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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-17 · 121 added, 306 removed, 183 unchanged (70% of the section changed)

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Introduction and Certain Cautionary Statements

As used in this Quarterly Report on Form 10-Q for the period ended March 31, 2024 (this “Quarterly Report on Form 10-Q”), unless the context requires otherwise, references to the "Company," "we," "us," and "our" refer to Safe & Green Holdings Corp.

As used in this Quarterly Report on Form 10-Q for the period ended June 30, 2024 (this “Quarterly Report on Form 10-Q”), unless the context requires otherwise, references to the "Company," "we," "us," and "our" refer to Safe & Green Holdings Corp.

and its subsidiaries.

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Factors that could cause or contribute to such differences include, but are not limited to:

general economic, political and financial conditions, includ ing inflatio n, b oth in the United States and internationally;

our ability to continue as a going concern;

our ability to obtain additional financing on acceptable terms, if at all, or to obtain additional capital in other ways ;

general economic, political and financial conditions, includ ing inflatio n, b oth in the United States and internationally;

our ability to increase sales, generate income, effectively manage our growth and realize our backlog;

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Recent Developments

May 1, 2024, we filed an amendment (the “Amendment”) to our Amended and

Restated Certificate of Incorporation (the “Restated Certificate”) with the

Secretary of State of the State of Delaware to effect a reverse stock split of

the Company’s common stock, par value $0.01 (the “Common Stock”), at a ratio of

1-for-20 (the “Reverse Stock Split”), with an effective time of 12:01 a.m.

Eastern Time on May 2, 2024 (the “Effective Time”).

Upon the opening of trading

on May 2, 2024, the Common Stock will begin trading under the existing trading

symbol “SGBX” on a split-adjusted basis

under a new CUSIP number, 78418A604.

During April 2024, the

Company issued 178,571 shares of common stock ( 8,928 as adjusted for the May Stock Split) to a

consultant for services performed.

On April 19, 2024, we

received a delinquency letter (the “Notice”) from the Nasdaq Stock Market LLC

(“Nasdaq”) notifying that we were not in compliance with the continued listing

requirements set forth in Nasdaq Listing Rule 5250 (c)( 1 ) (the “Rule”), which requires timely filing of

periodic reports with the Securities and Exchange Commission (the “SEC”) for

continued listing.

Nasdaq rules require public announcement to disclose the

Company’s receipt of the Notice within four

business days of receipt.

On May 7, 2024, we received a letter from

Nasdaq stating that we now comply with the Rule.

On May 1, 2024, we filed an amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s common stock, par value $0.01 (the “Common Stock”), at a ratio of 1-for-20, with an effective time of 12:01 a.m.

Eastern Time on May 2, 2024.

Upon the opening of trading on May 2, 2024, the Common Stock began trading under the existing trading symbol “SGBX” on a split-adjusted basis under a new CUSIP number, 78418A604.

On June 4, 2024, we received an expanded contract value in excess of $1,000,000, to construct an additional 11 container modules and related services for a government contractor to be used by an undisclosed major U.S.

government agency, bringing the total container modules ordered and delivered to 26 units.

On June 25, 2024, we received an expansion of an agreement to manufacture seven additional container-based electrical distribution centers as part of a multi-unit order for a client serving the big box retailer market, bringing the total units ordered to 11.

On July 25, 2024, we received an extension of time, through November 12, 2024, to regain compliance with Nasdaq’s Listing Rule 5550(b), which requires a minimum of $2,500,000 stockholders’ equity.

We expect to regain full compliance with the minimum stockholders’ equity requirement as a result of the recent private placement, cost-cutting initiatives aimed at achieving positive cash flow in 2024, ongoing debt reduction, and other strategic initiatives underway.

Results of Operations

Three Months Ended March 31, 2024 and 2023 :

For the Three Months Ended March 31, 2024

For the Three Months Ended March 31, 2023

Six Months Ended June 30, 2024 and 2023 :

For the Six Months Ended June 30, 2024

For the Six Months Ended June 30, 2023

Total revenue

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Total payroll and related expenses

Total operating expenses

Total other operating expenses

Total operating loss

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Net loss attributable to common stockholders of Safe & Green Holdings Corp.

During the three months ended March 31, 2024 , we derived revenue from our construction segment.

as well as sales from SG DevCorp’s new revenue stream.

Total revenue for the three months ended March 31, 2024 was $ 1,017,931 compared to $ 5,503,935 for the three months ended March 31, 2023 .

This decrease of $ 4,486,004 or approximately 82 % was mainly driven by a decrease in construction services.

During the six months ended June 30, 2024 , we derived revenue from our construction segment and development segment Total revenue for the six months ended June 30, 2024 was $ 2,271,347 compared to $ 10,600,990 for the six months ended June 30, 2023 .

This decrease of $ 8,329,643 or approximately 79 % was mainly driven by a decrease in revenues from construction services due to less jobs in progress.

Cost of Revenue and Gross Profit

Cost of revenue was $ 644,983 for the three months ended March 31, 2024 , compared to $ 5,573,407 for the three months ended March 31, 2023 .

The de crease of $ 4,928,424 or an increase of approximately 88 %, is primarily related to the de crease in construction services during the three months ended March 31, 2024 .

Gross profit (loss) was $ 372,948 and $( 69,472 ) for the three months ended March 31, 2024 and 2023 , respectively.

Gross profit (loss) margin percentage increased to 37% for the three months ended March 31, 2024 compared to (1)% for the three months ended March 31, 2023 primarily due to the recognition of losses on construction services recognized during the year ended December 31, 2023 .

Cost of revenue was $ 1,739,232 for the six months ended June 30, 2024 , compared to $ 10,636,832 for the six months ended June 30, 2023 .

The de crease of $ 8,897,600 or a decrease of approximately 84 %, is primarily related to the de crease in construction services during the six months ended June 30, 2024 .

Gross profit (loss) was $ 532,115 and $( 35,842 ) for the six months ended June 30, 2024 and 2023 , respectively.

Gross profit (loss) margin percentage increased to 23 % for the six months ended June 30, 2024 compared to 0 % for the six months ended June 30, 2023 primarily due to the recognition of losses on construction services recognized during the six months ended June 30, 2023.

Operating Expenses

Payroll and related expenses for the three months ended March 31, 2024 were $ 3,268,069 compared to $ 1,314,390 for the three months ended March 31, 2023 .

This increase was primarily caused by stock-based compensation being recognized by SG DevCorp during the three months ended March 31, 2024 .

Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for the three months ended March 31, 2024 were $ 1,137,338 compared to $ 1,876,207 for the three months ended March 31, 2023 .

Payroll and related expenses for the six months ended June 30, 2024 were $ 4,997,798 compared to $ 5,498,819 for the six months ended June 30, 2023 .

decrease was primarily caused by a decrease in the vesting of restricted stock units during

the six months ended June 30, 2024 as compared to the prior period.

Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for the six months ended June 30, 2024 were $ 2,360,583 compared to $ 3,336,266 for the six months ended June 30, 2023 .

This decrease was due to an overall decrease in operating expenses spend during 2024.

Other Income (Expense)

Interest income for the three months ended March 31, 2024 was $ 9,570 mainly derived from bank interest and interest associated with an outstanding note receivable.

There was $ 9,362 of interest income for the three months ended March 31, 2023 .

There was $ 48,617 and $ 18,639 of other income for the three months ended March 31, 2024 and 2023 .

Interest expense for the three months ended March 31, 2024 and 2023 was $ 1,282,756 and $ 287,372 , respectively.

Interest income for the six months ended June 30, 2024 was $ 9,570 mainly derived from bank interest and interest associated with an outstanding note receivable.

There was $ 18,816 of interest income for the six months ended June 30, 2023 .

There was $ 183,982 and $ 588,490 of other income for the six months ended June 30, 2024 and 2023 , respectively.

Interest expense for the six months ended June 30, 2024 and 2023 was $ 3,172,084 and $ 811,343 , respectively.

The increase in interest expense resulted from an increase in notes payable balances during 2024 .

Three Months Ended June 30, 2024 and 2023:

For the Three Months Ended June 30, 2024

For the Three Months Ended June 30, 2023

Total revenue

Total cost of revenue

Total payroll and related expenses

Total other operating expenses

Total operating loss

Total other expense

Total loss before income tax

Net income attributable non-controlling interest

Net loss attributable to common stockholders of Safe & Green Holdings Corp.

During the three months ended June 30, 2024 , we derived revenue primarily from our construction segment.

Total revenue for the three months ended June 30, 2024 was $ 1,253,416 compared to $ 5,097,055 for the three months ended June 30, 2023 .

This decrease of $ 3,843,639 or approximately 75 % was mainly driven by a decrease in construction services due to less job in progress.

Cost of Revenue and Gross Profit

Cost of revenue was $ 1,094,249 for the three months ended June 30, 2024 , compared to $ 5,063,425 for the three months ended June 30, 2023 .

The increase of $ 3,969,176 or a decrease of approximately 78 %, is primarily related to the decrease in construction services during the three months ended June 30, 2024 .

Gross profit was $ 159,167 and $ 33,630 for the three months ended June 30, 2024 and 2023 , respectively.

Gross profit margin percentage increased to 13 % for the three months ended June 30, 2024 compared to 1 % for the three months ended June 30, 2023 primarily due to the recognition of losses on construction services recognized during the three months ended June 30, 2023 .

Operating Expenses

Payroll and related expenses for the three months ended June 30, 2024 were $ 1,729,729 compared to $ 4,184,429 for the three months ended June 30, 2023 .

This decrease was primarily caused by a decrease in the vesting of restricted stock units during the three months ended June 30, 2024 as compared to the prior year period.

Other operating expenses (general and administrative expenses, marketing and business development expenses, pre-project expenses) for the three months ended June 30, 2024 were $ 1,223,245 compared to $ 1,460,059 for the three months ended June 30, 2023 .

This decrease was due to an overall decrease in operating expenses spend during 2024.

Other Income (Expense)

There was $ 9,454 of interest income for the three months ended June 30, 2023 .

There was $ 135,365 and $ 569,851 of other income for the three months ended June 30, 2024 and 2023 , respectively.

Interest expense for the three months ended June 30, 2024 and 2023 was $ 1,889,328 and $ 523,971 , respectively.

The increase in interest expense resulted from an increase in notes payable balances during 2024 .

Income Tax Provision

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Inflation has caused increases on some of the Company's estimated costs for construction projects in progress and completed during the past two fiscal years, which has affected the Company's revenue and income (loss) from continuing operations.

Our operations for the three months ended March 31, 2024 and 2023 may not be indicative of our future operations.

Our operations for the six months ended June 30, 2024 and 2023 may not be indicative of our future operations.

Liquidity and Capital Resources

As of March 31, 2024 and December 31, 2023 , we had an aggregate of $ 739,787 and $ 17,448 , respectively, of cash and cash equivalents and short-term investments.

As of June 30, 2024 and December 31, 2023 , we had an aggregate of $ 1,016,784 and $ 17,448 , respectively, of cash and cash equivalents and short-term investments.

Historically, our operations have primarily been funded through proceeds from equity and debt financings, as well as revenue from operations.

We have negative operating cash flows, which has raised substantial doubt about our ability to continue as a going concern.

We have negative operating cash flows, which has raised substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements in this Quarterly Report on Form 10-Q are issued.

We intend to meet our 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.

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We do not have any additional sources secured for future funding, and if we are unable to raise the necessary capital at the times we require such funding, we may need to materially change our business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether.

On January 5, 2024, SG Building Blocks and

SG Echo, together with SG Building Blocks, the (“Merchants”), entered into a

Cash Advance Agreement (“January Cash Advance Agreement”) with Maison Capital

Group (“Maison”) pursuant to which the Merchants sold to Maison $300,000

of their future receivables for a purchase price of $200,000,

less underwriting fees and expenses paid, for net funds provided of $190,000.

Pursuant to the January Cash Advance Agreement, Maison is expected to withdraw $12,500 a week directly from the Merchants’ bank account until the $300,000 due to Maison under the January Cash Advance Agreement is paid.

In the event of a default (as defined in the January Cash Advance Agreement), Maison, among other remedies, can demand payment in full of all amounts remaining due under the January Cash Advance Agreement.

The Merchants’ obligations under the January Cash Advance Agreement are secured by a security interest in all accounts, including without limitation, all deposit accounts, accounts-receivable, and other receivables, chattel paper, documents, equipment, general intangibles, instruments, and inventory, as those terms are defined by Article 9 of the Uniform Commercial Code, now or hereafter owned or acquired by any of them.

In addition, SG Building Blocks’ obligations under the January Cash Advance Agreement have been guaranteed by SG Echo, and SG Echo’s obligations under the January Cash Advance Agreement have been guaranteed by SG Building Blocks.

The amounts outstanding under the January Cash Advance Agreement may be prepaid by the Merchants at any time without penalty.

On January 11, 2024, we entered into a Securities Purchase Agreement (the “January Purchase Agreement”) with Peak One, pursuant to which we agreed to issue, in a private placement offering (the “January Offering”), upon the satisfaction of certain conditions specified in the January Purchase Agreement, two debentures to Peak One in the aggregate principal amount of $1,300,000.

The closing of the first tranche was consummated on January 12, 2024 and we issued an 8% convertible debenture in the principal amount of Six Hundred Fifty Thousand Dollars ($650,000) (the “Holdings Debenture”) to Peak One and a warrant (the “Warrant”) to purchase up to Three Hundred Seventy-Five Thousand (375,000) shares of our common stock (18,750 as adjusted for the May Stock Split), par value $0.01 per share (the “common stock”) to Peak One’s designee, as described in the Purchase Agreement.

The Holdings Debenture was sold to Peak One for a purchase price of $585,000, representing an original issue discount of ten percent (10%).

In connection with the January Offering, we paid $17,500 as a non-accountable fee to Peak One to cover its accounting fees, legal fees and other transactional costs incurred in connection with the transactions contemplated by the Purchase Agreement and issued to Peak One and its designee an aggregate of 300,000 shares of its restricted common stock (the “Commitment Shares”) (15,000 as adjusted for the May Stock Split) as provided in the January Purchase Agreement.

The Holdings Debenture matures twelve months from its date of issuance and bears interest at a rate of 8% per annum payable on the maturity date.

The Debenture is convertible, at the option of the holder, at any time, into such number of shares of common stock equal to the principal

amount of the Holdings Debenture, plus all accrued and unpaid interest, at a

conversion price equal to $ 0.46 (the “Conversion Price”) ($9.20 as adjusted for the May Stock Split), subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Holdings Debenture.

The Holdings Debenture is redeemable by us at a redemption price equal to 110% of the sum of the principal amount to be redeemed plus accrued interest, if any.

While the Holdings Debenture is outstanding, if we receives cash proceeds of more than $1,500,000.00 (the “Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, weshall, within two (2) business days of our receipt of such proceeds, inform Peak One of such receipt, following which Peak One shall have the right, in its sole discretion, to require us to immediately apply up to 50% of all proceeds received by us(from any source except with respect to proceeds from the issuance of equity or debt to officers and

directors of us) after the Minimum Threshold is reached to repay the

outstanding amounts owed under the Debenture.

During the three months ended

March 31, 2024, Peak One converted $ 300,000 of its principal balance into 57,627 shares of common stock.

Such conversion was

within the terms of the agreement with no gains or losses recognized on the transactions.

The Warrant expires five years from its date of issuance.

The Warrant is exercisable, at the option of the holder, at any time, for up to 375,000 of shares of common stock (18,750 as adjusted for the May Stock Split) at an exercise price equal to $0.53 (the “Exercise Price”) ($10.60 as adjusted for the May Stock Split), subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Warrant.

The Warrant provides for cashless exercise under certain circumstances.

Maxim Group LLC (“Maxim”) acted as placement agent in the Offering.

In connection with the closing of the first tranche of the Offering, we paid a placement fee of $40,950 to Maxim.

Assuming the second tranche is closed, a placement fee in an amount equal to $40,950 will be payable by us to Maxim upon closing of the second tranche of the Offering.

On January 29, 2024, SG Building Blocks, Inc., entered into a Cash Advance Agreement (“Second Cash Advance Agreement”) with Cedar Advance LLC (“Cedar”) pursuant to which SG Building Blocks sold to Cedar $1,733,420 of its future receivables for a purchase price of $1,180,000, less underwriting fees and expenses paid and the repayment of prior amounts due Cedar, for net funds provided of $215,575.

Pursuant to the Second Cash Advance Agreement, Cedar is expected to withdraw $49,150 a week directly from SG Building Blocks’ bank account until the $1,733,420 due to Cedar under the Second Cash Advance Agreement is paid.

In the event of a default (as defined in the Second Cash Advance Agreement), Cedar, among other remedies, can demand payment in full of all amounts remaining due under the Second Cash Advance Agreement.

SG Building Blocks’ obligations under the Cash Advance Agreement have been guaranteed by SG Echo.

On February 15, 2024, SG DevCo, entered into an amendment (the “Amendment”) to the Securities Purchase Agreement, dated November 30, 2023 (the “Purchase Agreement”) with Peak One pursuant to which SG DevCo agreed to issue, in a private placement offering (the “Offering”) upon the satisfaction of certain conditions specified in the Purchase Agreement, two Debentures to Peak One in the aggregate principal amount of $1,200,000.

The closing of the first tranche was consummated on November 30, 2023.

The Purchase Agreement provided that at any time after January 29, 2024, a second tranche closing could occur subject to the mutual written agreement of Peak One and SG DevCo and satisfaction of the closing conditions set forth in the Purchase Agreement, upon which SG DevCo would issue and sell to Peak One on the same terms and conditions a second 8% convertible debenture in the principal amount of $500,000.

The Amendment provides that the second tranche be separated into two tranches (the second and third tranche) wherein which SG DevCo would issue in each tranche an 8% convertible debenture in the principal amount of $250,000 at a purchase price of $225,000.

In addition, the Amendment provides that SG DevCo will issue (i) 35,000 shares of SG DevCo’s common stock on the closing of each of the second tranche and the third tranche as follows:

17,500 shares of common stock to Peak One’s designee as described in the Amendment and 17,500 shares of common stock to Peak One, as a commitment fee in connection with the issuance of the second debenture and the third debenture, respectively;

(ii) a common stock purchase warrant to Peak One’s designee as described in the Amendment for the purchase of 125,000 shares of common stock on the closing of each of the second tranche and the third tranche;

and (iii) pay $6,500 of Peak One’s non-accountable fees in connection with each of the second tranche and the third tranche.

The closing of the second tranche was consummated on February 16, 2024 and SG DevCo issued an 8% convertible debenture in the principal amount of $250,000 (the “Second Debenture”) to Peak One and a warrant (the “Second Warrant”) to purchase up to 125,000 shares of SG DevCo’s common stock to Peak One’s designee as described in the Amendment.

The Second Debenture was sold to Peak One for a purchase price of $225,000, representing an original issue discount of ten percent (10%).

In connection with the closing of the second tranche, SG DevCo paid $6,500 as a non-accountable fee to Peak One to cover its accounting fees, legal fees and other transactional costs incurred in connection with the second tranche and issued to Peak One and its designee an aggregate total of 35,000 shares of SG DevCo’s restricted common stock as described in the Amendment.

The Second Debenture matures twelve months from its date of issuance and bears interest at a rate of 8% per annum payable on the maturity date.

The Second Debenture is convertible, at the option of the holder, at any time, into such number of shares of common stock of SG DevCo equal to the principal amount of the Second Debenture plus all accrued and unpaid interest at a conversion price equal to $2.14, subject to adjustment for any stock splits, stock dividends, recapitalizations and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Second Debenture.

The Second Debenture is redeemable by SG DevCo at a redemption price equal to 110% of the sum of the principal amount to be redeemed plus accrued interest, if any.

While the Second Debenture is outstanding, if SG DevCo receives cash proceeds of more than $1,500,000.00 (“Minimum Threshold”) in the aggregate from any source or series of related or unrelated sources, SG DevCo shall, within two business days of SG DevCo’s receipt of such proceeds, inform the holder of such receipt, following which the holder shall have the right in its sole discretion to require SG DevCo to immediately apply up to 50% of all proceeds received by SG DevCo (from any source except with respect to proceeds from the issuance of equity or debt to officers and directors of SG DevCo) after the Minimum Threshold is reached to repay the outstanding amounts owed under the Second Debenture.

The Second Debenture contains customary events of default.

If an event of default occurs, until it is cured, Peak One may increase the interest rate applicable to the Second Debenture to the lesser of eighteen percent (18%) per annum and the maximum interest rate allowable under applicable law and accelerate the full indebtedness under the Second Debenture, in an amount equal to 110% of the outstanding principal amount and accrued and unpaid interest.

The Second Debenture prohibits SG DevCo from entering into a Variable Rate Transaction (as defined in the Second Debenture) until the Second Debenture is paid in full.

The Second Warrant expires five years from its date of issuance.

The Second Warrant is exercisable, at the option of the holder, at any time, for up to 125,000 shares of common stock of SG DevCo at an exercise price equal to $2.53, subject to adjustment for any stock splits, stock dividends, recapitalizations, and similar events, as well as anti-dilution price protection provisions that are subject to a floor price as set forth in the Second Warrant.

The Second Warrant provides for cashless exercise under certain circumstances.

Under the Amendment, a closing of the third tranche may occur subject to the mutual written agreement of Peak One and SG DevCo and satisfaction of the closing conditions set forth in the Purchase Agreement at any time after April 16, 2024.

Maxim acted as placement agent in connection with the Offering.

In connection with the closing of the second tranche, SG DevCo paid a placement fee of $13,500 to Maxim.

Assuming the third tranche is closed, a placement fee in an amount equal to $13,500 will be payable by SG DevCo to Maxim upon closing of the third tranche.

On February 23, 2024, the Merchants entered into a Cash Advance Agreement (“February Cash Advance Agreement”) with Bridgecap Advance LLC (“Bridgecap”) pursuant to which the Merchants sold to Bridgecap $224,850 of their future receivables for a purchase price of $150,000, less underwriting fees and expenses paid, for net funds provided of $135,000.

Pursuant to the February Cash Advance Agreement, Bridgecap is expected to withdraw $2,248.50 a day directly from the Merchants’ bank account until the $224,850 due to Bridgecap under the February Cash Advance Agreement is paid.

In the event of a default (as defined in the February Cash Advance Agreement), Bridgecap, among other remedies (including penalties and fees) can demand payment in full of all amounts remaining due under the February Cash Advance Agreement.

The Merchants’ obligations under the February Cash Advance Agreement are secured by a security interest in all accounts, including without limitation, all deposit accounts, accounts-receivable, other receivables, and proceeds therefrom, as those terms are defined by Article 9 of the Uniform Commercial Code, now or hereafter owned or acquired by any of them.

The amounts outstanding under the February Cash Advance Agreement may be prepaid by the Merchants at any time without penalty.

On March 1, 2024, SG DevCorp entered into a credit agreement with the Bryan Leighton Revocable Trust Dated December 13th, 2023 (the “Lender”) pursuant to which the Lender agreed to provide SG DevCorp with a line of credit facility (the “Line of Credit”) up to the maximum amount of $250,000 from which SG DevCorp may draw down, at any time and from time to time, during the term of the Line of Credit.

The “Maturity Date “of the Line of Credit is September 1, 2024.

At any time prior to the Maturity Date, upon mutual written consent of SG DevCorp and the Lender, the Maturity Date may be extended for up to an additional six-month period.

The advanced and unpaid principal of the Line of Credit from time to time outstanding will bear interest at a fixed rate per annum equal to 12.0% (the “Fixed Rate”).

On the first day of each month, SG DevCorp will pay to the Lender interest, in arrears, on the aggregate outstanding principal indebtedness of the Line of Credit at the Fixed Rate.

The entire principal indebtedness of the Line of Credit and any accrued interest thereon will be due and payable on the Maturity Date.

In consideration for the extension of the Line of Credit, SG DevCorp issued 154,320 shares of SG DevCorp restricted common stock to Lender.

The fair value of the shares issued to Lender amounted to $125,000 and has been recorded as a debt discount and will be amortized over the effective rate method.

During the three months ended March 31, 2024, SG DevCorp drew down $100,000 from the Line of Credit.

On March 5, 2024, we issued a Promissory Note (“Note”) in favor of 1800 Diagonal Lending LLC (the “Lender”) in the aggregate principal amount of $149,500 (the “Principal”), and an accompanying Securities Purchase Agreement, dated March 5, 2024 (the “SPA”).

The Note was purchased by the Lender for a purchase price of $130,000, representing an original issue discount of $19,500.

A one-time interest charge of ten percent (10%) (the “Interest Rate”) will be applied on the issuance date to the Principal.

Under the terms of the Note, beginning on April 15, 2024, we are required to make nine monthly payments of accrued, unpaid interest and outstanding principal, subject to adjustment, in the amount of $18,272,23.

We shall have a five business day grace period with respect to each payment.

Any amount of principal or interest on this Note which is not paid when due will bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”).

We have the right to accelerate payments or prepay in full at any time with no prepayment penalty.

Among other things, an event of default (“Event of Default”) will be deemed to have occurred if we fails to pay the principal or interest when due on the Note, whether at maturity, upon acceleration or otherwise, if bankruptcy or insolvency proceedings are instituted by or against us or if we fail to maintain the listing of its common stock on The Nasdaq Stock Market.

Upon the occurrence of an Event of Default, the Note will become immediately due and payable and we will be obligated to pay to the Investor, in satisfaction of its obligations under the Note, an amount equal to 200% times the sum of the then outstanding principal amount of the Note plus accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment plus Default Interest, if any.

After an Event of Default, at any time following the six month anniversary of the Note, the Lender will have the right, to convert all or any part of the outstanding and unpaid amount of the Note into shares of the our common stock at a conversion price equal to the greater of $0.08 or 65% multiplied by the lowest closing bid price during the 10 trading days prior to the conversion date (representing a discount rate of 35%).

The Note may not be converted into shares of our common stock if the conversion would result in the Lender and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock.

In addition, unless we obtain shareholder approval of such issuance, we shall not issue a number of shares of its common stock under Note, which when aggregated with all other securities that are required to be aggregated for purposes of Nasdaq Rule 5635(d), would exceed 19.99% of the shares of our common stock outstanding as of the date of definitive agreement with respect to the first of such aggregated transactions (the “Conversion Limitation”).

Upon the occurrence of an Event of Default as a result of us being delisted from Nasdaq, the Conversion Limitation shall no longer apply.

On May 3, 2024, we entered into a Securities Purchase

Agreement (the “May Securities Purchase Agreement”) for a private placement

(the “Private Placement”) with a single accredited institutional investor (the

“Purchaser”).

Pursuant to the Securities Purchase Agreement, the Purchaser

agreed to purchase 130,000 shares (the “Shares”)

of our common stock, par value $ 0.01 per share

(the “Common Stock”), and pre-funded warrants to purchase 1,249,310 shares of Common Stock in lieu thereof (the

“Pre-Funded Warrants”) and common warrants (the “Common Warrants”) to purchase

up to 2,758,620 shares of Common Stock.

to the May Securities Purchase Agreement, the combined offering price of each

Share and Common Warrant was set at $ 2.90 and the

combined offering price of each Pre-Funded Warrant and Common Warrant was set

at $ 2.8999 .

The Shares, the Pre-Funded Warrants,

the Common Warrants and the shares of Common Stock issuable upon exercise of

the Pre-Funded Warrants and Common Warrants are collectively referred to herein

as the “Securities.”

The Pre-Funded Warrants are

exercisable immediately following the date of issuance, may be exercised at any

time until all of the Pre-Funded Warrants are exercised in full, and have an

exercise price of $ 0.0001 per share.

Warrants are exercisable immediately following the date of issuance, have a

term of five years from the effective date of the

Registration Statement (as defined below) registering the Shares and the shares

of Common Stock issuable upon exercise of the Pre-Funded Warrants and the

Common Warrants and have an exercise price of $ 2.65

A holder may not exercise any Pre-Funded Warrants that would cause

the aggregate number of shares of common stock beneficially owned by the holder

to exceed 9.99 % of the Company’s outstanding

Common Stock immediately after exercise.

A holder may not exercise any Common

Warrants that would cause the aggregate number of shares of common stock

beneficially owned by the holder to exceed 4.99 %

of the Company’s outstanding Common Stock immediately after exercise.

Pre-Funded Warrants and the Common Warrants are subject to adjustment in the

event of certain stock dividends and distributions, stock splits, stock

combinations, reclassifications or similar events affecting the Common Stock

and also upon any distributions for no consideration of assets to the Company’s

stockholders.

In the event of certain corporate transactions, the holders of

the Pre-Funded Warrants and the Common Warrants will be entitled to receive,

upon exercise of the Pre-Funded Warrants and the Common Warrants, respectively,

the kind and amount of securities, cash or other property that the holders

would have received had they exercised the Pre-Funded Warrants and the Common

Warrants immediately prior to such transaction.

The Pre-Funded Warrants and the

Common Warrants do not entitle the holders thereof to any voting rights or any

of the other rights or privileges to which holders of common stock are

In the event of a

“Fundamental Transaction,” which term is defined in the Pre-Funded Warrants and

the Common Warrants and generally includes (i) the Company, directly or

indirectly, in one or more related transactions

effects any merger or consolidation of the Company with or into another Person

(as defined in the Pre-Funded Warrants and Common Warrants) in which the

Company is not the surviving entity (other than a reincorporation in a different

state, a transaction for changing the Company’s name, or a similar transaction

pursuant to which the surviving company remains a public company), (ii) the

Company, directly or indirectly, effects any sale, lease, license, assignment,

transfer, conveyance or other disposition of all or substantially all of the

Company’s assets in one or a series of related

transactions (which, for the avoidance of doubt, shall not include such

transactions that do not require approval of the Company’s stockholders), (iii)

any, direct or indirect, purchase offer, tender offer or exchange offer

(whether by the Company or another Person) is completed pursuant to which

holders of Common Stock are permitted to sell, tender or exchange their shares

for other securities, cash or property and has been accepted by the holders of

more than 50 % of the voting power of the common

equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any

reclassification, reorganization or recapitalization of the Common Stock or any

compulsory share exchange pursuant to which the Common Stock is effectively

converted into or exchanged for other securities, cash or property other than a

stock split, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or

share purchase agreement or other business combination (including, without

limitation, a reorganization, recapitalization, spin-off, merger or scheme of

arrangement) with another Person or group of Persons whereby such other

Person or group acquires more than 50 % of the

voting power of the common equity of the Company, the holders of the Pre-Funded

Warrants and Common Warrants will be entitled to receive upon exercise of the

Pre-Funded Warrants and the Common Warrants the kind and amount of securities,

cash or other property that the holders would have received had they exercised

such warrants immediately prior to such Fundamental Transaction.

Additionally,

as more fully described in the Common Warrants, in the event of certain

Fundamental Transactions, the holders of the Common Warrants will be entitled

to receive consideration in an amount equal to the Black Scholes Value (as

defined in the Common Warrants) of the remaining unexercised portion of the

Common Warrants on the date of consummation of such Fundamental Transaction.

The Private Placement closed

on May 7, 2024.

We received gross proceeds from the Private Placement of

approximately $ 4.0 million before deducting fees

to the placement agent and other offering expenses.

We intend to use the net

proceeds from the Private Placement for general corporate purposes and

potential repayment of indebtedness.

On May 3, 2024, we entered into a Securities Purchase Agreement (the “May Securities Purchase Agreement”) for a private placement (the “Private Placement”) with a single accredited institutional investor (the “Purchaser”).

Pursuant to the Securities Purchase Agreement, the Purchaser agreed to purchase 130,000 shares (the “Shares”) of our common stock, par value $ 0.01 per share (the “Common Stock”), and pre-funded warrants to purchase 1,249,310 shares of Common Stock in lieu thereof (the “Pre-Funded Warrants”) and common warrants (the “Common Warrants”) to purchase up to 2,758,620 shares of Common Stock.

Pursuant to the May Securities Purchase Agreement, the combined offering price of each Share and Common Warrant was set at $ 2.90 and the combined offering price of each Pre-Funded Warrant and Common Warrant was set at $ 2.8999 .

The Shares, the Pre-Funded Warrants, the Common Warrants and the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and Common Warrants are collectively referred to herein as the “Securities.”

The Pre-Funded Warrants are exercisable immediately following the date of issuance, may be exercised at any time until all of the Pre-Funded Warrants are exercised in full, and have an exercise price of $ 0.0001 per share.

The Common Warrants are exercisable immediately following the date of issuance, have a term of five years from the effective date of the Registration Statement (as defined below) registering the Shares and the shares of Common Stock issuable upon exercise of the Pre-Funded Warrants and the Common Warrants and have an exercise price of $ 2.65 per share.

A holder may not exercise any Pre-Funded Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99 % of the Company’s outstanding Common Stock immediately after exercise.

A holder may not exercise any Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 4.99 % of the Company’s outstanding Common Stock immediately after exercise.

The Pre-Funded Warrants and the Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock and also upon any distributions for no consideration of assets to the Company’s stockholders.

In the event of certain corporate transactions, the holders of the Pre-Funded Warrants and the Common Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants and the Common Warrants, respectively, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants and the Common Warrants immediately prior to such transaction.

The Pre-Funded Warrants and the Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which holders of common stock are entitled.

In the event of a “Fundamental Transaction,” which term is defined in the Pre-Funded Warrants and the Common Warrants and generally includes (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person (as defined in the Pre-Funded Warrants and Common Warrants) in which the Company is not the surviving entity (other than a reincorporation in a different state, a transaction for changing the Company’s name, or a similar transaction pursuant to which the surviving company remains a public company), (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of the Company’s assets in one or a series of related transactions (which, for the avoidance of doubt, shall not include such transactions that do not require approval of the Company’s stockholders), (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of more than 50 % of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property other than a stock split, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50 % of the voting power of the common equity of the Company, the holders of the Pre-Funded Warrants and Common Warrants will be entitled to receive upon exercise of the Pre-Funded Warrants and the Common Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised such warrants immediately prior to such Fundamental Transaction.

Additionally, as more fully described in the Common Warrants, in the event of certain Fundamental Transactions, the holders of the Common Warrants will be entitled to receive consideration in an amount equal to the Black Scholes Value (as defined in the Common Warrants) of the remaining unexercised portion of the Common Warrants on the date of consummation of such Fundamental Transaction.

The Private Placement closed on May 7, 2024.

We received gross proceeds from the Private Placement of approximately $ 4.0 million before deducting fees to the placement agent and other offering expenses.

We intend to use the net proceeds from the Private Placement for general corporate purposes and potential repayment of indebtedness.

On July 31, 2024, SG Building Blocks, Inc.

(“SG Building”), a wholly owned subsidiary of the Company, entered into a Cash Advance Agreement (the “Fifth Cedar Cash Advance Agreement”) with Cedar Advance LLC (“Cedar”), pursuant to which SG Building sold to Cedar $1,957,150 of its future receivables for a purchase price of $1,350,000, less underwriting fees and expenses paid and the repayment of prior amounts due to Cedar, for net proceeds to SG Building of $285,180.

Cedar is expected to withdraw $49,150 a week directly from SG Building until the $1,957,150 due to Cedar is paid in full.

In the event of a default (as defined in the Fifth Cedar Cash Advance Agreement), Cedar, among other remedies, can demand payment in full of all amounts remaining due under the Fifth Cash Advance Agreement.

SG Building’s obligations under the Fifth Cash Advance Agreement have been guaranteed by SG Echo, LLC, a wholly owned subsidiary of the Company.

We continue to generate losses from operations.

As of March 31, 2024, our stockholders’ equity was $6,637,478, compared to $6,334,859 as of December 31, 2023, and we had an accumulated deficit of $79,930,088, compared to $75,930,805 as of December 31, 2023.

Our net loss attributable to our common stockholders for the three months ended March 31, 2024 was $4,670,164 and net cash used in operating activities was $923,847.

As of June 30, 2024 , our stockholders’ equity was $ (4,789,275) , compared to $ (6,334,859) as of December 31, 2023, and we had an accumulated deficit of$ 83,033,136 , compared to $ 75,930,805 as of December 31, 2023.

Our net loss attributable to our common stockholders for the six months ended June 30, 2024 was $8 ,528,857 and net cash used in operating activities was $ 4,076,229 .

We will need to generate additional revenues or secure additional financing sources, such as debt or equity capital, to fund future growth, which financing may not be available on favorable terms or at all.

We are in the process of securing funding, which we believe will provide the needed working capital until we are cash flow positive[, which we believe will be in the first half of 2024].

We are in the process of securing funding, which we believe will provide the needed working capital until we are cash flow positive, which we believe will be in the second half of 2024 .

If we are unable to raise the necessary capital at the times we require such funding, we may need to materially change our business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether.

6 unchanged sentences

Net increase in cash and cash equivalents

Operating activities used net cash of $ 923,847 during the three months ended March 31, 2024 , and used net cash of $ 1,378,685 during the three months ended March 31, 2023 .

Operating activities used net cash of $ 4,618,283 during the six months ended June 30, 2024 , and used net cash of $ 3,039,177 during the six months ended June 30, 2023 .

Generally, our net operating cash flows fluctuate primarily based on changes in our profitability and working capital.

Cash used in operating activities decreased by approximately $ 454,838 .

Investing activities used net cash of $ 257,186 during the three months ended March 31, 2024 , and $ 638,348 net cash during th e three months ended March 31, 2023 a decrease in cash used of $ 381,162 .

This amount resulted from $31,841

in purchases of property an equipment, $1,082 received from our business combination and $226,425 in project development costs.

Financing activities provided net cash of $ 1,903,372 during the three months ended March 31, 2024 .

Financing activities used $ 2,886,758 net cash during the three months ended March 31, 2023 .

This amount resulted from $885,485 in repayments of short-term notes payable, proceeds of $2,293,644 from the issuances

of short-term notes payable and $494,213 received from a warrant inducment transaction.

Cash used in operating activities increase by approximately $ 1,579,106 .

Investing activities used net cash of $ 192,138 during the six months ended June 30, 2024 , and $ 669,006 net cash during th e six months ended June 30, 2023 a increase in cash used of $ 476,868 .

This amount resulted from $8,229 in purchases of property an equipment, $1,082 received from our business combination and $184,990 in project development costs.

Financing activities provided net cash of $ 5,809,757 during the six months ended June 30, 2024 .

Financing activities provided $ 4,726,738 net cash during the six months ended June 30, 2023 .

resulted from $ 1,588,001 in repayments of

short-term notes payable, proceeds of $ 2,741,867

from the issuances of short-term notes payable, $ 494,213 received from a warrant inducement transaction,

$15 from prefunded warrant exercise, and $3,619,253 from proceed from issuance

There can be no assurance that our customers will decide to and/or be able to proceed with these construction projects, or that we will ultimately recognize revenue from these projects in a timely manner or at all.

Off-Balance Sheet Arrangements

As of March 31, 2024 and December 31, 2023 , we had no material off-balance sheet arrangements to which we are a party.

As of June 30, 2024 and December 31, 2023 , we had no material off-balance sheet arrangements to which we are a party.

In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions which, in our judgment, are normal and customary for companies in our industry sector.

4 unchanged sentences

As a result, the estimated fair value of liabilities relating to these provisions is minimal.

Accordingly, we have no liabilities recorded for these provisions as of March 31, 2024 .

Accordingly, we have no liabilities recorded for these provisions as of June 30, 2024 .

Critical Accounting Estimates

34 unchanged sentences

( 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

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 indicate 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.

For product or equipment

sales, the Company applies recognition of revenue when the customer obtains

control over such goods, which is at a point in time.

Additionally, SG DevCorp

has begun to generate revenue resulting from commissions on residential real

estate purchases and sales transactions.

For this revenue, the Company applies

recognition of revenue when the customer obtains control over such service,

which his at a point in time.

Goodwill – The Company performs its

impairment test of goodwill at the reporting unit level each fiscal year, or

more frequently if events or circumstances change that would more likely than

not reduce the fair value of its reporting unit below its carrying

The Company performs a goodwill impairment test by comparing the

fair value of the reporting unit with its carrying value and recognizes an

impairment charge for the amount by which the carrying value exceeds the fair value,

not to exceed the total amount of goodwill.

The amount by which the carrying

value of the goodwill exceeds its implied fair value, if any, is recognized as

an impairment loss.

There were no

impairments during the three months ended

March 31, 2024 or 2023.

Intangible assets – Intangible assets consist

of $2,766,000 of proprietary knowledge and technology, which is being amortized

over 20 years.

In addition, included in intangible assets is $68,344 of

trademarks, and $238,422 of website costs that are being amortized over 5

The Company evaluated intangible assets for impairment during the

year ended December 31, 2023 and determined that there was an

$1,880,547 impairment loss for the year ended December 31, 2023.

amortization expense for the three months ended March 31, 2024 and 2023 was

$3,417 and $46,119, respectively.

The accumulated amortization as of March 31,

2024 and December 31, 2023 was $2,921,272 and $2,852,929, respectively.

remaining balance of the Company’ intangible assets is comprised of website

cost which are not yet placed in service.

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 indicate 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.

For product or equipment sales, the Company applies recognition of revenue when the customer obtains control over such goods, which is at a point in time.

Additionally, SG DevCorp has begun to generate revenue resulting from commissions on residential real estate purchases and sales transactions.

For this revenue, the Company applies recognition of revenue when the customer obtains control over such service, which his at a point in time.

Goodwill – The Company performs its impairment test of goodwill at the reporting unit level each fiscal year, or more frequently if events or circumstances change that would more likely than not reduce the fair value of its reporting unit below its carrying values.

The Company performs a goodwill impairment test by comparing the fair value of the reporting unit with its carrying value and recognizes an impairment charge for the amount by which the carrying value exceeds the fair value, not to exceed the total amount of goodwill.

The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss.

There were no impairments during the six months ended June 30, 2024 or 2023 .

Intangible assets – Intangible assets consist of $68,344 of trademarks, and $27,510 of website costs that are being amortized over 5 years.

The Company evaluated intangible assets for impairment during the year ended December 31, 2023 and determined that there was an $1,880,547 impairment loss for the year ended December 31, 2023 relating to intangible assets of proprietary knowledge and technology.

The amortization expense for the six months ended June 30, 2024 and 2023 was $6,834 and $47,291, respectively.

The accumulated amortization as of June 30, 2024 and December 31, 2023 was $56,558 and $2,852,929, respectively.

The remaining balance of the Company’ intangible assets is comprised of software development costs which are not yet placed in service.

New Accounting Pronouncements

19 unchanged sentences

The following is a reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net gain (loss) attributable to common stockholders:

Three Months Ended

March 31, 2024

Three Months Ended

March 31, 2023

Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

Six Months Ended June 30, 2024

Six Months Ended June 30, 2023

Net loss attributable to common stockholders of Safe & Green Holdings Corp.

3 unchanged sentences

EBITDA (non-GAAP)

Common stock deemed

Common stock deemed dividend

Addback litigation expense

3 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Not required.

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-Q

Item 2. Management’s Discussion and Analysis