STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Stock-based Compensation

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 were authorized for issuance.

Upon shareholder approval of the 2014 Plan, the 2013 Global Share Option Plan was terminated, other than respect to options outstanding under such plans.1,762,347 options remain outstanding under the 2013 and 2014 plans as of March 31, 2017.

On June 24, 2015, the Company adopted the 2015 Israeli Sub-plan (the “2015 Israeli Sub-plan”) to the Company’s 2014 Plan, which enables the Company to grant options, and issue shares of common stock to employees and non-employees, who are employed by the Company or any of its affiliates, who are residents of the State of Israel.

The Company has issued a total of 1,036,872 Restricted Stock Units ("RSUs") of which 348,772 remain outstanding as of March 31, 2017.  RSUs generally vest over three or four years, with one-third or one-fourth, respectively, vesting on the one-year anniversary followed by quarterly vesting thereafter.  

Stock-based compensation to employees and non-employees are recognized as expense in the condensed consolidated statement of operations. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using Black-Scholes option pricing model for stock options and fair value for RSUs), and is recognized as an expense over the requisite service period (generally the vesting of the equity awards). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including future employee stock option exercise behavior and requisite service periods.

During the three months ended March 31, 2017 and 2016, the Company expensed $209,000 and $142,000, respectively, of stock-based compensation in the condensed consolidated statements of operations. All stock-based compensation expenses were related to selling, general and administration. The aggregate intrinsic value of stock options outstanding and exercisable as of March 31, 2017 was $0.

During the three months ended March 31, 2017 and 2016, the Company granted options to purchase 155,000 and 7,500 shares of common stock, respectively. During the three months ended March 31, 2017 and 2016 the Company granted 200,000 and zero RSUs of common stock, respectively.

Number of Options Outstanding and Exercisable		Number of RSUs Outstanding
Outstanding 2013 & 2014 Plans – December 31, 2016	1,607,347	Non vested - December 31, 2016	185,260
Options granted	155,000	Shares granted	200,000
Options exercised	—	Shares vested	(36,488	)
Options forfeited	—	Shares forfeited	—
Options expired	—	Shares expired	—
Outstanding – March 31, 2017	1,762,347	Non Vested & Outstanding - March 31, 2017	348,772
Exercisable – March 31, 2017	1,266,097

The Company estimates the fair values of stock options using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model and the weighted-average grant date fair value of the option awards for the periods presented were as follows:

	Three Months Ended March 31,
	2017	2016
Volatility	140.22%	152%
Expected term (in years)	6	6
Risk-free rate	1.90%	1.22%
Expected dividend yield	—%	—%
Weighted-average grant date fair value per option	$1.45	$0.96

As of March 31, 2017, total compensation cost not yet recognized related to unvested stock options was approximately $0.9 million, which is expected to be recognized over a weighted-average period of 1.4 years.

Options granted during the three months ended March 31, 2017 had a weighted average exercise price of $1.57 per share and a weighted average contractual term of 10 years.

The risk-free interest rate is based on the U.S. Treasury rates with maturities similar to the expected term of the option. The volatility is a measure of the amount by which the Company’s share price has fluctuated or is expected to fluctuate and was based on historical volatility of comparative companies that are similar to the Company. For the three months ended March 31, 2017, the Company updated its volatility assumptions to reflect the increased trading history in the Company’s stock.The expected term was estimated using the simplified method. The simplified method calculates the expected term as the average of the time to vesting and the contractual life of the option. The dividend yield is 0% as the Company has never declared or paid any cash dividends and does not anticipate paying dividends in the future.