10-Q: Safe & Green Holdings Q3: Losses Mount Amid Acquisitions
Sentiment:
Quarterly Report
Safe & Green Holdings Corp. reports a significant net loss and negative working capital in its Q3 2025 filing, despite strategic acquisitions and a legal settlement.
Capital raiseThe company is exploring options for raising additional debt or equity capital as necessary to meet capital needs and fund future growth.The May 2024 Private Placement closed, yielding net proceeds of $3,590,386 from the sale of common stock and pre-funded warrants.The April 2025 Private Placement consummated, raising approximately $8 million from the sale of common stock and investor warrants, with net proceeds of $6,635,294 after fees.Entered into a Stock Purchase Agreement (ELOC Purchase Agreement) on May 29, 2025, with Generating Alpha Ltd. for up to $100 million in newly issued common stock, though no shares have been purchased as of September 30, 2025.The company's inability to currently utilize a short form registration statement on Form S-3 may impair its ability to obtain capital in a timely fashion.
Worse than expectedNet loss increased to $12,636,410 for the nine months ended September 30, 2025, from $12,094,545 in the prior year.Total revenue decreased by 41% for the nine months ended September 30, 2025.Gross profit turned into a significant gross loss of $(1,626,395) from a profit of $314,561 in the prior year, with gross margin dropping to (70)%.Operating loss increased to $(8,027,488) from $(5,021,927) in the prior year.Negative working capital of $19,635,275 as of September 30, 2025.Multiple notes payable are in default.A loss on conversion of notes payable of $4,915,209 was recognized.
Summary
- Net loss attributable to common stockholders for the nine months ended September 30, 2025, was $12,636,410, compared to $12,094,545 for the same period in 2024.
- Total revenue for the nine months ended September 30, 2025, decreased by approximately 41% to $2,338,870 from $3,932,592 in 2024, primarily due to fewer construction jobs.
- Gross loss for the nine months ended September 30, 2025, was $(1,626,395), a significant decline from a gross profit of $314,561 in 2024, with gross margin falling to (70)%.
- Operating loss for the nine months ended September 30, 2025, increased to $(8,027,488) from $(5,021,927) in 2024.
- Cash and cash equivalents increased to $3,021,757 as of September 30, 2025, from $375,873 as of December 31, 2024.
- Negative working capital of $19,635,275 as of September 30, 2025.
- The company received $2,000,000 from a legal settlement and $592,253 in employee retention tax credits during the nine months ended September 30, 2025.
- Completed acquisitions of New Asia Holdings, Inc. (NAHD), County Line Industrial LLC, and Sherman Oil Company LLC during 2025.
- Effected a 1-for-64 reverse stock split on September 8, 2025, following a 1-for-20 reverse stock split on May 2, 2024.
- Nasdaq granted continued listing conditioned on compliance by August 28, 2025, including a reverse stock split and restructuring of April 2025 warrants. The company regained compliance with the minimum bid price rule by October 3, 2025, but has not fully complied with all terms.
Sentiment
Score: 2
Explanation: The company faces severe financial distress, evidenced by increasing net losses, negative gross margins, negative working capital, and a going concern warning. While cash increased due to financing and a legal settlement, operational performance has significantly worsened, and Nasdaq listing remains precarious despite recent compliance with the bid price rule.
Positives
- Cash and cash equivalents significantly increased to $3,021,757 as of September 30, 2025, from $375,873 at December 31, 2024.
- Received $2,000,000 from a legal settlement with EDI International, PC.
- Recognized $592,253 in employee retention tax credits.
- Nasdaq Hearings Panel granted continued listing on the Nasdaq Capital Market, conditioned on compliance by August 28, 2025, and the company regained minimum bid price compliance by October 3, 2025.
- Completed strategic acquisitions of NAHD, County Line Industrial LLC, and Sherman Oil Company LLC, expanding into oil and gas and industrial services.
- Stockholders' equity improved to $24,935,557 as of September 30, 2025, from a deficit of $(12,460,308) as of December 31, 2024.
Negatives
- Net loss attributable to common stockholders for the nine months ended September 30, 2025, was $12,636,410, an increase from $12,094,545 in the prior year.
- Total revenue decreased by approximately 41% for the nine months ended September 30, 2025, to $2,338,870, primarily due to fewer construction jobs.
- Gross loss for the nine months ended September 30, 2025, was $(1,626,395), compared to a gross profit of $314,561 in the prior year, with gross margin decreasing to (70)%.
- Operating loss increased to $(8,027,488) for the nine months ended September 30, 2025, from $(5,021,927) in the prior year.
- Negative working capital of $19,635,275 as of September 30, 2025.
- The company has incurred losses since its inception and has negative operating cash flows, raising substantial doubt about its ability to continue as a going concern.
- Multiple notes payable are in default, including the July Cash Advance Agreement, Galvin Promissory Note, Note A, Note B, Note C, Note D, Note F, Note G, Note H, Note J, Note L, Generating Alpha, and GS Capital.
- Experienced a loss on conversion of notes payable of $4,915,209 during the nine months ended September 30, 2025.
- The company has undergone two significant reverse stock splits (1-for-20 in May 2024 and 1-for-64 in September 2025), indicating severe stock price depreciation and potential dilution concerns.
- Nasdaq had concerns regarding substantial dilution from the April 2025 securities issuance, leading to a discretionary delisting determination.
- The company has not fully complied with all terms and conditions outlined by the Nasdaq Hearings Panel for continued listing, specifically restructuring the Class B warrants.
- Significant customer concentration: 81% of revenue from one customer for the nine months ended September 30, 2025.
Risks
- Ability to continue as a going concern due to incurred losses, negative working capital ($19,635,275 as of September 30, 2025), and negative operating cash flows.
- Inability to obtain additional financing on acceptable terms or at all, which could force reduction in operating expenses, curtailment, or abandonment of business plans.
- Any equity financing would be dilutive to existing stockholders.
- Incurring debt would likely lead to restrictive covenants and asset encumbrances.
- Inability to currently utilize a short form registration statement on Form S-3 may impair ability to obtain capital in a timely fashion.
- Loss of one or a few significant customers could have a material adverse effect (81% of revenue from one customer for the nine months ended September 30, 2025).
- Backlog ($575,551 as of September 30, 2025) is not necessarily indicative of future revenues or earnings and is subject to cancellation, termination, or suspension at customers' discretion.
- Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies, and other factors beyond control may adversely impact business and operating results, including inflation.
- Failure to meet Nasdaq's continued listing requirements could result in delisting, negatively impacting stock price and ability to raise capital.
- The issuance of shares upon exercise of outstanding options, warrants, and restricted stock units may dilute percentage ownership of existing stockholders.
- Uncertainty regarding the ultimate resolution of ongoing legal proceedings (Pizzarotti, Farnam, Choctaw, Durant Industrial Authority, Rulien, Caliber, MDisrupt), with potential for material adverse effects.
- The company's independent registered public accounting firm has expressed doubt about its ability to continue as a going concern.
- The company has not completed its measurement period for recent acquisitions (NAHD, County Line, Sherman Oil), meaning provisional amounts are subject to adjustments.
Future Outlook
The company anticipates its current backlog of $575,571 to convert to revenue within one year (2025). It intends to meet capital needs from operations revenue, cost containment, strategic alliances, and potentially raising additional debt or equity capital. Management believes it will become cash flow positive in the second half of 2025. However, there is no assurance of successfully meeting capital requirements or securing additional funding, which could necessitate changes to or abandonment of its business plan. The company is assessing the impact of the One Big Beautiful Bill Act (OBBBA) on its financial statements.
Management Comments
- "We intend to meet our capital needs from revenue generated from operations and by containing costs, entering into strategic alliances, as well as exploring other options, including the possibility of raising additional debt or equity capital as necessary."
- "There is, however, no assurance we will be successful in meeting our capital requirements prior to becoming cash flow positive."
- "We are in the process of securing funding, which we believe will provide the needed working capital until we are cash flow positive, which we believe will be in the second half of 2025."
- "If we are unable to raise the necessary capital at the times we require such funding, we may need to materially change our business plan, including delaying implementation of aspects of such business plan or curtailing or abandoning such business plan altogether."
- "The Principal Executive Officer and the Principal Financial Officer believe that the condensed consolidated financial statements and other information contained in this Quarterly Report on Form 10-Q present fairly, in all material respects, our business, financial condition and results of operations."
Industry Context
The company operates in diverse segments including construction (modular structures), medical (modular technology for testing/treatment), oil and gas (acquiring and revitalizing underdeveloped energy assets, industrial IoT), and environmental (biomedical waste management). The expansion into oil and gas through acquisitions like Olenox and Machfu indicates a diversification strategy, potentially seeking growth in the energy sector, which is subject to commodity price volatility and environmental regulations. The construction segment, particularly modular, aligns with trends for faster, more sustainable building, but the company's declining construction revenue suggests challenges in this core area. The medical and environmental segments represent efforts to leverage modular technology and address waste management, tapping into healthcare infrastructure and sustainability trends. The overall financial performance, however, indicates significant internal challenges that overshadow potential industry tailwinds.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Paul Galvin (former CEO) | Michael McLaren | 2025-01-03 | Board of Directors approved appointment |
| Chief Operating Officer | Jim Pendergast | 2025-01-16 | Appointment | |
| Chief Financial Officer | Patricia Kaelin | 2023-05-01 | Annual base salary adjusted to $300,000, retroactive to May 1, 2023 |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Reverse Stock Split | Effected a 1-for-20 reverse stock split. | 2024-05-02 | Aimed to increase share price for Nasdaq compliance, but also resulted in significant share consolidation. |
| Reverse Stock Split | Effected a 1-for-64 reverse stock split. | 2025-09-08 | Further attempt to increase share price for Nasdaq compliance, indicating continued challenges with stock valuation and potential for further dilution. |
| Nasdaq Listing Compliance | Nasdaq Hearings Panel granted continued listing conditioned on maintaining full compliance by August 28, 2025, including a reverse stock split and restructuring of April 2025 warrants. The company regained minimum bid price compliance by October 3, 2025, but has not fully complied with all terms. | 2025-07-08 | Indicates ongoing regulatory scrutiny and the need for the company to address dilution concerns and other listing requirements to maintain its public trading status. |
| Preferred Stock Issuance | Series A and Series B Preferred Stock issued with specific dividend, voting, liquidation, and conversion rights, including conversion limitations and shareholder approval requirements for certain actions. | Introduces new classes of equity with specific rights that could influence corporate control and future capital structure, subject to shareholder approvals for conversions. |
Legal Proceedings
- Pizzarotti Litigation: Ongoing lawsuit filed August 10, 2018, alleging breach of contract. The company disputes claims and intends to vigorously defend. Cannot estimate potential loss.
- CPF GP 2019-1, LLC (CPF GP) Litigation: Settled in February 2024, with CPF GP agreeing to monthly payments totaling $745,000 to the company.
- Farnam Litigation: Ongoing suit filed October 2023 alleging breaches of a lease agreement. Settlement reached August 1, 2024, but disputes have arisen post-settlement. Cannot estimate potential loss beyond original $1.5 million included in accounts payable.
- American Express Litigation: AMEX filed suit in December 2023 for $232,218.94. Motion for Default Judgment granted September 19, 2024. Estimated potential loss of $232,000 included in accounts payable.
- Choctaw Litigation: Ongoing suit filed March 2024 against SG Echo, LLC and the Company for alleged breaches of a commercial lease and declaratory relief regarding crane ownership. Estimated potential loss of $138,000 included in accounts payable.
- Durant Industrial Authority Litigation: Ongoing suit filed November 2024 alleging breaches of a forgivable promissory note for $750,000, which DIA claims is no longer forgivable and has been accelerated. $750,000 included in short-term notes payable.
- Rulien Litigation: Ongoing suit filed March 2024 alleging breaches of a consulting agreement and seeking commissions. Cannot estimate potential loss.
- Caliber Litigation: Ongoing suit filed June 2024 alleging breaches of a consulting services agreement for $46,350. Cannot estimate potential loss.
- MDisrupt Litigation: Ongoing suit filed August 2024 against Safe and Green Medical Corporation and the Company for alleged breaches of a consulting services agreement for $183,901. Estimated potential loss of $183,901 included in accounts payable.
- SG Blocks, Inc. v. HOLA Community Partners, et. al.: Settled in December 2022, with all funds paid. Claims against settling parties dismissed.
- SG Blocks, Inc. v. EDI International, PC: Settled on September 11, 2025, with EDI paying the company $2,000,000.
- Teton Buildings, LLC: Claims against Teton settled via insurance carrier in December 2022.
- SG Blocks, Inc. v. Osang Healthcare Company, Ltd.: Settlement conference held March 14, 2023, granting the company $450,000.
Related Party Transactions
- Galvin Note Payable: Promissory note with Paul Galvin (Chairman and CEO) for $75,000 (plus an additional $10,000 note). Outstanding balance of $17,805 as of September 30, 2025, and is in default.
- Accrued Salary to Paul Galvin: Accrued approximately $450,000 for deferred salary due to Paul Galvin, former CEO.
- Acquisition Notes (NAHD): Acquired Note J, L, and M, which are due to related parties, totaling $3,124,727 as of September 30, 2025. Note J ($12,000 outstanding) is with a related party and in default. Note L ($909,006 outstanding) was assumed from the Chief Executive Officer.
- Olenox Operating Expenses: Certain shareholders and related parties paid operating expenses and outstanding bills on behalf of Olenox.
Stakeholder Impact
- Shareholders: Significant dilution from multiple reverse stock splits and potential future equity raises. Nasdaq delisting concerns could negatively impact share price and liquidity. Stockholders' equity improved, but net losses persist.
- Employees: Payroll and related expenses decreased, potentially indicating workforce adjustments. New CEO and COO appointments.
- Customers: Decreased construction services revenue due to "less jobs in progress" suggests reduced customer activity or project delays. Backlog is subject to cancellation.
- Suppliers/Creditors: Multiple notes payable are in default, indicating potential payment issues. Accounts payable and accrued expenses are high.
- Regulatory Authorities: Ongoing scrutiny from Nasdaq regarding listing compliance and dilution concerns.
Next Steps
- Convert anticipated backlog of $575,571 to revenue within one year (2025).
- Meet capital needs from revenue, cost containment, strategic alliances, and potentially raising additional debt or equity capital.
- Complete the measurement period for the NAHD, County Line, and Sherman Oil acquisitions.
- Address ongoing legal proceedings (Pizzarotti, Farnam, Choctaw, Durant Industrial Authority, Rulien, Caliber, MDisrupt).
- Fully comply with all terms and conditions outlined by the Nasdaq Hearings Panel, specifically restructuring the Class B warrants.
- Assess the impact of the One Big Beautiful Bill Act (OBBBA) on consolidated financial statements.
Key Dates
| Date | Description |
|---|---|
| 1993-12-29 | CDSI Holdings, Inc. incorporated in Delaware. |
| 2011-11-04 | CDSI Merger Sub, Inc. merged with SG Building Blocks, Inc. (SG Building), with SG Building surviving as a wholly-owned subsidiary. |
| 2022-12-01 | Company announced plan to separate SG DevCorp into two separate publicly traded companies. |
| 2023-02-01 | Entered into an agreement with The Peoples Health Care to deliver four Modules for medical services. |
| 2023-03-01 | Formed Safe and Green Medical Corporation. |
| 2023-03-15 | Complaint filed against John Williams Shaw and Leo Patrick Shaw for short swing profits. |
| 2023-09-27 | Distribution Date for pro rata distribution of SG DevCorp common stock to stockholders. |
| 2023-09-28 | SG DevCorp common stock began trading on Nasdaq Capital Market under symbol SGD. |
| 2023-10-03 | Stipulation and Order of Dismissal with Prejudice filed for John Williams Shaw and Leo Patrick Shaw litigation. |
| 2023-10-01 | Farnam Street Financial, Inc. (Farnam) filed suit against the Company. |
| 2023-12-14 | Company entered into a promissory note with Paul Galvin for $75,000. |
| 2023-12-01 | American Express Travel Related Services Company, Inc. (AMEX) filed suit against the Company. |
| 2024-01-01 | NAHD acquired Olenox Corp. and Machfu, Inc. |
| 2024-01-01 | Company's ownership in SG DevCorp fell below 50%, leading to deconsolidation. |
| 2024-01-01 | Company issued Peak Warrant #3 in connection with Holdings Debenture. |
| 2024-02-01 | CPF GP 2019-1, LLC (CPF GP) litigation settled. |
| 2024-03-01 | Choctaw Nation of Oklahoma filed suit against SG Echo, LLC and the Company. |
| 2024-03-05 | Company issued a promissory note to 1800 Diagonal Lending LLC. |
| 2024-04-01 | New York Supreme Court entered an order setting deposition dates for Pizzarotti litigation. |
| 2024-04-19 | Nasdaq notified the Company of non-compliance with Listing Rule 5250(c)(1) (timely filing). |
| 2024-05-02 | Company effected a 1-for-20 reverse stock split. |
| 2024-05-03 | Company entered into a Securities Purchase Agreement for a private placement. |
| 2024-05-07 | Private Placement closed, yielding $3,590,386 net proceeds. |
| 2024-05-10 | Nasdaq notified the Company of non-compliance with Rule 5550(a)(2) (minimum bid price). |
| 2024-05-13 | Nasdaq notified the Company of discretionary delisting determination due to April 2025 securities issuance. |
| 2024-05-13 | Company regained compliance with Rule 5250(c)(1) after filing Form 10-K and 10-K/A. |
| 2024-05-16 | Company regained compliance with Rule 5550(a)(2) (minimum bid price). |
| 2024-05-16 | Nasdaq notified the Company of non-compliance with Rule 5550(b)(1) (stockholders equity below $2.5 million). |
| 2024-06-01 | Caliber Corporate Advisers, LLC (Caliber) filed suit against the Company. |
| 2024-07-25 | Nasdaq granted an extension to regain compliance with Rule 5550(b)(1) until November 12, 2024. |
| 2024-07-31 | SG Building entered into a Cash Advance Agreement with Cedar Advance LLC. |
| 2024-08-01 | Company, SG Echo, and SG Environmental Solutions Corp. entered into a settlement agreement with Farnam. |
| 2024-08-01 | MDisrupt, Inc. filed suit against Safe and Green Medical Corporation and the Company. |
| 2024-08-27 | SG Building entered into a Cash Advance Agreement with Pawn Funding. |
| 2024-08-28 | Company issued a promissory note to 1800 Diagonal Lending LLC. |
| 2024-09-19 | AMEX's Motion for Default Judgment granted against the Company. |
| 2024-09-20 | SG Echo entered into a Loan and Security Agreement with Enhanced Capital Oklahoma Rural Fund, LLC. |
| 2024-11-01 | The Durant Industrial Authority (DIA) filed suit against the Company and SG Echo, LLC. |
| 2024-11-15 | Company received a jury verdict of $1.274 million in its favor against EDI International, PC. |
| 2024-12-12 | Nasdaq Staff notified the Company of non-compliance with Rule 5550(a)(2) (minimum bid price). |
| 2024-12-17 | SG Building entered into a Cash Advance Agreement with Cedar Advance LLC. |
| 2024-12-24 | SG Building entered into another Cash Advance Agreement with Cedar Advance LLC. |
| 2025-01-03 | Board of Directors approved appointment of Michael McLaren as CEO. |
| 2025-01-05 | Company entered into an employment agreement with Michael McLaren. |
| 2025-01-16 | Company appointed Jim Pendergast as COO. |
| 2025-01-22 | SG Building entered into a Cash Advance Agreement with Core Funding Source LLC. |
| 2025-01-22 | Company issued a promissory note to 1800 Diagonal Lending LLC. |
| 2025-01-29 | Company entered into a mutual release and discharge agreement with SG DevCorp. |
| 2025-02-02 | Company entered into Agreement and Plan of Merger with New Asia Holdings, Inc. (NAHD). |
| 2025-02-12 | Company executed and issued a Promissory Note to Firstfire Global Opportunities Fund, LLC. |
| 2025-02-13 | Closing conditions for NAHD Merger satisfied or waived, Preferred Shares issued. |
| 2025-02-17 | Company executed a Settlement Agreement and Release with Saddleback Roofing, Inc. |
| 2025-03-03 | Company executed and issued a Promissory Note to GS Capital Partners, LLC. |
| 2025-03-06 | Company closed and issued a promissory note to Tysadco Partners LLC. |
| 2025-03-27 | Company executed and issued a Promissory Note to Generating Alpha Ltd. |
| 2025-04-08 | Company entered into an asset purchase agreement with County Line Industrial LLC. |
| 2025-04-14 | Company consummated a private placement (April Private Placement). |
| 2025-05-28 | Company entered into an asset purchase agreement with Sherman Oil Company LLC. |
| 2025-05-29 | Company entered into a Stock Purchase Agreement (ELOC Purchase Agreement) with Generating Alpha Ltd. |
| 2025-06-03 | Olenox entered into a Promissory Note with Prosperity Bank. |
| 2025-06-10 | Deadline to regain compliance with Nasdaq Listing Rule 5550(a)(2) (minimum bid price) not met. |
| 2025-06-11 | Nasdaq notified the Company of ineligibility for a second 180-day period for bid price compliance. |
| 2025-06-17 | Nasdaq Hearings Panel hearing. |
| 2025-07-01 | Company issued 4,017 restricted shares of common stock for services. |
| 2025-07-04 | One Big Beautiful Bill Act (OBBBA) signed into law. |
| 2025-07-08 | Nasdaq Hearings Panel granted continued listing, conditioned on compliance by August 28, 2025. |
| 2025-07-17 | Company entered into an Exchange Agreement with Purchasers of April Private Placement. |
| 2025-07-31 | Company received exercise notices for 279,752 pre-funded warrants. |
| 2025-08-08 | End date for pre-funded warrant exercises. |
| 2025-08-28 | Deadline set by Nasdaq Hearings Panel to maintain full compliance with all continued listing requirements. |
| 2025-09-08 | Company effected a 1-for-64 reverse stock split. |
| 2025-09-11 | Company executed a settlement agreement with EDI International, PC for $2,000,000. |
| 2025-09-30 | End of the reporting period. |
| 2025-10-03 | Company regained compliance with Nasdaq Listing Rule 5550(a)(2) (minimum bid price). |
| 2025-10-01 | Company issued 528,625 shares of common stock from conversion of notes payable and 4,396,496 shares from conversion of preferred stock. |
| 2025-11-13 | Date of filing. |
Recommendation
strong sellThe company exhibits severe financial distress, marked by persistent and increasing net losses, a substantial negative working capital position, and a formal "going concern" warning from its auditors. Operational performance has deteriorated significantly, with a 41% revenue decline and a shift from gross profit to a deep gross loss. The company has resorted to multiple large reverse stock splits, which typically signal severe underlying issues and can erode shareholder confidence and liquidity. While recent acquisitions and a legal settlement provided a temporary cash infusion, the fundamental business operations are struggling, and numerous debt obligations are in default. The ongoing Nasdaq listing challenges, including discretionary delisting concerns due to dilution, add significant regulatory risk. Given the combination of poor financial health, high operational risk, and precarious market listing, the stock presents a high-risk profile with substantial downside potential.
Keywords
Modular construction, Oil and gas, Environmental solutions, SEC filing, 10-Q, Financial results, Going concern, Nasdaq delisting, Reverse stock split, Acquisitions, Debt default, Legal settlement, Working capital, SGBX
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