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SEC Filings

SEVEN STARS CLOUD GROUP, INC. filed this Form 10-Q on 11/13/2017
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Seven Stars Cloud Group, Inc., Its Subsidiaries and Variable Interest Entities


As of December 31, 2016, the warrant liability was revalued as disclosed in Note 10, and recorded at its fair value of approximately $70,785.


In 2017, there were 182,534 warrants exercised during nine months ended September 30, 2017, all the remaining 353,716 warrants were expired as of August 30, 2017.


14.Share-Based Payments


As of September 30, 2017, the Company had 1,845,010 options, 422,085 restricted shares and 3,118,181 warrants outstanding (including the 1,818,182 warrants issued to SSS as disclosed in Note 12 (a) to purchase shares of our common stock.


The Company awards common stock and stock options to employees and directors as compensation for their services, and accounts for its stock option awards to employees and directors pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.


Total share-based payments expense recorded by the Company during the three months and nine months ended September 30, 2017 and 2016 is as follows:


   Three Months Ended   Nine Months Ended 
   September 30,   September 30,   September 30,   September 30, 
   2017   2016   2017   2016 
Employees and directors share-based payments  $54,846   $75,000   $202,501   $287,000 


Effective as of December 3, 2010, our Board of Directors approved the SSC 2010 Stock Incentive Plan (“the 2010 Plan”) pursuant to which options or other similar securities may be granted. The maximum aggregate number of shares of our common stock that may be issued under the Plan is 4,000,000 shares. As of September 30, 2017, options available for issuance are 1,415,003 shares.


(a)Stock Options


Stock option activity for the nine months ended September 30, 2017 is summarized as follows:


           Weighted Average     
           Remaining   Aggregated 
   Options   Weighted Average   Contractual Life   Intrinsic 
   Outstanding   Exercise Price   (Years)   Value 
Outstanding at January 1, 2017   2,101,425   $2.42    4.59   $- 
Granted   170,000    1.57           
Exercised   (78,211)   1.63           
Expired   (45,662)   2.90           
Forfeited   (302,542)   1.50           
Outstanding at September 30, 2017   1,845,010    2.67    4.46    0.39 
Vested and expected to vest as of September 30, 2017   1,845,010    2.67    4.46    0.39 
Options exercisable at September 30, 2017 (vested)   1,609,196    2.82    3.80    0.36 


On January 4, March 1 and March 16, 2017, 90,000, 45,000 and 35,000 shares stock options, respectively, were issued to certain employees for services provided to us. The fair value of the stock options granted were valued using the Black-Scholes Merton method on the grant date, amounting to $61,200, $45,443 and $36,750, respectively.


As of September 30, 2017, approximately $220,777 of total unrecognized compensation expense related to non-vested share options is expected to be recognized over a weighted average period of approximately 1.98 years. The total fair value of shares vested during the nine months ended September 30, 2017 and 2016 was approximately $56,765 and $12,000,  respectively.