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SG Blocks Announces Second Quarter Financial Results

/EINPresswire.com/ -- 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.

   
   
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  
                                   
   
   
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  
                     
                     
       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     $ -  
   
   
 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
kbergou@rubensteinpr.com

Investors
Jason Assad
678-570-6791
Jassad@sgblocks.com