Share-Based Payments

3 Months Ended

Mar. 31, 2017

Compensation and Retirement Disclosure [Abstract]

Share-Based Payments

14. Share-Based Payments

As of March 31, 2017, the Company had 2,251,428 options and 3,778,002 warrants outstanding (including the 1,818,182 warrants issued to SSS as disclosed in Note 12 (a) to purchase shares of our common stock.

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.

Total share-based payments expense recorded by the Company during the three months ended March 31, 2017 and 2016 is as follows:

	Three Months Ended
	March 31		March 31
	2017		2016
Employees and directors share-based payments	$	71,428	$	139,000

Effective as of December 3, 2010, our Board of Directors approved the Wecast Network, Inc. 2010 Stock Incentive Plan (“the Plan”) pursuant to which options or other similar securities may be granted. The maximum aggregate number of shares of our common stock that may be issued under the Plan is 4,000,000 shares. As of March 31, 2017, options available for issuance are  1,069,465 shares.

(a) Stock Options

Stock option activity for the three months ended March 31, 2017 is summarized as follows:

					Weighted Average
					Remaining		Aggregated
	Options		Weighted Average		Contractual Life		Intrinsic
	Outstanding		Exercise Price		(Years)		Value
Outstanding at January 1, 2017		2,101,428	$	2.42		4.59		-
Granted		150,000		1.62
Exercised		-
Expired		-
Forfeited		-
Outstanding at March 31, 2017		2,251,428		2.33		4.67		-
Vested and expected to vest as of March 31, 2017		2,251,428		2.33		4.67		-
Options exercisable at March 31, 2017 (vested)		1,687,051		2.80		3.38		-

On January 4, 2017 and March 1 and March 16, 2017, 70,000, 45,000 and 35,000 shares stock options, respectively, were issued to certain employees for services provided to us. The fair value of the stock options granted were valued using the Black-Scholes Merton method on the grant date, amounting to $47,415, $45,443 and $36,750, respectively.

The following table summarizes the assumptions used to estimate the fair values of the share options granted in the three months ended March 31, 2017 presented:

	Black Scholes
Risk-free interest rate		2.26% ~ 2.34	%
Expected volatility		55	%
Expected term		5.88 years
Expected dividend yield		0	%

As of March 31, 2017, approximately $501,000 of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of approximately 2.40 years. The total fair value of shares vested during the three months ended March 31, 2017 and 2016 was approximately nil  and $16,000,  respectively.

(b) Warrants

In connection with the Company’s financings, the Warner Brother Agreement and the service agreements, the Company issued warrants to service providers to purchase common stock of the Company.

As of March 31, 2017, the weighted average exercise price of the warrants was $2.20 and the weighted average remaining life was 1.19 years. The following table outlines the warrants outstanding and exercisable as of March 31, 2017 and December 31, 2016:

	March 31,		December 31,
	2017		2016
	Number of		Number of
	Warrants		Warrants
Warrants Outstanding	Outstanding and  Exercisable		Outstanding and  Exercisable		Exercise Price		Expiration Date
2012 August Financing Warrants  (i)		536,250		536,250	$	1.50	08/30/17
2013 Broker Warrants (Series D Financing)		223,571		228,571	$	1.75	07/05/18
2013 Broker Warrants (Convertible Note)		114,285		114,285	$	1.75	11/04/18
2014 Broker Warrants (Series E Financing)		1,085,714		1,085,714	$	1.75	01/31/19
2016 Warrants to SSS (Note 12)		1,818,182		1,818,182	$	2.75	03/28/18
		3,778,002		3,783,002

(i) The warrants are classified as derivative liabilities as disclosed in Note 13.