Exhibit 99.1 

SG Blocks Announces Second Quarter Financial Results

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

Operating Results for the Quarter Ended June 30, 2017:

·Total revenues increased 17% to $1,001,734 for the three months ended June 30, 2017, compared to $828,477 for the three month period ending June 30, 2016.
·Gross profit for the three months ended June 30, 2017 was $145,787 compared to $141,732 for the three month period ending June 30, 2016.

 

·GAAP net loss was $(1,705,672), or $(3.15) per basic and diluted share, for the three months ended June 30, 2017 with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017.
·Non-GAAP net loss was $318,998, or $ (0.59) per basic and diluted share, for the three months ended June 30, 2017, with 541,424 weighted average basic and diluted shares outstanding as of June 30, 2017. Reconciliations between net income, earnings per share and other measures on a GAAP and non-GAAP basis are provided in the tables located in the section entitled "Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss."
·As of June 30, 2017, the Company had $5,662,488 of cash and cash equivalents and short-term investments.

Paul Galvin, Chief Executive Officer of SG Blocks, stated, "It’s been a very busy quarter for us at SG Blocks. The recent public offering of our shares now traded on Nasdaq, resulting in net proceeds of approximately $7.2 million, has placed the Company on its strongest financial footing to date, with no debt and a clean capital structure. With a construction backlog of $9.7 million on June 30th, we are galvanized around our core as the first company to receive an ESR rating from the ICC, and we are driving growth with disciplined decisions, product leadership and focused execution.  We are very optimistic about the future, and we look forward to building atop recent operational momentum while driving towards measurable earnings growth.”

Galvin concluded, "I want to also take this opportunity to thank all of those who have supported us and helped get us where we are today. We are grateful and humbled by your support. Rest assured, we will continue to work diligently on your behalf as we focus on building shareholder value.”

Mahesh Shetty, Chief Financial Officer of SG Blocks, stated, “We have held the line on our operating expenses and look forward to expanding our margins as we execute on our pipeline.”

SG Blocks will host a corresponding conference call to discuss the results with Chief Executive Officer Paul Galvin and Chief Financial Officer Mahesh Shetty today at 4:30 PM ET/1:30 PM PT. To participate in the conference call, investors from the U.S. and Canada should dial (877) 407-9716 ten minutes prior to the scheduled start time. International callers should dial (201) 493-6779.

In addition, the call will be broadcast live over the Internet and can be accessed through the Investor Relations section of the Company's website at www.sgblocks.com. The broadcast will be archived online upon completion of the conference call. A telephonic replay of the conference call will also be available until 11:59 p.m. ET on Wednesday, August 23, 2017 by dialing (844) 512-2921 in the U.S. and Canada and (412) 317-6671 internationally and entering the pin number: 13668248.

 

 1 
 

SG BLOCKS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

  

For the Three Months Ended

June 30,

  

For the Six Months Ended

June 30,

 
  

Successor

2017

  

Predecessor

2016

  

Successor

2017

  

Predecessor

2016

 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenue:                
Construction revenue  $882,499   $801,692   $1,402,457   $1,004,216 
Engineering services   119,235    26,785    203,870    52,007 
Project management   -    -    -    - 
Total   1,001,734    828,477    1,606,327    1,056,223 
                     
Cost of revenue:                    
Construction revenue   738,860    664,848    1,133,026    816,076 
Engineering services   117,087    21,897    174,285    43,898 
Project management   -    -    -    - 
Total   855,947    686,745    1,307,311    859,974 
                     
Gross profit   145,787    141,732    299,016    196,249 
                     
Operating expenses:                    
Payroll and related expenses   292,550    200,318    635,598    367,254 
General and administrative expenses   330,118    432,249    724,059    557,069 
Marketing and business development expense   37,618    12,877    66,186    22,729 
Pre-project expenses   7,508    22,233    16,647    26,411 
Total   667,794    667,677    1,442,490    973,463 
                     
Operating loss   (522,007)   (525,945)   (1,143,474)   (777,214)
                     
Other income (expense):                    
Interest expense   (165,194)   (265,253)   (330,388)   (429,017)
Interest income   4    5    8    8 
Loss on conversion of convertible debentures   (1,018,475)   -    (1,018,475)   - 
Change in fair value of financial instruments   -    -    96,327    - 
Total   (1,183,665)   (265,248)   (1,252,528)   (429,009)
                     
Net loss before reorganization items   (1,705,672)   (791,193)   (2,396,002)   (1,206,223)
                     
Reorganization items:                    
Legal and professional fees   -    (80,239)   -    (171,893)
Gain on reorganization   -    713,379    -    713,379 
Total   -    633,140    -    541,486 
                     
Net loss  $(1,705,672)  $(158,053)  $(2,396,002)  $(664,737)
                     
Net loss per share - basic and diluted:                    
Basic and diluted  $(3.15)  $0.00   $(6.75)  $(0.01)
                     
Weighted average shares outstanding:                    
Basic and diluted   541,424    42,918,927    354,703    42,918,927 

 

 2 
 

 

SG BLOCKS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,
2017
  

December 31,

2016

 
    (Unaudited)      
Assets          
Current assets:          
Cash and cash equivalents  $5,632,463   $549,100 
Short-term investment   30,025    30,017 
Accounts receivable, net   97,441    234,518 
Costs and estimated earnings in excess of billings on uncompleted contracts   258,149    33,349 
Prepaid expenses   317,344    124,720 
Inventory   -    9,445 
Total current assets   6,335,422    981,149 
Equipment, net   4,180    5,559 
Goodwill   4,162,173    4,162,173 
Intangible assets, net   3,322,879    3,587,250 
           
Totals  $13,824,654   $8,736,131 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $1,444,068   $350,772 
Billings in excess of costs and estimated earnings on uncompleted contracts   439,191    48,478 
Deferred revenue   -    72,788 
Conversion option liabilities   -    384,461 
Total current liabilities   1,883,259    856,499 
Convertible debentures, net of discounts   -    2,446,337 
Total liabilities   1,883,259    3,302,836 
           
Commitments and Contingencies          
           
Stockholders’ equity:          
Preferred stock, $1.00 par value, 5,405,010 shares authorized; 0 issued and outstanding as of June 30, 2017 and 1,801,670 issued and outstanding as of December 31, 2016   -    1,801,670 
Common stock, $0.01 par value, 300,000,000 shares authorized; 3,982,238 issued and outstanding as of June 30, 2017 and 163,901 issued and outstanding as of December 31, 2016   39,823    1,639 
Additional paid-in capital   15,604,150    4,936,562 
Accumulated deficit   (3,702,578)   (1,306,576)
Total stockholders’ equity   11,941,395    5,433,295 
           
Totals  $13,824,654   $8,736,131 

 

 3 
 

 

 

SG BLOCKS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  

Successor

For the Six Months Ended
June 30,
2017

  

Predecessor

For the Six Months Ended
June 30,
2016

 
    (Unaudited)    (Unaudited) 
Cash flows from operating activities:          
Net loss  $(2,396,002)  $(664,737)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation expense   1,379    1,629 
Amortization of debt issuance costs   -    5,204 
Amortization of discount on convertible debentures   330,388    387,965 
Amortization of intangible assets   293,191    - 
Interest income on short-term investment   (8)   (8)
Loss on conversion of convertible debentures   1,018,475    - 
Change in fair value of financial instruments   (96,327)   - 
Interest expense on debtor in possession financing   -    35,848 
Gain on reorganization   -    (713,379)
Stock-based compensation   209,383    119,146 
Changes in operating assets and liabilities:          
Accounts receivable   137,077    (104,858)
Cost and estimated earnings in excess of billings on uncompleted contracts   (224,800)   - 
Prepaid expenses   (192,624)   (28,589)
Inventory   9,445    118,011 
Intangible assets   (28,820)   - 
Accounts payable and accrued expenses   378,123    269,317 
Accounts payable and accrued expenses – subject to compromise   -    (22,457)
Related party accounts payable and accrued expenses   -    (163,522)
Billings in excess of costs and estimated earnings on uncompleted contracts   390,713    14,650 
Deferred revenue   (72,788)   (87,115)
Net cash used in operating activities   (243,195)   (832,895)
           
Cash flows provided by investing activities:          
Security deposit refund   -    2,700 
Net cash provided by investing activities   -    2,700 
           
Cash flows from financing activities:          
Proceeds from issuance of convertible debentures   -    1,319,001 
Proceeds from public stock offering, net of offering costs   6,826,558    - 
Payments on convertible debentures   (1,500,000)   - 
Net cash provided by financing activities   5,326,558    1,319,001 
           
Net increase in cash and cash equivalents   5,083,363    488,806 
           
Cash and cash equivalents - beginning of period   549,100    466,997 
           
Cash and cash equivalents - end of period  $5,632,463   $955,803 
           
Supplemental disclosure of cash flow information:          
Cash paid during the period for:          
Interest  $-   $- 
Supplemental disclosure of non-cash financing activities:          
Conversion of debtor in possession financing to convertible debentures  $-   $600,000 
Conversion of convertible debentures to common stock  $2,583,334   $- 
Conversion of preferred stock to common stock  $1,801,670   $- 
Offering costs not paid and included in accounts payable and accrued expenses  $715,173   $- 

 

 

 4 
 

 

SG BLOCKS, INC. AND SUBSIDIARIES

Reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss

 

  

Six Months Ended June 30,

2017

  

Three Months Ended June 30,

2017

 
Net loss  $(2,396,002)  $(1,705,672)
Addback interest expense   330,388    165,194 
Addback depreciation and amortization   294,570    148,005 
EBITDA (non-GAAP)   (1,771,044)   (1,392,473)
           
    Addback loss on conversion of convertible debentures   1,018,475    1,018,475 
    Less change in fair value of financial instruments   (96,327)   - 
    Addback stock compensation expense   209,383    55,000 
Adjusted EBITDA (non-GAAP)  $(639,513)  $(318,998)

About SG Blocks, Inc.

SG Blocks, Inc. is a premier innovator in advancing and promoting the use of code-engineered cargo shipping containers for safe and sustainable construction. The firm offers a product that exceeds many standard building code requirements, and also supports developers, architects, builders and owners in achieving greener construction, faster execution, and stronger buildings of higher value. For more information, visit www.sgblocks.com.

Forward-Looking Statements

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

 

Contact Information

Media

Rubenstein Public Relations

Kati Bergou

212-805-3014

Email Contact

Investors

Jason Assad

678-570-6791

Email Contact

 

 5