9. Share-based compensation

As of March 31, 2018, the Company maintains two share-based incentive plans: the 2008 Share Incentive Plan (the “2008 Plan”) and the Cogint, Inc. 2015 Stock Incentive Plan (the “2015 Plan”) which authorized the issuance of 13,500,000 shares of common stock.

As of March 31, 2018, there were 310,568 and 226,447 shares of common stock reserved for issuance under the 2008 Plan and the 2015 Plan, respectively.

In April 2018, the board of directors approved the Fluent, Inc. 2018 Stock Incentive Plan (the “2018 Plan”), which authorizes the issuance of ten percent of the Company’s issued and outstanding shares of common stock as may be increased from time to time. The 2018 Plan is subject to the stockholders’ approval during the annual meeting of stockholders to be held on June 6, 2018. The primary purpose of the 2018 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.

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 Michael Brauser, our Chairman prior to the Spin-off, 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, 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. On March 12, 2018, the Company terminated the Business Consulting Agreement. The unvested 500,000 shares were accelerated and related share-based compensation expense of $906 was recognized fully in loss on disposal of discontinued operations during the three months ended March 31, 2018.

Effective November 16, 2015, the Company entered into an employment agreement with Michael Brauser (the “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. 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 met certain vesting conditions during the vesting period. 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 on June 23, 2017, the Brauser Employment Agreement was terminated. Mr. Brauser continued to serve as Chairman of the Board of Directors of, prior to the Spin-off. 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”). In consideration for Mr. Brauser’s services, the Consulting Agreement provides for continued vesting on all outstanding RSUs granted to Mr. Brauser before. Among the total 5,000,000 shares granted, 1,250,000 shares were delivered in December 2017 and 1,250,000 shares were delivered in January 2018, and on March 12, 2018, the unvested 2,500,000 shares were accelerated and related share-based compensation expense of $6,468 was recognized in loss on disposal of discontinued operations during the three months ended March 31, 2018.

On December 8, 2015, when 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. These grants were fully vested on December 8, 2015, but Frost Gamma elected to defer delivery of any vested RSUs until Dr. Phillip Frost’s separation from service from the Company or death or disability. Dr. Phillip resigned as Vice Chairman effectively on March 8, 2018 and the 3,000,000 shares were delivered during the three months ended March 31, 2018.

Spin-off of red violet

On March 8, 2018, the Company’s Compensation Committee approved the acceleration (the “Acceleration”) of shares of stock options, RSUs and restricted stock held by certain employees, consultants, and directors, including only those employees who continue with red violet upon completion of the Spin-off, subject to such employees still being employed or providing services on March 12, 2018 (the “Acceleration Date”). An aggregate of 5,157,998 shares, including 47,500 shares of stock options, 4,960,498 shares of RSUs (inclusive of 500,000 shares to Marlin Capital and 2,500,000 to Michael Brauser, as discussed above), and 150,000 shares of restricted stock, were accelerated. Share-based compensation expense of $14,667 resulting from the Acceleration was recognized in loss on disposal of discontinued operations during the first quarter of 2018.

In connection with the Spin-off of red violet, an aggregate of 304,000 shares of common stock awards were granted to certain employees of red violet (“Spin-off Grants”) during the three months ended March 31, 2018 and the related share-based compensation expense of $881 was recognized in loss on disposal of discontinued operations. In addition, an aggregate of 2,041,000 shares of deferred common stock, subject to deferred delivery over a three-year period, were granted to certain Fluent employees as a result of the Spin-off (“Transaction Grants”), and related share-based compensation expense of $5,409 was recognized in costs and expenses as part of spin-off transaction costs.

Share-based compensation expense of $15,548, resulting from the Acceleration and Spin-off Grants, in connection with the Spin-off, was recognized in loss on disposal of discontinued operations. See Note 3, “Discontinued operations,” for details.

Share options

Details of share options activity during the three months ended March 31, 2018 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, 2017		222,000	$	12.59	5.4 years	$	-
Outstanding as of March 31, 2018		222,000	$	12.59	1.9 years	$	-
Options vested and expected to vest as of March 31, 2018		222,000	$	12.59	1.9 years	$	-
Options exercisable as of March 31, 2018		222,000	$	12.59	1.9 years	$	-

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock on March 29, 2018 of $2.50 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 three months ended March 31, 2018:

	Number of options			Weighted average exercise price per share		Weighted average remaining contractual term
Unvested as of December 31, 2017		47,500		$	8.96	7.9 years
Vested⁽¹⁾		(47,500	)	$	8.96
Unvested as of March 31, 2018		-		$	-		-

⁽¹⁾	As discussed in “Spin-off of red violet” above, the vesting of 47,500 shares of stock options was accelerated as a result of the Spin-off of red violet.

Compensation expense for these share options of $243 and $30 was recognized during the three months ended March 31, 2018 and 2017, respectively, which was all recorded in discontinued operations in the condensed consolidated statements of operations. As of March 31, 2018, there was no unrecognized share-based compensation with respect to granted share options.

Restricted stock units, common stock grants and restricted stock

Details of unvested RSUs, common stock grants and restricted stock activity during the three months ended March 31, 2018 were as follows:

	Number of units			Weighted average grant-date fair value
Unvested as of December 31, 2017		8,150,905		$	9.27
Granted⁽¹⁾		4,293,125		$	2.65
Vested and delivered⁽²⁾		(12,112,241	)	$	7.41
Withheld as treasury stock⁽³⁾		(143,395	)	$	7.80
Vested not delivered⁽⁴⁾		3,761,068		$	9.86
Forfeited		(135,334	)	$	5.63
Unvested as of March 31, 2018		3,814,128		$	8.51

⁽¹⁾

As discussed in “Spin-off of red violet” above, among the RSUs granted during the first quarter of 2018, there were an aggregate of 304,000 shares of Spin-off Grants that vested and were delivered in the current period, and an aggregate of 2,041,000 shares of Transaction Grants that vested but were subject to deferred delivery over a three-year period.

⁽²⁾	Among the shares vested and delivered during the first quarter of 2018, there were 6,273,318 shares that were vested but deferred in prior periods. See Item (4) below.

⁽³⁾	As discussed in Note 8, the increase in treasury stock was due to shares withheld to pay statutory withholding taxes upon the vesting of RSUs during the first quarter of 2018. As of March 31, 2018, there were 495,918 outstanding shares withheld as treasury stock.

⁽⁴⁾

Vested not delivered represent the vested RSUs or common stock grants with deferred delivery at a future time. During the first quarter of 2018, there was a net decrease of 3,761,068 shares included in “vested not delivered,” as a result of the delivery of common stock underlying RSUs included in “vested not delivered” in prior periods. As of March 31, 2018, there were 2,914,917 outstanding shares of RSUs or common stock grants included in “vested not delivered.”

The Company recognized compensation (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 consolidated balance sheets) for these RSUs, common stock grants and restricted stock of $22,458 and $7,528 for the three months ended March 31, 2018 and 2017, 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, while fair value of RSUs granted to non-employees is updated each reporting period end until the performance required to receive the awards is complete.

As of March 31, 2018, unrecognized share-based compensation expense associated with the granted RSUs amounted to $15,781, which are expected to be recognized over a weighted average period of 2.0 years.

The share-based compensation for the Company’s share options, RSUs, common stock grants and restricted stock were allocated to the following accounts in the condensed consolidated financial statements for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
(In thousands)	2018		2017
Sales and marketing expenses	$	766	$	612
General and administrative expenses		473		6,242
Spin-off transaction costs		5,409		-
Discontinued operations		15,713		458
		22,361		7,312
Capitalized in intangible assets of continuing operations		159		55
Capitalized in intangible assets of discontinued operations		181		191
Total	$	22,701	$	7,558