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Note 8 - Share-based Compensation | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | 8. Share-based compensation As of September 30, 2020, 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 21,132,372 shares of common stock. As of September 30, 2020, there were 1,868,050 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. Stock options 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, December 20, 2019 and March 1, 2020, respectively, 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 125.00%, 133.33% and 133.33%, respectively, of the exercise price for twenty 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%, 177.78% and 177.78%, respectively, of the exercise price for twenty consecutive trading days; provided, that no shares will vest prior to the first anniversary of the grant date. As of September 30, 2020, the first condition for the stock options issued on February 1, 2019 has been met; therefore, 50% of the shares subject to these stock options vested 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 key assumptions utilized to calculate the grant-date fair values for these awards are summarized below:
Issuance Date |  | February 1, 2019 |  |  | December 20, 2019 |  |  | March 1, 2020 |
Fair value lower range |  | $ | 2.81 |  |  | $ | 1.58 |  |  | $ | 1.46 |
Fair value higher range |  | $ | 2.86 |  |  | $ | 1.61 |  |  | $ | 1.49 |
Exercise price |  | $ | 4.72 |  |  | $ | 2.56 |  |  | $ | 2.33 |
Expected term (in years) |  |  | 1.0 - 1.3 |  |  |  | 1.0 - 1.6 |  |  |  | 1.0 - 1.5 |
Expected volatility |  |  | 65 | % |  |  | 70 | % |  |  | 70 | %
Dividend yield |  |  | — | % |  |  | — | % |  |  | — | %
Risk-free rate |  |  | 2.61 | % |  |  | 1.85 | % |  |  | 1.05 | %
For the nine months ended September 30, 2020, 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, 2019 |  |  | 2,120,000 |  |  | $ | 5.21 |  |  |  | 8.7 |  |  | $ | — |
Granted |  |  | 478,000 |  |  | $ | 2.48 |  |  |  | 9.3 |  |  |  |  |
Forfeited |  |  | (59,000 | ) |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | (30,000 | ) |  |  |  |  |  |  |  |  |  |  |  |
Outstanding as of September 30, 2020 |  |  | 2,509,000 |  |  | $ | 4.38 |  |  |  | 8.3 |  |  | $ | 19 |
Options exercisable as of September 30, 2020 |  |  | 1,086,000 |  |  | $ | 4.82 |  |  |  | 7.8 |  |  | $ | — |
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 nine months ended September 30, 2020, the unvested balance of options was as follows:
|  | Number of options |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term (in years) |
Unvested as of December 31, 2019 |  |  | 2,008,000 |  |  | $ | 4.72 |  |  |  | 9.1 |
Granted |  |  | 478,000 |  |  | $ | 2.48 |  |  |  | 9.3 |
Forfeited |  |  | (59,000 | ) |  |  |  |  |  |  |  |
Vested |  |  | (1,004,000 | ) |  | $ | 4.72 |  |  |  | 8.3 |
Unvested as of September 30, 2020 |  |  | 1,423,000 |  |  | $ | 4.04 |  |  |  | 8.6 |
Compensation expense recognized for stock options of $73 and $1,250 for the three months ended September 30, 2020 and 2019, respectively, and $1,424 and $3,353 for the nine months ended September 30, 2020 and 2019, respectively, was recorded in sales and marketing, product development and general and administrative expenses in the consolidated statements of operations. As of September 30, 2020, there was $289 of unrecognized share-based compensation with respect to outstanding stock options. Restricted stock units and restricted stock For the nine months ended September 30, 2020, 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, 2019 |  |  | 3,394,370 |  |  | $ | 8.03 |
Granted |  |  | 1,638,532 |  |  | $ | 2.02 |
Vested and delivered |  |  | (1,407,714 | ) |  | $ | 3.61 |
Withheld as treasury stock (1) |  |  | (210,683 | ) |  | $ | 4.13 |
Vested not delivered (2) |  |  | 525,334 |  |  | $ | 2.84 |
Forfeited |  |  | (334,991 | ) |  | $ | 2.91 |
Unvested as of September 30, 2020 |  |  | 3,604,848 |  |  | $ | 6.91 |
(1) | As discussed in Note 7, Common stock, treasury stock and warrants, the increase in treasury stock was due to shares withheld to cover statutory withholding taxes upon the delivery of shares following vesting of RSUs. As of September 30, 2020, there were 3,936,755 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, 2020, there was a net decrease of 525,334 shares included in the vested not delivered balance as a result of the delivery of 655,333 shares, partially offset by the vesting of 129,999 shares with deferred delivery election. As of September 30, 2020, 2,262,001 outstanding RSUs were vested not delivered.
Compensation expense recognized for RSUs and restricted stock of $1,131 and $1,562 for the three months ended September 30, 2020 and 2019, respectively, and $3,544 and $4,733 for the nine months ended September 30, 2020 and 2019, respectively, was recorded in sales and marketing, product development and general and administrative in the consolidated statements of operations, and intangible assets in the consolidated balance sheets. 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, 2020, unrecognized share-based compensation expense associated with the granted RSUs and stock options amounted to $8,770, which is expected to be recognized over a weighted average period of 2.5 years. For the three and nine months ended September 30, 2020 and 2019, 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, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Sales and marketing |  | $ | 172 |  |  | $ | 292 |  |  | $ | 659 |  |  | $ | 821 |
Product development |  |  | 291 |  |  |  | 278 |  |  |  | 814 |  |  |  | 800 |
General and administrative |  |  | 707 |  |  |  | 2,220 |  |  |  | 3,375 |  |  |  | 6,398 |
Share-based compensation expense |  |  | 1,170 |  |  |  | 2,790 |  |  |  | 4,848 |  |  |  | 8,019 |
Capitalized in intangible assets |  |  | 34 |  |  |  | 22 |  |  |  | 120 |  |  |  | 67 |
Total share-based compensation |  | $ | 1,204 |  |  | $ | 2,812 |  |  | $ | 4,968 |  |  | $ | 8,086 |

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