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Related party transactions
12 Months Ended
Dec. 31, 2017
Related Party Transactions [Abstract]  
Related party transactions

16. Related party transactions

For the years ended December 31, 2017, 2016 and 2015, material related party transactions were as follows:

Interest in the TBO Merger

Before the TBO Merger, but after giving effect to the Reverse Split, Frost Gamma, an affiliate of Phillip Frost, M.D., owned 2,144,275 shares of the Company, representing 29.4% of the Company’s outstanding ordinary shares. In addition, at the Effective Time of the TBO Merger, after giving effect to a TBO recapitalization, Frost Gamma owned 80,000 shares of TBO Common Stock, 640,000 shares of TBO Series C Preferred Stock, and 4,000 shares of TBO Series D Preferred Stock, which resulted in the Company issuing to Frost Gamma 2,660,309 shares of the Company’s common stock at closing, and an additional 900,108 shares of company stock subject to an earn-out. As a result, following the TBO Merger, Frost Gamma owned 34.6% of the Company’s common stock at closing and 38.6% of the Company’s common stock assuming the Common Earn-out Shares are earned. In connection with approving the TBO Merger and the related transactions, the Board of Directors of the Company and its Audit Committee reviewed and considered Frost Gamma’s interest in such transactions.

Business Consulting Agreement

Marlin Capital holds RSUs representing the right to receive 2,000,000 shares of the Company’s common stock, pursuant to the Business Consulting Agreement. 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. The Company determined the performance goals were met as of December 31, 2015. Share-based compensation expense of $4,272, $1,252 and $1,512 for the years ended December 31, 2017, 2016 and 2015, respectively, associated with shares under the Marlin Capital agreement, was recognized. See Note 14, “Share-based compensation,” for details.

Securities Purchase Agreements with Frost Gamma

On November 16, 2015, pursuant to securities purchase agreements, the Company raised approximately $10.0 million from certain investors, including $7.0 million from Frost Gamma, for the sale of an aggregate of 29,985 shares of Series B Preferred and warrants to purchase up to 749,625 shares of the Company’s common stock, with an exercise price of $6.67 per share. Frost Gamma received 20,990 shares of Series B Preferred and warrants to purchase up to 524,750 shares of common stock.

On November 16, 2015, the Company entered into a Stock Purchase Agreement with Frost Gamma providing for the sale of 119,940 shares of Series B Preferred to Frost Gamma, in exchange for $40.0 million.

Each share of Series B Preferred automatically converted into 50 shares of common stock in 2016.

Promissory Notes

On December 8, 2015, the Company entered into the Promissory Notes, with an interest rate of 10% per annum, with certain investors, for aggregate financing of $10.0 million, pursuant to which the Company received $5.0 million from Frost Gamma, $4.0 million from Michael Brauser, and $1.0 million from another investor. In addition, the Company also issued 500, 400 and 100 shares of Series B Preferred to Frost Gamma, Michael Brauser and another investor, respectively.

As of December 31, 2017, the principal, plus accrued PIK interest, of such Promissory Notes, owing to Frost Gamma, Michael Brauser and such other investor, were $5,574, $4,460 and $1,115, respectively, while as of December 31, 2016, the principal, plus accrued PIK interest, owing to Frost Gamma, Michael Brauser and such other investor, were $5,566, $4,453 and $1,113, respectively. During the year ended December 31, 2017, the Company repaid $533, $426, and $107 to Frost Gamma, Michael Brauser and another investor, respectively. See Note 11, “Long-term debt, net,” for details.

Conversion of Series B Preferred

On February 22, 2016, the Company’s Series B Preferred, 450,962 shares in total, including 141,430 shares previously issued to Frost Gamma in relation to certain financial arrangements, as mentioned above, and 156,544 and 105,704 shares previously issued to Ryan Schulke, Chief Executive Officer of Fluent, and Matthew Conlin, President of Fluent, respectively, in connection with the Fluent Acquisition, automatically converted into the Company’s common stock, by multiplying each such shares of Series B Preferred by 50.

TBO Merger Earn-out Shares

On March 11, 2016, the Company issued 900,108 Common Earn-out Shares to Frost Gamma, and 1,800,220 Series A Earn-out Shares to certain investors (which were subsequently converted to 1,800,220 shares of common stock), including 567,069 shares to Grander Holdings, Inc. 401K, an entity owned by Michael Brauser, upon a Board of Directors determination that certain financial targets had been achieved as set forth in the TBO Merger Agreement effective on March 21, 2015.

Appointment of Vice Chairman

On December 8, 2015, Phillip Frost, M.D., was appointed as Vice Chairman of our Board of Directors to fill the board seat vacated by Daniel Brauser. At the time of his joining the Board of Directors as Vice Chairman, Frost Gamma, received a grant of 3,000,000 RSUs, which was vested immediately and subsequently approved at the Company’s annual meeting of stockholders on June 3, 2016. See Note 14, “Share-based compensation,” for details.

Warrant Exchange

During the year ended December 31, 2016, the Company issued an aggregate of 1,069,728 shares of Exchange Shares and New Exchange Warrants to purchase up to 320,102 shares of common stock, in exchange for warrants previously issued to certain stockholders of the Company, including 524,750 shares to Frost Gamma. No additional consideration was paid by the shareholders and the warrants were cancelled upon the exchange. See Note 13, “Common shares, preferred shares and warrants,” for details.

Consulting Agreement

On September 6, 2017, the Company entered into the Consulting Agreement with Mike Brauser, effective on June 23, 2017, for a term of four years, 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. Share-based compensation expense of $1,742, associated with the Consulting Agreement, was recognized for the year ended December 31, 2017. See Note 14, “Share-based compensation,” for details.

Others

Effective on August 1, 2015, the Company entered into a consulting agreement with DAB Management Group Inc. (“DAB”) for DAB to provide consulting services related to business development, future acquisitions and strategic transactions for a term of six months, and shall automatically renew for additional six-month periods, unless either party provides written notice to the other of its intent not to renew not fewer than 30 days prior to the expiration of the then current term (the “DAB Agreement”). DAB is owned by Daniel Brauser, a director of the Company at the time the DAB Agreement was entered into and the son of Michael Brauser, our Chairman. Under the DAB Agreement, the consulting service fee is $20 per month. The Company recognized consulting service fee of $240, $240 and $100 for the years ended December 31, 2017, 2016 and 2015, respectively.

In October 2015, the Company entered into a Non-Exclusive Aircraft Dry Lease Agreement with Brauser Aviation, LLC, an affiliated entity of our Chairman, to pay a set hourly rate for Company-related usage of the aircraft. The Company recognized aircraft lease fees of $85, $216 and $94 for the years ended December 31, 2017, 2016 and 2015, respectively.