Quarterly report pursuant to Section 13 or 15(d)

Share-based Compensation

v3.20.2
Share-based Compensation
6 Months Ended
Jun. 30, 2020
Stock Options and Grants [Abstract]  
Share-based Compensation

14.

Share-based Compensation  


On October 26, 2016, the Company’s Board of Directors approved the issuance of up to 25,000 shares of the Company’s common stock in the form of restricted stock or options (“2016 Stock Plan”). Effective January 20, 2017, the 2016 Stock Plan was amended and restated as the SG Blocks, Inc. Stock Incentive Plan, as further amended effective June 1, 2018 (the “Incentive Plan”). The Incentive Plan authorizes the issuance of up to 125,000 shares of common stock. It authorizes the issuance of equity-based awards in the form of stock options, stock appreciation rights, restricted shares, restricted share units, other share-based awards and cash-based awards  to non-employee directors and to officers, employees and consultants of the Company and its subsidiary, except that incentive stock options may only be granted to the Company’s employees and its subsidiary’s employees. The Incentive Plan expires on October 26, 2026, and is administered by the Company’s Compensation Committee of the Board of Directors. Each of the Company’s employees, directors, and consultants are eligible to participate in the Incentive Plan. As of June 30, 2020, there were 3,473 shares of common stock available for issuance under the Incentive Plan. See Note 16 for a discussion on the approved amendment to the Company's Stock Incentive Plan that occurred during the 2020 Annual Meeting of Stockholders. 


Stock-Based Compensation Expense  


Stock-based compensation expense is included in the condensed consolidated statements of operations as follows:   





Three Months Ended
June 30,


Six Months Ended
June 30,





2020


2019

2020
2019


Payroll and related expenses

   

$ 72,630

$ 170,118

$

111,394

   

$

332,611

   


General and administrative expenses

57,120





57,120



Marketing and business development expenses




6,750




6,750

 

       Total

   

$ 129,750

$ 176,868

$

168,514

   

$

339,361

   

 

The following table presents total stock-based compensation expense by security type included in the condensed consolidated statements of operations:  





Three Months Ended
June 30,


Six Months Ended
June 30,





2020


2019

 2020

2019

 

Stock options

   

$ 2,667

$ 40,098

$

5,333

  

  

$

72,196

   

 

Restricted Stock Units 

   


127,083


136,770

 

163,181

  

  

 

267,165

   


Total
$ 129,750

$ 176,868

$ 168,514

$ 339,361


Stock-Based Option Awards 


The Company has issued no stock-based options during the six months ended June 30, 2020. The fair value of the stock-based option awards granted during the six months ended June 30, 2019, were estimated at the date of grant using the Black-Scholes option valuation model with the following assumptions:  

 

 

 



2019


 

Expected dividend yield



%

 

Expected stock volatility



68.35 %

 

Risk-free interest rate



2.44 %

 

Expected life



3.00


Because the Company does not have significant historical data on employee exercise behavior, the Company uses the “Simplified Method” to calculate the expected life of the stock-based option awards granted to employees. The simplified method is calculated by averaging the vesting period and contractual term of the options.  


The following table summarizes stock-based option activities and changes during the six months ended June 30, 2020 as described below: 

 


 

 

 Shares

 

 

Weighted Average Fair Value Per Share

 

 

Weighted
Average Exercise Price Per Share

 

 

Weighted Average Remaining Terms (in years)

 

 

Aggregate Intrinsic Value

 


Outstanding – December 31, 2019

 

 

53,170

 

 

$

24.80

 

 

$

81.20

 

 

 

7.40

 

 

$

 


Granted

 

 

 

 

 

 

 

 

 

 

 

— 

 

 

 

— 

 


Exercised 

 

 

 

 

 

 

 

 

 

 

— 

 

 

 

— 

 


Cancelled

 

 

(833

)

 

 

 

 

 

 

 

 


 

 

 

— 

 


Outstanding – June 30, 2020

 

 

52,337

 

 

 

24.75

 

 

 

81.60

 

 

 

6.90

 

 

$

 


Exercisable – December 31, 2019

 

 

52,649

 

 

 

24.80

 

 

 

81.20

 

 

 

7.39

 

 

 

 


Exercisable – June 30, 2020

 

 

52,024

 

 

$

24.74

 

 

$

81.54

 

 

 

6.89

 

 

$

 

  

For the three months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $2,667 and $40,098, respectively. For the six months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $5,333 and $72,196, respectively, related to stock options. This expense is included in payroll and related expenses in the accompanying condensed consolidated statements of operations.  

 

As of June 30, 2020, there was $8,000 of total unrecognized compensation costs related to non-vested stock options, which will be expensed over a weighted average period of less than one year. The intrinsic value is calculated as the difference between the fair value of the stock price at year end and the exercise price of each of the outstanding stock options. The fair value of the stock price at June 30, 2020 was $2.67 per share.


Restricted Stock Units 


On March 22, 2019, a total of 15,703 of restricted stock units were granted to Mr. Galvin, Mr. Armstrong, Mr. Shetty, six employees and one consultant of the Company, under the Company's stock-based compensation plan, at the fair value of $54.00 per share, which represents the closing price of the Company's common stock on February 26, 2019, as adjusted for stock splits. Restricted stock units granted to Mr. Galvin, Mr. Armstrong, Mr. Shetty, and an aggregate of six employees and one consultant of 6,1397725,729 and an aggregate of 3,063, respectively, vest in installments over either a one-year, two-year, three-year and four-year period and will fully vest by the end of December 31, 2022. The fair value of these units upon issuance amounted to $847,957.  


On January 15, 2019 and February 26, 2019, a total of 526 of restricted stock units were granted to two of the Company’s non-employee directors, under the Incentive Plan, at the calculated fair value of $58.80 and $55.20 per share, respectively, which represents the average closing price of the Company’s common stock for the ten trading days immediately preceding and including the grant date, as adjusted for stock splits. The restricted stock units granted on January 15, 2019 vested on January 15, 2020, subject to each individual’s continued service as a director of the Company through such date, and are payable six months after the termination of the director from the Company’s Board of Directors or death or disability. The restricted stock units granted on February 26, 2019 vested on the earlier of (A) the first anniversary of the date of the grant or (B) the date of the 2019 annual meeting of the Company’s stockholders subject to each individual’s continued service as a director of the Company through such date, and are payable six months after the termination of the director from the Board of Directors or death or disability.



On April 14, 2020, a total of 35,331 of restricted stock units were granted to Mr. Galvin, Mr. Armstrong, Mr. Sheeran, five employees and two consultants of the Company, under the Company's stock-based compensation plan, at the fair value of $4.76 per share, which represents the closing price of the Company's common stock on April 14, 2020. Restricted stock units granted to Mr. Galvin, Mr. Armstrong, Mr. Sheeran, and an aggregate of five employees and one consultant of 11,331, 1,000, 3,000 and an aggregate of 8,000, respectively, will vest in full on the first anniversary of the vesting commencement date and one consultant received 12,000 restricted stock units that vested immediately on April 15, 2020. The fair value of these units upon issuance amounted to $168,176.   


On April 14, 2020, total of 12,000 of restricted stock units were granted to three of the Company’s non-employee directors, under the Incentive Plan, at the calculated fair value of $4.76 per share, which represents the closing price of the Company’s common stock on April 14, 2020. The restricted stock units granted on April 14, 2020 will fully vest on April 14, 2021, subject to each individual’s continued service as a director of the Company through such date, and are payable six months after the termination of the director from the Company’s Board of Directors or death or disability. The fair value of these units upon issuance amounted to $57,120.


For the three months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $127,083 and $136,770 related to restricted stock units. For the six months ended June 30, 2020 and 2019, the Company recognized stock-based compensation of $163,181 and $267,165 related to restricted stock units. This expense is included in the payroll and related expenses and marketing and business development expense in the accompanying condensed consolidated statement of operations. For the six months ended June 30, 2020 and 2019, the Company recognized $0 and $108,629, respectively, related to restricted stock units in lieu of accrued compensation.  


The following table summarized restricted stock unit activities during the six months ended June 30, 2020:




    Number of Shares

 

Non-vested balance at January 1, 2020



8,938

 

Granted



47,331

Vested
(17,512 )

Forfeited/Expired

Non-vested balance at June 30, 2020 
38,757