10-Q
RLJ ENTERTAINMENT, INC. filed this Form 10-Q on 11/09/2017
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RLJ Entertainment, Inc.

 

Notes To Consolidated Financial Statements

(Unaudited)

 

financial criteria and upon certification by the Compensation Committee of the satisfaction of such performance criteria based upon our audited financial statements for 2017, 2018, 2019 and 2020. The above unrecognized stock-based compensation expense assumes that the performance awards will vest at 100% (or 0.5 million shares). However, the possible range of vesting is between zero and 1.0 million shares.

Assuming 100% vesting for all awards, we expect to recognize $2.8 million of compensation expense in the next 12 months.

During the nine months ended September 30, 2016, 418,805 shares of restricted stock-based awards were granted, 192,501 shares vested and 6,231 shares were forfeited based upon the failure to achieve the 2015 performance criteria. Of the shares granted, we issued 216,982 shares of restricted stock awards to executive officers and directors and 201,823 shares of restricted stock units to employees. A summary of the restricted stock-based award activity since December 31, 2016 is as follows:

 

(In thousands, except per share data)

 

Service Shares

 

 

Performance Shares

 

Restricted Stock-Based Compensation Award Activity

 

Shares

 

 

Weighted-

Average Grant

Date Fair Value

 

 

Shares

 

 

Weighted-

Average Grant

Date Fair Value

 

Non-vested shares at December 31, 2016

 

 

409

 

 

$

1.92

 

 

 

 

 

$

 

Granted

 

 

634

 

 

$

3.22

 

 

 

500

 

 

$

2.40

 

Vested

 

 

(204

)

 

$

2.01

 

 

 

 

 

$

 

Forfeited

 

 

(4

)

 

$

1.92

 

 

 

 

 

$

 

Non-vested shares at September 30, 2017

 

 

835

 

 

$

2.90

 

 

 

500

 

 

$

2.40

 

 

 

NOTE 9. STOCK WARRANTS

As of September 30, 2017, outstanding warrants to purchase shares of common stock are as follows:

 

 

 

September 30, 2017

(In thousands, except per share data)

 

Shares

 

 

Weighted-

Average

Exercise Price

 

 

Weighted-

Average

Remaining Life

AMC Unregistered warrants

 

 

18,333

 

 

$

3.00

 

 

5.1 years

2015 Unregistered warrants

 

 

2,999

 

 

$

2.29

 

 

2.6 years

2012 Warrants:

 

 

 

 

 

 

 

 

 

 

Registered warrants

 

 

5,125

 

 

$

36.00

 

 

Sponsor warrants

 

 

1,272

 

 

$

36.00

 

 

Unregistered warrants

 

 

617

 

 

$

36.00

 

 

 

 

 

28,346

 

 

 

 

 

 

 

 

Concurrent with entering into the AMC Credit Agreement, we issued AMC three warrants (the AMC Warrants) to acquire shares of our common stock at $3.00 per share. The first warrant is for 5.0 million shares of common stock, of which 1.7 million shares were exercised in June 2017, and expires on October 14, 2021. The second warrant is for 10.0 million shares of common stock and expires on October 14, 2022. The third warrant is for 5.0 million shares of common stock, subject to adjustment, and expires on October 14, 2023. The AMC Warrants are subject to certain standard anti-dilution provisions, and may be exercised on a non-cash basis at AMC’s discretion.

The third warrant (the AMC Tranche C Warrant) contains a provision that may increase the number of shares acquirable upon exercising, for no additional consideration payable by AMC, such that the number of shares acquirable upon exercise is equal to the sum of (i) at least 50.1% of our then outstanding shares of common stock, determined on a fully diluted basis, less (ii) the sum of 15.0 million shares and the equity interest shares issued in connection with the AMC Credit Agreement. This provision provides AMC the ability to acquire at least 50.1% of our common stock for $60.0 million, provided that all warrants are exercised and AMC elects not to exercise on a non-cash basis. The third warrant with this guarantee provision is being accounted for as a derivative liability.

On May 20, 2015 and concurrent with our preferred stock placement, we issued warrants to our preferred stock holders to acquire 3.1 million shares of our common stock (the 2015 Warrants). The warrants have term of five years. On October 14, 2016 and in connection with the AMC Credit Agreement, we amended the anti-dilution and redemption provisions of the warrants to

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