Riot Platforms, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stock based compensation, options and warrants

Stock based compensation, options and warrants

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock based compensation, options and warrants

Note 9. Stock based compensation, options and warrants:

Stock based compensation:

The Company recognized total expenses for stock-based compensation during the three and six months ended June 30, 2018 and 2017, which are included in the accompanying condensed interim consolidated statements of operations, as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Selling, general and administrative expenses	$	1,608,086	$	138,011	$	2,492,029	$	271,054
Total stock-based compensation	$	1,608,086	$	138,011	$	2,492,029	$	271,054

The Company recognized total stock-based compensation expense during the three and six months ended June 30, 2018 and 2017, from the following categories:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Restricted stock awards under the Plan	$	1,432,593	$	57,745	$	2,199,542	$	88,176
Stock option awards under the Plan		175,493		31,452		292,487		95,258
Non-qualified stock option awards		-		48,814		-		87,620
Total stock-based compensation	$	1,608,086	$	138,011	$	2,492,029	$	271,054

Restricted stock units:

A summary of the Company’s restricted stock activity in the six months ended June 30, 2018 is presented here:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2018		496,152		$	5.97
Granted		335,000			12.29
Vested		(108,439	)		9.36
Forfeited		(26,563	)		10.58
Delivered		(124,583	)		5.42
Unvested at June 30, 2018		571,567		$	8.78

During the six months ended June 30, 2018, the Company granted 255,000 and 67,500 restricted stock units to employees and non-employee directors, respectively, and 12,500 restricted stock units to a consultant. The total fair value of restricted stock units granted during the six months ended June 30, 2018 was approximately $4,116,000.

The fair value of restricted stock unit grants are measured based on their fair value on the date of grant and amortized over the vesting period of twenty-four months. As of June 30, 2018, there was approximately $4,679,000 of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of approximately six months.

Stock incentive plan options:

The Company currently provides stock-based compensation to employees, directors and consultants under the Plan. The Company granted 50,000 stock options to an employee of the Company for the six months ended June 30, 2018. There were no stock options granted to employees, directors or consultants for the six months ended June 30, 2017.

A summary of activity under the Plan for the six months ended June 30, 2018 is presented below:

	Shares Underlying Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2018		119,533		$	9.02
Granted		50,000			18.50
Exercised		(19,533	)		4.02
Forfeited		-			-
Outstanding at June 30, 2018		150,000		$	12.83		9.4	$	-

Exercisable at June 30, 2018		120,834		$	11.47		9.4	$	-

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on June 30, 2018 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders, had all option holders been able to, and in fact had, exercised their options on June 30, 2018.

In January 2018, 19,533 vested options granted under the Plan were exercised for cash proceeds of $78,522.

During the six months ended June 30, 2018, the 50,000 options granted had a ten year life and there were no options forfeited that were granted under the Plan. The vested options were exercisable at an average of $9.38 per share, the unvested options were exercisable at an average of $18.50 per share.

Other common stock purchase options and warrants:

Following is a summary of outstanding options and warrants that were issued outside of the Plan for the six months ended June 30, 2018:

	Shares Underlying Options/Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2017		1,944,895		$	35.06		2.7	$	6,135,000
Granted		-			-
Exercised		(113,009	)	$	3.50
Forfeited		(160,773	)	$	10.88
Outstanding at June 30, 2018		1,671,113		$	39.47		2.5	$	56,800

Exercisable at June 30, 2018		1,671,113		$	39.47		2.5	$	56,800

During the six months ended June 30, 2018, 13,009 of the warrants issued in the May 2013 private offering were surrendered for the issuance of 3,215 shares of common stock, 100,000 warrants issued in March 2018, were exercised for cash proceeds of $350,000 and 160,773 warrants were forfeited.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on June 30, 2018 and the exercise price, multiplied by the number of in-the-money options and warrants) that would have been received by the option and warrant holders, had all option and warrant holders been able to, and in fact had, exercised their options and warrants on June 30, 2018.