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Share-based payments | 9 Months Ended
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Sep. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-based payments | 8. Share-based payments As of September 30, 2017, 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 reverse acquisition between the Company and The Best One, Inc. (“TBO”) consummated on March 21, 2015, whereby TBO became a wholly-owned subsidiary of the Company (the “TBO Merger”), and the Cogint, Inc. 2015 Stock Incentive Plan (the “2015 Plan”), approved during the annual meeting of stockholders on June 2, 2015, which authorized the issuance of 2,500,000 shares of common stock. The total shares of common stock authorized for issuance under the 2015 Plan was increased on June 3, 2016 to 12,500,000 shares, and subsequently increased on September 6, 2017 to 13,500,000 shares, which subsequent increase becomes effective 20 days after the mailing of the stockholder notice on Schedule 14C. 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 September 30, 2017, there were 180,568 and 3,838,658 shares (inclusive of the increase of 1,000,000 shares to the 2015 Plan approved on September 6, 2017) of common stock reserved for issuance under the 2008 Plan and the 2015 Plan, respectively. Shares issued outside of the 2008 Plan and 2015 Plan The following RSUs were issued outside of the 2008 Plan and 2015 Plan: Marlin Capital Investments, LLC (“Marlin Capital”), a company which our Chairman Michael Brauser owns 50% and is one of two managers, holds RSUs representing the right to receive 2,000,000 shares of the Company’s common stock, which RSUs are outside of the 2008 Plan and 2015 Plan. 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. Share-based compensation expenses of $315 and $315 for the three months ended September 30, 2017 and 2016, respectively, and $937 and $937 for the nine months ended September 30, 2017 and 2016, respectively, associated with shares under the Marlin Capital agreement, were recognized. 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 RSUs outside of the 2008 Plan and 2015 Plan 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 at the 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 gross revenue in excess of $100.0 million and positive EBITDA in any one fiscal year during the vesting period (the “Vesting Conditions”). In addition, 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 determined that the Vesting Conditions were met, effective March 14, 2017, and as a result, 1,250,000 shares were vested, but Michael Brauser has elected to defer delivery of any vested RSUs until his separation from service from the Company or death or disability. Effective on June 23, 2017, the Michael Brauser Employment Agreement was terminated. Mr. Brauser continues to serve as Chairman of the Board of Directors of the Company. On September 6, 2017, the Company entered into a consulting services agreement with Mr. Brauser, effective on June 23, 2017, for a term of four years (the “Consulting Agreement”), under which Mr. Brauser will serve as a strategic advisor to cogint but will receive no salary for such services. In consideration for Mr. Brauser’s services, the Consulting Agreement provides for continued vesting on all outstanding RSUs granted to Mr. Brauser before the effective date of the Consulting Agreement. On December 8, 2015, at the time Dr. Phillip Frost joined the Board of Directors of the Company as Vice Chairman, Frost Gamma was granted 3,000,000 RSUs, outside of the 2008 Plan and 2015 Plan. The issuance of shares of common stock underlying such RSUs was approved by the stockholders at the annual meeting in 2016. These grants were fully vested on December 8, 2015, but Frost Gamma has elected to defer delivery of any vested RSUs until Dr. Phillip Frost’s separation from service from the Company or death or disability. Share options Details of share options activity during the nine months ended September 30, 2017 were as follows:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term |  | Aggregate intrinsic value |
Outstanding as of December 31, 2016 |  |  | 352,000 |  |  | $ | 10.25 |  |  | 4.4 years |  | $ | - |
Outstanding as of September 30, 2017 |  |  | 352,000 |  |  | $ | 10.25 |  |  | 3.6 years |  | $ | - |
Options vested and expected to vest as of September 30, 2017 |  |  | 352,000 |  |  | $ | 10.25 |  |  | 3.6 years |  | $ | - |
Options exercisable as of September 30, 2017 |  |  | 294,500 |  |  | $ | 8.36 |  |  | 2.7 years |  | $ | - |
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock on September 30, 2017 of $4.90 and the exercise price, multiplied by the number of in-the-money stock options as of the same date. The unvested balance of options is shown below for the nine months ended September 30, 2017:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term
Unvested as of December 31, 2016 |  |  | 68,750 |  |  | $ | 8.91 |  |  | 8.9 years
Vested |  |  | (11,250 | ) |  | $ | 7.44 |  |  |
Unvested as of September 30, 2017 |  |  | 57,500 |  |  | $ | 9.19 |  |  | 8.2 years
Compensation expenses recognized from employee stock options for the three months ended September 30, 2017 and 2016 of $31 and $35, respectively, and $91 and $82 for the nine months ended September 30, 2017 and 2016, respectively, were recognized in general and administrative expenses in the condensed consolidated statements of operations. As of September 30, 2017, unrecognized share-based compensation cost relating to granted share options amounted to $274, which are expected to be recognized over a weighted average period of 2.2 years. Restricted stock units and restricted stock Details of unvested RSUs and restricted stock activity during the nine months ended September 30, 2017 were as follows:
|  | Number of units |  |  | Weighted average grant-date fair value |
Unvested as of December 31, 2016 |  |  | 12,407,029 |  |  | $ | 8.40 |
Granted (1) |  |  | 2,732,000 |  |  | $ | 5.61 |
Vested and delivered |  |  | (2,357,852 | ) |  | $ | 6.58 |
Withheld as treasury stock (2) |  |  | (192,288 | ) |  | $ | 6.86 |
Vested not delivered (3) |  |  | (1,660,001 | ) |  | $ | 3.36 |
Forfeited |  |  | (172,416 | ) |  | $ | 5.80 |
Unvested as of September 30, 2017 |  |  | 10,756,472 |  |  | $ | 8.94 |
(1) | 650,000 shares of restricted stock were granted during the nine months ended September 30, 2017, and 150,000 shares of restricted stock were unvested as of September 30, 2017.
(2) | As discussed in Note 7, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during the nine months ended September 30, 2017.
(3) | Vested not delivered represent the vested RSUs with deferred delivery at a future time. As of September 30, 2017, the cumulative shares of RSUs included in “vested not delivered” above were 5,767,668.
The Company recognized share-based compensation (included in sales and marketing expenses, and general and administrative expenses in the condensed consolidated statements of operations, and intangible assets in the condensed consolidated balance sheets) for these RSUs and restricted stock of $11,461 and $7,615 for the three months ended September 30, 2017 and 2016, respectively, and $28,613 and $22,561 for the nine months ended September 30, 2017 and 2016, respectively. The fair value of the RSUs and restricted stock 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 September 30, 2017, unrecognized share-based compensation expenses associated with the granted RSUs and restricted stock amounted to $59,625, which are expected to be recognized over a weighted average period of 1.9 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. Stock compensation expenses for shares issued to third-party vendors of $0 and $37 for the three months ended September 30, 2017 and 2016, respectively, and $0 and $166 for the nine months ended September 30, 2017 and 2016, 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 condensed consolidated financial statements for the three and nine months ended September 30, 2017 and 2016:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
Sales and marketing expenses |  | $ | 862 |  |  | $ | 657 |  |  | $ | 2,428 |  |  | $ | 1,778 |
General and administrative expenses |  |  | 10,209 |  |  |  | 6,661 |  |  |  | 25,274 |  |  |  | 20,163 |
|  |  | 11,071 |  |  |  | 7,318 |  |  |  | 27,702 |  |  |  | 21,941 |
Capitalized in intangible assets |  |  | 421 |  |  |  | 369 |  |  |  | 1,002 |  |  |  | 868 |
Total |  | $ | 11,492 |  |  | $ | 7,687 |  |  | $ | 28,704 |  |  | $ | 22,809 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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