Greetings and welcome to SG Blocks Second Quarter Earnings Call. I'm Mark Moran CEO of Equity Animal. Will be host of our call today. I'm here with Paul Galvin, Chairman and CEO of the company. If you weren't doing so already, it is easy to participate in the call on Twitter spaces. On Twitter go to at SG Blocks and select the space titled SGBX 2Q 22 earnings call. [Operator Instructions] SG Blocks is also making this call available to listeners through traditional landline and webcasting. At this time, all participants are in listen-only mode. A question-and-answer session will follow. This conference is being recorded. A press release detailing the Company’s results was issued after the market closed at 4:05 p.m. is now available both in the investor relations section of the Company’s website at www.sgblocks.com. A replay of this conference call will be available for 30-days immediately after this call on the SG blocks Twitter page. Before I turn the call over to Paul, please remember that various remarks about future expectations, plans and prospects made on today's call constitute Forward Looking Statements for purposes of the safe harbor provisions under the private securities litigation Reform Act of 1995. SG Blocks cautions that these Forward-Looking Statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated including risks described in the Company’s filings with the SEC. These Forward-Looking Statements are subject to a number of risks and uncertainties. And any Forward-Looking Statements made on this conference call speak only as of today's date, Monday, August 15, 2022. SG Blocks does not intend to update any of these Forward-Looking Statements to reflect events or circumstances that occur after today. Now, it is my pleasure and privilege to introduce Paul Galvin, Chairman and CEO of SG Blocks. Paul, take it away.

Thank you, Mark, and welcome to all. We are excited to be hosting in our first earnings ever on Twitter spaces. Given that many joining us today may not be aware of SG Blocks and our mission, I want to first start off by explaining what it is that we do. The S&G in our name stands for Safe and Green. This is where our mission begins. Picture with me a traditional shipping container. The same shipping container that has helped to revolutionize and globalize the world, but has also inspired this Company. These containers are overbuilt for their life at sea. This means after their life service, they are no longer used, and usually just taking up space at any given port. In fact, the World Shipping Council estimated that there were approximately 30 million unused shipping containers in the world. Thus, SG Blocks was started by taking shipping containers and repurposing them. This is achieved using proprietary engineering and technology to take these containers and turn them into modules for use and construction of homes, restaurants, retail locations, among many other uses. The containers are incredible solution because of the minimal carbon footprint that is involved in repurposing them. On top of that they are hurricane and earthquake resistant, which makes them an ideal environmental solution. In 2017, we were the first company in history to get recycled material in this instance, the shipping container approved by the International Code Counsel, ICC. This was an historic moment for both construction and sustainability and we are grateful to our engineering team, led by Chief Technology Officer, Steve Armstrong for this accomplishment. Our business model previously consistent with transforming these containers for third-party clientele in various outsource factories across the country, however, since then, SG Blocks has evolved significantly. While…

Thank you very much, Paul. In beginning SG Blocks financial discussion, let's look first at the revenue breakdown year-over-year. You can see this on a tweet pinned to the top of this space. Two years-ago, back in the second quarter of 2020, the company had about $600,000 in revenue, with 85% of that coming from its construction segment and the other 15% from the engineering segment. A year later in 2021, the company had significantly increased its quarterly revenue, with 83% of that revenue coming from the medical segment and the remaining coming from the construction segment. The growth of the medical segment was driven by capitalizing on the opportunities to provide point-of-care testing and services for many locales and government agencies and accelerated this segments growth, which historically had always been part of the Company’s plan. For the current quarter, the company recorded one of its strongest quarters, with revenues coming in at 7.6 million and over 11 100% increase from two years ago. Importantly, this revenue growth is much more diversified than the second quarter of last year, with 56% of revenues coming from the construction segment and 44% of revenues coming from its medical segment. While the company capitalized off of the opportunities presented during COVID construction design is its bread and butter, and they viewed this quarter's strong earnings as return to normalcy and a sign of things to come. Given the unique dynamics of a global pandemic, leading to SG Blocks store in the medical vertical, they knew that they would have to adjust once COVID died down and the revenues from point-of-care testing for COVID were anticipated to decline. For the Company, the benefit of gaining this experience in medical is that not only are they a much more diversified company than they weren't…

Thanks Mark. We see ourselves as a company much different from whom we were two-years ago. We are basically debt free, a fully integrated, vertically integrated Company and with many revenue streams. This quarter alone, we had 2.5 times the total revenue for the full-year of 2019, we fine tune our capital allocation strategy throughout COVID and created our development company, SG Development Corp to pursue further opportunities by creating residential units and projects and even neighborhoods. Since we created the Development Corporation, it has grown quickly to now have a residential pipeline in excess of 4100 homes and apartments, comprising about three million square feet of projects and we continue to look more. A total manufacturing pipeline for all of SG Development Corp projects is estimated to be approximately $750 million based on our analysis. We estimate the manufacturing margin to be approximately open book costs plus 15% on that $750 million. This is because we have the full contractual right to manufacture the units for all of these projects. Our strategy is unique because we were building all of these projects modularly out of our own fees. We choose the locations of our projects and the factories strategically so that we can maximize the benefits of modular construction. By being near our projects we can avoid having to pay additional transportation costs for the modules. This vertical integration means SG as a whole is able to generate both manufacturing revenue and traditional revenues associated with real estate development. These include sale leaseback for our factories developers fees, refinancings, asset sales, operating income from projects and many others. Our goal will be to reach a pipeline of 10,000 units that we can and will maintain on a year-over-year basis going forward. We are excited about the future of SG…

Thanks, Paul, with the conclusion of the Company’s prepared remarks will now open the floor for the question and answer portion. As a reminder to ask a question you must be participating via Twitter spaces on a mobile device. For our first question, we are going to bring up Base Capital.

Yes, hello. Thank you. I mean I had a question on, you were speaking to some of the different companies you were currently partnered with in building out like Taco Bell and some others. And so I would love to know if there is any thoughts around the next sectors that you would like to really expand in, would you like to stay in kind of the fast food or are you thinking about different sectors into expanding into?

Sure. We have had some very good success in the quick serve restaurant space, and have some interesting names in our pipeline, but under NDA. What we offer those companies are smaller footprint stores, walk up, drive thru stores, stores that can be moved if they are not doing well on property. And generally speaking by doing it modularly we could potentially save these fast food and quick serve restaurants between four to seven weeks of opening time, which is really a nice hurdle for them to avoid. Lastly, we have had a lot of great fun and success working in the food hall and food court market. And we still see a steady stream of inquiries of people creating some interesting venues. You can see a lot of them on our website, I won't single any one particular out.

Fantastic , thanks very much Base Capital. Next up, we are going to bring [Wolfe] (Ph) up to the stage to ask a question. Wolfe you are up.

Thanks Mark. I appreciate you doing this. On here Galvin, My question is around the concentrated revenue. So I was just looking through and it looked like over 70% of the reported revenue in the last 10k was coming from a single client. It looks like yes, 77% was coming from one customer of the revenue. I know you are working to diversify the streams of revenue. I'm just curious how you are tamping down on the risk of that revenue concentration?

Sure, and that is a great question. And it is, it is one we hear when we have individual conversations. Our goal was never to become a full time COVID testing company, our goal was to prove that point-of-care medicine is strategically done and done well will increase utilization and positive outcomes wherever they are placed. We generated a tremendous amount of revenue from the CLIA lab operated at LAX airport, we use that money to buy the real estate for our factories, and to buy the real estate for our development companies, and to buy into projects that will fill our factories. There has always been an anticipated tapering off of COVID revenue from the airport location. And part of that strategy, we had a major milestone last week, when we were able to sign some letter of intent with the Teamsters 848, down at the Port of Long Beach, and they have very progressive leadership. They are interested in bringing point-of-care, primary care, point-of-care, testing, and point-of-care lab services to their 10,000 members at the port daily and their families and their retirees. We see that as a model. For things going forward, we see that as a real shift in how employers and employee can relate to each other and that this type of intervention will help people's health when they are younger and healthier with some of these early diagnostic tests, which we hope to be talking about more shortly. So we don't necessarily anticipate COVID testing revenue to go away. We see it more as being right size and we see it being replaced with more steady, scalable, predictable revenue in that vertical. And as those events occur, we will make sure we announce them in real time.

Okay perfect. One quick follow-up question just talking about the industry overall so engineering and construction industry has really had a nice boon for COVID. That industry added around $900 billion in Q1 2020 and employing over seven million people. There were a bunch of tailwinds that I saw there was mortgage rates, reopening economy, infrastructure, stimulus, and more. Now we are starting to see labor issues and some other pieces in the sector that could affect SG Blocks. And then there is of course, the rising inflation, you are not going to get down the inflation hole too much. But of course that affects the cost materials such as lumber, et cetera, and other pieces. So I'm just curious as the winds shift for the industry as a whole, if there is any adjustments you are making?

One is just understanding that we are going to have to always be flexible on the ground and have a good team at the factories, both the builders and the manufacturing experts at this time, we have no major supply chain issues. Our team is well versed in best practices, we have multiple scenarios to deliver always procure suppliers for long lead items, all of that manufacturing space we could potentially build out, we could potentially build them out for suppliers who feed our ecosystem. And lastly, the largest client inside our pipeline that will fill our factories is SG Dev Co. itself. And so there will be a high level of cooperation and trying to find out the most efficient way to deliver our safe and green structures. There is a total alignment of interest.

Okay, perfect. And then just my last question, and I will turn it back to Mark. Could you speak to the stock price movement over the last two years and just any thoughts you have on the way that it is gone?

The overall market conditions have been rough for most sectors, I would say our stock for the past eight to 10-quarters have traded between $1.50 and say $8.70 or $9. We are running a really good business, we are in all the right verticals, we have a great ESG mission. And we will do and fight for our shareholders and their value in our approach to investor relations and our approach to fighting for shareholders, and in our approach to maintain a good cap table. And so the stock price has fluctuated in that range. And we think our story is much stronger than the current price, which is why we have chosen to deploy capital to acquire what we believe to be very undervalued stock.

Thank you sir.

Thanks for the questions Wolfe. Really appreciate it. Next up, we are going to bring [Ticker History] (Ph).

Thanks, Mark. Just a more general question for the group. Galvin, you talked about the construction vertical and the pivots and medical. Do you see any other verticals that SG Blocks could eventually expand to and operate in?

Yes, we think that getting into some environmental space, which can include medical waste, sanitary waste, we think that that is a huge and potentially booming new market that is tightly controlled, that doesn't offer best practices. We have a license with a technology called Sana Tech, that microwaves medical waste into landfill eligible materials versus the current practices which by most accounts incinerate up in the air and down into the water table. So we are looking for potential verticals, we think there is going to be an awful lot of infrastructure money spent by the governments, state, federal, local, and we want to have access to some of that and we have ways to do that. Otherwise, the development companies have residential components, hospitality components, hotel components, food and beverage. Inside each project, there is a diversity of opportunities and a hedge on anyone that and so for the first time, I could say that we have a broad base of revenue and each one of them could potentially pop at any time. We are going to do some more communication about the relationship with the Teamsters, we are just trying to get a grasp on what that opportunity is going to mean for 2023. We intend to have our modules at the port providing services in January 2023.

Great. Thanks so much for the question Ticker History. Next up, we are going to bring Charlie to the floor once he is able to connect. And so it looks like Charlie dropped off was unable to connect. I believe we have another question from Wolfe. Wolfe you are up.

Okay, sure I can hop back in here. I was looking at some of the peer metrics. I was looking at like Green Brick and ITT and some of the others. But it feels like you are operating in so many different areas, right, with the medical side and other things. Do you consider these to be traditional peers are there other people that you would say are better kind of benchmarks for people to look at when examining your company?

That is a great question and observation. We don't think that they are a perfect fit peers for us. One of the things that is going on now is the company is undergoing research report that we think should be done in about six-weeks, that will help clarify and consolidate where our peer group should be versus what it is necessarily. So I think we see that all as a part of the process.

Okay, got it. Appreciate that. It looks like I think is that Charlie off up here now, Mark, or coffee? Someone else came up?

Yes, we are going to bring Charlie up in a second. But first, let's bring Coffee Meets Capital up.

Thanks for taking my question. I was just curious along the recently signed LOI, if there was additional progress for the lack of Lago Vista property.

Sure. And the Lago Vista property is still under an LOI, we are doing two things, we are hopefully wrapping up the process of having a purchase and sale agreement in the near-term. And simultaneously, we are doing what all good real estate developers do. We continue to advance best practices on getting the entitlements approved and the land use change we have talked about from partial rental to full rental, and we still love the asset. And we look forward to next steps with the potential buyer in any event. That is the latest on Lago Vista.

Got it. And then, as a follow-up on, could you talk a little bit more about your Dev Co. How much control do you guys typically have and what are the funding requirements after you get the project set up? Do you need to, I mean, will banks typically go fund your build with debt or how does that work?

Sure. Modular construction is the fastest growing sector of the construction industry. So there is an entire debt industry that is emerged with and alongside of it. So typical standard debt equity ratios, part of our plan, which is divide sites, entitle them, improve them, get them permit, read, ready, and then build structures in a controlled environment, at a controlled price and adapt the time that is a formula to produce projects that we believe should all be at or above 25% IRR on the project basis. The majority of the projects went in, we have operating control over the Cumberland Inlet projects were in the very capable hands of Jacoby development. And we have a 10% non-renewable interest in that and are contracted to build out all of those units and in their variety of forms and asset classes.

Got it. Okay, thank you.

Great, thanks so much for the question. Now we are going to bring [Charlie] (Ph) up to the floor.

So in the last few quarters, as COVID has fallen off, the medical revenue has fallen. And as you bring in the other diseases like diabetes, and you have mentioned in previous calls, how long do you think it will take for those to ramp up to overtake the revenues, we were at the peaks of COVID?

We see it more as a transition, the lab operated out at LAX is contracted and extended through 12, 31 of this year. Our stated goal with the teamsters in the LOI is to have service modules after court in January of 2023. And that, we see that as much more permanent and predictable revenue a much more holistic approach to wellness than what we are doing now. And we think the potential for that is virtually endless. Providing best-in-class medical care, including some tests we are looking to use in cancers and Alzheimer's and some of the diseases that rob humans have so many healthy years of life. We are going to combine that with whatever medical testing has to be done at the moment. Some of it will be brick-and-mortar, no pun intended sitting in containers somewhere, and the other is going to be mobile and on chasis and going where people are episodically. And we are very excited about it. It is a real change in medicine, and one we think is going to pay off.

Okay. So one more question about the pipeline. So you said the $750 million, you currently having pipeline, do you think that will speed up growing or do you think you hit a peak? And do you have any projections in actual revenue, we will hit next quarter and coming quarter?

Sure. So that $750 million are related to the projects that are inside the development company, where either the owner or manager or a partner that has the contractual rights to build every one of those. And those are going to be built at a 15% open book billing process. As we bring in new business into the development company, and as previously stated, on today's call, we want to get and stay above 10,000 units that will only increase the $750 million. It will take years to roll out that fleet of homes and then replace them in the pipeline. And it will fully activate our factory network. And in a way where we are not only going to get the revenue from the factory, but we are going to be vertically integrated where the client we are going to own, asset management fees project fees, developers fees, depreciation, income for rent, income from sale, income from refinance, every one of those ways, is a way to raise capital for our Company without issuing a single share. And that is what the real estate portfolio has done. That is what the eventual monetization of Lago Vista has done in contract at $15 million, or in LOI, to sign up $15 million. And our acquisition price in our all in is approximately $4 million, 4.5 million. That profit will help the company grow and give us not needed operating monies, it will give us the juice it needs to unfold and unleash the power of our projects in our factories in a more rapid manner. So that is the story.

Okay. One last question. I know the company right now is in a rapid growth phase. But have you all started to think about net income and profitability?

The day we sell Lago Vista we will be positive cash flow basis that year. Otherwise, we will be issuing some guidance as to revenue as we get closer to our own projects being in the factories. Since then we control the project, the projects financing, and the operations at the manufacturing level. And so we will be able to give a little more guidance and visibility on those things. As our projects enter the factory, so we can be less dependent on the ups and downs of some other entrepreneurs or potential clients.

Okay thank you Paul.

Okay. Thank you.

Thanks Paul and Charlie now for our last question is going to be Ticker History. Ticker History you are.

Thanks, Mark. I just had a question about revenue and market cap. You said you did I think it was 38.5 million and 2021. The stock trades at $26 million market cap by today's close. Why is revenue higher than market cap and what do you what do you see that?

Well, it is not a condition is new to us or new to anyone in this marketplace. It is a very complex question. There are different answers by different people you would ask from different perspectives and why that is the case. What we are focusing in on is keeping our heads down and then transitioning to this point-of-care program with the Teamsters, getting a Lago Vista to the point of sale. And to continue to build our factories, the market cap will take care of itself. We only have 12 million shares. We have enough operating monies, and we have multiple ways to raise money to growth that doesn't require us to issue shares. At some point, the weight of all that good news and all the support and our friends at Animal who are going to help us fight through and get this story out further and they are just the right tool for the right job here. We think meeting more people a fresh set of eyes and getting more people participating in the life of the stock and the stocks ecosystem will take care of the price of the of the stock itself in the market cap.

Fantastic. Paul, very much appreciate the time and appreciate everyone listening I want to give a special shout out to Dr. Pareek Patel, who is here. Thank you, Wolfe, Ticker History, Historic Bids, Charlie, Base Capital, Coffee Meets Capital and everyone else who asked questions and joined us in this. We plan to be able to do this more often to be able to communicate more effectively with the markets to help tell the story. And I thought the last question was just a great one that highlights a lot of the opportunity that is here. That being said, I want to encourage everyone to follow the SG Blocks corporate account, Paul Galvin's personal accounts, as well as the Equity Animal account and many of the other speakers here like Wolfe. We appreciate your time and we will be concluding this call now.