Safe & Green Holdings Corp. Reports 73% Revenue Decline and Significant Financial Challenges

Safe & Green Holdings Corp. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. The company generated total revenue of $3.93 million for the nine months ended September 30, 2024, a substantial decline of approximately 73% from $14.57 million during the same period in 2023. This decrease was primarily attributed to a reduction in construction services, resulting in a gross profit of $314,561, compared to a gross loss of $571,874 in the previous year. The operating loss for the nine months was $5.02 million, a notable improvement from a loss of $10.04 million in the prior year.

The company’s financial position has also changed markedly, with total assets decreasing from $17.21 million at the end of 2023 to $9.80 million as of September 30, 2024. This decline was driven by the deconsolidation of SG DevCorp, which resulted in a derecognition of $12.27 million in assets and $9.02 million in liabilities. The deconsolidation, which occurred when the company’s ownership in SG DevCorp fell below 50%, led to a gain of $4.73 million recognized in the income statement. As a result, the company’s stockholders’ equity fell to $(8.16 million) from $(6.33 million) at the end of 2023.

Operationally, Safe & Green Holdings has seen a decrease in its workforce and customer engagement metrics. The company reported a backlog of $1.92 million, indicating a potential for future revenue, although this is contingent on the successful execution of contracts. The company’s employee headcount has also been affected by the deconsolidation and restructuring efforts, which have led to a reduction in payroll and related expenses, down to $3.51 million from $5.42 million year-over-year.

Looking ahead, the company faces substantial liquidity challenges, with cash and cash equivalents totaling only $256,957 as of September 30, 2024, compared to $14,212 at the end of 2023. The company has indicated that it will need to secure additional financing to support its operations and growth initiatives, as it continues to experience negative operating cash flows. Management has expressed intentions to explore various funding options, including debt and equity capital, but acknowledges the uncertainty surrounding its ability to raise necessary funds in a timely manner. The outlook remains cautious, with the company emphasizing the need for strategic adjustments to its business plan if it cannot achieve cash flow positivity in the near future.