Safe & Green Holdings Corp. issues $360K promissory note

Safe & Green Holdings Corp. (NASDAQ:SGBX), a distributor of lumber and construction materials, has entered into a financing agreement with Firstfire Global Opportunities Fund, LLC. On February 12, 2025, the company issued a promissory note in the principal amount of $360,000.

The note was sold at a discount, with the lender paying $300,000, reflecting a $60,000 original issue discount. The note carries an interest rate of 15% per annum, with the first year’s interest totaling $54,000 guaranteed as of the issue date. In case of default, the interest rate increases to 18%. This adds to the company’s existing debt burden, which InvestingPro analysis indicates may be difficult to service given the negative EBITDA of $13.4 million and a concerning current ratio of 0.15.

The lender has the option to convert outstanding principal and interest into common stock at a conversion price of $0.65 per share, subject to adjustments. However, this conversion cannot result in the lender owning more than 4.99% of the company’s outstanding common stock.

Additionally, Safe & Green Holdings will grant the lender warrants exercisable into 450,000 shares of common stock. The note includes provisions that restrict the company’s ability to pay dividends, repurchase shares, repay certain debts, or sell significant assets without the lender’s consent.

The agreement stipulates that default events include failure to pay principal or interest, failure to issue shares upon conversion, or breach of any terms of the note or related agreements. Upon default, the lender can convert the note at a potentially lower "Alternate Price."

This financing arrangement is detailed in the company’s latest 8-K filing with the Securities and Exchange Commission. The filing includes the full text of the promissory note, securities purchase agreement, and associated warrant, which provide further information on the terms of the agreement. With a market capitalization of just $2.64 million and rapidly deteriorating financials, investors seeking deeper insights into SGBX’s financial health and growth prospects can access additional analysis and 15 more key ProTips through InvestingPro.

In other recent news, Safe & Green Holdings Corp. has completed its merger with New Asia Holdings, Inc., making NAHD and its subsidiaries indirect, wholly owned subsidiaries of Safe & Green Holdings. The merger involved issuing four million Series A non-voting convertible preferred shares to NAHD’s shareholders, which are convertible into common stock, pending shareholder approval. This strategic move is expected to enhance Safe & Green’s market position and operational capabilities. Additionally, Safe & Green Holdings has secured a $100 million equity line of credit from Alumni Capital LP, subject to certain conditions, including SEC registration statement effectiveness. This agreement allows Safe & Green Holdings to sell newly issued common stock to Alumni Capital, with the sales period ending by June 2026 or upon reaching the $100 million commitment.

Moreover, Safe & Green Holdings has entered into a material definitive agreement with 1800 Diagonal Lending LLC, issuing a promissory note of $143,750. This note includes an original issue discount and a one-time interest charge, with monthly payments scheduled to begin in late February 2025. The lender also has the option to convert the outstanding principal into common stock shares under specific conditions. These financial arrangements impose restrictions on the company’s asset disposition outside the ordinary course of business. Safe & Green Holdings’ recent developments signal significant strategic and financial maneuvers aimed at strengthening its market presence and financial flexibility.

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