Modules typically provides between four to six points towards the Leadership in Energy and Environmental Design (“LEED”) certification levels, including reduced site disturbance, resource reuse, recycled content, innovation in design and use of local and regional materials. Due to the ability of the Modules to satisfy such requirements, the Company believes the products produced utilizing its technology and expertise is a leader in environmentally sustainable construction.
There are
The Company also provides engineering and project management services related to the use and modification of Modules in construction.
| 7 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
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1. |
Description of Business (continued) |
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2. |
Separation and Distribution |
In December 2022, the Company and then owner of
In connection with the Separation and Distribution, SG DevCorp entered into a separation and distribution agreement and several other agreements with the Company. These agreements provide for the allocation between SG DevCorp and the Company of the assets, employees, liabilities and obligations (including, among others, investments, property, employee benefits and tax-related assets and liabilities) of the Company and its subsidiaries attributable to periods prior to, at and after the Separation and will govern the relationship between the Company and SG DevCorp subsequent to the completion of the Separation. In addition to the separation and distribution agreement, the other principal agreements entered into with the Company included a tax matters agreement and a shared services agreement.
During 2024, the Company’s ownership in SG DevCorp fell below
| 8 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
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3. |
Liquidity |
As of September 30, 2024, the Company had cash and cash equivalents of $
| 2024 |
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| Within 1 year | $ | ||||
| Total Backlog | $ | ||||
The Company has incurred losses since its inception, has negative working capital of $
The Company intends to meet its capital needs from revenue generated from operations and by containing costs, entering into strategic alliances, as well as exploring other options, including the possibility of raising additional debt or equity capital as necessary. There is, however, no assurance the Company will be successful in meeting its capital requirements prior to becoming cash flow positive. The Company does not have any additional sources secured for future funding, and if it is unable to raise the necessary capital at the times it requires such funding, it may need to materially change its business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether.
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4. |
Summary of Significant Accounting Policies |
Basis of presentation and principals of consolidation – The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 8 Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. The condensed financial statements and notes should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2023 included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on May 7, 2024. In the opinion of management, all adjustments, consisting of normal accruals, considered necessary for a fair presentation of the interim financial statements have been included. Results for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
Reclassifications - Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net loss or cash flows.
Recently adopted accounting pronouncements - New accounting pronouncements implemented by the Company are discussed below or in the related notes, where appropriate.
Accounting estimates – The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period, together with amounts disclosed in the related notes to the financial statements. The Company’s estimates used in these financial statements include, but are not limited to, revenue recognition, stock-based compensation, accounts receivable reserves, inventory valuations, goodwill, the valuation allowance related to the Company’s deferred tax assets, the carrying amount of intangible assets, right of use assets and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
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4. |
Summary of Significant Accounting Policies (continued) |
Operating cycle – The length of the Company’s contracts varies, but is typically between to
Revenue recognition – The Company determines, at contract inception, whether it will transfer control of a promised good or service over time or at a point in time, regardless of the length of contract or other factors. The recognition of revenue aligns with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps in accordance with its revenue policy:
(1) Identify the contract with a customer
(2) Identify the performance obligations in the contract
(3) Determine the transaction price
(4) Allocate the transaction price to performance obligations in the contract
(5) Recognize revenue as performance obligations are satisfied
On certain contracts, the Company applies recognition of revenue over time, which is similar to the method the Company applied under previous guidance (i.e., percentage of completion). Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress toward complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.
Disaggregation of Revenues
The Company’s revenues are primarily derived from construction related to Modules projects. The Company’s contracts are with customers in various industries. Revenue recognized over time was $
The following tables provide further disaggregation of the Company’s revenues by categories:
| 10 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
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4. |
Summary of Significant Accounting Policies (continued) |
| Three Months Ended September 30, | |||||||||||||||
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Revenue by Customer Type |
2024 |
2023 | |||||||||||||
| Construction and Engineering Services: |
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| Office | $ |
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% |
$ |
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% | |||||||
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Total revenue by customer type |
$ |
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% |
$ |
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% | |||||||
| Nine Months Ended September 30, | |||||||||||||||
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Revenue by Customer Type |
2024 |
2023 | |||||||||||||
| Construction and Engineering Services: |
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| Hotel/Hospitality | $ |
% | $ | % | |||||||||||
| Office |
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% |
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% | |||||||||
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Total revenue by customer type |
$ |
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% |
$ |
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% | |||||||
Contract Assets and Contract Liabilities
Accounts receivable are recognized in the period when the Company’s right to consideration is unconditional. Accounts receivable are recognized net of an allowance for credit losses. A considerable amount of judgment is required in assessing the likelihood of realization of receivables.
The timing of revenue recognition may differ from the timing of invoicing to customers.
Contract assets include unbilled amounts from long-term construction services when revenue recognized under the cost-to-cost measure of progress exceeds the amounts invoiced to customers, as the amounts cannot be billed under the terms of the Company’s contracts. Such amounts are recoverable from customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. Contract assets are generally classified as current within the condensed consolidated balance sheets.
Contract liabilities from construction and engineering contracts occur when amounts invoiced to customers exceed revenues recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from customers on certain contracts. Contract liabilities decrease as the Company recognizes revenue from the satisfaction of the related performance obligation. Contract liabilities are generally classified as current within the condensed consolidated balance sheet.
Although the Company believes it has established adequate procedures for estimating costs to complete on open contracts, it is at least reasonably possible that additional significant costs could occur on contracts prior to completion. The Company periodically evaluates and revises its estimates and makes adjustments when they are considered necessary.
| 11 |
SAFE & GREEN HOLDINGS CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
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4. |
Summary of Significant Accounting Policies (continued) |