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

3 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock based compensation, options and warrants

Note 9. Stock based compensation, options and warrants:

Stock based compensation:

The Company’s stock-based compensation expenses recognized during the three months ended March 31, 2019 and 2018, were attributable to selling, general and administrative expenses, which are included in the accompanying consolidated statements of operations.

The Company recognized total stock-based compensation expense during the three months ended March 31, 2019 and 2018, from the following categories:

	Three Months Ended March 31,
	2019		2018
Restricted stock awards under the Plan	$	176,544	$	766,949
Stock option awards under the Plan		58,498		116,994
Total stock-based compensation	$	235,042	$	883,943

Restricted stock units:

A summary of the Company’s unvested restricted stock activity in the three months ended March 31, 2019 is presented here:

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2018		95,939		$	12.49
Vested		(22,397	)	$	9.37
Forfeited		(40,000	)	$	16.82
Unvested at March 31, 2019		33,542		$	9.39

During the three months ended March 31, 2019, the Company did not grant restricted stock units.

During the three months ended March 31, 2019, forfeitures of restricted common stock totaled 40,000, which consisted of shares forfeited due to the termination of two of the Company’s officers.

The fair value of restricted stock unit grants is measured based on their fair value on the date of grant and amortized over the vesting period of twenty-four months. As of March 31, 2019, there was approximately $0.3 million 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 4 months.

Stock incentive plan options:

A summary of activity under the Plan for the three months ended March 31, 2019 is presented below:

	Shares Underlying Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2019		62,000	$	15.71		9.2	$	-
Outstanding at March 31, 2019		62,000	$	15.71		9.0	$	-

Exercisable at March 31, 2019		62,000	$	15.71		9.0	$	-

Aggregate intrinsic value represents the total intrinsic value (the difference between the Company’s closing stock price on March 31, 2019 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 March 31, 2019.

As of March 31, 2019, there was no unrecognized stock-based compensation expense related to unvested options.

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 three months ended March 31, 2019:

	Shares Underlying Options/Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2019		1,671,113	$	39.47		2.0	$	-
Granted		1,908,144	$	1.94		5.2	$	2,537,832
Outstanding at March 31, 2019		3,579,257	$	19.46		3.6	$	2,537,832

Exercisable at March 31, 2019		3,579,257	$	19.46		5.2	$	2,537,832

The Company granted warrants to purchase 1,908,144 shares of its common stock with an exercise price of $1.94, in connection with its Senior Secured Promissory Notes issued on January 28, 2019. (See Note 7).

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on March 31, 2019 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 March 31, 2019.