Annual report pursuant to Section 13 and 15(d)

Restricted Stock Units

v3.23.1
Restricted Stock Units
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Restricted Stock Units Stock Options
On September 18, 2015, the Company adopted the Genius Brands International, Inc. 2015 Incentive Plan (the “2015 Plan”). The total number of shares that can be issued under the 2015 Plan is 3,000,000 shares.
On September 1, 2020, the Company adopted the Genius Brands International, Inc. 2020 Incentive Plan (the “2020 Plan”). On August 4, 2020, the Board of Directors voted to adopt the 2020 Plan. The shares available for issuance under the 2020 Plan were approved by stockholders on August 27, 2020. The 2020 Plan as approved by the stockholders increased the maximum number of shares available for issuance up to an aggregate of 216,767 shares of common stock, which does not include shares that the Company may issue related to acquisitions.
During the year ended December 31, 2022, the Company granted options to purchase 201,029 shares of common stock to employees with a fair market value of $1.3 million. The options vest evenly over one to three years and expire five to ten years from grant date.
In addition, as part of the Wow Acquisition, the Company granted replacement options to purchase 173,310 shares of the Company’s common stock to Wow employees who would continue to provide services to the Company. 67,642 options to purchase common stock were also granted to certain departing Wow shareholders to replace their previously vested Wow options. These options were cancelled after 30 days of the grant date if not exercised. The fair market value of $1.5 million was determined utilizing assumptions as of the replacement date of April 6, 2022 and were valued using the
BSM option pricing model. The number of shares granted was determined by using an exchange ratio calculated by a third party based on the intrinsic value of the Wow common stock purchased as part of the acquisition and the value of the Company’s common stock as of the agreement date. The vesting terms of the replacement options remained the same as the Wow options for which they were exchanged. All shares that replaced previously vested Wow shares were included as part of the purchase price based on the calculated fair value on the acquisition date of $1.2 million for 196,753 shares. The remaining options to vest with a fair value of $0.3 million will be expensed over the remaining requisite period. The options expire within three years from the replacement option grant date or the original Wow option, whichever is greater.
The fair value of the options granted during the years ended December 31, 2022 and 2021 were calculated using the BSM option pricing model based on the following assumptions:
Year Ended
December 31, 2022 December 31, 2021
Exercise Price
$ 5.10 - 9.00
$ 12.00 - 30.60
Dividend Yield –  % –  %
Volatility
100% - 123%
99% - 143%
Risk-free interest rate
0.41% - 3.75%
0.41% - 1.26%
Expected life of options
3.0- 5.0 years
 5.0 years
The following table summarizes the stock option activity during the years ended December 31, 2022 and December 31, 2021:
Number of Shares Weighted- Average Remaining Contractual
Life		 Weighted- Average Exercise Price
Outstanding at December 31, 2020 911,618 9.84 $ 16.90 
Granted 124,614 4.38 $ 23.60 
Exercised – – $ – 
Forfeited/Cancelled (16,500) 3.73 $ 27.90 
Expired – – $ – 
Outstanding at December 31, 2021 1,019,732 7.96 $ 17.50 
Granted 441,981 4.49 $ 10.59 
Exercised – – $ – 
Forfeited/Cancelled (110,292) 2.82 $ 16.48 
Expired – – $ – 
Outstanding at December 31, 2022 1,351,421 6.49 $ 15.09 
Unvested at December 31, 2022 369,620 6.05 $ 13.07 
Vested and exercisable December 31, 2022 981,801 6.66 $ 15.85 
During the years ended December 31, 2022 and December 31, 2021, the Company recognized $1.7 million and $3.7 million, respectively in share-based compensation expense related to stock options. The unrecognized share-based compensation expense as of December 31, 2022 was $1.3 million and will be recognized over a weighted average remaining contractual life of 6.49 years. The outstanding shares as of December 31, 2022 have an aggregated intrinsic value of $0. The weighted average fair values per option granted for the year ended December 31, 2022 was determined to be $6.45 per share.
Restricted Stock Units
During the year ended December 31, 2022, the Company granted 108,667 fully vested RSUs to nonemployees for consulting services with a fair market value of $0.8 million and 30,000 RSUs to a nonemployee with a fair market value of $0.3 million that vest over 1.5 years. The Company granted 50,000 RSUs to an executive employee with a fair market value of $0.4 million that vest evenly over 3 years. The RSUs expire five years from date of grant.
Per terms of the restricted stock agreements, per option of the employee, the Company may pay the employee’s related taxes associated with the employee’s vested and issued stock by issuing shares net of taxes to the employee and decreasing the freely tradable shares of the Company. The value of the shares netted for employee taxes represents treasury stock repurchased. An aggregate of 593,358 shares of common stock were issued as a result of vested RSUs, of which, 699 shares of common stock were withheld to pay employee taxes upon such vesting. The Company recorded the cost of the withheld shares of $2,553 within Treasury Stock on the consolidated balance sheet as of December 31, 2022.
The following table summarizes the Company’s RSU activity during the years ended December 31, 2022 and December 31, 2021:
Restricted Stock Unites Weighted-
Average Remaining Contractual Life		 Weighted-
Average Grant Date Fair Value per Share
Unvested at December 31, 2020 907,500  4.94 $ 13.90 
Granted 841,318  4.47 $ 14.20 
Vested (210,494) 4.09 $ 14.40 
Forfeited/Cancelled –  – $ – 
Unvested at December 31, 2021 1,538,324  4.34 $ 14.00 
Granted 188,667 4.28 $ 7.48 
Vested (565,047) 3.51 $ 12.46 
Forfeited/Cancelled – – $ – 
Unvested at December 31, 2022 1,161,944 3.41 $ 13.67 
During the years ended December 31, 2022 and December 31, 2021, the Company recognized $9.2 million and $12.8 million, respectively in share-based compensation expense related to RSU awards. The unvested share-based compensation as of December 31, 2022 is $1.7 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the year ended December 31, 2022 was $5.5 million.