15. Share-based payments

As of December 31, 2016, the Company maintains two share-based incentive plans: the 2008 Share Incentive Plan (the “2008 Plan”), which was carried forward as a result of the TBO Merger effective on March 21, 2015 and the Cogint, Inc. 2015 Stock Incentive Plan (the “2015 Plan”), which was approved during the annual meeting of stockholders on June 2, 2015, which authorized the issuance of 2,500,000 shares of common stock. The 2015 Plan was amended on June 3, 2016 at the Company’s annual meeting of stockholders which approved an increase of the number of shares of common stock authorized for issuance under the 2015 Plan to 12,500,000. 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 the Company 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.

As of December 31, 2016, there were 180,568 and 5,555,742 shares of common stock reserved for issuance under the 2008 Plan and the 2015 Plan, respectively.

Outside of the 2008 Plan and 2015 Plan, as amended, Marlin Capital Investments, LLC (“Marlin Capital”), a company which our Executive Chairman Michael Brauser owns 50% and is one of two managers, held RSUs representing the right to receive 2,000,000 shares of common stock of TBO (“TBO Common Stock”), which was assumed by the Company upon closing of the TBO Merger and such RSUs represent the right to receive 2,000,000 shares of the Company’s common stock. These RSUs vest annually beginning from October 13, 2015 only if certain performance goals of the Company are met. The shares underlying such RSUs will not be delivered until October 13, 2018, unless there is a change of control of the Company. For the years ended December 31, 2016 and 2015, share-based compensation expenses of $1,252 and $1,512, associated with shares under the Marlin Capital agreement, were recognized, respectively.

In addition, 960,000 RSUs held by TBO employees, including the Company’s Chief Executive Officer and Interim President, and Chief Financial Officer, were also assumed by the Company and represent the right to receive 960,000 shares of the Company’s common stock, with a vesting period of two years, which were fully vested and delivered in 2016.

Outside of the 2008 Plan and 2015 Plan, effective 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 payable in accordance with the Company’s general payroll practices and 5,000,000 RSUs representing the right to receive 5,000,000 shares of common stock. The issuance of shares of common stock underlying the RSUs was approved by the stockholders annual meeting in 2016. These RSUs vest ratably over a four year period; provided, however, that no portion of the RSUs shall vest unless and until the Company has, for any 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 earnings before income tax, interests, depreciation and amortization (“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. As of December 31, 2015, the Company concluded that it would be probable that the Vesting Conditions would be met.

Outside of the 2008 Plan and 2015 Plan, on December 8, 2015, at the time of Phillip Frost’s joining the Board of Directors of the Company as Executive Vice Chairman, Frost Gamma received a grant of 3,000,000 RSUs, and the issuance of shares of common stock underlying such RSUs was approved by the stockholders annual meeting in 2016. These grants were fully vested on December 8, 2015.

The Company determined the Board of Directors approval date to be the grant date and amortize the share-based compensation expenses beginning from the grant date.

Share options

Details of share options activity during the years ended December 31, 2016, 2015 and 2014 were as follows:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term		Aggregate intrinsic value
Balance as of January 1, 2015		-		$	-		-	$	-
Additions as a result of the reverse acquisition		407,000		$	9.21
Granted		85,000		$	10.39
Forfeited		(30,000	)	$	7.85
Outstanding as of December 31, 2015		462,000		$	9.52	5.3 years		$	-
Granted		30,000		$	5.04
Forfeited		(40,000	)	$	8.45
Expired		(100,000	)	$	6.02
Outstanding as of December 31, 2016		352,000		$	10.25	4.4 years		$	-
Options vested and expected to vest as of December 31, 2016		352,000		$	10.25	4.4 years		$	-
Options exercisable as of December 31, 2016		283,250		$	10.56	3.3 years		$	-

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock on December 31, 2016 of $3.45 and the exercise price, multiplied by the number of in-the-money stock options as of the same date.

The activity of unvested balance of options is shown below for the years ended December 31, 2016, 2015 and 2014:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term
Unvested as of January 1, 2015		-		$	-		-
Additions as a result of the reverse acquisition		63,334		$	6.82
Granted		85,000		$	10.39
Vested		(11,667	)	$	8.10
Forfeited		(10,000	)	$	7.85
Unvested as of December 31, 2015		126,667		$	9.02	8.1 years
Granted		30,000		$	5.04
Vested		(47,917	)	$	7.16
Forfeited		(40,000	)	$	8.45
Unvested as of December 31, 2016		68,750		$	8.91	8.9 years

On June 3, 2016, a total of 30,000 share options were granted to two employees with a vesting period of four years.

We estimate the fair value of each stock option on the date of grant using a Black-Scholes option-pricing model applying the following assumptions, and amortize the fair value to expense over the option’s vesting period using the straight-line attribution approach for employees and non-employee directors, for the years ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
Expected term (in years)	4			4
Risk-free interest rate		1.71	%	1.57% - 1.66%
Expected volatility		99.27	%	20.97% - 128.66%
Expected dividend yield		0.00	%		0.00%

We estimate the risk-free interest rate based on rates in effect for United States government bonds with terms similar to the expected terms of the stock options, at the time of grant. We estimate the volatility of our shares on the date of grant utilizing the historical volatility of our publicly-traded shares. We estimate the expected terms by taking into account the contractual terms and historical exercise patterns.

The weighted average grant-date fair value of share options granted during the years ended December 31, 2016, 2015 and 2014 was $3.55, $7.35 and $0, respectively. There were no share options exercised for the three years ended December 31, 2016. The total fair value of share options vested during the years ended December 31, 2016, 2015 and 2014 was $272, $61, and $0, respectively.

Compensation expense recognized from employee stock options for the years ended December 31, 2016, 2015 and 2014 was $110, $28 and $0, respectively, which was recognized in general and administrative expenses and discontinued operations in the consolidated statements of operations. As of December 31, 2016, unrecognized share-based compensation cost in respect of granted share options amounted to $366, which are expected to be recognized over a weighted average period of 3.0 years.

Restricted stock units

Details of unvested RSUs activity during the years ended December 31, 2016, 2015 and 2014 were as follows:

	Number of units			Weighted average grant-date fair value
Balance as of September 22, 2014 (inception)		-		$	-
Granted		2,960,000		$	2.00
Unvested as of December 31, 2014		2,960,000		$	2.00
Additions as a result of the reverse acquisition		416,800		$	4.81
Granted ⁽¹⁾		13,890,500		$	9.16
Vested and delivered		(382,300	)	$	5.55
Vested not delivered		(3,085,000	)	$	8.36
Forfeited		(79,000	)	$	5.78
Unvested as of December 31, 2015⁽¹⁾		13,721,000		$	7.78
Granted		1,339,758		$	4.17
Vested and delivered		(1,074,327	)	$	3.28
Withheld as treasury stock ⁽²⁾		(360,235	)	$	1.52
Vested not delivered		(1,022,667	)	$	2.59
Forfeited		(196,500	)	$	7.16
Unvested as of December 31, 2016		12,407,029		$	8.40

⁽¹⁾	Among the grants in 2015 and the unvested balance as of December 31, 2015, 12,312,000 shares, with weighted average grant-date fair value of $9.48, were subsequently approved at the Company’s annual meeting of stockholders on June 3, 2016.

⁽²⁾	As discussed in Note 14, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during the year ended December 31, 2016, among which, 200,000 shares of treasury stock were subsequently sold to an investor in 2016.

The Company recognized compensation expenses (included in sales and marketing expenses, general and administrative expenses, and discontinued operations in the consolidated statements of operations, and intangible assets in the consolidated balance sheets) for these RSUs of $30,126, $34,505 and $23 for the years ended December 31, 2016, 2015 and 2014, respectively. The fair value of the RSUs was determined using the market value of the common shares on the date of grant, which was equivalent to the closing price of the common stock on the grant date.

As of December 31, 2016, unrecognized share-based compensation expenses associated with the granted RSUs amounted to $73,745, which are expected to be recognized over a weighted average period of 2.5 years.

Shares issued to third-party vendors

The Company issues shares to certain third-party vendors from time to time in lieu of cash for services rendered. During the years ended December 31, 2016, 2015 and 2014, 14,500, 45,000 and 0 restricted shares of common stock were issued to certain vendors of the Company as additional consideration for services rendered, respectively. Stock compensation expenses for shares issued to third-party vendors of $166, $446 and $0 for the years ended December 31, 2016, 2015 and 2014, respectively, were recognized in general and administrative expenses.

The share-based compensation expenses for the Company’s share options, RSUs and common stock were allocated to the following accounts in the consolidated financial statements for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
(In thousands)	2016		2015		2014
Sales and marketing expenses	$	2,340	$	310	$	-
General and administrative expenses		26,909		33,850		23
Discontinued operations		-		456		-
		29,249		34,616		23
Capitalized in intangible assets		1,154		363		-
Total	$	30,403	$	34,979	$	23