Q2 2020 SG Blocks Inc Earnings Call

Okay and welcome to S.T. blocks second quarter 2020 earnings Conference call and webcast. Today's conference call is being recorded at this time I would like to turn the conference over to Gerald Cheered Chief Financial Officer.

Please go ahead.

Thank you and good afternoon. Thank you all for joining us for F. G box second work 2020 <unk> earnings call. Your hosts today as Paul That's your poll Gallagher Chief Executive Officer, a press release detailing. These results was issued this afternoon just after the market close and is available.

The company's website.

She walks dot com.

Before I turn the call over to Paul. Please remember that certain statements contained and that's really are forward looking statements within the meaning of the private security Litigation Reform Act.

1995.

All statements other than statements of historical facts contained in this presentation.

Quoting statements regarding the company's future operations and financial position.

No strategy and plans and objectives of management for future operation are forward looking statement.

In some cases forward looking statements can be identified by Terminologies such as believe my estimate continue anticipate town.

Good plan.

We expect her do it but central or the negative of these terms.

Or other similar expressions, we have basically these forward looking.

Statements largely on our current expectations and projections about future of that and financial trends that we believe may affect our financial condition.

Loss from operations business strategy and financial needs. These forward looking statements are subject to a number of risk and uncertainty and assumptions described.

Including those set forth in our filings with the Securities and Exchange Commission, which are available at Www <unk>.

Dot FCC dot job.

You should not rely.

Upon forward looking statements as prediction, we cannot assure you that they've done some circumstances reflected in the forward looking statements will be achieved.

Finally, this conference call.

It is being webcast. The webcast is available in the Investor Relations section of our website at Www Dot SG walks dot com.

With that I will now turn the call over to our Chief Executive Officer, All Galban for his prepared comments.

Oh. Please go ahead.

Thank you Charles and welcome to the S. U Blox second quarter 2020, <unk> financial results Conference call.

We were hard at work in the second quarter executing on projects already under contract. While also pursuing a number of new business development opportunities and expanding the application of our containerized solutions to the cold it making diagnostics market, we are materially moving our business forward setting the stage.

But what we expect to be a strong second half 2020.

Health care.

In the healthcare vertical we executed a nonexclusive distribution agreement with all saying health care of South Korea, who is a global manufacturer and distributor medical grade diagnostic tests and equipment, including a threeg PCR cobot 19 cats.

Since that time actually blocks has accomplished the following.

One completed U.S. customs import license and FDIC registration process too high or three staff consultants to self service, our cobot Nike testing solutions Threed established cold storage supply chain for.

Executed multiple reseller and fee agreements five created with Grimshaw architects a series of medical testing and laboratory services known as the Ditech series six focused our business development efforts on all levels of government.

Medical and academic institutions as well, that's probably that employers.

Residential.

Residential vertical operates on a royalty model, which was licensed last year. We are happy to report the following progress.

One Martha Cielo Muse received its final site plan approval subsequent to Q2 2020, ending at site work has commenced recall. The project is expected to yield 302 units of workforce housing over six buildings and three phases S. U blox anticipates, a multimillion dollar loyalty.

Upon completion of the project to work has resumed on the 55 concrete shells in Wyoming, which had been halted due to the koby pandemic.

Three we have entered into an agreement subsequent to Q2 2020 for the completion of 40 office boxes to Puerto Rico for the provision of functional office speech, which is in demand.

This project is subject to royalties and our license greater.

The rest box prototype is nearing completion and it is expected to be widely marketed domestically, we expect to see exponential growth in our royalty revenue over the next four quarters once completed.

Commercial and our commercial vertical we executed and any design contract in Q2 2020, and subsequently were awarded or construction contract for approximately $4 million to manufacture a boutique mixed used hospitality project with gates construction.

The project is located in the scenic, Florida, Everglades, and will yield 24, hospitality units and it dining component.

The location and use of the product are ideal for the clientele and its challenges.

Manufacturing is expected to commence in Q3 2020 and be completed in Q1 2021. This contract alone represents a potential 300% increase in gross revenue over the trailing four quarters.

In other commercial news, we're happy to report the following progress and new business subsequent to Q2 2020.

One executed purchase orders for third quarter deliveries for two exploration pop up containers to the University of West Virginia.

To the previously announced Aurizona invest ties mints mold living hospitality project is expected to habits prototype completed in Q3.

Three we executed or does already contract for a restaurant expansion in Georgia for.

Our planet's movie project has reached its final construction cranes, having a shipment to its final destination and Djibouti Africa five the previously announced we're always in store was completed in Denver.

Other the company continues to see talent in both business development and supply chain functions. We continue to explore synergistic uses and partners for the use of prefabricated modules for the delivery of housing products and services.

MS Mackie Coleman veteran financed and real estate industry professionals, who joined our board of directors and will be a member of both the audit and compensation Committee.

Actually blocks in Grimshaw announced the joint venture for the design build services for the global delivery a modular education facility further S. U Blox now has access to grim shorts International network of manufactured Fabricators project managers and store.

Yes, it's up to revenue in the second quarter of 2020 was approximately $629000 compared to approximately $728000 in the second quarter 2019, the decrease of approximately $19000 or approximately 14% was mainly driven by acquiring.

Of roughly 404070 2000 in retail and office customers as well are shifting to a royalty based model, which was offset by an increase of revenue of approximately $300000 $57000 and $41000 in other medical and hospitality costing us.

Gross profit in the second quarter was approximately 374000 compared to approximately 267000 in the quarter a year ago.

Gross profit margin as a percentage of revenue increased to approximately 60% in the second quarter of 2020 as compared to approximately 37% in the second quarter of 2019.

Operating expenses in the second quarter of 2020 were approximately 1.21 million down modestly compared to 1.24 million in the year a quarter ago degree. The decrease was largely driven by a reduction in our opera operating expenses related to payroll and related expenses of approximately 253.

Thousand dollars and did decrease of approximately $53000 in marketing and business development expenses in the second quarter of 2020, which was partially offset by an increase of approximately $260000.

In general and administrative expenses.

Driven mostly higher by legal fees and some consulting expense.

Our net loss was approximately $838000 and the second quarter 2020, compared to a loss of approximately $972000 in the second quarter of 2019.

Looking at the balance sheet, we had cash and cash equivalents of $16.1 million as of June Thirtyth, which compares to approximately 1.6 million at the end of 2019.

During the second quarter, we computed to public offerings, one that resulted in aggregate net proceeds of approximately 1.5 million and subsequent offering that resulted in aggregate net proceeds of approximately $15.6 million, including the exercise of the overallotment and after deducting underwriting discounts commissions and other stuff.

Yes.

We believe we are sufficiently capitalized to support near term working capital needs for our day to day operations as we move toward being cash flow positive by year end.

We have worked universally during 2022 successfully advanced projects, such as Monticello, Muse expanded product product offerings in the medical and educational space and build an ecosystem for the sales and service of cope with 19 diagnostic testing, we look forward to a productive second half and beyond.

The launch of new products and partnerships, the signing of new contracts and the execution of initial orders in the first half of 2020 should be setting the stage for strong second half.

Thank you for joining us today, if you have any specific questions what we'd like to speak with me or our IR team you can email us at S.G. be X at Hayden IR dotcom for called the S. U Blox hotline number on our website and we'll arrange for a call.

We look forward to speaking with you again as we continue to make progress throughout the year.

Operator.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.