What changed in this filing

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Item 1A. Risk Factors

2023-03-31 compared with 2022-04-18 · 329 added, 79 removed, 371 unchanged (52% of the section changed)

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Investing in our common stock involves a high degree of risk.

You should consider carefully the following risks, together with all the other information in this Annual Report on Form 10-K, including the section titled “Forward-Looking Statements,” and Part II, Item 7.“Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.

You should consider carefully the following risks, together with all the other information in this Annual Report, including the section titled “Forward-Looking Statements,” and Part II, Item 7.“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes included elsewhere in this Annual Report.

The risks described below are not the only ones we face.

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If there is a shortfall, we may be forced to reduce operating expenses, among other steps, all of which would have a material adverse effect on our operations going forward.

We may also seek to obtain debt or additional equity financing to meet any cash shortfalls.

We may also seek to obtain debt or additional equity financing to meet any cash shortfalls both in the public company or our subsidiaries.

The type, timing and terms of any financing we may select will depend on, among other things, our cash needs, the availability of other financing sources and prevailing conditions in the financial markets.

However, there can be no assurance that we will be able to secure additional funds if needed and that, if such funds are available, the terms or conditions would be acceptable to us.

However, there can be no assurance that we will be able to secure additional funds if needed and that, if such funds are available, the terms or conditions would be acceptable to us, especially in light of the fact that our ability to sell securities registered on our registration statement on Form S-3 will be limited until such time the market value of our voting securities held by non-affiliates is $75 million or more.

If we are unable to secure additional financing, further reduction in operating expenses might need to be substantial in order for us to ensure enough liquidity to sustain our operations.

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Our consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern .

The report of our independent registered public accounting firm contains a note stating that the accompanying financial statements have been prepared assuming we will continue as a going concern.

At December 31, 2022 and 2021, we had cash and cash equivalents and a short-term investment, collectively, of $582,776 and $13,024,381, respectively.

However, during the fiscal years ended December 31, 2022 and 2021, we reported a net loss of $7,089,242 and $5,908,372, respectively, and used $5,630,614 and $662,759 of cash for operations, respectively.

Until we begin generating sufficient revenue, there is a doubt about our ability to continue as a going concern through December 31, 2023.

We have incurred net losses in prior periods, and there can be no assurance that we will generate income in the future, or that we will be able to successfully achieve or maintain our growth strategy.

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We may continue to incur operating losses in the future as we execute our growth strategy.

Although we expect that our expenses will decline due to our new business model, there can be no assurance that our revenue from royalties will exceed our expenses, especially since we anticipate that most of our expenses will be fixed expenses that will not be dependent upon revenue generated.

The likelihood that we will generate net income in the future must be considered in light of the difficulties facing the construction industry as a whole, economic conditions and the competitive environment in which we operate.

The likelihood that we will generate net income in the future must be considered in light of the difficulties facing the construction and real estate development industry as a whole, economic conditions and the competitive environment in which we operate.

Our operating results for future periods are subject to numerous uncertainties, and we may not achieve sufficient revenues to sustain or increase profitability.

In addition, we may be unable to successfully achieve or maintain our growth strategy, including our ability to expand into new geographic markets.

To date we have not generated revenue from SG DevCorp or SG Environmental and there can be no assurance that we will be able to do so in the future.

In 2021, we formed SG DevCorp.

to develop real estate properties and in 2022 we formed SG Environmental to manage waste removal.

To date neither subsidiary has generated any revenue from its operations and there can be no assurance that either will do so in the future.

Each business is subject to all of the risks associated with a new business.

An impairment of goodwill could have a material adverse effect on our financial condition and results of operations.

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Changes to our business strategy, changes in industry or market conditions, changes in operating performance or other indicators of impairment could cause us to record a significant impairment charge during the period in which the impairment is determined, negatively impacting our results of operations and financial position.

We will need to raise additional capital to fund our existing operations.

If we or our subsidiaries are unable to raise capital when needed, we would be compelled to delay, reduce or eliminate our development or commercialization efforts.

We expect to incur significant development expenses related to SG DevCorp.

operations as well as our other operations.

Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

However, we have estimated our current additional funding needs based on assumptions that may prove to be wrong.

Additionally, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control.

Additional capital may not be available to us at such times or in the amounts we need.

Even if capital is available, it might be available only on unfavorable terms.

Until such time, if ever, as we can generate substantial revenue, we expect to finance our operations through a combination of public or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships and alliances or marketing, distribution or licensing arrangements with third parties.

If access to sufficient capital is not available as and when needed, our business will be materially impaired and we may be required to cease operations, curtail one or more product development or commercialization programs, significantly reduce expenses, sell assets, seek a merger, or joint venture partner, file for protection from creditors or liquidate all our assets.

Our failure to timely register the shares of our common stock issuable under the Debenture and the Warrant we issued to Peak One Opportunity Fund, L.P.

could have a material adverse effect on our business, financial condition, results of operations and cash flows.

On February 7, 2023, we closed a private placement offering of $1,100,000 in principal amount of an 8% convertible debenture (the “Debenture”) and a warrant (the “Warrant”) to purchase up to Five Hundred Thousand (500,000) shares of the Company’s common stock, with Peak One Opportunity Fund, L.P.

(“Peak One”) for gross proceeds of $1,000,000.

In connection with the Peak One financing, we entered into a registration rights agreement with Peak One where we agreed to file a registration statement within 60 days to register the shares of common stock issuable under the Debenture and the Warrant with the SEC and to use our reasonable best efforts to have the registration statement declared effective within 90 calendar days from the closing of the financing.

In the event we were to default on our obligation to register the shares of common stock issuable under the Debenture and the Warrant as agreed, Peak One may, among other things, increase the interest rate applicable to the Debenture to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law and accelerate the immediate payment of the full indebtedness due under the Debenture, in an amount equal to one hundred ten percent (110%) of the then outstanding principal amount and accrued and unpaid interest.

The acceleration of the Debenture issued to Peak One could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not have an adequate number of shares of common stock authorized to enable us to complete future equity financing transactions or strategic transactions, which may adversely affect our ability to grow and develop.

We are authorized to issue 25,000,000 shares of common stock, of which approximately 12,613,978 shares of common stock are issued and outstanding and there are outstanding options and warrants to purchase 36,436 and 2,025,520 shares of common stock, respectively, in addition to 3,212,504 vested and unvested restricted stock units.

If all of these securities were exercised it would leave 7,111,562 authorized but unissued shares of common stock.

As a result of our limited number of our authorized and unissued shares of common stock, we may have insufficient shares of common stock available to issue in connection with any future equity financing transactions or strategic transactions we may seek to undertake.

Accordingly, we will likely take steps in the near future to increase our number of available shares, which may include seeking stockholder approval of an increase in our authorized number of shares of common stock or a reverse stock split.

Risks Relating to our Company

Our residential construction business is difficult to evaluate because we are currently focused on a new business model and have very limited operating history and limited information.

We recently terminated our licensing business model for our residential construction business in the United States and are currently developing and constructing our own residential developments.

In 2019 we entered into one license agreement for use of our technology for construction of residences in the United States which we terminated in June 2021.

There is a risk that we will be unable to successfully generate revenue from this new business model.

Although we believe that we will experience increased revenue from this new business model, there can be no assurance that we will experience increased costs and generate less income that we anticipate.

We are subject to many risks associated with this new business model such as our dependence upon third parties to provide services and supply required materials.

Even if we generate revenue, there can be no assurance that we will be profitable.

Our residential construction business is difficult to evaluate because we changed our business model in June 2021 and have a limited operating history and limited information.

In 2021 we terminated our licensing business model for our residential construction business in the United States and are currently developing and constructing our own residential developments.

In 2019 we had entered into one license agreement for use of our technology for construction of residences in the United States.

We terminated this license agreement in June 2021.

There is a risk that we will be unable to successfully generate income from our new business model.

Although we believe that we will experience increased revenue, there can be no assurance that we will not experience increased costs and generate less income with this new business model than we anticipate.

We are subject to many risks associated with currently developing and constructing our own residential developments, such as our dependence upon third parties to provide services and supply required materials.

Even if we generate increased revenue as anticipated, there can be no assurance that we will be profitable.

We are subject to the risks inherent to the operation of a new business enterprise, and cannot assure you that we will be able to successfully address these risks.

In addition, it is still too early to evaluate the impact of our recent acquisition of Echo.

Although we expect to control have better control of cost of goods and efficiency from this acquisition, it is too early to determine the full benefits, if any to be experienced as a result of the acquisition.

The impact of the COVID-19 coronavirus outbreak, or similar global health concerns, could negatively impact our ability to source certain products, impact product pricing, impact our customers’ ability or that of our licensee to obtain financing or have a negative impact on our business.

In March 2020, the World Health Organization declared COVID-19 a global pandemic.

This contagious disease outbreak, which has continued to spread, and the related adverse public health developments, have adversely affected work forces, economies and financial markets globally .

Our use of third-party suppliers for production and shipping of certain products could be negatively impacted by the regional or global outbreak of illnesses, including the COVID-19 coronavirus outbreak.

In addition, any outbreak of COVID at our Echo facility could result in closures of the facility and negatively impact our ability to meet timelines.

To date, we have experienced some delays in projects due to COVID-19 .

Any quarantines, the timing and length of containment and eradication solutions, travel restrictions, absenteeism by infected workers, labor shortages or other disruptions to our suppliers and their contract manufacturers or our customers would likely adversely impact our sales and operating results and result in further project delays.

In addition, the pandemic could result in an economic downturn that could affect the ability of our customers and licensees to obtain financing and therefore impact demand for our products.

Order lead times could be extended or delayed and pricing could increase.

Some products or services may become unavailable if the regional or global spread were significant enough to prevent alternative sourcing.

Accordingly, we are considering alternative product sourcing in the event that product supply becomes problematic.

We expect this global pandemic to have an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict.

In addition, the outbreak of the COVID- 19 coronavirus could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office or other workplace, or due to quarantines.

COVID- 19 illness could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors, and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.

The global outbreak of the COVID- 19 coronavirus continues to rapidly evolve.

The extent to which the COVID- 19 coronavirus may impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

We may be unable to successfully integrate the Echo business with its current management and structure and the acquisition of Echo may not result in the benefits anticipated.

Our failure to successfully complete the integration of Echo could have an adverse effect on our prospects, business activities, cash flow, financial condition, results of operations and stock price.

Integration challenges may include the following:

assimilating Echo’s technology and retaining personnel;

estimating the capital, personnel and equipment required for Echo based on the historical experience of management with the businesses they are familiar with;

minimizing potential adverse effects on existing business relationships;

successfully developing the new products and services.

We believe the acquisition of Echo will provide certain strategic benefits which would enable us to accelerate our business plan through an increased access to capital in the public equity markets.

However, our employee number has experienced significant growth from the acquisition as has our expenses.

There can be no assurance that these anticipated benefits of the acquisition will materialize or that if they materialize will result in increased stockholder value or revenue stream to the combined company.

Our ability to meet our workforce needs is crucial to our results of operations and future sales and profitability.

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We have a fixed cost base that will affect our profitability if our sales decrease.

The fixed cost levels of operating Echo can put pressure on profit margins when sales and production decline.

The fixed cost levels of operating SG Echo can put pressure on profit margins when sales and production decline.

Our profitability depends, in part, on our ability to spread fixed costs over a sufficiently large number of products sold and shipped, and if we make a decision to reduce our rate of production, gross or net margins could be negatively affected.

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or war, acts of terrorism or other unexpected events.

Any downtime or damage at our suppliers’ facilities or Echo’s facilities could prevent us from meeting customer demand for our products or require us to make more expensive purchases from a competing supplier.

Any downtime or damage at our suppliers’ facilities or SG Echo’s facilities could prevent us from meeting customer demand for our products or require us to make more expensive purchases from a competing supplier.

If our suppliers were to incur significant downtime, our ability to satisfy customer requirements could be impaired, resulting in customers seeking products from other distributors, as well as decreased customer satisfaction and lower sales and operating income.

A natural disaster, the effects of climate change, or other disruptions at our Echo facility could adversely affect our business, financial condition, and results of operations .

We rely on the continuous operation of our Echo facility in Durant, Oklahoma for the production of our Modules .

We rely on the continuous operation of our SG Echo facility in Durant, Oklahoma for the production of our Modules.

Any natural disaster or other serious disruption to our facility due to fire, flood, earthquake, or any other unforeseen circumstance would adversely affect our business, financial condition, and results of operations.

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Our success depends highly upon the personal efforts and abilities of our senior management team, specifically the efforts of Paul M.

Galvin, our Chief Executive Officer, Gerald Sheeran , our Acting Chief Financial Officer and William Rogers, our Chief Operations Officer.

Galvin, our Chief Executive Officer and Acting Chief Financial Officer and William Rogers, our Chief Operations Officer.

The Company has entered into employment agreements with Messrs.

Galvin, Sheeran and Rogers.

Galvin and Rogers.

The employment agreements with Messrs.

Galvin, Sheeran and Rogers each provide for two-year terms, with automatic renewal after the end of such term.

Galvin and Rogers each provide for two-year terms, with automatic renewal after the end of such term.

The loss of the services of one or more of these individuals could have a material adverse effect on our business.

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A few customers have in the past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several consecutive years.

At December 31, 2021 and 2020, 78% and 79%, respectively, of the our gross accounts receivable were due from four and three customers.

Revenue relating to one and three customers represented approximately 80% and 61% of our total revenue for the years ended December 31, 2021 and 2020, respectively.

At December 31, 2022 and 2021, 80% and 78%, respectively, of the our gross accounts receivable were due from one and three customers.

Revenue relating to two and three customers represented approximately 65% and 80% of our total revenue for the years ended December 31, 2022 and 2021, respectively.

Although we have contractual relationships with many of our significant customers, our customers may unilaterally reduce or discontinue their contracts with us at any time.

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We may have difficulty protecting our proprietary manufacturing processes, which could adversely affect our ability to compete.

We use a proprietary manufacturing process that allows us to be code-compliant in our SGBlocks™ product .

We use a proprietary manufacturing process that allows us to be code-compliant in our Safe & Green ™ product .

Such manufacturing process is unique to the construction industry and is important to ensure our continued success, and we cannot assure you that our efforts to protect our proprietary rights will be sufficient or effective.

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Risks Relating to our Business and Industry

We, in particular Clarity Mobile Venture, are dependent on the availability and skill of subcontractors, their willingness to work with us, and their expertise in the medical industry.

We rely and expect to continue to rely on subcontractors to perform the collection of COVID-19 tests and run testing procedures within our LAX laboratory.

Despite detailed specifications and quality control procedures, in some cases, improper processes or defective materials may cause issues in producing a timely test result.

We may need to spend money to remediate such problems when they are discovered.

Defective materials and or improper testing procedures can result in refunds owed back to our COVID-19 customers.

Pervasive problems could adversely affect our business and therefore our ability to generate income at LAX.

The inability to contract with skilled subcontractors at reasonable costs and on a timely basis could erode our profit margins and adversely affect our results of operations and cash flows.

Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.

Our operations and performance depend on global, regional and U.S.

economic and geopolitical conditions.

General worldwide economic conditions have experienced significant instability in recent years including the recent global economic uncertainty and financial market conditions.

Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from U.S.

and European leaders and financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022.

Resulting changes in U.S.

trade policy and European policies could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” Furthermore, if other countries, including the U.S., become further involved in the conflict, we could face significant adverse effects to our business and financial condition.

The uncertain financial markets, disruptions in supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact our business in the future.

The COVID-19 outbreak and government measures taken in response to the pandemic have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, have spiked, while demand for other goods and services, such as travel, have fallen.

The future progression of the pandemic and its effects on our business and operations are uncertain.

In addition, the outbreak of a pandemic could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office or laboratory facilities, or due to quarantines.

Pandemics could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors,and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.

Further, due to increasing inflation, operating costs for many businesses including ours have increased and, in the future, could impact demand or pricing of our services or services providers, foreign exchange rates or employee wages.

Inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital.

In addition, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.

Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver.

Although we did not have any cash or cash equivalent balances on deposit with Silicon Valley Bank, uncertainty and liquidity concerns in the broader financial services industry remain and the failure of Silicon Valley Bank and its potential near- and long-term effects on the biotechnology industry and its participants such as our vendors, suppliers, and investors, may also adversely affect our operations and stock price.

We are actively monitoring the effects these disruptions and increasing inflation could have on our operations.

These conditions make it extremely difficult for us to accurately forecast and plan future business activities.

We depend on third parties for transportation services, and limited availability or increases in costs of transportation could adversely affect our business and operations.

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We rely primarily on third parties for transportation of the products we manufacture or distribute and for the delivery of our raw materials.

We are also subject to seasonal capacity constraints, which may be severely reduced due to COVID-19 coronavirus, and weather-related delays for both rail and truck transportation.

We are also subject to seasonal capacity constraints and weather-related delays for both rail and truck transportation.

If any of our third-party transportation providers were to fail to deliver raw materials to us or our Modules to our customers in a timely manner, we may be unable to complete projects in a timely manner and may, among other things, incur penalties for late delivery or be unable to use the Modules as intended.

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As of December 31, 2021, our backlog totaled approximately $3.2 million and as of December 31, 2022 , our backlog totaled approximately $6.8 million.

The decrease in backlog at December 31, 2021 from December 31, 2020 is primarily attributable to two contract cancellation, one which occurred during the third quarter of 2021 in the amount of approximately $1.3 million and one cancellation during the fourth quarter of 2021 in the amount of approximately $16.9 million.

The increase in backlog at December 31, 2022 from December 31, 2021 is primarily attributable to one contract in the amount of $5.7 million entered into during 2022.

Our backlog is described more in detail in “Note 13 —Construction Backlog” of the notes to our consolidated financial statements included elsewhere in this Annual Report.

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The cyclical and seasonal nature of the construction industry causes our revenues and operating results to fluctuate, and we expect this cyclicality and seasonality to continue in the future.

The construction industry is highly cyclical and seasonal and is influenced by many international, national and regional economic factors, including the availability of consumer and wholesale financing, which may be severely reduced due to COVID-19 coronavirus, seasonality of demand, consumer confidence, interest rates, income levels and general economic conditions, including inflation and recessions.

The construction industry is highly cyclical and seasonal and is influenced by many international, national and regional economic factors, including the availability of consumer and wholesale financing, seasonality of demand, consumer confidence, interest rates, income levels and general economic conditions, including inflation and recessions.

As a result of the foregoing factors, the revenues and operating results we derive from customers will fluctuate and we currently expect them to continue to fluctuate in the future.

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A significant portion of our sales are for projects with non-public owners, such as non-residential builders and home builders who make investments with private funds into their projects.

Construction spending is affected by their customers’ ability to finance projects, which may be severely reduced due to the COVID-19 coronavirus .

Construction spending is affected by their customers’ ability to finance projects, which may be severely reduced due to rising interest rates .

Residential and nonresidential construction could decline if companies and consumers are unable to finance construction projects or if the economy slows or is stalled, which could result in delays or cancellations of capital projects.

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or war, acts of terrorism or other unexpected events.

Any downtime or damage at our suppliers’ facilities or Echo's facilities could prevent us from meeting customer demand for our products or require us to make more expensive purchases from a competing supplier.

Any downtime or damage at our suppliers’ facilities or SG Echo's facilities could prevent us from meeting customer demand for our products or require us to make more expensive purchases from a competing supplier.

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As such, any significant changes to, among other things, the general political and social conditions in foreign counties in which we maintain operations or sourcing relationships, unfavorable changes in U.S.

trade legislation and regulation, the recent outbreak of the COVID-19 coronavirus, the imposition of governmental economic sanctions on countries in which we do business or other trade barriers, threats of war, terrorism or governmental instability, labor disruptions, currency controls, fluctuating exchange rates with respect to contracts not denominated in U.S.

trade legislation and regulation, the outbreak of the COVID-19 coronavirus, the imposition of governmental economic sanctions on countries in which we do business or other trade barriers, threats of war, terrorism or governmental instability, labor disruptions, currency controls, fluctuating exchange rates with respect to contracts not denominated in U.S.

dollars and unanticipated or unfavorable changes in government policies with respect to laws and regulations, anti-inflation measures and method of taxation.

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We are dependent upon third-party financing, and our financial condition and results of operations could be negatively affected if additional third-party financing for our customers does not become available

Our business and earnings depend substantially on our ability to obtain financing for the development of their construction projects , which may be adversely impacted by the recent COVID-19 coronavirus outbreak.

Our business and earnings depend substantially on our ability to obtain financing for the development of their construction projects , which may be adversely impacted by rising interest rates.

The availability and cost of such financing is further dependent on the number of financial institutions participating in the industry, the departure of financial institutions from the industry, the financial institutions’ lending practices, the strength of the domestic and international credit markets generally, governmental policies and other conditions, all of which are beyond our control.

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The availability of insurance that covers risks we and our competitors typically insure against may decrease, and the insurance that we are able to obtain may have higher deductibles, higher premiums and more restrictive policy terms.

Risks Relating to the Clarity Mobile Venture Sector

There can be no assurance that the velocity of COVID-19 tests being conducted by Clarity Mobile Venture will continue at current rates or be effective for new variants of the COVID-19 virus.

There can be no assurance that the demand for Clarity Mobile Venture’s COVID-19 testing and related laboratory services will continue to grow at the current pace.

While we expect that the coronavirus will be a part of our lives for the foreseeable future, viruses constantly change through mutation, and new variants of the COVID-19 virus are expected to occur over time.

Our business may be disrupted by the emergence and spread of new variants of the COVID-19 virus that may require different types of tests that may or may not be readily available to us at the time.

Currently, we are deploying several COVID-19 tests including PCR and Rapid-Antigen tests.

No assurance can be given that the COVID-19 tests currently deployed by us will be effective for any future variants.

We may be adversely affected by actions of our competitors.

The market for COVID-19 testing facilities is highly competitive.

Many of our competitors have substantially greater financial, technical and other resources than we have.

Our ability to compete effectively depends in part on market acceptance of our testing solutions and our ability to service customers in a timely manner.

There can be no assurance that we will be able to compete effectively or that we will respond appropriately to industry trends or to activities of competitors.

We rely on third-party vendors to supply us with the COVID-19 tests that Clarity Mobile Venture uses that, if we were unable to obtain, could adversely affect our business.

Clarity Mobile Venture relies on third-party vendors to supply it with COVID-19 tests.

Any inability to obtain COVID-19 tests in the volumes required and at competitive prices from our vendors, the loss of any major vendor may seriously harm our business because we may not be able to meet the demands of our customers on a timely basis in sufficient quantities or at all.

Risks Relating to SG DevCorp.

The long-term sustainability of SG DevCorp.’s operations as well as future growth depends in part upon SG DevCorp.’s ability to acquire land parcels suitable for residential projects at reasonable prices.

The long-term sustainability of SG DevCorp.’s operations, as well as future growth, depends in large part on the price at which it is able to obtain suitable land parcels for development or homebuilding operations.

SG DevCorp.’s ability to acquire land parcels for various residential projects may be adversely affected by changes in the general availability of land parcels, the willingness of land sellers to sell land parcels at reasonable prices, competition for available land parcels, availability of financing to acquire land parcels, zoning, regulations that limit housing density, the ability to obtain building permits, environmental requirements and other market conditions and regulatory requirements.

If suitable lots or land at reasonable prices become less available, the number of units SG DevCorp.

may be able to build and sell could be reduced, and the cost of land could be increased substantially, which could adversely impact it.

As competition for suitable land increases, the cost of undeveloped lots and the cost of developing owned land could also rise and the availability of suitable land at acceptable prices may decline, which could adversely impact it.

The availability of suitable land assets could also affect the success of SG DevCorp.’s land acquisition strategy, which may impact SG DevCorp.’s ability to maintain or increase the number of active communities, as well as to sustain and grow its revenues and margins, and achieve or maintain profitability.

Additionally, developing undeveloped land is capital intensive and time consuming and SG DevCorp.

may develop land based upon forecasts and assumptions that prove to be inaccurate, resulting in projects that are not economically viable.

operates in a highly competitive market for investment opportunities, and SG DevCorp.

may be unable to identify and complete acquisitions of real property assets.

The housing industry is highly competitive, and SG DevCorp.

faces competition from many sources, including from other housing communities both in the immediate vicinity and the geographic market where SG DevCorp.’s properties are and will be located.

Furthermore, housing communities SG DevCorp.

invests in compete, or will compete, with numerous housing alternatives in attracting residents, including owner occupied single and multifamily homes available to rent or purchase.

Increased competition may prevent SG DevCorp.

from acquiring attractive land parcels or make such acquisitions more expensive, hinder SG DevCorp.’s market share expansion, or lead to pricing pressures that may adversely impact its margins and revenues.

Competitors may independently develop land and construct housing units that are superior or substantially similar to SG DevCorp.’s products and because they are or may be significantly larger, have a longer operating history, and have greater resources or lower cost of capital than it, may be able to compete more effectively in one or more of the markets in which SG DevCorp.

operates or plans to operate.

will also compete with public and private funds, commercial and investment banks, commercial financing companies and public and private REITs to make certain of the investments that it plans to make.

Many of such competitors are substantially larger and have considerably greater financial, technical and marketing resources than it.

In addition, some of SG DevCorp.’s competitors may have higher risk tolerances or different risk assessments, allowing them to pay higher consideration, consider a wider variety of investments and establish more effective relationships than it.

These competitive conditions could adversely affect SG DevCorp.’s ability to make investments.

Moreover, SG DevCorp.’s ability to close transactions will be subject to its ability to access financing within stipulated contractual time frames, and there is no assurance that it will have access to such financing on terms that are favorable to it, if at all.

SG DevCorp.’s property portfolio has a high concentration of properties located in certain states.

To date, SG DevCorp.’s properties are located in Georgia, Texas and Oklahoma.

Certain of SG DevCorp.’s properties are located in areas that may experience catastrophic weather and other natural events from time to time, including hurricanes or other severe weather, flooding fires, snow or ice storms, windstorms or earthquakes.

These adverse weather and natural events could cause substantial damages or losses to SG DevCorp.’s properties which could exceed its insurance coverage.

In the event of a loss in excess of insured limits, SG DevCorp.

could lose its capital invested in the affected property, as well as anticipated future revenue from that property.

could also continue to be obligated to repay any mortgage indebtedness or other obligations related to the property.

Any such loss could materially and adversely affect SG DevCorp.’s business and its financial condition and results of operations.

To the extent that significant changes in the climate occur, SG DevCorp.

may experience extreme weather and changes in precipitation and temperature and rising sea levels, all of which may result in physical damage to or a decrease in demand for properties located in these areas or affected by these conditions.

Should the impact of climate change be material in nature, including destruction of SG DevCorp.’s properties, or occur for lengthy periods of time, SG DevCorp.’s financial condition or results of operations may be adversely affected.

In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of SG DevCorp.’s existing properties or to protect them from the consequence of climate change.

There can be no assurance that the properties in SG DevCorp.’s development pipeline will be completed in accordance with the anticipated timing or cost.

The development of the projects in SG DevCorp.’s pipeline is subject to numerous risks, many of which are outside of SG DevCorp.’s control, including:

inability to obtain entitlements;

● inability to obtain financing on acceptable terms;

● default by any of the contractors it engages to construct SG DevCorp.’s projects;

site accidents;

● failure to secure tenants or residents in the anticipated time frame, on acceptable terms, or at all.

can provide no assurances that it will complete any of the projects in SG DevCorp.’s development pipeline on the anticipated schedule or within the budget, or that, once completed, these properties will achieve the results that it expects.

If the development of these projects is not completed in accordance with SG DevCorp.’s anticipated timing or cost, or the properties fail to achieve the financial results it expects, it could have a material adverse effect on SG DevCorp.’s business, financial condition, results of operations and cash flows and ability to repay SG DevCorp.’s debt, including project-related debt.

SG DevCorp.’s insurance coverage on its properties may be inadequate to cover any losses it may incur and its insurance costs may increase.

maintains insurance on its properties.

However, there are certain types of losses, generally of a catastrophic nature, such as floods or acts of war or terrorism that may be uninsurable or not economical to insure.

Further, insurance companies often increase premiums, require higher deductibles, reduce limits, restrict coverage, and refuse to insure certain types of risks, which may result in increased costs or adversely affect SG DevCorp.’s business.

uses its discretion when determining amounts, coverage limits and deductibles, for insurance, based on retaining an acceptable level of risk at a reasonable cost.

This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of SG DevCorp.’s lost investment.

In addition, SG DevCorp.

may become liable for injuries and accidents at SG DevCorp.’s properties that are underinsured.

A significant uninsured loss or increase in insurance costs could materially and adversely affect SG DevCorp.’s business, liquidity, financial condition and results of operations.

may not be able to secure sufficient modular units to complete its developments using modules built by SG Echo

intend to construct many of its planned developments using modules built by SG Holdings subsidiary, SG Echo, and to rely on SG Holdings and SG Echo as the sole source of the modular units used in its projects.

SG Holdings has a $6,810,762 backlog of signed construction and engineering contracts in existence at December 31, 2022 on which work has not yet begun.

SG DevCorp.’s ability to complete its modular developments will be limited to the available capacity of the SG Echo facility.

If SG DevCorp.

is unable to secure sufficient modular units to complete its developments using modules built by SG Echo, its business, prospects, financial condition, results of operations, and cash flows would be materially and adversely affected.

SG DevCorp.’s operating results may be negatively affected by potential development and construction delays and resultant increased costs and risks.

has acquired properties upon which it will construct improvements.

In connection with SG DevCorp.’s development activities, it is subject to uncertainties associated with re-zoning for development, environmental concerns of governmental entities or community groups and SG DevCorp.’s contractor’s or partner’s ability to build in conformity with plans, specifications, budgeted costs, and timetables.

Performance also may be affected or delayed by conditions beyond its control.

may incur additional risks when it makes periodic progress payments or other advances to builders before they complete construction.

If a builder or development partner fails to perform, SG DevCorp.

may resort to legal action to rescind the purchase or the construction contract or to compel performance, but there can be no assurance any legal action would be successful.

These and other factors can result in increased costs of a project or loss of SG DevCorp.’s investment.

In addition, SG DevCorp.

will be subject to normal lease-up risks relating to newly constructed projects.

also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time it acquires the property.

If SG DevCorp.’s projections are inaccurate, SG DevCorp.

may pay too much for a property, and its return on its investment could suffer.

relies on third-party suppliers and long supply chains, and if it fails to identify and develop relationships with a sufficient number of qualified suppliers, or if there is a significant interruption in its supply chains, SG DevCorp.’s ability to timely and efficiently access raw materials that meet its standards for quality could be adversely affected.

SG DevCorp.’s ability to identify and develop relationships with qualified suppliers who can satisfy its standards for quality and its need to access products and supplies in a timely and efficient manner will be a significant challenge.

may be required to replace a supplier if their products do not meet its quality or safety standards.

In addition, SG DevCorp.’s suppliers could discontinue selling products at any time for reasons that may or may not be in its control or the suppliers’ control.

SG DevCorp.’s operating results and inventory levels could suffer if it is unable to promptly replace a supplier who is unwilling or unable to satisfy its requirements with a supplier providing similar products.

SG DevCorp.’s suppliers’ ability to deliver products may also be affected by financing constraints caused by credit market conditions, which could negatively impact its revenue and costs, at least until alternate sources of supply are arranged.

The construction of manufacturing facilities involves significant risks.

has limited experience constructing manufacturing facilities and doing so is a complex and lengthy undertaking that requires sophisticated, multi-disciplinary planning and precise execution.

The construction of manufacturing facilities is subject to a number of risks.

In particular, the construction costs may materially exceed budgeted amounts, which could adversely affect SG DevCorp.’s results of operations and financial condition.

For example, SG DevCorp.

may suffer construction delays or cost overruns as a result of a variety of factors, such as labor and material shortages, defects in materials and workmanship, adverse weather conditions, transportation constraints, construction change orders, site changes, labor issues and other unforeseen difficulties, any of which could delay or prevent the completion of SG DevCorp.’s planned facilities.

While SG DevCorp.’s goal is to negotiate contracts with engineering, procurement and construction firms that minimize risk, any delays or cost overruns it encounters may result in the renegotiation of SG DevCorp.’s construction contracts, which could increase its costs.

In addition, the construction of manufacturing facilities may be subject to the receipt of approvals and permits from various regulatory agencies.

Such agencies may not approve the projects in a timely manner or may impose restrictions or conditions on a production facility that could potentially prevent construction from proceeding, lengthen its expected completion schedule and/or increase its anticipated cost.

If construction costs are higher than it anticipates, SG DevCorp.

may be unable to achieve its expected investment return, which could adversely affect its business and results of operations.

Discovery of previously undetected environmentally hazardous conditions may adversely affect SG DevCorp.’s operating results.

is subject to various federal, state and local laws and regulations that (a) regulate certain activities and operations that may have environmental or health and safety effects, such as the management, generation, release or disposal of regulated materials, substances or wastes, (b) impose liability for the costs of cleaning up, and damages to natural resources from, past spills, waste disposals on and off-site, or other releases of hazardous materials or regulated substances, and (c) regulate workplace safety.

Compliance with these laws and regulations could increase SG DevCorp.’s operational costs.

Violation of these laws may subject SG DevCorp.

to significant fines, penalties or disposal costs, which could negatively impact its results of operations, financial position and cash flows.

Under various federal, state and local environmental laws, a current or previous owner or operator of currently or formerly owned, leased or operated real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property.

The costs of removal or remediation could be substantial.

Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances.

Accordingly, SG DevCorp.

may incur significant costs to defend against claims of liability, to comply with environmental regulatory requirements, to remediate any contaminated property, or to pay personal injury claims.

Moreover, environmental laws also may impose liens on property or other restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent SG DevCorp.

or its lessees from operating such properties.

Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require SG DevCorp.

to incur material expenditures.

Future laws, ordinances or regulations or the discovery of currently unknown conditions or non-compliances may impose material liability under environmental laws.

Legislative, regulatory, accounting or tax rules, and any changes to them or actions brought to enforce them, could adversely affect SG DevCorp.

is subject to a wide range of legislative, regulatory, accounting and tax rules.

The costs and efforts of compliance with these laws, or of defending against actions brought to enforce them, could adversely affect SG DevCorp.

In addition, if there are changes to the laws, regulations or administrative decisions and actions that affect SG DevCorp., SG DevCorp.

may have to incur significant expenses in order to comply, or SG DevCorp.

may have to restrict or change its operations.

has invested, and expect to continue to invest, in real property assets which are subject to laws and regulations relating to the protection of the environment and human health and safety.

These laws and regulations generally govern wastewater discharges, noise levels, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials and the remediation of contamination associated with disposals.

Environmental laws and regulations may impose joint and several liabilities on tenants, owners or operators for the costs to investigate and remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal.

This liability could be substantial.

In addition, the presence of hazardous substances, or the failure to properly remediate these substances, could adversely affect SG DevCorp.’s ability to sell, rent or pledge an affected property as collateral for future borrowings.

intends to take commercially reasonable steps when it can to protect itself from the risks of environmental law liability;

however, SG DevCorp.

may not obtain independent third-party environmental assessments for every property it acquires.

In addition, any such assessments that it does obtain may not reveal all environmental liabilities, or whether a prior owner of a property created a material environmental condition not known to it.

In addition, there are various local, state and federal fire, health, safety and similar regulations with which SG DevCorp.

may be required to comply, and that may subject it to liability in the form of fines or damages.

In all events, the existing condition of land when SG DevCorp.

buys it, operations in the vicinity of its properties or activities of unrelated third parties could all affect its properties in ways that lead to costs being imposed on it.

Any material expenditures, fines, damages or forced changes to SG DevCorp.’s business or strategy resulting from any of the above could adversely affect its financial condition and results of operations.

SG DevCorp.’s business, results of operations, cash flows and financial condition are greatly affected by the performance of the real estate industry.

real estate industry is highly cyclical and is affected by global, national and local economic conditions, general employment and income levels, availability of financing, interest rates, and consumer confidence and spending.

Other factors impacting real estate businesses include over-building, changes in traffic patterns, changes in demographic conditions, changes in tenant and buyer preferences and changes in government requirements, including tax law changes.

These factors are outside of SG DevCorp.’s control and may have a material adverse effect on its business, profits and the timing and amounts of its cash flows.

SG DevCorp.’s industry is cyclical and adverse changes in general and local economic conditions could reduce the demand for housing and, as a result, could have a material adverse effect on us.

SG DevCorp.’s business can be substantially affected by adverse changes in general economic or business conditions that are outside of its control, including changes in short-term and long-term interest rates;

employment levels and job and personal income growth;

housing demand from population growth, household formation and other demographic changes, among other factors;

availability and pricing of mortgage financing for homebuyers;

consumer confidence generally and the confidence of potential homebuyers in particular;

consumer spending;

financial system and credit market stability;

private party and government mortgage loan programs (including changes in FHA, USDA, VA, Fannie Mae and Freddie Mac conforming mortgage loan limits, credit risk/mortgage loan insurance premiums and/or other fees, down payment requirements and underwriting standards), and federal and state regulation, oversight and legal action regarding lending, appraisal, foreclosure and short sale practices;

federal and state personal income tax rates and provisions, including provisions for the deduction of mortgage loan interest payments, real estate taxes and other expenses;

supply of and prices for available new or resale multifamily units;

interest of financial institutions or other businesses in purchases;

and real estate taxes.

Adverse changes in these conditions may affect SG DevCorp.’s business nationally or may be more prevalent or concentrated in particular submarkets in which it operates.

Inclement weather, natural disasters (such as earthquakes, hurricanes, tornadoes, floods, prolonged periods of precipitation, droughts, and fires), other calamities and other environmental conditions can delay the delivery of its units and/or increase its costs.

Civil unrest or acts of terrorism can also have a negative effect on its business.

If the housing industry experiences a significant or sustained downturn, it would materially adversely affect SG DevCorp.’s business and results of operations in future years.

The potential difficulties described above can cause demand and prices for SG DevCorp.’s units to fall or cause it to take longer and incur more costs to develop the land and build its units.

may not be able to recover these increased costs by raising prices because of market conditions.

Fluctuations in real estate values may require SG DevCorp.

to write-down the book value of its real estate assets.

The housing and land development industries are subject to significant variability and fluctuations in real estate values.

As a result, SG DevCorp.

may be required to write-down the book value of SG DevCorp.’s real estate assets in accordance with GAAP, and some of those write-downs could be material.

Any material write-downs of assets could have a material adverse effect on SG DevCorp.’s business, prospects, liquidity, financial condition, and results of operations.

In addition, valuations of real estate properties do not necessarily represent the price at which a willing buyer would purchase such property;

therefore, there can be no assurance that SG DevCorp.

would realize the values underlying estimated valuations of SG DevCorp.’s properties if it were to sell such properties.

Inflation could adversely affect SG DevCorp.’s business and financial results.

Inflation could adversely affect SG DevCorp.’s business and financial results by increasing the costs of land, raw materials and labor needed to operate SG DevCorp.’s business.

If SG DevCorp.’s markets have an oversupply of housing, relative to demand, SG DevCorp.

may be unable to offset any such increases in costs with corresponding higher sales prices for its units or buildings.

Inflation may also accompany higher interest rates, which could adversely impact potential customers’ ability to obtain financing on favorable terms, thereby further decreasing demand.

If SG DevCorp.

is unable to raise the prices of its units or buildings to offset the increasing costs of its operations, its margins could decrease.

Furthermore, if SG DevCorp.

needs to lower the price of its units to meet demand, the value of its land inventory may decrease.

Inflation may also raise SG DevCorp.’s costs of capital and decrease its purchasing power, making it more difficult to maintain sufficient funds to operate its business.

could be impacted by its investments through joint ventures, which involve risks not present in investments in which SG DevCorp.

is the sole owner.

has and may continue to fund development projects through the use of joint ventures.

Joint ventures involve risks including, but not limited to, the possibility that the other joint venture partners may possess the ability to take or force action contrary to its interests or withhold consent contrary to its requests, have business goals which are or become inconsistent with SG DevCorp.’s or default on their financial obligations to the joint venture, which may require it to fulfill the joint venture’s financial obligations as a legal or practical matter.

and its joint venture partners may each have the right to initiate a buy-sell arrangement, which could cause it to sell its interest, or acquire a joint venture partner’s interest, at a time when it otherwise would not have entered into such a transaction.

In addition, a sale or transfer by it to a third party of its interests in the joint venture may be subject to consent rights or rights of first refusal in favor of its partners which would restrict SG DevCorp.’s ability to dispose of its interest in the joint venture.

Each joint venture agreement is individually negotiated, and its ability to operate, finance, or dispose of a joint venture project in its sole discretion is limited to varying degrees depending on the terms of the applicable joint venture agreement.

Risks associated with SG DevCorp.’s land and lot inventories could adversely affect its business or financial results.

Risks inherent in controlling, purchasing, holding, and developing land are substantial.

The risks inherent in purchasing and developing land parcels increase as consumer demand for housing decreases and the holding period increases.

As a result, SG DevCorp.

may buy and develop land parcels on which housing units cannot be profitably built and sold.

In certain circumstances, a grant of entitlements or development agreement with respect to a particular parcel of land may include restrictions on the transfer of such entitlements to a buyer of such land, which could negatively impact the price of such entitled land by restricting its ability to sell it for its full entitled value.

In addition, inventory carrying costs can be significant and can result in reduced margins or losses in a poorly performing community or market.

The time and investment required for development may adversely impact its business.

In the event of significant changes in economic or market conditions, SG DevCorp.

may have to sell units or buildings at significantly lower margins or at a loss, if SG DevCorp.

is able to sell them at all.

Additionally, deteriorating market conditions could cause SG DevCorp.

to record significant inventory impairment charges.

The recording of a significant inventory impairment could negatively affect its reported earnings per share and negatively impact the market perception of its business.

may not be able to sell its real property assets when it desires.

Investments in real property are relatively illiquid compared to other investments.

Accordingly, SG DevCorp.

may not be able to sell real property assets when it desires or at prices acceptable to it.

This could substantially reduce the funds available for satisfying its obligations, including any debt obligations.

Access to financing sources may not be available on favorable terms, or at all, which could adversely affect SG DevCorp.’s ability to maximize its returns.

SG DevCorp.’s access to third-party sources of financing will depend, in part, on:

general market conditions;

● the market’s perception of its growth potential;

● with respect to acquisition and/or development financing, the market’s perception of the value of the land parcels to be acquired and/or developed;

its current debt levels;

● its current and expected future earnings;

● its cash flow;

● if applicable, the market price per share of its common stock.

The global credit and equity markets and the overall economy can be extremely volatile, which could have a number of adverse effects on SG DevCorp.’s operations and capital requirements.

For the past decade, the domestic financial markets have experienced a high degree of volatility, uncertainty and, during certain periods, tightening of liquidity in both the high yield debt and equity capital markets, resulting in certain periods where new capital has been both more difficult and more expensive to access.

If SG DevCorp.

is unable to access the credit markets, it could be required to defer or eliminate important business strategies and growth opportunities in the future.

In addition, if there is volatility and weakness in the capital and credit markets, potential lenders may be unwilling or unable to provide SG DevCorp.

with financing that is attractive to it or may increase collateral requirements or may charge us prohibitively high fees in order to obtain financing.

Consequently, SG DevCorp.’s ability to access the credit market in order to attract financing on reasonable terms may be adversely affected.

Investment returns on SG DevCorp.’s assets and its ability to make acquisitions could be adversely affected by its inability to secure additional financing on reasonable terms, if at all.

Depending on market conditions at the relevant time, SG DevCorp.

may have to rely more heavily on additional equity financings or on less efficient forms of debt financing that require a larger portion of its cash flow from operations, thereby reducing funds available for SG DevCorp.’s operations, future business opportunities and other purposes.

may not have access to such equity or debt capital on favorable terms at the desired times, or at all.

We may not achieve some or all of the expected benefits of the Separation and Distribution, and the Separation and Distribution may materially adversely affect our business.

We may not be able to achieve the full strategic and financial benefits expected to result from the Separation and Distribution, or such benefits may be delayed or not occur at all.

The Separation and Distribution is expected to provide the following benefits, among others:

(1) enabling SG DevCorp.’s management to more effectively pursue its own distinct operating priorities and strategies;

(2) permitting SG DevCorp.

to allocate its financial resources to meet the unique needs of its business, which will allow SG DevCorp.

to intensify our focus on its distinct strategic priorities and to more effectively pursue its own distinct capital structure and capital allocation strategies;

(3) allowing SG DevCorp.

to more effectively articulate a clear investment thesis to attract a long-term investor base suited to its respective business and providing investors with a distinct and targeted investment opportunity;

(4) creating an independent equity security tracking SG DevCorp.’s underlying business, which should afford direct access to the capital markets and facilitate SG DevCorp.’s ability to consummate future acquisitions or other transactions using its common stock;

and (5) permitting SG DevCorp.

to more effectively recruit, retain and motivate employees through the use of stock-based compensation that more closely aligns management and employee incentives with specific business goals and objectives related to its business.

We may not achieve these and other anticipated benefits for a variety of reasons, including, among others:

(1) the Separation and Distribution will demand management’s time and effort, which may divert management’s attention from operating and growing our business;

(2) following the Separation and Distribution, SG DevCorp.

may be more susceptible to market fluctuations and other adverse events than if it were still a part of the Company because its business will be less diversified than the Company’s business prior to the completion of the Separation;

(3) the Separation may require us to pay costs that could be substantial and material to our financial resources, including accounting, tax, legal and other professional services costs, recruiting costs, and tax costs;

and (4) after the Separation and Distribution, we cannot predict the trading prices of SG DevCorp.’s common stock or know whether the combined trading prices of the Company’s common stock and SG DevCorp.’s common stock will be less than, equal to or greater than the market value of the Company’s common stock prior to the Separation and Distribution.

If we fail to achieve some or all of the benefits expected to result from the Separation, or if such benefits are delayed, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.

The Company’s plan to separate into two publicly traded companies is subject to various risks and uncertainties and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect our business.

In December 2022, the Company announced its plan to separate into two publicly traded companies.

The Separation and Distribution is subject to the satisfaction of certain conditions (or waiver by the Company in its sole and absolute discretion), including final approval by the Company’s Board of Directors of the final terms of the Separation and Distribution.

Furthermore, unanticipated developments or changes, including changes in the law, the macroeconomic environment, competitive conditions of the Company’s markets could delay or prevent the completion of the proposed Separation and Distribution, or cause the Separation and Distribution to occur on terms or conditions that are different or less favorable than expected.

The process of completing the proposed Separation and Distribution has been and is expected to continue to be time-consuming and involves significant costs and expenses.

The costs may be significantly higher than what we currently anticipate and may not yield a discernible benefit if the Separation and Distribution is not completed or is not well executed, or the expected benefits of the Separation and Distribution are not realized.

Risks Relating to the Medical Sector

We are dependent on the availability and skill of subcontractors, their willingness to work with us as the clinical operators of our medical modules, and their expertise in the medical industry.

We have relied and expect to continue to rely on subcontractors to perform medical services as the clinical operators and staffers of our medical modules.

The inability to contract with skilled subcontractors at reasonable costs and on a timely basis could erode our profit margins and adversely affect our results of operations and cash flows.

Risks Relating to our Common Stock

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The issuance of shares of our common stock upon the exercise of outstanding options, warrants and restricted stock units may dilute the percentage ownership of the then-existing stockholders and may make it more difficult to raise additional equity capital.

As of April 11, 2022, there are outstanding options and warrants to purchase 36,436 and 2,025,520 shares of common stock, respectively, in addition to 2,220,514 vested and unvested restricted stock units.

As of March 29, 2023, there are outstanding options and warrants to purchase 36,436 and 2,025,520 shares of common stock, respectively, in addition to 3,212,504 vested and unvested restricted stock units.

The exercise of such options and warrants and the vesting of restricted stock units would dilute the then-existing stockholders’ percentage ownership of our stock, and any sales in the public market of common stock underlying such securities could adversely affect prevailing market prices for the common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors