Humble Beginnings and Rapid Growth

Safe & Green Holdings Corp. (NASDAQ: SGBX) is a leading developer, designer, and fabricator of modular structures, offering innovative solutions that are reshaping the construction industry. With a rich history spanning over a decade, the company has established itself as a trailblazer in the realm of sustainable and efficient building practices.

Safe & Green Holdings, previously known as SG Blocks, Inc., was incorporated on December 29, 1993, as CDSI Holdings, Inc. The company's current form took shape on November 4, 2011, when CDSI Merger Sub, Inc., a wholly-owned subsidiary, merged with SG Building Blocks, Inc. This reverse merger was accounted for as a recapitalization of SG Building, which became the accounting acquirer and a wholly-owned subsidiary of the company.

The company operates in four distinct segments: construction, medical, real estate development, and environmental. In the construction segment, Safe & Green Holdings designs and constructs modular structures using Made-in-America raw materials in its factories. The medical segment leverages the company's modular technology to provide turnkey solutions for medical testing and treatment, generating revenue from these services.

The real estate development segment, through the company's majority-owned subsidiary SG DevCorp, focuses on building innovative and green single or multi-family projects in underserved regions across the nation. By utilizing modules built in one of the company's vertically integrated factories, SG DevCorp streamlines the construction process and delivers cost-effective, sustainable housing solutions.

The environmental segment, the newest addition to the company's portfolio, offers a sustainable medical and waste management solution. This segment features patented technology for collecting and treating waste for safe disposal, further demonstrating the company's commitment to sustainability and innovation.

In 2020, Safe & Green Holdings made a strategic move to enhance its manufacturing capabilities by forming SG Echo, LLC, a wholly-owned subsidiary. SG Echo acquired substantially all the assets of Echo DCL, a Texas-based container-modular manufacturer specializing in the design and construction of permanent and temporary modular buildings. This acquisition allowed the company to expand its reach for modules and vertically integrate a significant portion of its cost of goods sold, leading to increased margins, productivity, and efficiency in design, estimating, manufacturing, and delivery.

The year 2021 marked another significant milestone for the company with the formation of Safe and Green Development Corporation (formerly SG Development Corp.) as a wholly-owned subsidiary focused on real property development utilizing the company's technologies. However, in 2024, the company's ownership in SG DevCorp fell below 50%, resulting in the deconsolidation of SG DevCorp from its financial statements. This strategic shift had a major impact on the company's operations and financial results, reflecting its adaptability to changing market conditions and business priorities.

Financial Performance and Liquidity Challenges

Safe & Green Holdings' financial performance has been marked by both successes and challenges. In the fiscal year 2023, the company reported total revenue of $16.52 million, a decrease from the previous year's $24.39 million. The net loss for the year stood at $26.28 million, compared to a net loss of $8.32 million in the prior year. The company's annual operating cash flow for 2023 was negative $7.14 million, with a free cash flow of negative $7.84 million.

The challenges continued into 2024, with the company reporting total revenue of $3.93 million for the nine months ended September 30, 2024, a significant decrease of 73% compared to the prior year period. This decrease was mainly driven by a reduction in revenues from construction services due to fewer jobs in progress. For the same period, the company reported a gross profit loss of $314,560 and a net loss attributable to common stockholders of $11.51 million.

The most recent quarter (Q3 2024) saw revenue of $1.75 million and a net loss of $3.72 million. The decrease in revenue and net income was primarily due to a decrease in construction services and project delays.

The company's liquidity position has also been a concern, with cash and cash equivalents amounting to $256,960 as of September 30, 2024. This has resulted in the company reporting negative working capital and raising substantial doubt about its ability to continue as a going concern. The company's debt-to-equity ratio stood at -0.84, with a current ratio of 0.15 and a quick ratio of 0.10 as of Q3 2024, indicating significant liquidity challenges.

To address these financial challenges, Safe & Green Holdings has been exploring strategic options, including securing additional financing and cost-cutting initiatives. In 2024, the company completed a warrant inducement transaction, generating $2.4 million in gross proceeds, which has strengthened its balance sheet and provided the necessary working capital to fuel its ongoing growth initiatives.

Operational Highlights and Strategic Partnerships

Despite the financial headwinds, Safe & Green Holdings has continued to demonstrate its operational prowess. In 2024, the company successfully completed two substantial projects for a long-time customer, a large contractor to a U.S. government agency. These contracts, totaling 45 container-style office units, highlighted the company's rapid production capabilities, high-quality manufacturing, and commitment to timely delivery.

The company's key products include GreenSteel modules, which form the structural core and shell of its buildings, as well as fully fabricated and finished modular buildings. Safe & Green Holdings also provides engineering and project management services, serving customers in various industries, including office, hotel/hospitality, and government sectors.

In February 2023, the company entered into an agreement to deliver four modules to provide medical services to union members in Glendale, California. The following month, Safe Green Medical Corporation was formed to focus on the medical segment, with the objective of establishing a national presence with various clinics and labs.

Furthermore, the company has forged strategic partnerships that have expanded its reach and capabilities. In 2025, Safe & Green Holdings announced the execution of a binding Letter of Intent to acquire 100% of the outstanding securities of New Asia Holdings Inc. (OTCQB: NAHD), which includes Olenox Corp., a diversified energy company, and Machfu.com, a leader in the energy and industrial IoT sectors. This transformative acquisition is poised to introduce game-changing innovations and drive long-term shareholder value.

Recent Developments and Future Outlook

Safe & Green Holdings has continued to make strides in 2025, further strengthening its financial position and operational capabilities. The company has secured a favorable legal judgment against EDI International, PC, and PVE, LLC, awarding the company $1.27 million in damages, which underscores its commitment to protecting its interests and ensuring fairness for its shareholders.

Additionally, the company has announced the appointment of Michael McLaren as its new Chief Executive Officer, bringing over 30 years of leadership experience in the energy industry. This strategic move is expected to elevate Safe & Green Holdings' focus on innovation, sustainability, and long-term growth.

Looking ahead, the company's future outlook remains promising, as it continues to capitalize on the growing demand for modular construction solutions and its expanding presence in the medical and real estate development sectors. As of September 30, 2024, the company reported a backlog of $1.92 million, indicating potential for future revenue generation.

Safe & Green Holdings primarily operates in the United States, focusing on four main segments: construction, medical, real estate development, and environmental. The construction segment, which previously relied on third-party suppliers, has gained more control over the manufacturing process since the acquisition of Echo DCL, LLC in September 2020. This has allowed the company to increase its product offerings to include modules made out of wood.

The medical segment has shown promise, with the company selling and leasing medical suites and privacy pods in addition to providing turnkey solutions for medical testing and treatment. The formation of Safe Green Medical Corporation in 2023 demonstrates the company's commitment to expanding its presence in this sector.

While the real estate development segment, operated through SG DevCorp, has been deconsolidated from the company's financial statements due to reduced ownership, Safe & Green Holdings continues to account for its investment in SG DevCorp using the equity method. This strategic shift allows the company to maintain a stake in the real estate development sector while focusing on its core operations.

The environmental segment, represented by SG Environmental Solutions Corp., is focused on biomedical waste removal using patented technology. This innovative approach to waste management aligns with the company's overall commitment to sustainability and environmental responsibility.

With a focus on strategic partnerships, operational excellence, and prudent financial management, Safe & Green Holdings is poised to navigate the challenges and seize the opportunities that lie ahead, ultimately delivering value to its shareholders. The company's diverse portfolio of services and products, combined with its commitment to innovation and sustainability, positions it well to capitalize on the growing demand for modular and environmentally friendly construction solutions in the coming years.