UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to
____________
Commission file number: 001-41581
SAFE AND GREEN DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
(Address of principal executive offices) (Zip Code)
904-496-0027
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share SGD The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the common stock
held by non-affiliates of Safe and Green Development Corporation based on the closing price of the shares of common stock on the Nasdaq
Capital Market on June 30, 2024 was approximately $3,503,309. Shares of the registrant’s common stock held by each executive officer,
director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates.
This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.
As of March 31st, 2025, the issuer
had a total of 1,916,034 shares of common stock outstanding and 44 record holders.
DOCUMENTS INCORPORATED BY REFERENCE
None
SAFE AND GREEN DEVELOPMENT CORPORATION
FORM 10-K
TABLE OF CONTENTS
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 29
Item 1C. Cybersecurity 29
Item 2. Properties 30
Item 3. Legal Proceedings 30
Item 4. Mine Safety Disclosures 30
Item 6. Reserved 31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42
Item 8. Financial Statements and Supplementary Data 42
Item 9A. Controls and Procedures 42
Item 9B. Other Information 43
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 43
PART III 44
Item 10. Directors, Executive Officers and Corporate Governance 44
Item 11. Executive Compensation 49
Item 14. Principal Accountant Fees and Services 61
Item 15. Exhibit and Financial Statement Schedules 62
SIGNATURES 72
i
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (the “Annual
Report”) contains “forward-looking statements” that involve risks and uncertainties. Our actual results could differ
materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical
are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act”,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Forward-looking statements are
often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“project,” “seek,” “should,” “strategy,” “target,” “will,” “would”
and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions
of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties
and other important factors that could cause actual results and the timing of certain events to differ materially from future results
expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not
limited to, those identified below and those discussed in the section titled “Risk Factors” included under Part I, Item 1A
below. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake
no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Although we believe
that our assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as
a representation by us or any other person that the objectives and plans of ours will be achieved. Investors are cautioned not to
place undue reliance on such forward-looking statements, which speak only as of the date on which such statements are made. Any forward-looking
statements made by us or on our behalf speak only as of the date they are made, and we do not undertake to update any forward-looking
statement that may be made from time to time on our behalf.
As used in this Annual
Report, unless the context requires otherwise, references to “SG DevCo”, “the Company”, “we”, “us”,
and “our” refer to Safe and Green Development Corporation and its subsidiaries, as the context requires. References to Common
Stock refer to the Company’s common stock, par value $0.001 per share.
“SG DevCo”
and the SG logo are our trademarks. All other trademarks and service marks appearing in this Annual Report are the property of their respective
owners.
ii
Summary of Risk Factors
An investment in our Company is subject to a number
of risks, including risks relating to our business, and risks related to our Common Stock. Set forth below is a high-level summary of
some, but not all, of these risks. You should review and consider carefully the risks and uncertainties described in more detail in “Part
I, Item 1A. Risk Factors” of this Annual Report, which includes a more complete discussion of the risks summarized below as well
as a discussion of other risks related to our business and an investment in our Common Stock.
Risks Related to Our Business Generally
iii
● We may not be able to sell our real property assets when we desire.
iv
Risks Related to Our Common Stock
Risks Related
to Resource Group, its Business and its Acquisition
● Compliance with environmental regulations is costly and subject to change
● We face intense competition and pressure from alternative products
● Logistical challenges could disrupt supply chains and limit our market reach
v
PART I
Item 1. Business.
Company Overview
We were formed in 2021 by Safe & Green Holdings
Corp. (“SG Holdings”) for the purpose of real property development utilizing SG Holdings’ proprietary technologies
and SG Holdings’ manufacturing facilities. During 2023 and 2024, our business focus was primarily on the direct acquisition and
indirect investment in properties nationally to be developed in the future into green single or multi-family projects and increasing our
presence in markets with favorable job formation and a favorable demand/supply ratio for multifamily and/or single-family housing. To
date, we have generated minimal revenue and our activities have consisted mostly of the acquisition and entitlement of three properties,
an investment in two entities that have acquired two properties to be further developed, entry into three joint ventures with the intention
of developing properties in the Texas market and an investment in real-estate related artificial intelligence (“AI”) assets
and entities, as further described below.
In January 2024, we announced that we would strategically
look to monetize our real estate holdings throughout 2024 by identifying markets where our land may have increased in value, as demonstrated
by third-party appraisals and selling those properties. In connection with this strategy, we have entered into agreements to sell our
St. Mary’s site and our Lago Vista site described in more detail below. Additionally, we expect to subdivide our McLean property
into buildable single family lots that can subsequently be sold to developers or developed internally. We intend to develop the properties
that we own and invest the proceeds of sales of our securities and future financings, both at the corporate and project level, and/or
sale proceeds from properties that are sold. However, our ability to develop any properties will be subject to our ability to raise capital
either through the sale of equity or by incurring debt for which there can be no assurance.’
In August 2024, we entered into joint ventures
with Milk & Honey LLC, Sugar Phase I LLC and Hacienda Olivia Phase II LLC, with the intention of developing green single-family homes
in the Southern Texas market. To date, we have completed construction of five single family homes in the Sugar Phase joint venture which
were delivered during the first quarter of 2025. Additionally, we were developing 57 single family lots through our Hacienda Olivia. We
have also entered into a joint venture named Pulga Internacional with the intention of developing an eco-friendly commercial retail outlet.
In February 2025, we entered into a Membership
Interest Purchase Agreement (the “Membership Interest Purchase Agreement”) with Resource Group US Holdings LLC (“Resource
Group”) and its members to acquire 100% of the membership interests of Resource Group. See “Membership Interest Purchase Agreement”
below for additional information about the Membership Interest Purchase Agreement. Upon the closing of the acquisition we intend to shift
our primary focus to the business conducted by Resource Croup, which is the transformation of targeted organic green waste materials into
engineered, environmentally friendly soil and mulch products. As a result, we have started the process of strategically realigning the
business focus towards Resource Group’s core business by monetizing real estate holdings held by us and in our joint ventures. We
will continue this process and expect that by the end of 2025 the Company will be focused solely on the engineered soils business. Following
the acquisition of Resource Group, we also intend to reevaluate the projects, technologies, and operations of our real-estate related
AI assets.
Upcycling, Composting and Logistics Business
Resource Group Acquisition
On February 25, 2025, we entered into a Membership
Interest Purchase Agreement (the “RG Purchase Agreement”) with Resource Group US Holdings LLC, a Florida limited liability
company (“Resource Group”), and the members of RG (the “RG Equityholders”) to acquire 100% of the membership interests
of Resource Group. Resource Group is a next-generation, full-service organic recycling and compost technology company specializing in
transforming targeted organic green waste materials into engineered, environmentally friendly soil and mulch products. In addition, Resource
Group offers year-round collection and disposal services through high-capacity grapple trucks, open-top walking floor trailers, and
variable-sized containers serving green waste generators, landscaping companies, golf courses, communities, and municipalities. Resource
Group works to streamline operations by internalizing transportation services, reducing over-the-road mileage, lowering disposal
costs, and maximizing efficiency. The purchase price for the membership interests of Resource Group is $480,000 in cash, the issuance
of shares of our restricted common stock (the “RG Closing Shares”) equal to 19% of our outstanding shares of common stock
at closing and a convertible note (the “RG Convertible Note”) in an amount to be determined at closing, convertible into shares
of our restricted common stock subject to the receipt of our shareholders’ approval post-closing in accordance with Nasdaq rules.
The RG Closing Shares and the shares of our common stock to be issuable under the RG Convertible Note will together equal 49% of our outstanding
shares of common stock at closing. The transaction is expected to close early in the second quarter of 2025 subject to customary closing
conditions and the completion of Resource Group’s audit.
1
The RG Purchase Agreement provides that our board
of directors will be reorganized at closing such that four current directors will remain on the board of directors and three new directors
will be appointed to the board of directors by Resource Group. The RG Purchase Agreement further provides that on or prior to the three-month
anniversary of the closing, we will use our best efforts to have on file with and approved by the Securities and Exchange Commission an
effective registration statement on Form S-1 or any other allowable form providing for the resale by the RG Equityholders on a pro rata
basis of the RG Closing Shares issued to them.
Upcycling, Composting, Logistics
Industry and Business Opportunity
We believe the upcycling, composting, and logistics
industries present timely and strategic opportunities for our company, particularly through our engagement with innovative waste-to-resource
and supply chain optimization technologies. We have identified Resource Group’s suite of products and services as a valuable complement
to our sustainability-driven business model. Their offerings include organic waste processing units, dewatering systems, and composting
equipment designed for on-site use at universities, hospitals, municipalities, and private enterprises. These systems enable the efficient
transformation of food and organic waste into usable compost, significantly reducing hauling costs and landfill dependency. Additionally,
Resource Group is expanding into upcycling solutions that repurpose materials otherwise destined for disposal, transforming them into
high-value products for commercial and industrial use. This aligns with circular economy principles and opens new revenue streams by converting
waste into functional assets. In parallel, Resource Group is exploring logistics applications that enhance operational efficiency across
waste and materials handling, including route optimization, on-site processing coordination, and supply chain integration for upcycled
materials. Their turnkey services—which include installation, maintenance, and monitoring—help clients meet environmental
goals and comply with evolving regulations. We view this business line as an important component of our long-term growth strategy and
anticipate increased demand for the services they provide as organizations seek cost-effective, environmentally responsible, and logistically
sound waste management and resource recovery solutions.
Competition
The market for upcycling, composting, and
related logistics technologies is highly competitive and rapidly evolving, driven by increasing regulatory pressure, expanding
sustainability mandates, and a growing demand for environmentally conscious supply chain solutions. We recognize that Resource Group
operates in a landscape populated by both established waste management firms and emerging clean technology companies offering
composting, upcycling, and organic waste processing systems. However, Resource Group differentiates itself through its integrated,
end-to-end solutions that include equipment, site-specific logistics planning, and ongoing operational support tailored for
institutions such as universities, hospitals, and municipalities. While many competitors offer isolated components—such as
equipment without service, or processing without logistics—Resource Group provides a unified approach that lowers total costs
and maximizes efficiency. Their focus on localized, decentralized solutions also gives them an edge over national waste firms that
prioritize centralized processing, enabling clients to reduce transportation, emissions, and costs. We believe this positioning
offers a strategic advantage as public and private sector clients increasingly seek agile, scalable, and sustainable alternatives to
conventional waste and logistics models.
Regulatory Matters
Resource Group is subject to a range of federal,
state, and local regulations that govern its waste management and environmental operations. At the federal level, applicable laws include
the Resource Conservation and Recovery Act (RCRA), which oversees the handling and disposal of solid and hazardous waste, as well as the
Clean Air Act and Clean Water Act, which may apply to emissions or discharges associated with organic material processing.
In Florida, where Resource Group is currently
located and will conduct business for the foreseeable future, the company is primarily regulated by the Florida Department of Environmental
Protection (FDEP). The FDEP enforces state-specific regulations related to solid waste management, composting, and recycling, including
permitting requirements, operational standards, and reporting obligations for facilities engaged in organic waste processing. Resource
Group’s operations may also fall under Florida Administrative Code Chapters 62-701 (Solid Waste Management) and 62-709 (Composting
Facilities), which establish the framework for compliance with design, siting, and performance standards.
At the local level, county and municipal governments
in Florida may impose additional regulations through zoning ordinances, environmental health codes, and nuisance abatement standards.
These can include rules related to odor control, vector prevention, and site-specific permitting or inspection processes.
Resource Group is responsible for maintaining
compliance with all applicable federal, state, and local laws and continuously monitors regulatory developments in Florida that may affect
its business operations.
2
AI and Software Development Projects
AI Platform Acquisition I
On February 7, 2024, we entered into a Membership
Interest Purchase Agreement (“MIPA”) to acquire Majestic World Holdings LLC (“Majestic”). Majestic is a prop-tech
company that has created an AI software platform (the “AI Powered Platform”). The AI Powered Platform, which was launched
in April 2024, aims to decentralize the real estate marketplace, creating an all-in-one solution that brings banks, institutions,
home builders, clients, agents, vendors, gig workers, and insurers into a seamlessly integrated and structured AI-driven environment.
The aggregate consideration payable for the outstanding
membership interests (the “Membership Interests’) of Majestic consisted of 500,000 shares of our restricted stock
(the “Stock Consideration”) and $500,000 in cash (the “Cash Consideration”). Pursuant to the terms of the
MIPA and a related side letter we agreed to (i) issue 500,000 shares of our common stock to the members of Majestic, which shares were
issued on the closing date, February 7, 2024; and (ii) to pay 100% of the Cash Consideration in five equal installments of $100,000 each
on the first day of each of the five quarterly periods following the Closing. In addition, pursuant to a profit sharing agreement entered
into as of February 7, 2024 (the “Profit Sharing Agreement”), we agreed to pay the former members of Majestic a 50%
share of the net profits for a period of five years that are directly derived from the technology and intellectual property utilized in
the real estate focused software as a service offered and operated by Majestic and its subsidiaries.
On November 4th, 2024, we and the members
of Majestic entered into an amendment to the MIPA. The amendment reduced the cash consideration for the purchase of Majestic from $500,000
to $154,675. Members to whom less than $5,000 was due were paid their share of cash consideration on October 30th, 2024. Members
to whom more than $5,000 was due were paid 50% of their consideration on October 30th, 2024 and the remainder on December 1st,
2024 (the “Final Payment Date”), with the exception of Vikash Jain, who shall be paid over a 12-month term. On the Final Payment
Date the remaining 31.75% interest in Majestic was transferred to us. The amendment also stipulates those commercial notes totaling $337,226
would be cancelled and deemed satisfied in full and retired on the Final Payment Date.
Following the acquisition of Resource Group, we
intend to reevaluate the projects, technologies, and operations currently under development by Majestic to determine how or if they will
be integrated into our broader business structure. This evaluation will consider alignment with our strategic objectives, operational
synergies, and the scalability of Majestic’s AI Powered Platform in light of the regulatory and market environments in which Resource
Group operates. Final determinations regarding integration, restructuring, or continuation of these projects will be made after a thorough
post-closing review.
MyVonia
On June 6, 2024, we completed the acquisition
of all of the assets related to the AI technology known as My Virtual Online Intelligent Assistant (“MyVONIA”) pursuant to
an Asset Purchase Agreement, dated as of May 7, 2024, by and between us and Dr. Axely Congress (the “APA”). MyVONIA, is an
advanced AI assistant, that utilizes machine learning and natural language processing algorithms to provide users with human-like conversational
interactions, tailored to their specific needs. MyVONIA does not require an app, or website but is accessible to subscribers via text
messaging. The APA provides that the purchase price for MyVONIA is up to 500,000 shares of our common stock. Of such shares, 200,000 shares
of common stock were issued at the closing on June 6, 2024, with an additional 300,000 shares of common stock issuable upon the achievement
of certain benchmarks. Pursuant to the APA, Dr. Congress has agreed to a non-compete. In connection with the closing, Dr. Congress also
entered into a consulting agreement with us (the “Consulting Agreement”) to continue to develop MyVONIA and provide such other
services as are required pursuant thereto under which Dr. Congress will receive a consulting fee of $10,000 a month. The Consulting Agreement
has a term of two years and has a non-compete.
AI and Software Development Business
AI Industry and Business Opportunity
We believe the artificial intelligence industry
presents a transformative opportunity for our company, particularly as it relates to the deployment of intelligent digital tools that
enhance user engagement, operational efficiency, and industry-specific automation. Our acquisitions of MyVONIA and Majestic World Holdings
represent key milestones in our strategic entry into the AI sector. MyVONIA utilizes advanced natural language processing and machine
learning algorithms to deliver personalized, human-like interactions via text messaging—without the need for an app or web interface.
This frictionless and highly accessible format positions MyVONIA to serve a wide range of industries, including real estate, customer
service, and administrative automation.
3
In addition, Majestic’s AI Powered Platform,
launched in April 2024, offers an integrated software ecosystem designed to decentralize and streamline the real estate marketplace. This
AI-driven environment brings together banks, institutions, home builders, clients, agents, vendors, gig workers, and insurers into a unified,
intelligent interface that simplifies complex workflows and improves transactional transparency. We view these platforms as highly complementary
and well-aligned with macroeconomic trends, including labor shortages, rising demand for digitization, and the accelerating adoption of
conversational and generative AI. Together, they reflect our broader vision to integrate scalable, user-friendly, and industry-specific
AI applications across our operations and commercial partnerships.
Competition
The artificial intelligence and prop-tech software
markets are highly competitive and rapidly evolving. We face competition from a range of companies, including major technology firms offering
enterprise-grade AI platforms, as well as niche startups developing specialized tools for conversational AI, customer automation, and
real estate technology. MyVONIA is uniquely positioned within the conversational AI space due to its text-first interface, which does
not require users to download a dedicated app or navigate a web platform—making it broadly accessible and easy to adopt across diverse
use cases.
Majestic’s AI Powered Platform differentiates
itself in the real estate sector through its vertical integration and AI-driven structuring of industry participants. While many competitors
in the prop-tech space offer isolated tools or data solutions, Majestic’s platform unites the entire transaction ecosystem—financial
institutions, builders, clients, and service providers—into one seamless digital environment. We believe this comprehensive, AI-structured
approach, combined with MyVONIA’s accessible communication interface, gives us a competitive edge by addressing real-world inefficiencies
with tailored, user-centric solutions. As the market continues to expand, we intend to capitalize on this strategic positioning by focusing
on vertical-specific deployment, data-driven enhancements, and scalable commercial integration.
Regulatory Matters
We remain mindful of the evolving regulatory landscape
surrounding artificial intelligence, software platforms, and digital privacy. The development, deployment, and commercialization of both
MyVONIA and the AI Powered Platform are subject to a growing number of regulatory frameworks at federal, state, and international levels.
These include regulations concerning data protection, digital communications, algorithmic transparency, and AI ethics.
In particular, our operations must comply with
the California Consumer Privacy Act (CCPA), the General Data Protection Regulation (GDPR) where applicable, and other emerging legislation
focused on AI accountability and consumer rights. We are committed to ensuring that the architecture of both platforms is built with privacy,
data integrity, and user consent as core principles. In support of this commitment, our product teams are focused on integrating compliance-driven
features and maintaining adherence to industry best practices. We believe that a proactive and responsible approach to regulatory matters
will not only safeguard our users and stakeholders but also serve as a competitive differentiator as public scrutiny and legal oversight
of AI technologies continue to increase.
Current Real Estate Projects and Development Sites
Lago Vista
On May 10, 2021, LV Peninsula Holding LLC (“LV
Holding”), our wholly-owned subsidiary, acquired a 50+ acre site in Lago Vista, Texas for $3,500,000, paid in cash, pursuant to
an Unimproved Property Contract, dated February 25, 2021, with Northport Harbor LLC. The acquired parcel sits on Lake Travis on the Colorado
River in central Texas. We acquired the property and were able to successfully obtain approval to establish a planned development district
(PDD) consisting of 174 condominium units with an allowance for 30% short-term rental. As a result of obtaining the site approval and
market conditions, we believe that the property’s value has increased significantly from the time of purchase.
On July 14, 2021, we issued a Real Estate Lien
Note, dated July 14, 2021, in the principal amount of $2,000,000 (the “Short Term Note”), secured by a Deed of Trust, dated
July 14, 2021, on the Lake Travis project site in Lago Vista, Texas and a related Assignment of Leases and Rents, dated July 8, 2021,
for net loan proceeds of $1,945,233 after fees. The Short-Term Note had a term of one (1) year, provided for payments of interest only
at a rate of twelve percent (12%) per annum and could be prepaid without penalty commencing nine (9) months after its issuance date. If
the Short-Term Note was prepaid prior to nine (9) months after its issuance date, a 0.5% prepayment penalty would be due. This Short-Term
Note was initially extended until January 14, 2023 and was further extended until February 1, 2024. In addition, on September 8, 2022,
we issued a Second Lien Note in the principal amount of $500,000 (the “Second Short-Term Note”) also secured by a Deed of
Trust on the Lake Travis project site in Lago Vista, Texas. The Second Short-Term Note provided for payments of interest only at a rate
of twelve percent (12%) per annum and originally matured on January 14, 2023, which maturity date was extended until February 1, 2024.
4
On March 31, 2023, LV Peninsula Holding LLC (“LV
Holding”), our wholly-owned subsidiary and the owner of the Lago Vista property, pursuant to a Loan Agreement, dated March 30, 2023
(the “Loan Agreement”), issued a promissory note, in the principal amount of $5,000,000 (the “LV Note”), secured
by a Deed of Trust and Security Agreement, dated March 30, 2023 (the “Deed of Trust”) on our Lake Travis project site in Lago
Vista, Texas, a related Assignment of Contract Rights, dated March 30, 2023 (“Assignment of Rights”), on our project site
in Lago Vista, Texas and McLean site in Durant, Oklahoma and a Mortgage, dated March 30, 2023 (“Mortgage”), on our site in
Durant, Oklahoma.
The proceeds of the LV Note were used to pay off
the Short-Term Note and the Second Short-Term Note. The LV Note requires monthly installments of interest only, is due in full on April
1, 2024 and bears interest at the prime rate as published in the Wall Street Journal (currently 8.0%) plus five and 50/100 percent (5.50%),
currently equaling 13.5%; provided that in no event will the interest rate be less than a floor rate of 13.5%. The LV Holding obligations
under the LV Note have been guaranteed by us pursuant to a Guaranty, dated March 30, 2023 (the “Guaranty”), and may be prepaid
by LV Holding at any time without interest or penalty. The net loan proceeds were approximately $1,337,000, after loan commission fees
of $250,000, broker fees of $125,000, the escrow of a 12-month $675,000 interest reserve, other closing fees and the repayment of the
Short-Term Note and Second Short-Term Note. LV Holdings expects to execute extension documents in the first week of April to extend the
maturity of the LV Note to April 1, 2026 unless the property is sold before.
On October 10, 2024,
we retained the $45,000 of non-refundable earnest money pursuant to the terms of the Contract of Sale since the buyer did not perform
under their obligations.
On January 30, 2025, the Company entered into
a definitive agreement (the “Purchase Agreement”) with Lithe, for the sale of the Lago Vista Site. The agreed-upon purchase
price for the property is $6,575,000.
Prior to the execution of the Lago Purchase Agreementwe
had entered into a Contract of Sale with Lithe to sell approximately 60 acres of waterfront property at the Lago Vista Site
for $5,825,000. The Contract of Sale provided for a 70-day due diligence period followed by a 30-day closing period. The Purchase Agreement
executed on January 30, 2025, supersedes the Contract of Sale and reflects updated terms, including the revised purchase price.
The closing of the transaction under the Purchase
Agreement is expected to occur on or before April 1st, 2025. This decision is consistent with our decision to strategically
realign the business towards engineered soils and logistics.
On July 23, 2024, we entered into a Joint Venture
Agreement (the “JV Agreement”) with Milk & Honey LLC, a Texas limited liability company (“Milk & Honey”),
for the purpose of establishing a joint venture to be conducted under the name of Sugar Phase I LLC (the “Joint Venture”)
for the purpose of developing and constructing single-family homes (the “Project”) on five parcels of land located in Edinburg
Texas (the “Land”). We and Milk & Honey are each referred to as a “Joint Venturer” and collectively are referred
to as the “Joint Venturers.”
5
Pursuant to JV Agreement, we have agreed to contribute
capital in the amount of $100,000 to the Joint Venture to be used for the development and construction of single-family homes on the Land,
and Milk & Honey has agreed to contribute the Land, valued at $317,500, to the Joint Venture. The Joint Venturers shall make such
other capital contributions required to enable the Joint Venture to carry out its purposes as set forth in the JV Agreement as the Joint
Venturers may mutually agree upon. The Joint Venturers shall arrange for or provide any financing as may be required by the Joint Venture
for carrying out the purposes of the Joint Venture.
The JV Agreement provides that we will have a
60% interest and Milk & Honey will have a 40% interest in the Joint Venture. In addition, it provides that net profits of the Joint
Venture as they accrue will be distributed 45% to the Company and 55% to Milk & Honey, and that the expenses of the Joint Venture
will be paid by the Joint Venturers, in the ratio which the contribution of each Joint Venturer bears to the total contributions.
Pursuant to Joint Venture in the event the Joint
Venturers are divided on a material issue and cannot agree on the conduct of the business and affairs of Sugar Phase JV, a deadlock shall
be deemed to have occurred in which the Company (the “Offerer”) may elect to purchase the Joint Venture interest of the other
Joint Venturer (the “Offeree”) at an agreed upon valuation of $1,100,000 or the Company shall make the final decision to break
the deadlock.
On October 1, 2024, we entered into a JV Agreement
with Milk & Honey for the purpose of establishing a joint venture to be conducted under the name of Hacienda Olivia Phase II LLC (the
“2nd Joint Venture”) for the purpose of developing and constructing a single family homes (the “Second Project”)
on fifty-seven (57) lots of land located in Hidalgo County, Texas (the “Second Land”). We are the manager of the 2nd
Joint Venture.
Pursuant to 2nd JV Agreement, we agreed
to contribute $10,000 to the 2nd Joint Venture as an initial capital contribution for the specific purpose of satisfying the
existing mortgage on the Second Land, and Milk & Honey has agreed to contribute the Second Land to the 2nd Joint Venture.
The terms of the 2nd Joint Venture are similar to the Joint Venture.
On November 18 2024, we entered into a JV Agreement
with Milk & Honey, for the purpose of establishing a joint venture to be conducted under the name of Hacienda Olivia Phase III LLC
(the “3rd Joint Venture”) for the purpose of developing and constructing single family homes on twelve (12) acres
of land representing 77 lots located in Hidalgo County, Texas (the “Third Land”). We are the manager of the 3rd
Joint Venture.
Pursuant to the 3rd JV Agreement, we
agreed to contribute $10,000 to the 3rd Joint Venture as an initial capital contribution, and Milk & Honey has agreed to
contribute the Third Land to the Joint Venture. The terms of the 3rd Joint Venture are similar to the Joint Venture.
As of January 16, 2025, the Joint Venture, acquired
twenty-two (22) lots in South Texas (the “Property”) for a purchase price of $440,000 for development of its residential development
project (the “January Project”). In connection with the acquisition of the Property, the Joint Venture entered into a Loan
Agreement, dated as of January 16, 2025 (the “Loan Agreement”), for the periodic draw down of up to $1,092,672.75 in principal
amount of loan proceeds to be used for the completion of the construction of the January Project, the payment of the lender’s expenses
related to the Loan Agreement and the payment of expenses related to the acquisition by the Joint Venture of the Property. The loan bears
interest at the greater of the 1-Month Term Secured Overnight Financing Rate plus 5.710%, as adjusted monthly, or 9.740%, includes a loan
origination fee of $23,110, matures on March 12, 2026 and is secured by the Property and other related collateral. The loan is also guaranteed
by us and Properties by Milk & Honey (each a “Guarantor”) pursuant to an Unconditional Guaranty, dated January 16, 2025
(the “Guaranty”). The obligations of each Guarantor are joint and several. The Guaranty may be enforced against any Guarantor
without attempting to collect from the Joint Venture any other Guarantor or any other person, and without attempting to enforce lender’s
rights in any of the collateral. We, Properties by Milk & Honey and the principals of Properties by Milk & Honey also entered
into an Indemnity Agreement, dated January 16, 2025 (the “Indemnity Agreement”), for the benefit of the lender under the Loan
Agreement, with respect to the January Project’s compliance with Environmental Laws, Hazardous Substances Laws and Building Laws
(as such terms are defined in the Indemnity Agreement).
On March 6, 2025, Safe and Green Development Corporation
(the “Company”) entered into a Buyout Agreement (the “Buyout Agreement”) with Properties by Milk & Honey LLC,
a Texas limited liability company (“Milk & Honey”), pursuant to which the Company agreed to sell to Milk & Honey the
Company’s 60% membership interest (the “Interest”) in Sugar Phase I LLC, a joint venture (the “JV”) established
under a Joint Venture Agreement with Milk & Honey, dated July 23, 2024, for a purchase price of $700,415.24, reflecting amounts contributed
and costs incurred by the Company in connection with the Sugar Phase I project, to be evidenced by a one-year promissory note (the “Note”)
in the principal amount of $700,415.24, bearing interest at 10% per annum.
The Buyout Agreement and Note provide that the
Company’s Interest will be transferred to Milk & Honey incrementally as the Note is repaid. The closing under the Buyout Agreement
occurred on March 7, 2025. In connection therewith, Milk & Honey prepaid $120,000.00 of the principal amount due under the Note and
the Company transferred 10.27% of the Company’s Interest in the JV. The Company currently holds a 49.73% in the JV. This decision
is consistent with our decision to strategically realign the business towards engineered soils and logistics.
6
Norman Berry Village
On May 31, 2021, we acquired a 50% membership
interest for $600,000 in a limited liability company, Norman Berry II Owners, LLC (“NB Owners”), that is building affordable
housing in the Atlanta, Georgia metropolitan area to be known as “Norman Berry Village.” We partnered with CMC Development
Group (“CMC”), a New York City-based real estate development firm with national expertise providing design build services.
CMC owns the other 50% membership interest in NB Owners. The NB Owners’ operating agreement provides that NB Owners will initially
have two managers, one designated by CMC (the “CMC Manager”) and one designated by us. Pursuant to the operating agreement,
the CMC Manager will manage the day-to-day business and affairs of NB Owners and all non-routine decisions requires the approval of members
owning a majority of the outstanding membership interests. The operating agreement also provides that any fee earned by CMC in connection
with the acquisition and development of the Norman Berry Village and related real property will be split 75% to CMC and 25% to us. We
have no obligation under the operating agreement to make any additional capital contributions to NB Owners. In addition, neither we nor
CMC may voluntarily make any additional capital contributions to NB Owners. In accordance with the operating agreement, we are entitled
to a preferred return equal to 10% per annum on our unreturned capital contributions which return will (i) accrue from the date on which
our capital contributions were actually contributed to NB Owners until the date such capital contributions are returned to us, and (ii)
compound annually. We expect the project to develop 125,000 square feet of space and build approximately 134 multi-family rental apartments
in two buildings. We expect the project to commence in the third quarter of 2024, subject to available funding, and to be completed within
three years of commencement. The estimated development costs for this project are approximately $35,000,000. NB Owners recently received
approval from the city of Eastpoint to purchase the right of way approval to begin developing the Norman Berry Village. On March 11, 2024,
NB Owners, pursuant to a loan agreement dated March 11, 2022, issued a promissory note in the amount of $200,000. The note has a maturity
date of March 11, 2025 and provides for interest only payments at a rate of 12%. To secure the full payment of the note, the note is secured
by a security deed in the Norman Berry property. As of March 31, 2025, NB Owners is in negotiations regarding the extension of the loan
agreement through August 11, 2025.
Cumberland Inlet
On June 24, 2021, we, as a member, entered into
an Operating Agreement, with Jacoby Development, Inc., a Georgia corporation (“JDI”), as manager, dated June 24, 2021 (the
“Operating Agreement”), for JDI-Cumberland Inlet, LLC, a Georgia limited liability company (“JDI-Cumberland”),
pursuant to which we acquired a 10% non-dilutable equity interest (“LLC Interest”) in JDI-Cumberland for $3,000,000. JDI-Cumberland
has purchased a 1,298 acre waterfront parcel in downtown historic St. Mary’s, Georgia and expects to develop approximately 352 acres
thereof (the “Cumberland Inlet Project”). We, in conjunction with JDI, expect to develop a mixed-use destination community.
The location will serve as home to 3,500 units made up of single family, multi-family, vacation and hospitality use, as well as a full-service
marina, village, and upscale Eco-Tourism park inclusive of camping, yurts, cabins and cottages. JDI-Cumberland recently received all approvals
to build out the marina portion of the project.
We have no obligation under the Operating Agreement
to make any additional capital contributions to JDI-Cumberland. The Operating Agreement provides JDI with the right, at its option, to
purchase the LLC Interest from us on or before June 24, 2023 for $3,000,000, plus an amount equal to an annual internal rate of return
(IRR) on such funds of forty (40%) percent (i.e., $1,200,000 annualized). After June 24, 2023, the Operating Agreement provides JDI with
the right, at its option, to purchase the LLC Interest from us for $3,000,000 million, plus an amount equal to an IRR of thirty-two and
one-half (32.5%) percent (i.e., $975,000 annualized). The Operating Agreement also provides that if JDI receives a good faith, bona fide
written offer from an unaffiliated third party to purchase all or any portion of the Cumberland Inlet Project, JDI shall first offer the
Cumberland Inlet Project to us at the same price and upon substantially the same terms as are contained in the offer. The Operating Agreement
contains certain protective provisions that prevent JDI, as manager, from determining to, or taking, certain significant actions without
our consent. SG Echo, a subsidiary of SG Holdings, entered into a Fabrication and Building Services Agreement (“Building Services
Agreement”) with JDI-Cumberland to design, fabricate and install various improvements for the Cumberland Inlet Project using modular
structures, pursuant to budgets prepared by SG Echo submitted for approval to JDI-Cumberland, including a marina, town center, apartments
and single family units, townhomes, commercial, retail and lodging buildings/structures, eco-tourism park, camping yurts, cabins and cottages.
The Building Services Agreement has an initial term of three years, with two-year automatic renewal provisions. During the term of the
Building Services Agreement, SG Echo will have a right of first refusal with respect to each phase of the construction of the project
buildings. If SG Echo’s quote for a given phase is no more than five percent more than the average of all bona fide, arm’s
length bids that JDI-Cumberland obtains from reputable, unaffiliated builders, the phase will be awarded to SG Echo. In the event that
SG Echo’s quote for a given phase is more than five percent more than the average of all bona fide arm’s length bids JDI-Cumberland
obtains from reputable, unaffiliated builders, SG Echo will have the right to match such best bona fide, arm’s length offer and
secure the work.
On February 11, 2025, we entered into an
Amendment (this “Amendment”) to the Operating Agreement, dated June 24, 2021 for JDI-Cumberland Inlet, LLC, a Georgia limited
liability company, by and between us and Jacoby Development Inc., a Georgia corporation, and a Forced Sale Agreement by and between the
Company and JDI, pursuant to which JDI-Cumberland acquired our 10% equity interest JDI-Cumberland in exchange for a promissory note (the
“Note”) from JDI-Cumberland in the principal amount of $4.5 million. The Note bears interest at the rate of 6.5% per annum,
matures on February 6, 2026 and is secured by a pledge of a 10% equity interest in JDI-Cumberland. Payment of the Note is also guaranteed
by JDI. This decision to sell our interest is consistent with our decision to strategically realign the business towards engineered soils
and logistics.
7
St Mary’s Site
On August 18, 2022, we purchased, for $296,870
approximately 27 acres of land adjacent to our Cumberland Inlet Project from the Camden County Joint Development Authority (JDA). We had
planned to build a 120,000 square foot state of the art manufacturing facility on this site. In connection with the purchase of the St.
Mary’s Site, we entered into a promissory note in the amount of $148,300. This note had a maturity date of September 1, 2023, subject
to our right to extend for 6 months upon payments of a fee equal to 1% of the principal balance of the note and provides for payments
of interest only at a rate of nine and three quarters percent (9.75%) per annum. During August 2023, such note was extended for a one-year
period. This note could be prepaid without penalty, provided, however, if the lender has not received six months of interest, we must
pay the lender an amount equivalent to the months of interest necessary to complete six months of interest. In addition, at the time of
payment in full of the note, we must pay the lender an amount equivalent to half of one percent (0.50%) of the original loan amount. To
secure payment in full of the note, the note is secured by a security deed in the property with power of the lender to sell the property.
On March 7, 2024, we entered into a modification agreement to the promissory note to increase the loan amount to $200,000. The promissory
note was paid off in connection with the sale described below.
On January 31, 2024, we entered into an Agreement
of Sale with Pigmental Studios to sell the St. Mary’s Site. On October 14, 2024, we entered into a Modification Agreement with Palermo
Lender LLC (“Palermo”), effective as of October 2, 2024 (the “Modification Agreement”), to modify the Deed of
Trust (the “Security Deed”) securing our promissory note issued to Palermo in the original principal amount of $148,300.00,
as subsequently modified to increase the principal amount to $200,000.00, to extend the maturity date to March 1, 2025 and to change the
interest rate from 10.99% with ACH to 11.99% without ACH.
On November 13th, 2024 we entered into
an amendment to the Agreement of Sale (the “Second Amendment”) that amended the closing date to November 15th,
2024 and increased the purchase price to $1,400,000 payable $439,328 in cash and $960,672 by the issuance of a promissory note to us.
The promissory note will bear 10% interest per annum, provide for monthly interest payments and mature on March 15, 2025 with the option
to extend up to three times by paying $10,000 for each extension.
On March 23, 2025, Pigmental Studios exercised
the first of its three extension options by making the required $10,000 payment, which was received. As a result, the new maturity date
of the promissory note is April 22, 2025. The promissory note contains all the same provisions as the original note; only the maturity
date was extended.
McLean Mixed Use Site
On November 10, 2021, we entered into a Purchase
Agreement (“Purchase Agreement) with the Durant Industrial Authority to acquire 100% ownership of approximately 114 mixed-use acres
in Durant, Oklahoma for $868,000. We anticipate building approximately 800 residential units and up to 1.1 million square feet of industrial
manufacturing space on the mixed-use property. The closing on the 114 mixed-use acres occurred in the first quarter of 2022. We had planned
to build a 120,000 square foot state of the art manufacturing facility. The property is zoned for an additional 1.0 million square feet
of industrial space. We are currently marketing the additional space to potential tenants.
As of March 31st, 2025 we expect to
subdivide our McLean property into buildable single family lots that can subsequently be sold to developers or developed internally. We
analyzed market conditions and determined that this process is expected to yield the highest return without having to take on construction
related risks. This decision is consistent with our decision to strategically realign the business towards engineered soils and logistics.
8
Real Estate Development Business
Housing Industry
The U.S. housing market experienced notable activity
in early 2025, with single-family home production increasing in response to limited existing inventory, while multifamily development
began to show signs of stabilization after a prolonged period of softness. Several structural and economic factors continue to influence
residential construction activity, including:
● persistent shortages of buildable lots and skilled labor;
● tight financing conditions and ongoing concerns around housing affordability;
● continued regional variation in residential construction activity; and
According to data released by the U.S. Department
of Housing and Urban Development and the U.S. Census Bureau, total housing starts increased by 11.2% in February 2025 to a seasonally
adjusted annual rate of 1.50 million units. Within this total, single-family housing starts rose by 11.4% to an annualized rate of 1.11
million units, the highest level recorded since February 2024. Multifamily housing starts, which include apartments and condominiums,
increased by 10.7% to a 393,000-unit annual rate, representing the first monthly gain after 18 consecutive months of declines.
Despite these gains in starts, the issuance of
building permits—a leading indicator of future construction—declined 1.2% in February 2025 to a seasonally adjusted annual
rate of 1.46 million units and was 6.8% lower than the same period in the prior year. Single-family permits decreased by 0.2% to a 992,000-unit
pace, while multifamily permits declined by 3.1% to a 464,000-unit rate.
On a regional, year-to-date basis, combined single-family
and multifamily housing starts were down 4.7% in the Northeast, 21.5% in the Midwest, and 8.3% in the South, but increased by 20.2% in
the West. Permit activity followed a similar trend, with year-to-date declines of 30.1% in the Northeast, 12.5% in the West, and 2.1%
in the South, while the Midwest experienced a 2.3% increase.
According to the National Association of Home
Builders (NAHB), single-family housing starts are expected to remain relatively flat in 2025, with the potential benefits of a more favorable
regulatory environment offset by ongoing uncertainty related to tariffs and construction costs. Multifamily construction activity is projected
to remain soft through the first half of the year due to financing constraints, but may stabilize in the second half of 2025 as market
conditions evolve.
Joint Venture and Partnership
Activities
We have entered into, and may continue in the
future to enter into, joint ventures (including limited liability companies or partnerships) through which we would own an indirect economic
interest of less than 100% of the property owned directly by such joint ventures. Our decision to develop a property either on our own
or through a joint venture is based on a variety of factors and considerations, including: (i) the economic and tax terms required by
the seller of land; (ii) our desire to diversify our portfolio of communities by market, submarket and product type; (iii) our desire
at times to preserve our capital resources to maintain liquidity or balance sheet strength; and (iv) our projections, in some circumstances,
that we could achieve higher returns on our invested capital or reduce our risk if a joint venture vehicle is used. Each joint venture
agreement is individually negotiated, and our ability to operate and/or dispose of a development project may be limited to varying degrees
depending on the terms of the joint venture agreement.
9
Conflicts of Interest
We expect that numerous conflicts of interest
will exist after the Separation and Distribution based upon the numerous arrangements and/or agreements between the parties.
Competition
We face competition in the real estate development
and housing industries. Real estate developers compete for, among other things, residents, desirable land parcels, financing, raw materials,
and skilled labor. Increased competition may prevent us from acquiring attractive land parcels or make such acquisitions more expensive,
hinder our market share expansion, or lead to pricing pressures that may adversely impact our margins and revenues. Competitors may independently
develop land and construct housing units that are superior or substantially similar to our products and because they are or may be significantly
larger, have a longer operating history, and have greater resources or lower cost of capital than us, may be able to compete more effectively
in one or more of the markets in which we operate or plan to operate. We believe we can distinguish ourselves from our competitors on