Share-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-Based Compensation

Share-Based Compensation

Note 15.    Share-Based Compensation

As of September 30, 2020, the Company had 26.3 million options, 29,586 restricted shares and 1.7 million warrants outstanding.

The Company awards common stock and stock options to employees and directors as compensation for their services, and accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

Effective as of December 3, 2010 and amended on August 3, 2018, the Company’s Board of Directors approved the 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. The maximum aggregate number of shares of  common stock that may be issued under the 2010 Plan increased from 4.0 million shares to 31.5 million shares. On October 22, 2020, the Company’s shareholders approved the amendment and restatement of the 2010 Plan. The maximum aggregate number of shares of common stock that may be issued under the 2010 Plan increased

from 31.5 million shares to 56.8 million shares. As of September 30, 2020, options available for issuance are 0.5 million shares.

For the three months ended September 30, 2020 and 2019, total share-based compensation expense was $3.3 million and $2.5 million, respectively, and $8.8 million and $6.5 million for the nine months ended September 30, 2020 and 2019, respectively.

(a) Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2020:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregated
	Options	Exercise		Contractual	Intrinsic
	Outstanding	Price		Life (Years)	Value
Outstanding at January 1, 2020	14,936,726	$	2.13	8.48	$	—
Granted	13,750,000		0.53	9.45		5,225,000
Exercised	(60,000)		1.83	—		—
Expired	(1,144,326)		2.59	—		—
Forfeited	(1,153,333)		1.70	—		—
Outstanding at September 30, 2020	26,329,067		1.29	8.75		5,141,400
Vested as of September 30, 2020	13,684,070		1.74	8.17		1,258,592
Expected to vest at September 30, 2020	12,644,997		0.81	9.38		3,882,808

As of September 30, 2020, $7.3 million of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of 1.2 years. The total fair value of shares vested in the  nine months ended September 30, 2020 and 2019 was $8.8 million and $6.0 million, respectively. No cash was received from options exercised.

(b) Warrants

In connection with certain of the Company’s financings and service agreements, the Company issued warrants to service providers to purchase common stock of the Company. The warrants issued to Warner Brother expired without exercise on January 31, 2019. The Company issued warrants to IDV and YA II PN, Ltd. in connection with senior secured convertible notes. The weighted average exercise price for all warrants was $1.65 and the weighted average remaining life was 4.3 years.  Refer to Note 12 for additional information on promissory notes.

	September 30, 2020	December 31, 2019
	Number of	Number of
	Warrants	Warrants
	Outstanding and	Outstanding and	Exercise		Expiration
Warrants Outstanding	Exercisable	Exercisable	Price		Date
$2.05 million IDV**	—	1,671,196	$	1.00	2/22/2026
$3.58 million IDV**	1,000,000	4,658,043		0.5869	9/27/2026
$5.0 million YA II PN*	—	1,666,667		1.50	12/13/2024
$5.0 million YA II PN*	—	1,000,000		1.00
Service providers	200,000	—		5.00	7/1/2022
Service providers	450,000	—		2.50	2/28/2022 - 7/1/2022
Total	1,650,000	8,995,906

*    YA II PN exercised 1.0 million and 1.7 million warrants on March 31, 2020 and June 22, 2020 and the Company  received $1.0 million and $2.5 million proceeds, respectively.

**    ID Venturas exercised 5.3 million warrants in June 2020. The Company received $3.1 million proceeds.