SG Blocks Announces Second Quarter Financial Results
NEW YORK, NY -- (Marketwired) -- 08/09/17 -- SG Blocks, Inc. (NASDAQ: SGBX) ("SG Blocks" or the "Company"), a premier designer, innovator and fabricator of container-based structures, today announced its operating results for the three months ended June 30, 2017, as published in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.
Operating Results for the Quarter Ended June 30, 2017:
- Total revenues increased 17% to $1,001,734 for the three months ended June 30, 2017, compared to $828,477 for the three month period ending June 30, 2016.
- Gross profit for the three months ended June 30, 2017 was $145,787 compared to $141,732 for the three month period ending June 30, 2016.
- GAAP net loss was $(1,705,672), or $(3.15) per basic and diluted share, for the three months ended June 30, 2017 with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017.
- Non-GAAP net loss was $318,998, or $ (0.59) per basic and diluted share, for the three months ended June 30, 2017, with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017. Reconciliations between net income, earnings per share and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss."
- As of June 30, 2017, the Company had $5,662,488 of cash and cash equivalents and short-term investments.
Paul Galvin, Chief Executive Officer of SG Blocks, stated, "It's been a very busy quarter for us at SG Blocks. The recent public offering of our shares now traded on Nasdaq, resulting in net proceeds of approximately $7.2 million, has placed the Company on its strongest financial footing to date, with no debt and a clean capital structure. With a construction backlog of $9.7 million on June 30th, we are galvanized around our core as the first company to receive an ESR rating from the ICC, and we are driving growth with disciplined decisions, product leadership and focused execution. We are very optimistic about the future and we look forward to building atop recent operational momentum while driving towards measurable earnings growth."
Galvin concluded, "I want to also take this opportunity to thank all of those who have supported us and helped get us where we are today. We are grateful and humbled by your support. Rest assured, we will continue to work diligently on your behalf as we focus on building shareholder value."
Mahesh Shetty, Chief Financial Officer of SG Blocks, stated, "We have held the line on our operating expenses and look forward to expanding our margins as we execute on our pipeline."
SG Blocks will host a corresponding conference call to discuss the results with Chief Executive Officer Paul Galvin and Chief Financial Officer Mahesh Shetty today at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 ten minutes prior to the scheduled start time. International callers should dial (201) 493-6779.
In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company's website at www.sgblocks.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Wednesday, August 23, 2017 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13668248.
| SG BLOCKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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| Successor 2017 |
Predecessor 2016 |
Successor 2017 |
Predecessor 2016 |
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| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Construction revenue | $ | 882,499 | $ | 801,692 | $ | 1,402,457 | $ | 1,004,216 | ||||||||||
| Engineering services | 119,235 | 26,785 | 203,870 | 52,007 | ||||||||||||||
| Project management | - | - | - | - | ||||||||||||||
| Total | 1,001,734 | 828,477 | 1,606,327 | 1,056,223 | ||||||||||||||
| Cost of revenue: | ||||||||||||||||||
| Construction revenue | 738,860 | 664,848 | 1,133,026 | 816,076 | ||||||||||||||
| Engineering services | 117,087 | 21,897 | 174,285 | 43,898 | ||||||||||||||
| Project management | - | - | - | - | ||||||||||||||
| Total | 855,947 | 686,745 | 1,307,311 | 859,974 | ||||||||||||||
| Gross profit | 145,787 | 141,732 | 299,016 | 196,249 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Payroll and related expenses | 292,550 | 200,318 | 635,598 | 367,254 | ||||||||||||||
| General and administrative expenses | 330,118 | 432,249 | 724,059 | 557,069 | ||||||||||||||
| Marketing and business development expense | 37,618 | 12,877 | 66,186 | 22,729 | ||||||||||||||
| Pre-project expenses | 7,508 | 22,233 | 16,647 | 26,411 | ||||||||||||||
| Total | 667,794 | 667,677 | 1,442,490 | 973,463 | ||||||||||||||
| Operating loss | (522,007 | ) | (525,945 | ) | (1,143,474 | ) | (777,214 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest expense | (165,194 | ) | (265,253 | ) | (330,388 | ) | (429,017 | ) | ||||||||||
| Interest income | 4 | 5 | 8 | 8 | ||||||||||||||
| Loss on conversion of convertible debentures | (1,018,475 | ) | - | (1,018,475 | ) | - | ||||||||||||
| Change in fair value of financial instruments | - | - | 96,327 | - | ||||||||||||||
| Total | (1,183,665 | ) | (265,248 | ) | (1,252,528 | ) | (429,009 | ) | ||||||||||
| Net loss before reorganization items | (1,705,672 | ) | (791,193 | ) | (2,396,002 | ) | (1,206,223 | ) | ||||||||||
| Reorganization items: | ||||||||||||||||||
| Legal and professional fees | - | (80,239 | ) | - | (171,893 | ) | ||||||||||||
| Gain on reorganization | - | 713,379 | - | 713,379 | ||||||||||||||
| Total | - | 633,140 | - | 541,486 | ||||||||||||||
| Net loss | $ | (1,705,672 | ) | $ | (158,053 | ) | $ | (2,396,002 | ) | $ | (664,737 | ) | ||||||
| Net loss per share - basic and diluted: | ||||||||||||||||||
| Basic and diluted | $ | (3.15 | ) | $ | 0.00 | $ | (6.75 | ) | $ | (0.01 | ) | |||||||
| Weighted average shares outstanding: | ||||||||||||||||||
| Basic and diluted | 541,424 | 42,918,927 | 354,703 | 42,918,927 | ||||||||||||||
| SG BLOCKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
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|
June 30, 2017 |
December 31, 2016 |
|||||||||
| (Unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 5,632,463 | $ | 549,100 | ||||||
| Short-term investment | 30,025 | 30,017 | ||||||||
| Accounts receivable, net | 97,441 | 234,518 | ||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 258,149 | 33,349 | ||||||||
| Prepaid expenses | 317,344 | 124,720 | ||||||||
| Inventory | - | 9,445 | ||||||||
| Total current assets | 6,335,422 | 981,149 | ||||||||
| Equipment, net | 4,180 | 5,559 | ||||||||
| Goodwill | 4,162,173 | 4,162,173 | ||||||||
| Intangible assets, net | 3,322,879 | 3,587,250 | ||||||||
| Totals | $ | 13,824,654 | $ | 8,736,131 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued expenses | $ | 1,444,068 | $ | 350,772 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 439,191 | 48,478 | ||||||||
| Deferred revenue | - | 72,788 | ||||||||
| Conversion option liabilities | - | 384,461 | ||||||||
| Total current liabilities | 1,883,259 | 856,499 | ||||||||
| Convertible debentures, net of discounts | - | 2,446,337 | ||||||||
| Total liabilities | 1,883,259 | 3,302,836 | ||||||||
| Commitments and Contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| Preferred stock, $1.00 par value, 5,405,010 shares authorized; 0 issued and outstanding as of June 30, 2017 and 1,801,670 issued and outstanding as of December 31, 2016 | - | 1,801,670 | ||||||||
| Common stock, $0.01 par value, 300,000,000 shares authorized; 3,982,238 issued and outstanding as of June 30, 2017 and 163,901 issued and outstanding as of December 31, 2016 | 39,823 | 1,639 | ||||||||
| Additional paid-in capital | 15,604,150 | 4,936,562 | ||||||||
| Accumulated deficit | (3,702,578 | ) | (1,306,576 | ) | ||||||
| Total stockholders' equity | 11,941,395 | 5,433,295 | ||||||||
| Totals | $ | 13,824,654 | $ | 8,736,131 | ||||||
| SG BLOCKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
Successor For the Six Months Ended June 30, 2017 |
Predecessor For the Six Months Ended June 30, 2016 |
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| (Unaudited) | (Unaudited) | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (2,396,002 | ) | $ | (664,737 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation expense | 1,379 | 1,629 | ||||||||||
| Amortization of debt issuance costs | - | 5,204 | ||||||||||
| Amortization of discount on convertible debentures | 330,388 | 387,965 | ||||||||||
| Amortization of intangible assets | 293,191 | - | ||||||||||
| Interest income on short-term investment | (8 | ) | (8 | ) | ||||||||
| Loss on conversion of convertible debentures | 1,018,475 | - | ||||||||||
| Change in fair value of financial instruments | (96,327 | ) | - | |||||||||
| Interest expense on debtor in possession financing | - | 35,848 | ||||||||||
| Gain on reorganization | - | (713,379 | ) | |||||||||
| Stock-based compensation | 209,383 | 119,146 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | 137,077 | (104,858 | ) | |||||||||
| Cost and estimated earnings in excess of billings on uncompleted contracts | (224,800 | ) | - | |||||||||
| Prepaid expenses | (192,624 | ) | (28,589 | ) | ||||||||
| Inventory | 9,445 | 118,011 | ||||||||||
| Intangible assets | (28,820 | ) | - | |||||||||
| Accounts payable and accrued expenses | 378,123 | 269,317 | ||||||||||
| Accounts payable and accrued expenses - subject to compromise | - | (22,457 | ) | |||||||||
| Related party accounts payable and accrued expenses | - | (163,522 | ) | |||||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 390,713 | 14,650 | ||||||||||
| Deferred revenue | (72,788 | ) | (87,115 | ) | ||||||||
| Net cash used in operating activities | (243,195 | ) | (832,895 | ) | ||||||||
| Cash flows provided by investing activities: | ||||||||||||
| Security deposit refund | - | 2,700 | ||||||||||
| Net cash provided by investing activities | - | 2,700 | ||||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of convertible debentures | - | 1,319,001 | ||||||||||
| Proceeds from public stock offering, net of offering costs | 6,826,558 | - | ||||||||||
| Payments on convertible debentures | (1,500,000 | ) | - | |||||||||
| Net cash provided by financing activities | 5,326,558 | 1,319,001 | ||||||||||
| Net increase in cash and cash equivalents | 5,083,363 | 488,806 | ||||||||||
| Cash and cash equivalents - beginning of period | 549,100 | 466,997 | ||||||||||
| Cash and cash equivalents - end of period | $ | 5,632,463 | $ | 955,803 | ||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | - | $ | - | ||||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||||||
| Conversion of debtor in possession financing to convertible debentures | $ | - | $ | 600,000 | ||||||||
| Conversion of convertible debentures to common stock | $ | 2,583,334 | $ | - | ||||||||
| Conversion of preferred stock to common stock | $ | 1,801,670 | $ | - | ||||||||
| Offering costs not paid and included in accounts payable and accrued expenses | $ | 715,173 | $ | - | ||||||||
| SG BLOCKS, INC. AND SUBSIDIARIES Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss |
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| Six Months Ended June 30, 2017 |
Three Months Ended June 30, 2017 |
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| Net loss | $ | (2,396,002 | ) | $ | (1,705,672 | ) | |||
| Addback interest expense | 330,388 | 165,194 | |||||||
| Addback depreciation and amortization | 294,570 | 148,005 | |||||||
| EBITDA (non-GAAP) | (1,771,044 | ) | (1,392,473 | ) | |||||
| Addback loss on conversion of convertible debentures | 1,018,475 | 1,018,475 | |||||||
| Less change in fair value of financial instruments | (96,327 | ) | - | ||||||
| Addback stock compensation expense | 209,383 | 55,000 | |||||||
| Adjusted EBITDA (non-GAAP) | $ | (639,513 | ) | $ | (318,998 | ) | |||
About SG Blocks, Inc.
SG Blocks, Inc. is a premier innovator in advancing and promoting the use of code-engineered cargo shipping containers for safe and sustainable construction. The firm offers a product that exceeds many standard building code requirements, and also supports developers, architects, builders and owners in achieving greener construction, faster execution, and stronger buildings of higher value. For more information, visit www.sgblocks.com.
Forward-Looking Statements
Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation those set forth in the Company's filings with the Securities and Exchange Commission. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.
Contact Information
Media
Rubenstein Public Relations
Kati Bergou
212-805-3014
kbergou@rubensteinpr.com
Investors
Jason Assad
678-570-6791
Jassad@sgblocks.com
Source: SG Blocks, Inc.
Released August 9, 2017