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Share-based compensation | 12 Months Ended
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Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share-based compensation | 14. Share-based compensation As of December 31, 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 TBO consummated on March 21, 2015, the TBO Merger, whereby TBO became a wholly-owned subsidiary of the Company, 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 via a written consent by the holders of a majority of shares (and which was effective January 8, 2018) to 13,500,000 shares. 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, 2017, there were 310,568 and 4,384,240 shares 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: Pursuant to a business consulting agreement (the “Business Consulting Agreement”), 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, for the consulting services provided by Marlin Capital. 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, termination of the agreement by the Company without cause, or termination of the agreement by Marlin Capital for good reason. The Company determined the performance goals were met as of December 31, 2015. As of December 31, 2017, an aggregate of 1,500,000 shares have vested. On March 12, 2018, the Company terminated the Business Consulting Agreement and the outstanding 500,000 shares vested upon the termination. 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. As of December 31, 2017, an aggregate of 2,500,000 shares have vested, of which, 1,250,000 shares were delivered in 2017 and the remaining 1,250,000 shares were delivered in January 2018. 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 and related share-based compensation expense of $25,350 was recognized for the year ended December 31, 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 years ended December 31, 2017, 2016 and 2015 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 |  |  | $ | - |
Expired |  |  | (130,000 | ) |  | $ | 6.25 |  |  |  |  |  |  |  |  |
Outstanding as of December 31, 2017 |  |  | 222,000 |  |  | $ | 12.59 |  |  | 5.4 years |  |  | $ | - |
Options vested and expected to vest as of December 31, 2017 |  |  | 222,000 |  |  | $ | 12.59 |  |  | 5.4 years |  |  | $ | - |
Options exercisable as of December 31, 2017 |  |  | 174,500 |  |  | $ | 10.05 |  |  | 4.7 years |  |  | $ | - |
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock on December 31, 2017 of $4.40 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, 2017, 2016 and 2015:
|  | 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 |
Vested |  |  | (21,250 | ) |  | $ | 8.80 |  |  |  |  |
Unvested as of December 31, 2017 |  |  | 47,500 |  |  | $ | 8.96 |  |  | 7.9 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. There was no grant of share options for the year ended December 31, 2017.
|  | 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 and 2015 was $3.55 and $7.35, respectively. There were no share option grants during the year ended December 31, 2017. There were no share options exercised for the years ended December 31, 2017, 2016 and 2015. The total fair value of share options vested during the years ended December 31, 2017, 2016 and 2015 was $125, $272 and $61, respectively. Compensation expense recognized from employee stock options for the years ended December 31, 2017, 2016 and 2015 was $123, $110 and $28, respectively, which was recognized in general and administrative expenses and discontinued operations in the consolidated statements of operations. As of December 31, 2017, unrecognized share-based compensation expense in respect of granted share options amounted to $243, which are expected to be recognized over a weighted average period of 2.0 years. Restricted stock units and restricted stock Details of unvested RSUs and restricted stock activity during the years ended December 31, 2017, 2016 and 2015 were as follows:
|  | Number of units |  |  | Weighted average grant-date fair value |
Unvested as of January 1, 2015 |  |  | 2,960,000 |  |  | $ | 2.00 |
Additions as a result of the reverse acquisition |  |  | 416,800 |  |  | $ | 4.81 |
Granted |  |  | 13,890,500 |  |  | $ | 9.16 |
Vested and delivered |  |  | (382,300 | ) |  | $ | 5.55 |
Vested not delivered (1) |  |  | (3,085,000 | ) |  | $ | 8.36 |
Forfeited |  |  | (79,000 | ) |  | $ | 5.78 |
Unvested as of December 31, 2015 |  |  | 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) |  |  | (1,022,667 | ) |  | $ | 2.59 |
Forfeited |  |  | (196,500 | ) |  | $ | 7.16 |
Unvested as of December 31, 2016 |  |  | 12,407,029 |  |  | $ | 8.40 |
Granted |  |  | 2,732,000 |  |  | $ | 5.61 |
Vested and delivered |  |  | (3,659,520 | ) |  | $ | 8.29 |
Withheld as treasury stock (2) |  |  | (192,288 | ) |  | $ | 8.48 |
Vested not delivered (1) |  |  | (2,568,318 | ) |  | $ | 3.43 |
Forfeited |  |  | (567,998 | ) |  | $ | 5.65 |
Unvested as of December 31, 2017 (3) |  |  | 8,150,905 |  |  | $ | 9.27 |
(1) | Vested not delivered represent the vested RSUs with deferred delivery at a future time. As of December 31, 2017, the cumulative shares of RSUs included in “vested not delivered” were 6,675,985.
(2) | As discussed in Note 13 above, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during related periods, among which, 200,000 shares of treasury stock were subsequently sold to an investor in 2016. As of December 31, 2017, the cumulative shares withheld as treasury stock were 352,523.
(3) | Among the unvested shares as of December 31, 2017, there were 150,000 shares of unvested restricted stock, which were included in the issued and outstanding shares of the Company’s common stock as of December 31, 2017.
The Company recognized compensation (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 and restricted stock of $35,169, $30,127 and $34,505 for the years ended December 31, 2017, 2016 and 2015, respectively. The fair value of the RSUs and restricted stock was determined using the market value of the common stock on the date of grant, which was equivalent to the closing price of the common stock on the grant date. As of December 31, 2017, unrecognized share-based compensation expense associated with the granted RSUs and restricted stock amounted to $34,878, which are expected to be recognized over a weighted average period of 1.4 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, 2017, 2016 and 2015, 0, 14,500 and 45,000 restricted shares of common stock were issued to certain vendors of the Company as additional consideration for services rendered, respectively. Share-based compensation expense for shares issued to third-party vendors of $0, $166 and $446 for the years ended December 31, 2017, 2016 and 2015, respectively, were recognized in general and administrative expenses. The share-based compensation for the Company’s share options, RSUs and restricted stock were allocated to the following accounts in the consolidated financial statements for the years ended December 31, 2017, 2016 and 2015:
|  | Year Ended December 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Sales and marketing expenses |  | $ | 2,873 |  |  | $ | 2,340 |  |  | $ | 310 |
General and administrative expenses |  |  | 31,123 |  |  |  | 26,909 |  |  |  | 33,850 |
Discontinued operations |  |  | - |  |  |  | - |  |  |  | 456 |
|  |  | 33,996 |  |  |  | 29,249 |  |  |  | 34,616 |
Capitalized in intangible assets |  |  | 1,296 |  |  |  | 1,154 |  |  |  | 363 |
Total |  | $ | 35,292 |  |  | $ | 30,403 |  |  | $ | 34,979 |

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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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