6. Stockholders' Equity

9 Months Ended

Sep. 30, 2014

Stockholders' Equity

Stockholders' Equity

Common Stock

On July 10, 2014 the Company’s Stockholders approved an amendment to the Company’s charter to decrease the number of authorized Shares of common stock from 1,000,000,000 to 80,000,000. 

Stock-based Compensation

The Company estimates the fair values of stock options using the Black-Scholes option-pricing model. For the three and nine months ended September 30, 2014, and 2013, the assumptions used in the Black-Scholes option-pricing model were as follows:

		Employee Grants Three and Nine Months Ended September 30,						Non-Employee Grants Three and Nine Months Ended September 30,
		2014			2013			2014			2013
Weighted-average grant date fair value	$	1.46		$	1.44		$	1.44		$	1.44
Weighted-average Black-Scholes option pricing model assumptions:
Volatility		49.2	%		50.6	%		58.1	%		50.6	%
Expected term (in years)		6.0			6.0			8.6			10.0
Risk-free rate		1.0	%		1.0	%		2.4	%		1.8	%
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%
Forfeiture rate		8.0	%		0.0	%		0.0	%		0.0	%

The risk-free interest rate is the United States Treasury rate for the day of the grant having a term equal to the life of the equity instrument. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate. Since the Company’s common stock was not publicly traded at the time of certain grants to employees in 2013, an average of the historic volatility of comparative companies was used. The dividend yield is 0% as the Company has not made any dividend payment and does not anticipate paying a dividend in the near future. An increase or decrease in the risk-free rate or volatility could increase or decrease the fair value of our equity instruments.

On July 10, 2014, the Company’s stockholders approved the Finjan Holdings, Inc. 2014 Incentive Compensation Plan (the "2014 Plan") at the annual meeting of stockholders, pursuant to which 2,196,836 shares of common stock are authorized for issuance. Upon shareholder approval of the 2014 Plan, the Company issued a total of 244,504 Restricted Stock Units ("RSUs") and options to purchase an aggregate of 25,000 shares of our common stock that had been previously approved by the Board and the Compensation Committee, subject to stockholder approval of the 2014 Plan, to certain non-executive employees and non-executive directors. For each grant of RSUs, one-third of the RSUs are scheduled to vest on the one-year anniversary of the grant date or employee start date, and an additional 8.33% of the RSUs are scheduled to vest every three calendar months thereafter.  For each grant of options, one-fourth of the options are scheduled to vest on the one-year anniversary of the employee start date, and an additional 6.25% of the options are scheduled to vest every three calendar months thereafter.

Upon shareholder approval of the 2014 Plan, the 2013 Global Share Option Plan and Israeli Sub-Plan (the “2013 Plan”) was terminated, other than respect to options outstanding under such plan. 1,456,833 options remain outstanding as of September 30, 2014 under the 2013 Plan.

During the nine months ended September 30, 2014, 74,699 options were exercised for cash proceeds of approximately $124,000, and 93,944 options were forfeited. Approximately $0.4 million and $1.0 million of stock-based compensation expense was recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2014, respectively.  Approximately $0.1 million and $0.5 million of stock-based compensation expense was recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the three and nine months period ended September 30, 2013, respectively.

The aggregate intrinsic value of RSU and stock options outstanding and exerciseable as of September 30, 2014 and December 31, 2013 was $1.7 million and $2.7 million respectively.

As of September 30, 2014, total compensation cost not yet recognized related to unvested stock options under the 2013 Plan; and the 2014 Plan was $0.7 million and $1.5 million, respectively, which is expected to be recognized over a weighted-average period of 1.4 years and 2.4 years respectively.