12.

Subsequent Events.

On July 24, 2018, the Compensation Committee approved an increase in annual base salary for Mr. Galvin and Mr. Shetty to $370,000 and $300,000, respectively, effective as of January 1, 2018. The Company has recognized the increase in base salaries as additional payroll and related expenses as reflected in the financial statements for the quarterly period ended June 30, 2018.

On July 26, 2018, based on the recommendation of the Compensation Committee of the Company’s Board of Directors (the “Board”), the full Board approved the adoption of a non-employee director compensation plan, pursuant to which the Company’s non-employee directors are to receive total annual compensation of $60,000 per year, consisting of (1) a $30,000 cash component and (2) a $30,000 equity component, which will be granted each year in conjunction with the Company’s annual meeting of stockholders.

The cash component is payable quarterly in advance and, beginning in the 2019 calendar year, each non-employee director may elect to receive the $30,000 in the form of RSUs, in either a $15,000 or $30,000 increment. In addition, the chairs of the audit committee and compensation committee and the lead independent director will receive an additional annual cash retainer in the amounts of $10,000, $7,500 and $10,000, respectively. In the event the Board forms a nominating and corporate governance committee, the chair of such committee will receive an annual cash retainer in the amount of $5,000. The cash component of the non-employee director compensation plan, including the additional retainers, is effective as of January 1, 2018. The Company has recognized the cash component of the non-employee director compensation plan as additional general and administrative expenses as reflected in the financial statements for the quarterly period ended June 30, 2018.

On July 26, 2018, pursuant to the equity component of the plan, the Company awarded 5,591 RSUs to each of the Company’s five non-employee directors serving as a director immediately after the Company’s 2018 annual meeting of stockholders held on June 1, 2018. These RSUs will vest on the earlier of July 26, 2019 or the date of the Company’s 2019 annual stockholder meeting, subject to accelerated vesting in the event of death or disability, and shall be payable six months after termination from the Board or death or disability.

On August 2, 2018, Sean M. McAvoy notified the Company of his resignation from the Board, effective immediately. There was no disagreement between Mr. McAvoy and the Company on any matter relating to the Company’s operations, policies or practices.

On August 10, 2018, the Company filed a registration statement on Form S-3 with the Securities and Exchange Commission, registering 622,726 shares of the Company’s common stock for resale by HCI; Mr. McAvoy is affiliated with HCI due to his role as the manager of Hillair Capital Management LLC, the investment adviser of HCI. The Company filed the registration statement to comply with certain registration obligations under the Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock of SG Blocks, Inc., the Securities Purchase Agreement, dated June 30, 2016, between the Company and HCI and the Securities Purchase Agreement, dated November 17, 2016, between the Company and HCI. The registration statement is currently under review by the Securities and Exchange Commission.