SG Blocks Announces Second Quarter Financial Results

NEW YORK, NY–(Marketwired – Aug 9, 2017) – SG Blocks, Inc. (NASDAQ: SGBX) (“SG Blocks” or the “Company”), a premier designer, innovator and fabricator of container-based structures, today announced its operating results for the three months ended June 30, 2017, as published in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.
Operating Results for the Quarter Ended June 30, 2017:

Total revenues increased 17% to $1,001,734 for the three months ended June 30, 2017, compared to $828,477 for the three month period ending June 30, 2016.

Gross profit for the three months ended June 30, 2017 was $145,787 compared to $141,732 for the three month period ending June 30, 2016.

GAAP net loss was $(1,705,672), or $(3.15) per basic and diluted share, for the three months ended June 30, 2017 with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017.

Non-GAAP net loss was $318,998, or $ (0.59) per basic and diluted share, for the three months ended June 30, 2017, with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017. Reconciliations between net income, earnings per share and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled “Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss.”

As of June 30, 2017, the Company had $5,662,488 of cash and cash equivalents and short-term investments.

Paul Galvin, Chief Executive Officer of SG Blocks, stated, “It’s been a very busy quarter for us at SG Blocks. The recent public offering of our shares now traded on Nasdaq, resulting in net proceeds of approximately $7.2 million, has placed the Company on its strongest financial footing to date, with no debt and a clean capital structure. With a construction backlog of $9.7 million on June 30th, we are galvanized around our core as the first company to receive an ESR rating from the ICC, and we are driving growth with disciplined decisions, product leadership and focused execution. We are very optimistic about the future and we look forward to building atop recent operational momentum while driving towards measurable earnings growth.”
Galvin concluded, “I want to also take this opportunity to thank all of those who have supported us and helped get us where we are today. We are grateful and humbled by your support. Rest assured, we will continue to work diligently on your behalf as we focus on building shareholder value.”
Mahesh Shetty, Chief Financial Officer of SG Blocks, stated, “We have held the line on our operating expenses and look forward to expanding our margins as we execute on our pipeline.”
SG Blocks will host a corresponding conference call to discuss the results with Chief Executive Officer Paul Galvin and Chief Financial Officer Mahesh Shetty today at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 ten minutes prior to the scheduled start time. International callers should dial (201) 493-6779.
In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company’s website at www.sgblocks.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Wednesday, August 23, 2017 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13668248.

 
 

 
 

SG BLOCKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 

 
 

 
 
For the Three Months Ended
June 30,
 
 
For the Six Months Ended
June 30,
 

 
 
Successor
2017
 
 
Predecessor
2016
 
 
Successor
2017
 
 
Predecessor
2016
 

 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 

Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Construction revenue
 
$
882,499
 
 
$ 801,692
 
 
$
1,402,457
 
 
$
1,004,216
 

 
Engineering services
 
 
119,235
 
 
 
26,785
 
 
 
203,870
 
 
 
52,007
 

 
Project management
 
 

 
 
 

 
 
 

 
 
 

 

 
 
Total
 
 
1,001,734
 
 
 
828,477
 
 
 
1,606,327
 
 
 
1,056,223
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cost of revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Construction revenue
 
 
738,860
 
 
 
664,848
 
 
 
1,133,026
 
 
 
816,076
 

 
Engineering services
 
 
117,087
 
 
 
21,897
 
 
 
174,285
 
 
 
43,898
 

 
Project management
 
 

 
 
 

 
 
 

 
 
 

 

 
 
Total
 
 
855,947
 
 
 
686,745
 
 
 
1,307,311
 
 
 
859,974
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Gross profit
 
 
145,787
 
 
 
141,732
 
 
 
299,016
 
 
 
196,249
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Operating expenses:
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 

 
Payroll and related expenses
 
 
292,550
 
 
 
200,318
 
 
 
635,598
 
 
 
367,254
 

 
General and administrative expenses
 
 
330,118
 
 
 
432,249
 
 
 
724,059
 
 
 
557,069
 

 
Marketing and business development expense
 
 
37,618
 
 
 
12,877
 
 
 
66,186
 
 
 
22,729
 

 
Pre-project expenses
 
 
7,508
 
 
 
22,233
 
 
 
16,647
 
 
 
26,411
 

 
 
Total
 
 
667,794
 
 
 
667,677
 
 
 
1,442,490
 
 
 
973,463
 

 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 

Operating loss
 
 
(522,007
)
 
 
(525,945
)
 
 
(1,143,474
)
 
 
(777,214
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Interest expense
 
 
(165,194
)
 
 
(265,253
)
 
 
(330,388
)
 
 
(429,017
)

 
Interest income
 
 
4
 
 
 
5
 
 
 
8
 
 
 
8
 

 
Loss on conversion of convertible debentures
 
 
(1,018,475
)
 
 

 
 
 
(1,018,475
)
 
 

 

 
Change in fair value of financial instruments
 
 

 
 
 
–  
 
 
96,327
 
 
 

 

 
 
Total
 
 
(1,183,665
)
 
 
(265,248
)
 
 
(1,252,528
)
 
 
(429,009
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net loss before reorganization items
 
 
(1,705,672
)
 
 
(791,193
)
 
 
(2,396,002
)
 
 
(1,206,223
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Reorganization items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Legal and professional fees
 
 

 
 
 
(80,239
)
 
 

 
 
 
(171,893
)

 
Gain on reorganization
 
 

 
 
 
713,379
 
 
 

 
 
 
713,379
 

 
 
Total
 
 

 
 
 
633,140
 
 
 

 
 
 
541,486
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 
$
(1,705,672
)
 
$
(158,053
)
 
$
(2,396,002
)
 
$
(664,737
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net loss per share – basic and diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Basic and diluted
 
$
(3.15 )
 
$
0.00
 
 
$
(6.75
)
 
$
(0.01
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Basic and diluted
 
 
541,424
 
 
 
42,918,927
 
 
 
354,703
 
 
 
42,918,927
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

 
 

SG BLOCKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 

 
 
 
 
 
 
 

 
 
June 30,
2017
 
 
December 31,
2016
 

 
 
(Unaudited)
 
 
 
 

Assets  
 
 
 
 
 

Current assets:
 
 
 
 
 
 
 
 

 
Cash and cash equivalents
 
$
5,632,463
 
 
$
549,100
 

 
Short-term investment
 
 
30,025
 
 
 
30,017
 

 
Accounts receivable, net
 
 
97,441
 
 
 
234,518
 

 
Costs and estimated earnings in excess of billings on uncompleted contracts
 
 
258,149
 
 
 
33,349
 

 
Prepaid expenses
 
 
317,344
 
 
 
124,720
 

 
Inventory
 
 

 
 
 
9,445
 

 
 
Total current assets
 
 
6,335,422
 
 
 
981,149
 

Equipment, net
 
 
4,180
 
 
 
5,559
 

Goodwill
 
 
4,162,173
 
 
 
4,162,173
 

Intangible assets, net
 
 
3,322,879
 
 
 
3,587,250
 

 
 
   
 
 
 
 
 

 
 
Totals
 
$
13,824,654
 
 
$
8,736,131
 

 
 
 
 
 
 
 
 
 

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 

Current liabilities:
 
 
 
 
 
 
 
 

 
Accounts payable and accrued expenses
 
$
1,444,068
 
 
$
350,772
 

 
Billings in excess of costs and estimated earnings on uncompleted contracts
 
 
439,191
 
 
 
48,478
 

 
Deferred revenue
 
 

 
 
 
72,788
 

 
Conversion option liabilities
 
 

 
 
 
384,461
 

 
 
Total current liabilities
 
 
1,883,259
 
 
 
856,499
 

 
Convertible debentures, net of discounts
 
 

 
 
 
2,446,337
 

 
 
Total liabilities
 
 
1,883,259
 
 
  3,302,836
 

 
 
 
 
 
 
 
 
 

Commitments and Contingencies
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

Stockholders’ equity:
 
 
 
 
 
 
 
 

 
Preferred stock, $1.00 par value, 5,405,010 shares authorized; 0 issued and outstanding as of June 30, 2017 and 1,801,670 issued and outstanding as of December 31, 2016
 
 

 
 
 
1,801,670
 

 
Common stock, $0.01 par value, 300,000,000 shares authorized; 3,982,238 issued and outstanding as of June 30, 2017 and 163,901 issued and outstanding as of December 31, 2016
 
 
39,823
 
 
 
1,639
 

 
Additional paid-in capital
 
 
15,604,150
 
 
 
4,936,562
 

 
Accumulated deficit
 
 
(3,702,578
)
 
 
(1,306,576
)

 
 
Total stockholders’ equity
 
 
11,941,395
 
 
 
5,433,295
 

 
 
 
 
 
 
 
 
 

 
 
Totals
 
$
13,824,654
 
 
$
8,736,131
 

 
   
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

       SG BLOCKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
 
 
 
 
 
 

 
 
Successor
For the Six Months Ended
June 30,
2017
 
 
Predecessor
For the Six Months Ended
June 30,
2016
 

 
 
(Unaudited)
 
 
(Unaudited)
 

Cash flows from operating activities:
 
 
 
 
 
 
 
 

Net loss
 
$
(2,396,002
)
 
$
(664,737
)

Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
 
 

 
Depreciation expense
 
 
1,379
 
 
 
1,629
 

 
Amortization of debt issuance costs
 
 

 
 
 
5,204
 

 
Amortization of discount on convertible debentures
 
 
330,388
 
 
 
387,965
 

 
Amortization of intangible assets
 
 
293,191
 
 
 

 

 
Interest income on short-term investment
 
 
(8
)
 
 
(8 )

 
Loss on conversion of convertible debentures
 
 
1,018,475
 
 
 

 

 
Change in fair value of financial instruments
 
 
(96,327
)
 
 

 

 
Interest expense on debtor in possession financing
 
 

 
 
 
35,848
 

 
Gain on reorganization
 
 

 
 
 
(713,379
)

 
Stock-based compensation
 
 
209,383
 
 
 
119,146
 

 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 

 
 
 
Accounts receivable
 
 
137,077
 
 
 
(104,858
)

 
 
 
Cost and estimated earnings in excess of billings on uncompleted contracts
 
 
(224,800
)
 
 

 

 
 
 
Prepaid expenses
 
 
(192,624
)
 
 
(28,589
)

 
 
 
Inventory
 
 
9,445
 
 
 
118,011
 

 
 
 
Intangible assets
 
 
(28,820
)
 
 

 

 
   
Accounts payable and accrued expenses
 
 
378,123
 
 
 
269,317
 

 
 
 
Accounts payable and accrued expenses – subject to compromise
 
 

 
 
 
(22,457
)

 
 
 
Related party accounts payable and accrued expenses
 
 

 
 
 
(163,522
)

 
 
 
Billings in excess of costs and estimated earnings on uncompleted contracts
 
 
390,713
 
 
 
14,650
 

 
 
 
Deferred revenue
 
 
(72,788
)
 
 
(87,115
)

 
 
 
 
Net cash used in operating activities
 
 
(243,195
)
 
 
(832,895
)

 
 
 
 
 
 
 
 
 

Cash flows provided by investing activities:
 
 
 
 
 
 
 
 

 
Security deposit refund
 
 

 
 
 
2,700
 

 
 
 
 
Net cash provided by investing activities
 
 

 
 
 
2,700
 

 
 
 
 
   
 
 
 

Cash flows from financing activities:
 
 
 
 
 
 
 
 

 
Proceeds from issuance of convertible debentures
 
 

 
 
 
1,319,001
 

 
Proceeds from public stock offering, net of offering costs
 
 
6,826,558
 
 
 

 

 
Payments on convertible debentures
 
 
(1,500,000
)
 
 

 

 
 
 
 
Net cash provided by financing activities
 
 
5,326,558
 
 
 
1,319,001
 

 
 
 
 
 
 
 
 
 

Net increase in cash and cash equivalents
 
 
5,083,363
 
 
 
488,806
 

 
 
 
 
 
 
 
 
 

Cash and cash equivalents – beginning of period
 
 
549,100
 
 
 
466,997
 

 
 
 
 
 
 
 
 
 

Cash and cash equivalents – end of period
 
$
5,632,463
 
 
$
955,803
 

 
 
 
 
 
 
 
 
 

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 

 
Cash paid during the period for:
 
 
 
 
 
 
 
 

 
Interest
 
$

 
 
$

 

Supplemental disclosure of non-cash financing activities:
 
 
 
 
 
 
 
 

 
Conversion of debtor in possession financing to convertible debentures
 
$

 
 
$
600,000
 

 
Conversion of convertible debentures to common stock
 
$
2,583,334
 
 
$

 

 
Conversion of preferred stock to common stock
 
$
1,801,670
 
 
$

 

 
Offering costs not paid and included in accounts payable and accrued expenses
 
$
715,173
 
 
$

 

 
 

 
 

 SG BLOCKS, INC. AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss
 

 
 
 
 
 
 
 

 
 
Six Months Ended June 30,
2017
 
 
Three Months Ended June 30,
2017
 

Net loss
  $
(2,396,002
)
 
$
(1,705,672
)

 
Addback interest expense
 
 
330,388
 
 
 
165,194
 

 
Addback depreciation and amortization
 
 
294,570
 
 
 
148,005
 

EBITDA (non-GAAP)
 
 
(1,771,044
)
 
 
(1,392,473
)

 
 
 
 
 
 
 
 
 

 
Addback loss on conversion of convertible debentures
 
 
1,018,475
 
 
 
1,018,475
 

 
Less change in fair value of financial instruments
 
 
(96,327
)
 
 

 

 
Addback stock compensation expense
 
 
209,383
 
 
 
55,000
 

Adjusted EBITDA (non-GAAP)
 
$
(639,513
)
 
$
(318,998
)

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

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. For more information, visit www.sgblocks.com.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.

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