Quarterly report pursuant to Section 13 or 15(d)

Common Stock, Stock Options and Warrants

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Common Stock, Stock Options and Warrants
 3 Months Ended
Mar. 31, 2016
Equity [Abstract]  
Common Stock, Stock Options and Warrants
Common Stock, Stock Options and Warrants    

Share Repurchase Program

In March 2016, the Company's Board of Directors authorized a stock repurchase program under which we the Company may repurchase up to $50.0 million of its common stock. Under the stock repurchase program, the Company may repurchase shares from time to time using a variety of methods, which may include open-market purchases and privately negotiated transactions. The extent to which the Company repurchases its shares, and the timing and manner of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by management. The Company regularly reviews potential growth opportunities both within its existing business and through acquisitions and all potential buybacks will be measured against other potential uses of capital that meet our investment criteria and which may arise from time to time. The repurchase program does not obligate the Company to repurchase any specific number of shares, and may be suspended or discontinued at any time. The Company expects to finance any purchases with existing cash on hand, cash from operations and potential additional borrowings. During the three months ended March 31, 2016, there were no share repurchases.

Stock Options

Under the Company's 2013 Equity Incentive Plan, (as amended and restated from time to time, the "Plan"), the Administrator of the Plan, which is the compensation committee of the Company's board of directors, may grant up to 9,000,000 stock options, restricted stock, restricted stock units and other incentive awards to employees, officers, non-employee directors, and consultants, and such options or awards may be designated as incentive or non-qualified stock options at the discretion of the Administrator. The exercise price of stock option awards granted is equal to the per share closing price of the common stock on the date the options were granted. Stock option awards generally vest over one to four years, expire five years from date of grant and certain stock option awards have accelerated vesting provisions in the event of a change in control and termination without cause.

Fair values of the stock options at March 31, 2016 and 2015 were determined using the Black-Scholes model and the following weighted average assumptions:
 
Three Months Ended March 31,
 
2016
 
2015
Common stock price on grant date
$9.22
 
$13.14
Expected life (in years)
3.8

 
4.0

Risk-free interest rate
1.24
%
 
1.31
%
Expected stock volatility
44.6
%
 
50
%
Expected dividend yield
—
%
 
—
%
Fair value of stock options granted
$3.23
 
$5.37


Stock option activity for the three months ended March 31, 2016 is as follows:

Global Eagle Stock Option Plan
Shares (in thousands)
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Term (in years)
 
Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016
5,625

 
$
11.20

 

 


Granted
599

 
$
9.22

 

 
 
Exercised
(26
)
 
$
9.87

 

 
 
Forfeited
(81
)
 
$
12.34

 

 
 
Outstanding at March 31, 2016
6,117

 
$
11.00

 
3.17
 
$
2

Vested and expected to vest at March 31, 2016
5,544

 
$
10.97

 
3.09
 
$
1

Exercisable at March 31, 2016
2,898

 
$
10.77

 
2.64
 
$
—



Restricted Stock Units
    
Under the Plan, restricted stock unit awards that can be granted to employees, officers and consultants vest 1/4th annually on the grant anniversary date over a 4-year term. Restricted stock unit awards granted to non-employee directors vest monthly over 13 months from the grant date. The grant date fair value of an RSU equals the closing price of the Company's common stock on the grant date.

The following summarizes select information regarding our RSUs during the three months ended March 31, 2016:

 
Units (in thousands)
 
Weighted Average Grant Date Fair Value
 
Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2016
408

 
$
12.71

 
 
Granted
269

 
$
9.18

 
 
Vested
(32
)
 
$
13.14

 
 
Forfeited
(15
)
 
$
11.98

 
 
Balance nonvested at March 31, 2016
630

 
$
11.20

 
$
5,368

Vested and expected to vest at March 31, 2016
468

 
$
11.27

 
$
3,990



Stock-Based Compensation Expense

Stock-based compensation expense related to all employee and non-employee stock-based awards for the three months ended March 31, 2016 and 2015 were as follow, (in thousands):

 
 
Three Months Ended March 31,
 
 
2016
 
2015
Stock-based compensation expense:
 
 
 
 
Cost of services
 
$
75

 
$
41

Sales and marketing expenses
 
168

 
26

Product development
 
248

 
313

General and administrative
 
1,578

 
2,170

Total stock-based compensation expense
 
$
2,069

 
$
2,550


 
Warrants

The following is a summary of non-public warrants outstanding as of March 31, 2016 that the Company assumed in the Business Combination:


Weighted Average Exercise Price per Warrant
 
Number of Warrants (as converted) (in thousands)
 
Weighted Average Remaining Life
(in years)
Common stock warrants
$
8.79

 
690

 
0.97
Series C Preferred stock warrants
$
8.74

 
477

 
1.19


The following is a summary of public warrants outstanding as of March 31, 2016. For the three months ended March 31, 2016 there was no activity.

Public Warrants
 
Number of Warrants (in thousands)
 
Weighted Average Exercise price
 
Weighted Average Remaining Contractual Term (in years)
Outstanding and exercisable at March 31, 2016
 
6,173

 
$
11.50

 
1.84


The Company accounts for its 6.2 million public warrants as derivative liabilities at March 31, 2016. During the three months ended March 31, 2016 and 2015, the Company recorded approximately $5.9 million and $1.0 million of income, respectively, in the condensed consolidated statements of operations as a result of the remeasurement of these warrants. The fair value of warrants issued by the Company has been estimated using the warrants' quoted public market price. In the event the closing price of the Company's common stock is at or above $17.50 for twenty of thirty consecutive trading days, the Company can redeem the 6.2 million public warrants for $0.01 per warrant following a 30 day notice period, during which period holders may exercise their warrants at $11.50 per share, with estimated proceeds of approximately $71.0 million, unless we decide, at our option, to make them exercisable on a cashless basis.