OLENOX INDUSTRIES INC. 10-Q

ITEM 2 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Introduction and Certain Cautionary Statements As used in this Quarterly Report on Form 10-Q for the period ended September 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. The following discussion and analysis of the financial condition and results of our operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and schedules included elsewhere in this Quarterly Report on Form 10-Q and with our audited condensed consolidated financial statements and notes for the year ended December 31, 2023, which were included in our Annual Report on Form 10-K for the year then ended December 31, 2023, as filed with the Securities and Exchange Commission (the "SEC") on May 7, 2024 (the " 2023 Form 10-K"). This discussion, particularly information with respect to our future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special note regarding forward-looking statements" in this Quarterly Report on Form10-Q. You should review the disclosure under the heading “Risk Factors” in the 2023 Form 10-K and in this Quarterly Report on Form 10-Q for a discussion for important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Special note regarding forward-looking statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended (the "Securities Act"), and Section 21 E of the Securities Exchange Act of 1934 , as amended (the "Exchange Act"). Statements contained in this Quarterly Report on Form 10-Q may use forward-looking terminology, such as "anticipates," "believes," "could," "would," "estimates," "may," "might," "plan," "expect," "intend," "should," "will," or other variations on these terms or their negatives. All statements other than statements of historical facts are statements that could potentially be forward-looking. The Company cautions that forward-looking statements involve risks and uncertainties and actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate or prediction is realized. Factors that could cause or contribute to such differences include, but are not limited to: 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, including inflation, both in the United States and internationally; our ability to increase sales, generate income, effectively manage our growth and realize our backlog; competition in the markets in which we operate, including the consolidation of our industry, our ability to expand into and compete in new geographic markets and our ability to compete by protecting our proprietary manufacturing process; a disruption or cybersecurity breach in our or third-party suppliers' information technology systems; our ability to adapt our products and services to industry standards and consumer preferences and obtain general market acceptance of our products; product shortages and the availability of raw materials, and potential loss of relationships with key vendors, suppliers or subcontractors; the seasonality of the construction industry in general, and the commercial and residential construction markets in particular; a disruption or limited availability with our third party transportation vendors; the loss or potential loss of any significant customers; exposure to product liability, including the possibility that our liability for estimated warranties may be inadequate, and various other claims and litigation; our ability to attract and retain key employees; our ability to attract private investment for sales of product; the credit risk from our customers and our customers’ ability to obtaining third-party financing if and as needed; an impairment of goodwill; the impact of federal, state and local regulations, including changes to international trade and tariff policies, and the impact of any failure of any person acting on our behalf to comply with applicable regulations and guidelines; costs incurred relating to current and future legal proceedings or investigations; the cost of compliance with environmental, health and safety laws and other local building regulations; our ability to utilize our net operating loss carryforwards and the impact of changes in the United States' tax rules and regulations; dangers inherent in our operations, such as natural or man-made disruptions to our facilities and project sites and other restrictions on business and commercial activity and the adequacy of our insurance coverage; our ability to comply with the requirements of being a public company; fluctuations in the price of our common stock, including decreases in price due to sales of significant amounts of stock; potential dilution of the ownership of our current stockholders due to, among other things, public offerings or private placements by the Company or issuances upon the exercise of outstanding options or warrants and the vesting of restricted stock units; the ability of our principal stockholders, management and directors to potentially exert control due to their ownership interest; any ability to pay dividends in the future; potential negative reports by securities or industry analysts regarding our business or the construction industry in general; Delaware law provisions discouraging, delaying or preventing a merger or acquisition at a premium price; our ability to remain listed on the Nasdaq Capital Market and the possibility that our stock will be subject to penny stock rules; our classification as a smaller reporting company resulting in, among other things, a potential reduction in active trading of our common stock or increased volatility in our stock price; and any factors discussed in “Part II - Item 1 A. Risk Factors” to this Quarterly Report on Form 10-Q as well as “Part I – Item 1 A. Risk Factors” in our 2023 Form 10-K, and other filings with the SEC. In addition, certain information presented below is based on unaudited financial information. There can be no assurance that there will be no changes to this information once audited financial information is available. As a result, readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of this report. The Company will not undertake to update any forward-looking statement herein or that may be made from time to time on behalf of the Company. 48 Overview We operate in the following four segments: (i) construction; (ii) medical; (ii) real estate development; and (iv) environmental. The construction segment designs and constructs modular structures built in our factories using raw materials that are Made-in-America. In the medical segment we use our modular technology to offer turnkey solutions to medical testing and treatment and generating revenue from medical testing. Our real estate development segment builds innovative and green single or multifamily projects in underserved regions nationally using modules built in one of our vertically integrated factories. The environmental segment, the newest segment, is a sustainable medical and waste management solution that has a patented technology to collect waste and treat waste for safe disposal. We are a provider of modular facilities (“Modules”). We currently provide Modules made out of both code-engineered cargo shipping containers and wood for use as both permanent or temporary structures for residential housing use and commercial use, including for health care facilities. Prior to the COVID- 19 pandemic, the Modules we supplied were primarily for retail, restaurant and military use and were manufactured by third party suppliers using our proprietary technology and design and engineering expertise, which modifies code-engineered cargo shipping containers and purpose-built modules for use for safe and sustainable commercial, industrial and residential building. Since our acquisition in September 2020 of Echo DCL, LLC (“Echo”), one of our key supply chain providers, we now have more control over the manufacturing process and have increased our product offerings to add Modules made out of wood. In March 2020, in response to the COVID- 19 pandemic we began increasing our focus on providing our Modules as health care facilities for deployable medical response solutions. In February 2023, we entered into an agreement with The Peoples Health Care, in Glendale, California, working in conjunction with Teamsters Local 848 , to deliver four Modules to provide medical services to union members. In March 2023, we formed Safe & Green Medical Corporation to focus on our medical segment with an objective to establish a national presence with various clinics and labs that cater to the specific needs of local communities. During 2021 , through our subsidiary, Safe and Green Development Corporation. (“SG DevCorp”), we also began to focus on acquiring property to build multi-family housing communities that allows us to utilize the manufacturing services of Echo. SG Environmental Solutions Corp. (“SG Environmental”), formed in Delaware is focused on biomedical waste removal and will utilize a patented technology that it licenses to shred and disinfect biomedical waste, rendering the waste disinfected, unrecognizable, and of no greater risk to the public health than residential household waste. SG DevCorp develops, co-develops builds and finances single and multi-family homes in underserved regions nationally using modules built in one of our vertically integrated factories. SG DevCorp has a minority interest in Norman Berry II Owners LLC and JDI-Cumberland Inlet LLC. During 2024 , the Company’s ownership in SG DevCorp fell below 50 %, and the Company deconsolidated SG DevCorp from its financial statements (the “Deconsolidation”). As of September 30, 2024, the Company accounts for its investment in SG DevCorp on the equity method. Upon deconsolidation, the Company recognized a gain of $ 4,728,348 which resulted from the difference between the fair value of the Company’s investment upon deconsolidation, and the net assets and carrying value of the non-controlling interest. The Deconsolidation represents a strategic shift in the Company’s operations and will have a major effect on the Company’s operations and financial results. Prior year financial statements for 2023 have been restated to present the operations of SG DevCorp as a discontinued operation Recent Developments On October 30, 2024, we have successfully completed two substantial projects for a long-time customer, a large contractor to a U.S. government agency. The contracts, totaling 45 container-style office units, included one order for 15 units and another for 30 units, resulting in significant time and material savings for the customer. The entire design-to-completion process highlights SG Echo’s rapid production capabilities, high-quality manufacturing, and commitment to timely delivery. The office units, custom-designed from shipping containers, provide flexible, “plug-and-play” temporary office solutions for U.S. military operations. Each unit is built to meet strict safety and quality standards, underscoring SG Echo’s reputation for reliability, durability, and cost-effectiveness in modular construction. The quick turnaround time of the project emphasizes SG Echo’s efficiency and capability in supporting government projects on tight timelines. On November 6, 2024, we entered into an agreement with a single investor that is an existing holder of warrants to purchase shares of common stock of the Company for cash (the “Existing Warrants”), wherein the investor agreed to exercise the Existing Warrants to purchase up 2,758,620 shares of common stock at a reduced exercise price of $ 0.8718 per share, resulting in gross proceeds of approximately $ 2.4 million, before deducting offering fees and other expenses payable by the Company. In consideration for the exercise of the Existing Warrants for cash, the investor received new warrants (the “New Warrants”) to purchase up to an aggregate of 5,517,240 shares of common stock. The New Warrants are exercisable after stockholder approval at an exercise price of $ 0.8718 per common share and will expire five years after stockholder approval. The Company issued and sold the New Warrants and any shares of common stock issuable upon exercise of the New Warrants in reliance on the exemption from the registration requirements of the Securities Act of 1933 , as amended (the “Securities Act”) by virtue of Section 4 (a)( 2 ) thereof and Rule 506 of Regulation D thereunder. 49 Results of Operations Nine Months Ended September 30, 2024 and 2023 : For the Nine Months Ended September 30, 2024 For the Nine Months Ended September 30, 2023 Total revenue $ 3,932,592 $ 14,566,351 Total cost of revenue 3,618,031 15,138,225 Total payroll and related expenses 3,507,118 5,419,852 Total other operating expenses 1,829,370 4,052,957 Total operating loss ( 5,021,927 ) ( 10,044,683 ) Total other expense ( 8,119,147 ) ( 22,450 ) Total loss before income tax ( 13,141,074 ) ( 10,067,133 ) Common stock deemed dividend ( 1,146,594 ) — Income (loss) from discontinued operations 2,776,013 ( 2,615,965 ) Net loss attributable to common stockholders of Safe & Green Holdings Corp. $ ( 11,511,655 ) $ ( 12,683,098 ) Revenue During the nine months ended September 30, 2024 , we derived revenue from our construction segment. Total revenue for the nine months ended September 30, 2024 was $ 3,932,592 compared to $ 14,566,351 for the nine months ended September 30, 2023 . This decrease of $ 10,633,759 , or approximately 73 %, 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 $ 3,618,031 for the nine months ended September 30, 2024 , compared to $ 15,138,225 for the nine months ended September 30, 2023 . The de crease of $ 11,520,194 , or a decrease of approximately 76 %, is primarily related to the de crease in construction services during the nine months ended September 30, 2024 . Gross profit (loss) was $ 314,561 and $( 571,874 ) for the nine months ended September 30, 2024 and 2023 , respectively. Gross profit (loss) margin percentage increased to 8 % for the nine months ended September 30, 2024 compared to ( 4 )% for the nine months ended September 30, 2023 primarily due to the recognition of losses on construction services recognized during the nine months ended September 30, 2023 . Operating Expenses Payroll and related expenses for the nine months ended September 30, 2024 were $ 3,507,118 compared to $ 5,419,852 for the nine months ended September 30, 2023 . This decrease was primarily caused by a decrease in the vesting of restricted stock units during the nine months ended September 30, 2024 as compared to the prior period, as well as the deconsolidation of SG DevCorp during 2024 . Other operating expenses (general and administrative expenses and marketing and business development expenses) for the nine months ended September 30, 2024 were $ 1,829,370 compared to $ 4,052,957 for the nine months ended September 30, 2023 . This decrease was due to an overall decrease in operating expenses spend during the nine months ended September 30, 2024 , as well as the deconsolidation of SG DevCorp during 2024 .. Other Income (Expense) Interest income for the nine months ended September 30, 2024 was $ 9,570 mainly derived from bank interest and interest associated with an outstanding note receivable. There was $ 22,002 of interest income for the nine months ended September 30, 2023 . There was $ 186,634 and $ 690,618 of other income for the nine months ended September 30, 2024 and 2023 , respectively. Interest expense for the nine months ended September 30, 2024 and 2023 was $( 2,404,277 ) and $( 735,070 ), respectively. The increase in interest expense resulted from an increase in notes payable balances during the nine months ended September 30, 2024 . During the nine months ended September 30, 2024, there was a change in fair value of equity-based investments of $( 5,590,666 ) recognized which resulted from the deconsolidation of SG DevCorp as well as $ 320,408 recognized from the disposition of SG DevCorp shares. Income from Discontinued Operations During the nine months ended September 30, 2024 , there was a gain on deconsolidation of $ 4,738,348 recognized which resulted from the deconsolidation of SG DevCorp, as well as $ 1,952,335 in a net loss recognized. . 50 Three Months Ended September 30, 2024 and 2023 : For the Three Months Ended September 30, 2024 For the Three Months Ended September 30, 2023 Total revenue $ 1,753,223 $ 3,965,361 Total cost of revenue 1,878,799 4,501,393 Total payroll and related expenses 1,761,827 591,130 Total other operating expenses 353,682 1,263,971 Total operating loss ( 2,241,085 ) ( 2,391,133 ) Total other expense ( 1,475,020 ) ( 293,458 ) Total loss before income tax ( 3,716,105 ) ( 2,684,591 ) Add: Net income attributable non-controlling interest — — Loss from discontinued operations — ( 923,543 ) Net loss attributable to common stockholders of Safe & Green Holdings Corp. $ ( 3,716,105 ) $ ( 3,608,134 ) Revenue During the three months ended September 30, 2024 , we derived revenue primarily from our construction segment. Total revenue for the three months ended September 30, 2024 was $ 1,753,223 compared to $ 3,965,361 for the three months ended September 30, 2023 . This decrease of $ 2,212,138 , or approximately 56 %, was mainly driven by a decrease in construction services due to less jobs in progress. Cost of Revenue and Gross Profit Cost of revenue was $ 1,878,799 for the three months ended September 30, 2024 , compared to $ 4,501,393 for the three months ended September 30, 2023 . The decrease of $ 2,622,594 , or a decrease of approximately 58 %, is primarily related to the decrease in construction services during the three months ended September 30, 2024 . Gross loss was $( 125,576 ) and $( 536,032 ) for the three months ended September 30, 2024 and 2023 , respectively. Gross profit margin percentage increased to ( 7 )% for the three months ended September 30, 2024 compared to ( 14 ) % for the three months ended September 30, 2023 primarily due to the recognition of losses on construction services recognized during the three months ended September 30, 2023 . Operating Expenses Payroll and related expenses for the three months ended September 30, 2024 were $ 1,761,827 compared to $ 591,130 for the three months ended September 30, 2023 . This increase was primarily caused by a decrease in the vesting of restricted stock units during the three months ended September 30, 2024 as compared to the prior year period. Other operating expenses (general and administrative expenses and marketing and business development expenses) for the three months ended September 30, 2024 were $ 353,682 compared to $ 1,263,971 for the three months ended September 30, 2023 . This decrease was due to an overall decrease in operating expenses spend during the three months ended September 30, 2024 , as well as the deconsolidation of SG DevCorp during 2024 . Other Income (Expense) There was $ 3,186 of interest income for the three months ended September 30, 2023 . There was $ 2,652 and $ 102,128 of other income for the three months ended September 30, 2024 and 2023 , respectively. Interest expense for the three months ended September 30, 2024 and 2023 was $ 864,007 and $ 398,772 , respectively. The increase in interest expense resulted from an increase in notes payable balances during the three months ended September 30, 2024 . Additionally, during the three months ended September 30, 2024 , there was a change in fair value of equity-based investments of $( 613,665 ) recognized which resulted from the deconsolidation of SG DevCorp. Income Tax Provision A 100 % valuation allowance was provided against the deferred tax asset consisting of available net operating loss carry forwards and, accordingly, no income tax benefit was provided. 51 Impact of Inflation 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 nine months ended September 30, 2024 and 2023 may not be indicative of our future operations. Liquidity and Capital Resources As of September 30, 2024 and December 31, 2023 , we had an aggregate of $ 256,957 and $ 14,212 , 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 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. There is, however, no assurance we will be successful in meeting our capital requirements prior to becoming cash flow positive. 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 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. 52 On August 27, 2024, SG Building entered into a Cash Advance Agreement (the “Pawn Cash Advance Agreement”) with Pawn Funding (“Pawn”) pursuant to which SG Building sold to Pawn $ 599,600 of its future receivables for a purchase price of $ 400,000 , less underwriting fees and expenses paid and the repayment of prior amounts due Pawn, for net funds provided of $ 360,000 . Pursuant to the Pawn Cash Advance Agreement, Pawn is expected to withdraw $ 4,999.67 a week directly from SG Building until the $ 599,600 due to Pawn is paid in full. In the event of a default (as defined in the Pawn Cash Advance Agreement), Cedar, among other remedies, can demand payment in full of all amounts remaining due under the Pawn Cash Advance Agreement. On August 28, 2024, the Company issued a promissory note (the “August 1800 Diagonal Note”) in favor of 1800 Diagonal in the principal amount of $ 290,000 for a purchase price of $ 250,000 , representing an original issue discount of $ 40,000 . A one -time interest charge of twelve percent ( 12 %) be applied on the issuance date to the principal balance. Under the terms of the August 1800 Diagonal Note, beginning on February 28, 2025, the Company is required to make five monthly payments of accrued, unpaid interest and outstanding principal, subject to adjustment, in the amount of $ 40,600 , with $ 162,400 being due on February 28, 2025. The Company has right to accelerate payments or prepay in full at any time with no prepayment penalty. The connection with the August 1800 Diagonal Note, the Company incurred $ 8,000 in debt issuance costs. The August 1800 Diagonal Note has default terms similar to the 1800 Diagonal Note as described above. On September 20, 2024, SG Echo entered into a Loan and Security Agreement (the “Enhanced Loan Agreement”) with Enhanced Capital Oklahoma Rural Fund, LLC (“Enhanced”) pursuant to which SG Echo borrowed $ 4,000,000 (the “Principal”) from Enhanced, and whereby SG Echo executed and delivered a Secured Promissory Note (the “Enhanced Note”) to Enhanced to evidence SG Echo’s obligations under the Enhanced Loan Agreement. The Enhanced Note shall bear interest at a rate equal to the greater of (i) the Secured Overnight Financing Rate (“SOFR”) plus six and sixty-five tenths percent ( 6.65 %) and (ii) ten percent ( 10.0 %) per annum (the “Interest Rate”). SG Echo shall pay to Enhanced a closing fee of $ 80,000 , which shall be due and payable on October 1, 2025, unless such date shall be extended by Lender. SG Echo’s obligations under the Enhanced Loan Agreement and the Enhanced Note have been guaranteed by the Company. Pursuant to the terms of the Enhanced Note, SG Echo shall make monthly payments of accrued interest on the first business day of each calendar month until December 31, 2025. Commencing January 2026, SG Echo shall make monthly payments of accrued interest and additionally shall make a monthly principal payment on the Note in an amount equal to $ 22,222.22 . The maturity date of the Note shall be the sixty -month anniversary of the closing date (the “Enhanced Maturity Date”). All outstanding principal and accrued interest shall be due and payable on the Enhanced Maturity Date. Pursuant to the terms of the Enhanced Loan Agreement, on the closing date, $ 360,000 (the “Interest Reserve”) will be deposited in a segregated deposit account in SG Echo’s name, which account shall be subject to a Control Agreement in favor of the Lender (the “Interest Reserve Account”). Beginning February 1, 2025, Lender may withdraw the monthly interest payments due under the Enhanced Note from the Interest Reserve Account until the Interest Reserve has been fully withdrawn. SG Echo shall have no obligation to replenish amounts withdrawn from the Interest Reserve Account. Pursuant to the terms of the Enhanced Loan Agreement, SG Echo shall grant Enhanced a first priority mortgage on the real property located at 101 Waldron Rd., Durant, Oklahoma. Additionally, SG Echo shall grant Lender a continuing security interest in, a general lien upon, collateral assignment of, and a right of set-off against all of SG Echo’s right, title, and interest in and to all assets of SG Echo. In the event of default (as defined in the Enhanced Loan Agreement), Enhanced, among other remedies, can demand all amounts and/or liabilities owing from time to time by SG Echo to Enhanced pursuant to the Enhanced Loan Agreement and the Enhanced Note (with accrued interest thereon) and all other amounts owing under the Enhanced Loan Agreement due and payable. 53 We continue to generate losses from operations. As of September 30, 2024 , our stockholders’ equity was $ ( 8,158,927 ) , compared to $ ( 6,334,859 ) as of December 31, 2023, and we had an accumulated deficit of $ 84,303,865 , compared to $ 75,930,805 as of December 31, 2023. Our net loss attributable to our common stockholders for the nine months ended September 30, 2024 was $ ( 11,511,655 ) and net cash used in operating activities was $ 9,915,916 . 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 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. Cash Flow Summary Nine Months Ended September 30 , 2024 2023 Net cash provided by (used in): Operating activities $ ( 9,915,916 ) $ ( 4,671,863 ) Investing activities ( 401,448 ) ( 692,603 ) Financing activities 10,560,109 5,494,596 Net increase in cash and cash equivalents $ 242,745 $ 130,130 Operating activities used net cash of $ 9,915,916 during the nine months ended September 30, 2024 , and used net cash of $ 4,671,863 during the nine months ended September 30, 2023 . Generally, our net operating cash flows fluctuate primarily based on changes in our profitability and working capital. Cash used in operating activities increased by approximately $ 5,244,053 . Investing activities used net cash of $ 401,448 during the nine months ended September 30, 2024 , and $ 692,603 net cash during th e nine months ended September 30, 2023 a decrease in cash used of $ 291,155 . This amount resulted from $ 8,007 in purchases of property and equipment, , $ 125,000 received from the sale of equity-based investment and $ 154,089 in project development costs, as well as $ 364,352 used in discontinued operations. Financing activities provided net cash of $ 10,560,109 during the nine months ended September 30, 2024 . Financing activities provided $ 5,494,596 net cash during the nine months ended September 30, 2023 . This amount resulted from $ 5,143,298 in repayments of short-term notes payable, proceeds of $ 8,013,745 from the issuances of short-term notes payable, $ 494,213 received from a warrant inducement transaction, $ 3 0 from prefunded warrant exercise, and $ 3,619,253 from proceed from issuance of stock, as well as $ 3,576,166 received from discontinued operations. 54 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 September 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. These agreements are typically with consultants and certain vendors. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to actions taken or omitted by us. The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. 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 September 30, 2024 . Critical Accounting Estimates Our condensed consolidated financial statements have been prepared using generally accepted accounting principles in the United States of America (“GAAP”). In connection with the preparation of the financial statements, we are required to make assumptions and estimates and apply judgments that affect the reported amounts of assets, liabilities, revenue, and expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors that we believe to be relevant at the time the consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Our significant accounting policies are discussed in “Note 3 — Summary of Significant Accounting Policies” of the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. We believe that the following accounting policies are the most critical in fully understanding and evaluating our reported financial results. Share-based payments . We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, including non-employee directors, the fair value of the award is measured on the grant date. For non-employees, the fair value of the award is generally re-measured on interim financial reporting dates and vesting dates until the service period is complete. The fair value amount is then recognized over the period services are required to be provided in exchange for the award, usually the vesting period. We recognize stock-based compensation expense on a graded-vesting basis over the requisite service period for each separately vesting tranche of each award. Stock-based compensation expense to employees and all directors is reported within payroll and related expenses in the consolidated statements of operations. Stock-based compensation expense to non-employees is reported within marketing and business development expense in the consolidated statements of operations. Other derivative financial instruments. We classify as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provide a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement), provided that such contracts are indexed to our own stock. We classify as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if any event occurs and if that event is outside SGB’s control) or (ii) give the counterparty a choice of net-cash settlement or settlement shares (physical settlement or net-cash settlement). SGB assesses classification of common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities or equity is required Convertible instruments . We bifurcate conversion options from their host instruments and accounts for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract; (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable GAAP measures with changes in fair value reported in earnings as they occur; and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. We determined that the embedded conversion options that were included in the previously outstanding convertible debentures should be bifurcated from their host and a portion of the proceeds received upon the issuance of the hybrid contract has been allocated to the fair value of the derivative. The derivative was subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations. 55 Critical Accounting Estimates (continued) Revenue recognition – We determine, at contract inception, whether we will transfer control of a promised good or service over time or at a point in time, regardless of the length of contract or other factors. The recognition of revenue aligns with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve this core principle, we apply the following five steps in accordance with its revenue policy: ( 1 ) Identify the contract with a customer ( 2 ) Identify the performance obligations in the contract ( 3 ) Determine the transaction price ( 4 ) Allocate the transaction price to performance obligations in the contract ( 5 ) Recognize revenue as performance obligations are satisfied On certain contracts, the Company applies recognition of revenue over time, which is similar to the method the Company applied under previous guidance (i.e. percentage of completion). Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress toward complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation 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. 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 nine months ended September 30, 2024 or 2023 . Intangible assets – Intangible assets consist of $ 68,344 of trademarks, and $ 6,706 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 nine months ended September 30, 2024 and 2023 was $ 1 0,251 and $ 14 0,437 , respectively. The accumulated amortization as of September 30, 2024 and December 31, 2023 was $ 59,975 and $ 2,852,929 , respectively. New Accounting Pronouncements See Note 4 to the accompanying consolidated financial statements for all recently adopted and new accounting pronouncements. 56 Non-GAAP Financial Information In addition to our results under GAAP, we also present EBITDA and Adjusted EBITDA for historical periods. EBITDA and Adjusted EBITDA are non-GAAP financial measures and have been presented as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We calculate EBITDA as net income (loss) attributable to common stockholders before interest expense, income tax benefit (expense), depreciation and amortization. We calculate Adjusted EBITDA as EBITDA before certain non-recurring, unusual or non-operational items, such as litigation expense, stock issuance expense and stock compensation expense. We believe that adjusting EBITDA to exclude the effects of these items that are not closely associated with ongoing corporate operations provides management and investors with a meaningful measure that increases period-to -period comparability of our operating performance. We believe the presentation of EBITDA and Adjusted EBITDA is relevant and useful by enhancing the readers’ ability to understand the Company’s operating performance. Our management utilizes EBITDA and Adjusted EBITDA as a means to measure performance. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. These measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing us and our results of operations. Our measurements of EBITDA and Adjusted EBITDA may not be comparable to similar titled measures reported by other companies. Other companies, including other companies in our industry, may not use such measures or may calculate one or more of the measures differently than as presented in this Quarterly Report on Form 10-Q, limiting their usefulness as a comparative measure. EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered as an alternative to net income (loss) attributable to common stockholders, or any other measures of financial performance derived in accordance with GAAP. We do not consider these non-GAAP measures to be substitutes for or superior to the information provided by our GAAP financial results. . The non-GAAP information should be read in conjunction with our consolidated financial statements and related notes. These measures also should not be construed as an inference that our future results will be unaffected by the non-recurring, unusual or non-operational items for which these non-GAAP measures make adjustments. Additionally, EBITDA and Adjusted EBITDA are not intended to be liquidity measures. Non-GAAP Financial Information (continued) 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 September 30, 2024 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Net loss attributable to common stockholders of Safe & Green Holdings Corp. $ ( 3,716,105 ) $ ( 3,608,134 ) $ ( 11,511,655 ) $ ( 12,683,098 ) Addback interest expense 864,007 398,772 2,404,277 735,070 Addback interest income — ( 3,186 ) ( 9,570 ) ( 22,002 ) Addback depreciation and amortization 110,407 1,448,305 1,709,230 1,538,585 EBITDA (non-GAAP) ( 2,741,691 ) ( 1,764,243 ) ( 7,407,718 ) ( 10,431,445 ) Common stock deemed dividend — — 1,146,594 — Gain on deconsolidation-SG DevCorp (including noncontrolling interest portion) — — ( 3,990,304 ) — Change in fair value of equity-based investments 613,665 — 5,590,666 — Loss on disposition of equity-based investments — — 320,408 — Addback litigation expense 43,801 — 356,046 17,361 Addback stock issued for services — — — 484,825 Addback stock compensation expense 570,362 — 1,097,698 3,210,631 Adjusted EBITDA (non-GAAP) $ ( 1,513,863 ) $ ( 1,764,243 ) $ ( 2,886,610 ) $ ( 6,718,628 ) 57 ITEM 3 . Quantitative and Qualitative Disclosures About Market Risk Not required.