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Safe & Green Holdings Corp. (NASDAQ:SGBX), a wholesale distributor of lumber and construction materials, has entered into a material definitive agreement with 1800 Diagonal Lending LLC, issuing a promissory note for $290,000, as reported in a recent SEC filing. The note, dated August 28, 2024, was sold at a discount, with the lender purchasing it for $250,000.
The company, headquartered in Miami, FL, has agreed to an interest rate of 12% on the principal amount, with repayment scheduled to begin on February 28, 2025. The repayment plan includes a first payment of $162,400 followed by four monthly payments of $40,600 each. Safe & Green Holdings has a five-day grace period for each payment, and any overdue amounts will incur a default interest rate of 22% per annum.
If the company defaults on the note, the lender has the right to demand immediate payment of 200% of the outstanding principal and accrued interest. Additionally, the lender can convert the note into shares of Safe & Green Holdings' common stock.
Initially, the conversion price is set at $1.30 per share for the first 180 days post-issuance, after which it will be $0.25 per share. However, conversions are restricted to prevent the lender from acquiring more than 4.99% of the company's outstanding common stock.
The agreement also limits the company's ability to dispose of significant assets without the lender's consent, ensuring that any such transaction is in the ordinary course of business. The consent for asset disposition may be contingent on the use of proceeds as specified by the lender.
This financial move comes as the company, previously known as SG Blocks, Inc., continues to manage its financial obligations and growth strategy. The information is based on a press release statement and the full text of the note and agreement can be referenced in the exhibits attached to the SEC filing.
In other recent news, Safe & Green Holdings Corp. has reported various noteworthy developments. The company has successfully completed its annual audit by the International Code Council Evaluation Service (ICC-ES) for the 2024/2025 period, reaffirming its authority to certify intermodal shipping containers as approved building materials.
Safe & Green Holdings has also unlocked working capital valued at $4.7 million through a sale-leaseback deal for its Waldron facility in Durant, Oklahoma, facilitated by Northmarq Capital.
In addition, Safe & Green Holdings has expanded its military contract by approximately $1 million, designating over $900,000 for the construction of 11 new modular office containers.
The company has also extended its contract with a government contractor to refurbish 15 container modules for a significant U.S. government agency. The company has also announced a 1-for-20 reverse stock split to comply with Nasdaq's minimum bid price requirements and other listing standards.
Furthermore, Safe & Green Holdings has entered a cash advance agreement with Cedar Advance LLC, selling $1,957,150 of its future receivables for a purchase price of $1,350,000. The company has also been granted an extension until November 12, 2024, to meet Nasdaq's minimum stockholders' equity requirement of $2.5 million.
Lastly, Safe & Green Holdings is set to deliver its first sustainable modular unit to a quick-service restaurant in the Pacific Northwest. These are all recent developments within the company.
InvestingPro Insights
As Safe & Green Holdings Corp. (NASDAQ:SGBX) navigates its financial strategy with new agreements, a snapshot of the company's financial health provided by InvestingPro data reveals challenges ahead. With a market cap of just $2.58 million and a negative P/E ratio reflecting losses, the company's financial position is delicate. The last twelve months as of Q2 2024 show significant revenue decline at -56.5%, and a gross profit margin deep in the negative territory at -24.27%, underscoring operational difficulties.
InvestingPro Tips suggest that SGBX operates with a significant debt burden and may struggle with making interest payments, a concern that aligns with the details of their recent promissory note issuance. The company's stock is also characterized by high volatility and has experienced a substantial price drop over the past year, with the price being only 4.7% of its 52-week high. These factors are critical for investors to consider, especially in light of the company's recent financial maneuvers.
For a more comprehensive analysis and additional InvestingPro Tips on SGBX, interested parties can find over 15 tips at InvestingPro. These tips provide deeper insights into the company's financial stability, stock performance, and market position, which can be invaluable for making informed investment decisions.
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