Description of Business

6 Months Ended

Jun. 30, 2017

1.	Description of Business

SG Blocks, Inc. (the “Company” or “SGB”) was previously known as CDSI Holdings, Inc. (a Delaware corporation incorporated on December 29, 1993). On November 4, 2011, the Company’s wholly-owned subsidiary was merged with and into SG Building Blocks, Inc. (“SG Building,” formerly SG Blocks Inc.) (the “Merger”), with SG Building surviving the Merger and becoming a wholly-owned subsidiary of the Company. The Merger was a reverse merger that was accounted for as a recapitalization of SG Building as SG Building was the accounting acquirer. Accordingly, the historical financial statements presented are the financial statements of SG Building.

The Company is a provider of code engineered cargo shipping containers that it modifies and delivers to meet the growing demand for safe and green commercial, industrial and residential building construction. Rather than consuming new steel and lumber, it capitalizes on the structural engineering and design parameters a shipping container must meet and repurposes them for use in building. It offers the construction industry a safer, greener, faster, longer lasting and more economical alternative to conventional construction methods.

The Company also provides engineering and project management services related to the use of modified containers in construction.

Reverse Stock Split

On February 28, 2017, the Company effected a 1-for-3 reverse stock split of its common stock and preferred stock, which has since been converted. All share and per share amounts set forth in the consolidated financial statements of the Company have been retroactively restated to reflect the split as if it had occurred as of the earliest period presented.

Public Offering

On June 27, 2017, we completed a public offering of our common stock (the “June Offering”). In connection with the June Offering, we sold 1,500,000 shares of common stock at a public offering price of $5.00 per share for aggregate net proceeds of $6,826,558 after deducting underwriting discounts and commissions and related expenses. The Company also incurred $715,173 in offering costs in connection with the public offering, which has been paid subsequent to June 30, 2017.

As of June 30, 2017, we had 3,982,238 shares of common stock issued and outstanding.

Subsequent to the date of this Quarterly Report on Form 10-Q, on July 12, 2017, the underwriters exercised their option to purchase an additional 225,000 shares of common stock for net proceeds of approximately $1,000,000 after deducting underwriting discounts and commissions and related expenses. See Note 12 for additional information on the underwriters’ exercise of their option to purchase additional shares.

In connection with the underwriters’ overallotment, the Company issued warrants to purchase an additional 11,250 shares of common stock, in the aggregate, to certain affiliates of the underwriters at an exercise price of $6.25 per share. See Note 12 for additional information.

Upon the closing of the June Offering, the Company issued to certain affiliates of the underwriters, as compensation, warrants to purchase an aggregate of 75,000 shares of common stock at an exercise price of $6.25 per share. See Note 9 for additional information on the underwriters’ warrants.