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Note 10 - Share-based Compensation | 9 Months Ended
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Sep. 30, 2019
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | 10. Share-based compensation As of September 30, 2019 , the Company maintains two share-based incentive plans: the Cogint, Inc. 2015 Stock Incentive Plan (the "2015 Plan") and the Fluent, Inc. 2018 Stock Incentive Plan (the " 2018 Plan") which, combined, authorize the issuance of 21,178,330 shares of common stock. As of September 30, 2019 , there were 3,614,784 shares of common stock reserved for issuance under the 2018 Plan. The primary purpose of the plans is to attract, retain, reward and motivate certain individuals by providing them with opportunities to acquire or increase their ownership interests in the Company. Spin-off of Red Violet On March 8, 2018, the Company's Compensation Committee approved the acceleration (the "Acceleration") of stock options, RSUs and restricted stock held by certain employees, consultants and directors, including only those employees who were to 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 were accelerated, including 47,500 stock options, 4,960,498 RSUs (inclusive of 500,000 shares to Marlin Capital and 2,500,000 to Michael Brauser), and 150,000 shares of restricted stock. 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, common stock awards comprised of an aggregate of 304,000 shares were granted to certain employees of Red Violet ("Spin-off Grants") during the first quarter of 2018 , and related share-based compensation expense of $881 was recognized in loss on disposal of discontinued operations. Additionally, an aggregate of 2,041,000 shares of 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 the Spin-off transaction costs during the first quarter of 2018 . In total, 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 during the first quarter of 2018 . See Note 3 , Discontinued operations . Stock options On January 31, 2019, the Compensation Committee of the Company's Board of Directors approved the grant of stock options to certain Company officers, which were issued on February 1, 2019 under the 2018 Plan. Subject to continuing service, 50% of the shares subject to these stock options will vest if the Company's stock price remains above 125% of the exercise price for 20 consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest if the Company's stock price remains above 156.25% of the exercise price for 20 consecutive trading days; provided, that no shares will vest prior to the first anniversary of the grant date. As of September 30, 2019 , the first condition has been met; therefore, subject to continuing service, 50% of the shares subject to these stock options will vest on February 1, 2020. Any shares that remain unvested as of the fifth anniversary of the grant date will vest in full on such date. The fair value of the stock options granted was estimated at the trading day before the date of grant using a Monte Carlo simulation model. The range of the fair value of the stock options that were awarded is $2.81 to $2.86 per share. The key assumptions utilized to calculate the grant-date fair values for these awards are summarized below:
Key Assumptions |
Exercise price |  | $ | 4.72 |
Expected term (in years) |  |  | 1.0 - 1.3 |
Expected volatility |  |  | 65 | %
Dividend yield |  |  | — | %
Risk-free rate |  |  | 2.61 | %
For the nine months ended September 30, 2019 , details of stock option activity were as follows:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term (in years) |  |  | Aggregate intrinsic value |
Outstanding as of December 31, 2018 |  |  | 112,000 |  |  | $ | 13.98 |  |  |  | 2.8 |  |  | $ | — |
Granted |  |  | 2,064,000 |  |  | $ | 4.72 |  |  |  | 9.3 |  |  |  |  |
Forfeited |  |  | (56,000 | ) |  | $ | 4.72 |  |  |  |  |  |  |  |  |
Outstanding as of September 30, 2019 |  |  | 2,120,000 |  |  | $ | 5.21 |  |  |  | 9.0 |  |  | $ | — |
Options exercisable as of September 30, 2019 |  |  | 112,000 |  |  | $ | 13.98 |  |  |  | 2.1 |  |  | $ | — |
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company's common stock at the end of the reporting period and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date. For the three and nine months ended September 30, 2019 , compensation expense recognized for stock options of $1,250 and $3,353 , respectively, was recorded in sales and marketing and general and administrative expenses in the consolidated statements of operations. For the three and nine months ended September 30, 2018 , compensation expense recognized for stock options of $0 and $243 , respectively, was recorded in discontinued operations in the consolidated statements of operations. As of September 30, 2019 , there was $2,339 of unrecognized share-based compensation with respect to outstanding stock options. Restricted stock units and restricted stock For the nine months ended September 30, 2019 , details of unvested RSU and restricted stock activity were as follows:
|  | Number of units |  |  | Weighted average grant-date fair value |
Unvested as of December 31, 2018 |  |  | 3,831,965 |  |  | $ | 7.95 |
Granted |  |  | 2,119,628 |  |  | $ | 4.93 |
Vested and delivered |  |  | (1,490,913 | ) |  | $ | 4.00 |
Withheld as treasury stock (1) |  |  | (557,988 | ) |  | $ | 4.16 |
Vested not delivered (2) |  |  | 112,582 |  |  | $ | 4.75 |
Forfeited |  |  | (221,047 | ) |  | $ | 3.59 |
Unvested as of September 30, 2019 |  |  | 3,794,227 |  |  | $ | 7.66 |
( 1 ) | As discussed in Note 9 , the increase in treasury stock was due to shares withheld to cover statutory withholding taxes upon the delivery of shares following vesting of RSUs and issuance of restricted stock. As of September 30, 2019 , there were 1,791,186 outstanding shares of treasury stock.
( 2 ) | Vested not delivered represents vested RSUs with delivery deferred to a future time. For the nine months ended September 30, 2019 , there was a net decrease of 112,582 shares included in vested not delivered as a result of the delivery of Spin-off Grants of 740,334 shares, partially offset by the net activity from vesting of RSUs with deferred delivery of 627,752 shares. As of September 30, 2019 , there were 2,797,335 outstanding RSUs included in vested not delivered.
The Company recognized compensation (included in sales and marketing, product development, general and administrative and discontinued operations in the consolidated statements of operations, and intangible assets in the consolidated balance sheets) for RSUs and restricted stock of $1,562 and $2,675 for the three months ended and $4,733 and $27,871 for the nine months ended September 30, 2019 and 2018 , respectively. The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant. As of September 30, 2019 , unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $14,668 , which is expected to be recognized over a weighted average period of 2.5 years. For the three and nine months ended September 30, 2019 and 2018 , share-based compensation for the Company's stock option, RSU, common stock and restricted stock awards were allocated to the following accounts in the consolidated financial statements:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Sales and marketing |  | $ | 292 |  |  | $ | 717 |  |  | $ | 821 |  |  | $ | 2,125 |
Product development |  |  | 278 |  |  |  | 136 |  |  |  | 800 |  |  |  | 487 |
General and administrative |  |  | 2,220 |  |  |  | 1,741 |  |  |  | 6,398 |  |  |  | 3,835 |
Spin-off transaction costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,409 |
Discontinued operations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,713 |
Total share-based compensation expense |  |  | 2,790 |  |  |  | 2,594 |  |  |  | 8,019 |  |  |  | 27,569 |
Capitalized in intangible assets of continuing operations |  |  | 22 |  |  |  | 81 |  |  |  | 67 |  |  |  | 364 |
Capitalized in intangible assets of discontinued operations |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 181 |
Total share-based compensation |  | $ | 2,812 |  |  | $ | 2,675 |  |  | $ | 8,086 |  |  | $ | 28,114 |

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