Business Wire | Nov 19, 2020 04:05PM EST

SG Blocks Reports Third Quarter 2020 Financial Results

Nov. 19, 2020

BROOKLYN, N.Y.--(BUSINESS WIRE)--Nov. 19, 2020--SG Blocks, Inc. (Nasdaq: SGBX) ("SG Blocks" or the "Company"), a leading designer, innovator and fabricator of container-based structures, reported its financial results for the third quarter ending September 30, 2020.

"The third quarter was a strong quarter for SG Blocks, as we accelerated our momentum from the first half of the year," stated Paul Galvin, SG Blocks' Chairman and Chief Executive Officer. "Importantly, in addition to a growing pipeline of active and pending projects, we were extremely pleased to execute our agreement to acquire the assets of ECHO DCL, with the right of first refusal to acquire the building and land. ECHO DCL-re-named SG Echo-offers us an opportunity to vertically integrate a large portion of our supply chain, giving us better control of inventory and production, while allowing for better margins, productivity and efficiency for design, engineering, manufacturing and delivery.

"We announced strong activity across all of our major verticals during the quarter. Major announcements included our partnership with Clarity Lab Solutions to deliver CLIA-certified laboratories to facilitate on site COVID testing utilizing our exclusive distribution rights to OSANG's GeneFinderTM test kits. Demand for these facilities is booming, and we have announced projects to deliver modular labs in Boca Raton, Florida, at Los Angeles Airport, and to Memorial Healthcare in Wayne County, Michigan. Additionally, our joint venture partnership, Clarity Mobile Venture, was one of the approved TTP providers for state mandated testing and diagnostic services in order to by-pass the 14-day quarantine for passengers arriving in Hawaii. In our commercial vertical, we partnered with Grimshaw to create and deliver modular units for educational systems to help alleviate the current strain on existing space due to the impact of COVID-19, and subsequent to quarter end, we announced a partnership with Blink, a leader in electric vehicle charging equipment, to deploy charging stations nationwide."

Mr. Galvin concluded, "Amid great uncertainty in 2020, we are thriving because of the durability and innovative design of our products, and the speed and efficiency with which we can deploy our finished boxes. We have spent many years building a strong foundation, and I believe we are now positioned to benefit from growing project activity that should drive increased earnings and cash flow through year end and into 2021. I would like to thank the entire SG Blocks team for all of your hard work and dedication this year."

Third Quarter 2020 and Subsequent Operational Highlights:

At September 30, 2020, the Company had 17 projects under contract, compared to 12 projects under contract at June 30, 2020. At September 30, 2020, the construction backlog was approximately $24.9 million, as compared to $17.3 million as of June 30, 2020.

In the health care vertical:

* On August 27th, the Company formed a joint venture with Clarity Lab Solutions, based in Boca Raton, Florida.

* On September 23rd, in a substantial vertical integration, SG Blocks acquired the assets of modular factory Echo DCL. The Company also has the right of first refusal to acquire the factory building and 19-acre parcel located in Durant, Oklahoma. This facility will provide the ability to build the majority of the medical structures, and represents a significant step in vertical integration to better control cost of goods sold and provide better efficiency.

* On September 25th, SG Blocks announced it would partner with the Los Angeles World Airport ("LAWA") to establish an operational Covid D Tec Lab at Los Angeles Airport ("LAX"). On October 16th, testing services began inside three terminals at LAX.

Subsequent to quarter end, the Company announced:

* On October 19th, SG Blocks and OSANG Healthcare announced a Managed Covid Test Supply Agreement and Purchase Order for 2 million Covid PCR tests being stored in Southern California.

* On October 30th, SG Blocks and Grimshaw announced its D Tec product was selected by CBS's coveted "New York by Design" competition commencing in November 2020.

* On November 16th, SG Blocks' subsidiary, Clarity Mobile Venture announced it had been selected as a Trusted Testing Partner approved by the State of Hawaii for their comprehensive Travel Testing program to and from California.

* On November 19, SG Blocks announced that the Company has been selected by Memorial Healthcare, in Wayne County, Michigan, to provide a full service modular testing and lab facility network aimed at reducing the spread of COVID-19. Under the contract, Wayne County will provide a capital grant of $2.7mm million to SG Blocks deliver 4 D-Tec 1 units and a central scalable D-Tec 5 hub. The D-Tec 1 units will be deployed throughout the county and will provide sample extraction and lab services, with the capacity to process up to 7,000 tests per eight-hour shift.

Within the Commercial and Residential verticals, the Company:

* Advanced a contract worth approximately $4.0 million for a hospitality project in the Everglades, anticipated to be completed by second quarter 2021.

* Executed a $2.9 million contract for a series of buildings in New Mexico, which will be substantially complete in calendar year 2020.

* Commenced the site work by SG Residential on Monticello Mews which is 6 buildings and 300 units of workforce housing, under license agreement in the Catskills, New York.

* Advanced its "Mo Living" prototype in the mobile hospitality vertical, to build affordable homes through a partnership with RhoHouse.

Subsequent to quarter end, the Company announced:

* An agreement with BLINK for the design and delivery of unique electric vehicle charging solutions.

Third Quarter 2020 Financial Results:

* Revenue of approximately $575,000 in the third quarter, as compared to approximately $184,000 in the third quarter 2019.

* Gross profit of approximately $194,000 in the third quarter 2020, as compared to gross loss of approximately $182,000 in the third quarter 2019. Gross profit margin was 34% for the third quarter 2020.

* Operating expenses of approximately $1,720,000 in the third quarter 2020, as compared to approximately $1,091,000 in the third quarter 2019. The increase in operating expenses was primarily driven by higher payroll and related expenses, and higher G&A expenses related to legal and consulting expenses, , partially offset by lower marketing and business development expenses.

* Net loss of approximately $1,478,000 in the third quarter 2020, or $(0.17) per basic and diluted share, as compared to a net loss of approximately $1,325,000, or $(4.66) per basic and diluted share, in the third quarter 2019.

* Adjusted EBITDA loss of approximately $1,024,000 in the third quarter 2020, as compared to a loss of approximately $1,092,000 in the third quarter 2019. (See below for further discussion about the presentation of Adjusted EBITDA, a non-GAAP financial measurement).

* Total assets at September 30, 2020 were approximately $26.3 million, as compared to approximately $6.6 million at December 31, 2019.

* Cash and cash equivalents at September 30, 2020 totaled approximately $13.0 million, as compared to approximately $1.6 million at December 31, 2019.

Further details about the Company's results will be available in its Quarterly Report on Form 10-Q, accessible in the investor relations section of the Company's website at www.sgblocks.com and through the U.S. Securities and Exchange Commission's website.

Conference Call Information

SG Blocks' Chief Executive Officer, Paul Galvin, and Acting Chief Financial Officer, Gerald Sheeran, will host a listen-only conference call today, November 19, 2020, at 4:30 p.m. eastern time. The conference call will be broadcast live and available for replay at the investor relations section of the Company's website at www.sgblocks.com. Please call the conference telephone number 5-10 minutes prior to the start time; an operator will register your name and organization.

To access the call, please use the following information:

Date: November 19, 2020

Time: 4:30 p.m. ET

Toll-free dial-in number: 1-855-327-6837

International dial-in number: 1-631-891-4304

Conference ID: 10011924

To access the replay, please use the following information

Toll-free replay number: 1-844-512-2921

International replay number: 1-412-317-6671

Replay ID: 10011924

Use of Non-GAAP Financial Information

In addition to its results under GAAP, the Company presents EBITDA and Adjusted EBITDA for historical periods. EBITDA and Adjusted EBITDA are non-GAAP financial measures and have been presented as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. The Company calculates EBITDA as net income (loss) before interest expense, income tax benefit (expense), depreciation and amortization. It calculates Adjusted EBITDA as EBITDA before certain non-recurring adjustments such stock-based compensation expense. EBITDA and Adjusted EBITDA are presented because they are important metrics used by management as one of the means by which it assesses the Company's financial performance. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company's industry. These measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing the Company and its results of operations.

EBITDA and Adjusted EBITDA have certain limitations. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), or any other measures of financial performance derived in accordance with GAAP. These measures also should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items for which these non-GAAP measures make adjustments. Additionally, EBITDA and Adjusted EBITDA are not intended to be liquidity measures because of certain limitations, including, but not limited to: i) they do not reflect the Company's cash outlays for capital expenditures; They do not reflect changes in, or cash requirements for, working capital; and Although depreciation and amortization are non-cash charges, the assets are being depreciated and amortized and may have to be replaced in the future, and these non-GAAP measures do not reflect cash requirements for such replacements.

The non-GAAP information should be read in conjunction with the Company's consolidated financial statements and related notes.

The following is a reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss:

In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same or similar to some of the adjustments made in our calculations, and our presentation of EBITDA and Adjusted EBITDA should not be construed to mean that our future results will be unaffected by such adjustment. Management compensates for these limitations by using EBITDA and Adjusted EBITDA as supplemental financial metrics and in conjunction with our results prepared in accordance with GAAP. The non-GAAP information should be read in conjunction with our consolidated financial statements and related notes.

The following is a reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss:

Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September September September September 30, 2020 30, 2019 30, 2020 30, 2019

Net loss $ (1,478,273 ) $ (1,325,469 ) $ (3,063,673 ) $ (2,787,913 )

Addbackinterest 2,614 - 8,877 -expense

Addbackinterest (27,401 ) - (38,497 ) -income

Addbackdepreciation 47,488 38,677 142,290 117,540andamortization

EBITDA (1,455,572 ) (1,286,792 ) (2,951,003 ) (2,670,373 )(non-GAAP)

Addback losson asset 1,012 52,039 1,012 52,039disposal

Addbacklitigation 127,205 - 395,045 -expense

Addback stockcompensation 303,169 142,777 471,683 482,139expense

AdjustedEBITDA $ (1,024,186 ) $ (1,091,976 ) $ (2,083,263 ) $ (2,136,195 )(non-GAAP)

About SG Blocks:

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. Each project starts with GreenSteelTM, the structural core and shell of an SG Blocks building, and then customized to client specifications. For more information, visit www.sgblocks.com.

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions and includes statements such as being positioned to benefit from growing project activity that should drive increased earnings and cash flow through year end and into 2021, completing a $4.0 million hospitality project in the Everglades by second quarter 2021 and substantially completing a $2.9 million contract for a series of buildings in Pueblo, Colorado.. These forward-looking statements are based on management's expectations and assumptions as of the date of this press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the Company's ability to benefit from growing project activity and drive increased earnings and cash flow through year end and into 2021, the Company's ability to complete its $4.0 million hospitality project in the Everglades as scheduled, the Company's ability to substantially completing its $2.9 million contract for a series of buildings in Pueblo, Colorado as scheduled, the Company's ability to position itself for future profitability, the Company's ability to maintain compliance with the NASDAQ listing requirements, and the other factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, December 31, 2020 2019

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 13,047,565 $ 1,625,671

Accounts receivable, net 4,337,020 1,101,185

Contract assets 151,230 106,015

Inventories 812,320 -

Prepaid expenses and other current assets 270,481 73,938

Total current assets 18,618,616 2,906,809



Property, plant and equipment, net 1,729,920 11,747

Goodwill 1,223,520 1,223,520

Right-of-use asset 1,624,194 -

Long-term note receivable 673,185 -

Intangible assets, net 2,293,681 2,298,805

Deferred contract costs, net 163,140 193,730

Total Assets $ 26,326,256 $ 6,634,611



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses $ 1,990,993 $ 2,105,505

Contract liabilities 2,860,730 168,957

Earnout liability 752,559 -

Lease liability, current maturities 331,905 -

Other current liabilities 5,000 -

Total current liabilities 5,941,187 2,274,462

Lease liability, net of current maturities 1,292,289 -

Total liabilities 7,233,476 2,274,462

Commitments and contingencies - -



Stockholders' equity:

Preferred stock, $1.00 par value, 5,405,010shares authorized; none issued or - - outstanding

Common stock, $0.01 par value, 25,000,000shares authorized; 8,596,189 issued andoutstanding as of September 30, 2020 and 85,962 11,579 1,157,890 issued and outstanding as ofDecember 31, 2019

Additional paid-in capital 39,654,308 21,932,387

Accumulated deficit (20,647,490 ) (17,583,817 )

Total stockholders' equity 19,092,780 4,360,149

Total Liabilities and Stockholders' Equity $ 26,326,256 $ 6,634,611

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

For the Three Months Ended September 30,

For the Three Months Ended September 30,

For theNine Months Ended September 30,

For theNine Months Ended September 30,

2020

2019

2020

2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue:

Construction services

$

494,330

$

187,895

$

1,118,197

$

2,521,139

Engineering services

82,230

(3,369

)

286,068

126,419

Total

576,560

184,526

1,404,265

2,647,558

Cost of revenue:

Construction services

311,002

391,494

576,121

1,986,394

Engineering services

70,952

(24,711

)

213,324

31,998

Total

381,954

366,783

789,445

2,018,392

Gross profit (loss)

194,606

(182,257

)

614,820

629,166

Operating expenses:

Payroll and related expenses

679,863

548,156

1,344,009

1,832,333

General and administrative expenses

980,773

478,726

2,238,837

1,318,390

Marketing and business development expense

46,650

63,016

109,887

194,591

Pre-project expenses

12,650

1,275

37,650

19,726

Total

1,719,936

1,091,173

3,730,383

3,365,040

Operating loss

(1,525,330

)

(1,273,430

)

(3,115,563

)

(2,735,874

)

Other income (expense):

Loss on asset disposal

(1,012

)

(52,039

)

(1,012

)

(52,039

)

Interest expense

(2,614

)

-

(8,877

)

-

Interest income

27,401

-

38,497

-

Other income

23,282

-

23,282

-

Total

47,057

(52,039

)

51,890

(52,039

)

Loss before income taxes

(1,478,273

)

(1,325,469

)

(3,063,673

)

(2,787,913

)

Income tax expense

-

-

-

-

Net loss

$

(1,478,273

)

$

(1,325,469

)

$

(3,063,673

)

$

(2,787,913

)

Net loss per share - basic and diluted:

Basic and diluted

$

(0.17

)

$

(4.66

)

$

(0.60

)

$

(11.29

)

Weighted average shares outstanding:

Basic and diluted

8,596,189

284,737

5,070,816

246,927

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

For the For the For the For the Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September September September September 30, 30, 30, 30,

2020 2019 2020 2019

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue:

Construction services $ 494,330 $ 187,895 $ 1,118,197 $ 2,521,139

Engineering services 82,230 (3,369 ) 286,068 126,419

Total 576,560 184,526 1,404,265 2,647,558



Cost of revenue:

Construction services 311,002 391,494 576,121 1,986,394

Engineering services 70,952 (24,711 ) 213,324 31,998

Total 381,954 366,783 789,445 2,018,392



Gross profit (loss) 194,606 (182,257 ) 614,820 629,166



Operating expenses:

Payroll and related 679,863 548,156 1,344,009 1,832,333 expenses

General andadministrative 980,773 478,726 2,238,837 1,318,390 expenses

Marketing andbusiness development 46,650 63,016 109,887 194,591 expense

Pre-project expenses 12,650 1,275 37,650 19,726

Total 1,719,936 1,091,173 3,730,383 3,365,040



Operating loss (1,525,330 ) (1,273,430 ) (3,115,563 ) (2,735,874 )



Other income (expense):

Loss on asset (1,012 ) (52,039 ) (1,012 ) (52,039 )disposal

Interest expense (2,614 ) - (8,877 ) -

Interest income 27,401 - 38,497 -

Other income 23,282 - 23,282 -

Total 47,057 (52,039 ) 51,890 (52,039 )



Loss before income (1,478,273 ) (1,325,469 ) (3,063,673 ) (2,787,913 )taxes

Income tax expense - - - -



Net loss $ (1,478,273 ) $ (1,325,469 ) $ (3,063,673 ) $ (2,787,913 )



Net loss per share - basic and diluted:

Basic and diluted $ (0.17 ) $ (4.66 ) $ (0.60 ) $ (11.29 )



Weighted average shares outstanding:

Basic and diluted 8,596,189 284,737 5,070,816 246,927

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

$0.01 Par ValueCommon Stock

AdditionalPaid-in

Accumulated

TotalStockholders'

Shares

Amount

Capital

Deficit

Equity

Balance at June 30, 2020

8,596,189

$

85,962

$

39,351,139

$

(19,169,217

)

$

20,267,884

Stock-based compensation

-

-

303,169

-

303,169

Conversion of restricted stock units to common stock

-

-

-

-

-

Conversion of debt exchange to common stock

-

-

-

-

-

Issuance of common stock, net of issuance costs

-

-

-

-

-

Net loss

-

-

-

(1,478,273

)

(1,478,273

)

Balance at September 30, 2020

8,596,189

$

85,962

$

39,654,308

$

(20,647,490

)

$

19,092,780

Balance at December 31, 2019

1,157,890

$

11,579

$

21,932,387

$

(17,583,817

)

$

4,360,149

Stock-based compensation

-

-

471,683

-

471,683

Conversion of restricted stock units to common stock

24,672

246

(246

)

-

-

Reverse stock split settlement

(38

)

-

(122

)

-

(122

)

Conversion of debt exchange to common stock

73,665

737

205,526

-

206,263

Issuance of common stock, net of issuance costs

7,340,000

73,400

17,045,080

-

17,118,480

Net loss

-

-

-

(3,063,673

)

(3,063,673

)

Balance at September 30, 2020

8,596,189

$

85,962

$

39,654,308

$

(20,647,490

)

$

19,092,780

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders' Equity(Unaudited)

$0.01 Par Value Accumulated Total Common Stock Additional Stockholders' Paid-in

Shares Amount Capital Deficit Equity

Balance atJune 30, 8,596,189 $ 85,962 $ 39,351,139 $ (19,169,217 ) $ 20,267,884 2020

Stock-based - - 303,169 - 303,169 compensation

Conversionofrestricted - - - - -stock unitsto commonstock

Conversionof debt - - - - -exchange tocommon stock

Issuance ofcommonstock, net - - - - -of issuancecosts

Net loss - - - (1,478,273 ) (1,478,273 )

Balance atSeptember 8,596,189 $ 85,962 $ 39,654,308 $ (20,647,490 ) $ 19,092,78030, 2020

Balance atDecember 31, 1,157,890 $ 11,579 $ 21,932,387 $ (17,583,817 ) $ 4,360,149 2019

Stock-based - - 471,683 - 471,683compensation

Conversionofrestricted 24,672 246 (246 ) - - stock unitsto commonstock

Reversestock split (38 ) - (122 ) - (122 )settlement

Conversionof debt 73,665 737 205,526 - 206,263exchange tocommon stock

Issuance ofcommonstock, net 7,340,000 73,400 17,045,080 - 17,118,480of issuancecosts

Net loss - - - (3,063,673 ) (3,063,673 )

Balance atSeptember 8,596,189 $ 85,962 $ 39,654,308 $ (20,647,490 ) $ 19,092,78030, 2020

$0.01 Par ValueCommon Stock

AdditionalPaid-in

Accumulated

TotalStockholders'

Shares

Amount

Capital

Deficit

Equity

Balance at June 30, 2019

255,390

$

2,554

$

18,741,489

$

(12,125,721

)

$

6,618,322

Stock-based compensation

-

-

197,090

-

197,090

Issuance of common stock, net of issuance costs

45,000

450

582,856

-

583,306

Net loss

-

-

-

(1,325,469

)

(1,325,469

)

Balance at September 30, 2019

300,390

$

3,004

$

19,521,435

$

(13,451,190

)

$

6,073,249

Balance at December 31, 2018

213,002

$

2,130

$

17,741,214

$

(10,663,277

)

$

7,080,067

Stock-based compensation

-

-

645,080

-

645,080

Issuance of common stock, net of issuance costs

87,388

874

1,135,141

-

1,136,015

Net loss

-

-

-

(2,787,913

)

(2,787,913

)

Balance at September 30, 2019

300,390

$

3,004

$

19,521,435

$

(13,451,190

)

$

6,073,249

$0.01 Par Value Accumulated Total Common Stock Additional Stockholders' Paid-in

Shares Amount Capital Deficit Equity

Balance atJune 30, 255,390 $ 2,554 $ 18,741,489 $ (12,125,721 ) $ 6,618,322 2019

Stock-based - - 197,090 - 197,090 compensation

Issuance ofcommonstock, net 45,000 450 582,856 - 583,306of issuancecosts

Net loss - - - (1,325,469 ) (1,325,469 )

Balance atSeptember 300,390 $ 3,004 $ 19,521,435 $ (13,451,190 ) $ 6,073,24930, 2019

Balance atDecember 31, 213,002 $ 2,130 $ 17,741,214 $ (10,663,277 ) $ 7,080,067 2018

Stock-based - - 645,080 - 645,080compensation

Issuance ofcommonstock, net 87,388 874 1,135,141 - 1,136,015of issuancecosts

Net loss - - - (2,787,913 ) (2,787,913 )

Balance atSeptember 300,390 $ 3,004 $ 19,521,435 $ (13,451,190 ) $ 6,073,24930, 2019

SG BLOCKS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For theNine Months EndedSeptember 30,2020

For theNine Months Ended

September 30,2019

(Unaudited)

(Unaudited)

Cash flows from operating activities:

Net loss

$

(3,063,673

)

$

(2,787,913

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

2,858

8,697

Amortization of intangible assets

108,842

108,843

Amortization of deferred license costs

30,590

-

Bad debt expense (benefit)

-

(54,000

)

Interest income on long-term note receivable

(23,185

)

-

Stock-based compensation

471,683

482,139

Loss on asset disposal

1,012

52,039

Changes in operating assets and liabilities:

Accounts receivable

(2,581,925

)

363,987

Contract assets

(14,786

)

251,636

Inventories

(681,521

)

-

Prepaid expenses and other current assets

(189,143

)

821,802

Accounts payable and accrued expenses

(841,778

)

(653,821

)

Contract liabilities

2,322,164

(1,093,796

)

Other current liabilities

5,000

-

Net cash used in operating activities

(4,453,862

)

(2,500,387

)

Cash flows from investing activities:

Advances in note receivable

(650,000

)

-

Purchase of Echo DCL, LLC, net of cash acquired

(743,168

)

-

Purchase of property, plant and equipment

(49,434

)

(2,070

)

Net cash used in investing activities

(1,442,602

)

(2,070

)

Cash flows from financing activities:

Proceeds from public stock offering, net of issuance costs

17,118,480

1,136,015

Proceeds from long-term note payable

200,000

-

Settlement of common stock from reverse stock split

(122

)

-

Net cash provided by financing activities

17,318,358

1,136,015

Net increase (decrease) in cash and cash equivalents

11,421,894

(1,366,442

)

Cash and cash equivalents - beginning of period

1,625,671

1,368,395

Cash and cash equivalents - end of period

$

13,047,565

$

1,953

Supplemental disclosure of non-cash investing and financing activities:

Non-cash conversion of accrued interest of long-term note payable to common stock

$

6,263

$

-

Non-cash conversion of long-term note payable to common stock

200,000

-

Non-cash conversion of accrued salary to restricted stock units to common stock

-

162,941

Total non-cash investing and financing activities

$

206,263

$

162,941

View source version on businesswire.com: https://www.businesswire.com/news/home/20201119006224/en/

CONTACT: Media: Rubenstein Public Relations Christina Levin Account Director 212-805-3029 clevin@rubensteinpr.com

CONTACT: Investors: Stephen Swett (203) 682-8377 investors@sgblocks.com