11. Share-based payments

As of March 31, 2016, the Company maintains two share-based incentive plans. The 2008 Share Incentive Plan (the “2008 Plan”) was carried forward as a result of the TBO Merger effective on March 21, 2015, with 136,068 shares of common stock reserved for issuance. On April 27, 2015, the Board of Directors approved the IDI, Inc. 2015 Stock Incentive Plan (the “2015 Plan”), which was subsequently approved during the annual shareholder meeting on June 2, 2015, covering the issuance of 2,500,000 shares of common stock in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units. The primary purpose of the 2015 Plan is to attract, retain, reward and motivate certain individuals by providing them with an opportunity to acquire or increase a proprietary interest in IDI and to incentivize them to expend maximum effort for the growth and success of the Company, so as to strengthen the mutuality of the interests between such individuals and the stockholders of the Company. On November 16, 2015, the Board of Directors and the Compensation Committee approved the increase of the number of shares of common stock authorized for issuance under the 2015 Plan (the “2015 Plan Amendment”), to 12,500,000, subject to stockholder approval at the Company’s next Annual Meeting of Stockholders in accordance with the rules of the NYSE MKT LLC (the “Stockholder Approval”).

As of March 31, 2016, there were 80,568 and 6,738,000 shares of common stock reserved for issuance under the 2008 Plan and the 2015 Plan, respectively.

Non-plan share-based payments

On October 13, 2014, IDI Holdings entered into a business consulting services agreement with Marlin Capital Investments, LLC (“Marlin Capital”) for a term of four years (the “Marlin Consulting Agreement”), pursuant to which, Marlin Capital held RSUs representing the right to receive 2,000,000 shares of TBO Common Stock, which were assumed by the Company upon closing of the TBO Merger and the RSUs represent the right to receive 2,000,000 shares of the Company’s common stock, outside of the 2008 Plan and 2015 Plan. The RSUs vest annually beginning October 13, 2015 provided certain performance goals of the Company are met. The performance goals of the Company were met in January 2016. The shares underlying such RSUs will not be delivered until October 13, 2018, unless there is a change of control of the Company. In addition, 960,000 RSUs held by TBO employees, including the Company’s Chief Executive Officer, Chief Financial Officer, and President and Chief Operating Officer, were also assumed by the Company and represent the right to receive 960,000 shares of Company’s common stock, with a vesting period ranging from two to four years from the grant date.

Effective on November 16, 2015, the Company entered into an employment agreement with Michael Brauser (the “Michael Brauser Employment Agreement”) relating to his service as Executive Chairman of the Board of Directors, pursuant to which, Michael Brauser will receive an annual base salary of $25,000 payable in accordance with the Company’s general payroll practices and 5.0 million RSUs, outside of the 2008 Plan and 2015 Plan, representing the right to receive 5.0 million shares of common stock, provided that the issuance of shares of common stock underlying the RSUs is subject to Stockholder Approval. The RSUs vest annually over a four year period; provided, however, that no portion of the RSUs shall vest unless and until the Company has, for any one fiscal year in which the RSUs are outstanding, gross revenue determined in accordance with the Company’s audited financial statements in excess of $100.0 million for such fiscal year and positive EBITDA (as determined based on the Company’s audited financial statements) for such fiscal year, after subtracting all charges for equity compensation paid to executives or other service providers to the Company (collectively, the “Vesting Conditions”). Such RSUs vest in full upon a Company change in control, termination of Michael Brauser without cause, termination by Michael Brauser for good reason, or Michael Brauser’s death or disability. The Company concluded that it was probable that the Vesting Conditions would be met.

On December 8, 2015, at the time of Phillip Frost’s joining the Board of Directors of the Company as Vice Chairman, Frost Gamma received a grant of 3,000,000 RSUs, outside of the 2008 Plan and 2015 Plan, provided that the issuance of shares of common stock underlying such RSUs is subject to the Stockholder Approval. These grants were fully vested on December 8, 2015.

The Company determined that the Board of Directors approval date was the grant date and began to amortize the share-based compensation expenses on the grant date.

Share options

Details of share options activity during the three months ended March 31, 2016 were as follows:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term	Aggregate intrinsic value
Balance as of December 31, 2015		462,000		$	9.52	5.3 years	$	-
Forfeited		(30,000	)	$	9.59
Balance as of March 31, 2016		432,000		$	9.51	3.7 years	$	-
Options exercisable as of March 31, 2016		365,333		$	9.35	2.7 years

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of IDI’s common stock on March 31, 2016 of $5.80 and the exercise price, multiplied by the number of stock options as of the same date.

The unvested balance of options were shown below for the three months ended March 31, 2016:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term
Unvested as of December 31, 2015		126,667		$	9.02	8.1 years
Vested		(30,000	)	$	5.50
Forfeited		(30,000	)	$	9.59
Unvested as of March 31, 2016		66,667		$	10.34	9.4 years

Compensation expense recognized from employee stock options for the three months ended March 31, 2016 and 2015 of $16 and $2, respectively, was recognized in general and administrative expenses and discontinued operations in the condensed consolidated statements of operations. As of March 31, 2016, unrecognized share-based compensation cost relating to granted share options amounted to $389, which are expected to be recognized over a weighted average period of 3.5 years.

Restricted stock units

Details of unvested restricted stock unit activity during the three months ended March 31, 2016 were as follows:

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2015 ⁽²⁾		13,721,000		$	7.35
Vested and delivered		(332,542	)		6.50
Withheld as treasury stock ⁽¹⁾		(55,212	)		6.50
Vested not delivered		(22,667	)		6.50
Forfeited		(19,000	)		7.01
Unvested as of March 31, 2016 ⁽²⁾		13,291,579		$	7.38

⁽¹⁾	As mentioned in Note 10, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during the quarter.

⁽²⁾

Among the total unvested balance as of March 31, 2016 and December 31, 2015, 12,312,000 shares, with weighted average grant-date fair value of $9.48, are subject to the Stockholder Approval. Among such shares, 3,000,000 shares were granted to Frost Gamma, and were vested fully on the grant date, and the remaining shares have a vesting period ranging from three to four years. For accounting purposes, the grant date was determined to be in 2015, as the Company concluded the Stockholder Approval was perfunctory.

The Company recognized compensation cost (included in sales and marketing expenses, general and administrative expenses, and discontinued operations in the condensed consolidated statements of operations, and intangible assets in the condensed consolidated balance sheets) for these RSUs of $7,511 and $100 for the three months ended March 31, 2016 and 2015, respectively. The fair value of the restricted stock units was estimated using the market value of the Company’s common stock on the date of grant, which was equivalent to the closing price of the common stock on the grant date.

As of March 31, 2016, unrecognized share-based compensation costs in respect of granted restricted stock units amounted to $92,179 that are expected to be recognized over a weighted average period of 3.2 years.

Shares issued to third-party vendors

The Company issues shares to certain third-party vendors in lieu of cash for services rendered. As mentioned in Note 10, during the three months ended March 31, 2016, 12,000 restricted shares of common stock were issued to a vendor of the Company as additional consideration for services rendered. An aggregate of $129 amortization expense was recognized for the three months ended March 31, 2016.

The share-based compensation expenses for the Company’s share options, RSUs and common stock were allocated to the following accounts in the condensed consolidated financial statement for the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,
(In thousands)	2016		2015
Sales and marketing expenses	$	546	$	-
General and administrative expenses		6,832		59
Discontinued operations		-		43
Capitalized in intangible assets		278		-
Total	$	7,656	$	102