Benzinga | Oct 28, 2021 08:46AM EDT

SG Blocks Gives Comment On Recent Capital Raise: 'Provides Visible Funding to Fuel Growing Development Pipeline'

On October 27th, 2021, SG Blocks, Inc. (NASDAQ:SGBX) ("SG Blocks" or the "Company"), a leading designer, innovator and fabricator of modular structures, closed on the issuance of approximately 3.16 million shares of common stock (or common stock equivalents in lieu thereof in the form of pre-funded warrants) together with warrants to purchase up to approximately 1.9 million shares of common stock, for total gross proceeds of approximately $11.55 million. Each share of common stock and accompanying common warrant were sold together at a combined offering price of $3.65, and each common stock equivalent and accompanying common warrant were sold together at a combined offering price of $3.649. The common stock equivalents will be immediately exercisable at a nominal exercise price of $0.001 and will expire when exercised in full. The common warrants will have an exercise price of $4.80 per share, will be exercisable upon issuance and will expire five years from the date of an issuance.

Use of proceeds will be for working capital as existing projects advance.

Paul Galvin, Chairman and Chief Executive Officer of SG Blocks, commented, "We believe this capital raise was a momentous step for our Company, providing a definitive path forward as we work to roll-out our growing list of projects. We were extremely pleased with the execution, at a 50% premium to our last share issuance, supported by an investment bank with significant real estate experience. We also welcome a world class institutional investor as a new shareholder."

Mr. Galvin continued, "Given the pipeline of activity we have underway, we believe it was extremely important to ensure we had sufficient capital to meet our co-investment priorities. Having invested approximately $8 million in our pipeline over the past year, this incremental capital provides us with visible funding, as well as should provide optionality with regard to anticipated growing supply chain disruptions and delays. 2021 has already been a record revenue year for SG Blocks. As we look to 2022 and beyond, however, we believe we are at the mere beginning of the opportunity we have to deliver innovative solutions with our world class structures in a variety of applications, from the commercial sector, to healthcare, residential, and other technological functions."

SG Blocks current pipeline of announced projects includes:

* Lago Vista, on Lake Travis, on the Colorado River in Austin, Texas. The project is expected to consist of up to 225 one- and two-bedroom condominium units, as well as amenities including a community center, marina and health club. Development work is expected to commence in the second quarter of 2022, with an anticipated completion date in the fourth quarter of 2022. SG Blocks expects to capture approximately $25 million in manufacturing revenue over the life of the project. The Company also anticipates that its minority interest in the sale of the units will be no less than approximately $5.0 million as units are sold.

* A 50% membership interest to build a 138-unit, 125,000 square foot affordable housing community in East Point, GA within the Atlanta metropolitan area. The community will be known as "Norman Berry Village," and the units will be constructed at the Company's manufacturing facilities in Durant, OK and shipped to Atlanta. SGB DevCorp. has partnered with CMC Development Group, ZT Architecture & Land Development, and Community Development Consortium on the project. The Company expects to complete the project at a cost of approximately $15 million -- $20 million. SGB DevCorp. will control the planning and construction process, and earn manufacturing revenue, as well as a share of development fees.

* Monticello Mews, a multi-family development project located in the Catskills region of New York. Upon completion, the development is expected to consist of 187 townhomes with one- and two-bedroom units, with amenities including a clubhouse, gym, and outdoor green spaces. The project is expected to be complete in the third quarter of 2023. The Company has carried interest in this project of approximately $650,000, and expects to earn a preferred payment upon completion of the project.

* A 10% non-dilutable equity interest in JDI-Cumberland Inlet, LLC, a Georgia limited liability company, contributing $3,000,000 in capital to develop Cumberland Inlet, a 1,286 acre waterfront parcel in historic downtown St. Marys, Georgia. Modular housing units for the project will be produced at the Company's manufacturing facilities in Durant, OK, with gross potential manufacturing revenues totaling approximately $180 million, making Cumberland Inlet SGB DevCorp.'s largest project to date. The development is expected to commence site work in the fourth quarter of 2021, with initial deliveries of modular units expected in third quarter of 2022.