EQUITY-BASED COMPENSATION EXPENSE

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company adopted an incentive plan in November 2020 (the “2020 Plan”) which authorized the issuance of incentive common unit options and restricted common units (collectively, “Awards”). The maximum number of Awards to be issued under the 2020 Plan is 10,031 and any Awards that expire or are forfeited may be re-issued. As of March 31, 2024, a total of 9,994 Awards had been granted under the 2020 Plan and, as of March 31, 2024, there are no remaining unvested Awards and no remaining unrecognized compensation cost associated with these Awards. The Awards issued generally vested over two or three years and the estimated fair value of the Awards at issuance was recognized as compensation expense over the related vesting period.

In July 2021, the Company adopted a new stock incentive plan (the “2021 Plan”), pursuant to which 17,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. Following the adoption of the 2021 Plan, no additional awards are expected to be issued under the 2020 Plan. The 2021 Plan authorized the issuance of stock options, stock appreciation rights (“SAR Awards”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and other stock-based awards (collectively the “2021 Plan Awards”). Any 2021 Plan Awards that expire or are forfeited may be re-issued. The estimated fair value of the 2021 Plan Awards at issuance is recognized as compensation expense over the related vesting, exercise, or service periods, as applicable.

On March 9, 2023, the Company’s board of directors unanimously approved, subject to stockholder approval, an amendment to the 2021 Plan (the “Amendment” and together with the 2021 Plan, the “Amended 2021 Plan”) to increase the maximum number of shares of Class A common stock available for issuance under the Amended 2021 Plan to an amount not to exceed 10% of the total number of issued and outstanding shares of Class A common stock, on a non-diluted basis, as constituted on the grant date of an award pursuant to the Amended 2021 Plan. On May 5, 2023, the stockholders of the Company voted to approve the Amendment. As of March 31, 2024, there were 2,575 shares of Class A common stock available for grant for future equity-based compensation awards under the Amended 2021 Plan. Activity related to awards issued under the Amended 2021 Plan is further described below. As of March 31, 2024, no SAR Awards and no RSAs had been granted under the Amended 2021 Plan.

Stock Options

The following table summarizes stock option activity during the three months ended March 31, 2024:


	Options Outstanding
(in thousands, except per share amounts)	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)	Aggregate Intrinsic Value(1)
Outstanding, December 31, 2023	4,010	$	1.80	3.9	$	353



Forfeited	(33)	1.58
Expired	(125)	4.10
Outstanding, March 31, 2024	3,852	$	1.73	3.8	$	1,037
Exercisable at March 31, 2024	2,141	$	1.86	3.7	$	603

(1)Based on the amount by which the closing market price of our Class A common stock exceeds the exercise price on each date indicated.

No options were exercised during the three months ended March 31, 2024. Total unrecognized stock-based compensation expense related to unvested options was $1,210 as of March 31, 2024, which is expected to be recognized over a weighted-average remaining period of 2.5 years.

Restricted Stock Units

The following table summarizes the RSU activity during the three months ended March 31, 2024:


	Number of Shares (in thousands)	Weighted-Average Grant Date Fair Value per Share



Unvested, December 31, 2023	12,021	$	2.15
Granted(1)	9,863	1.29
Vested(1)(2)	(7,053)	2.78
Forfeited	(115)	1.67
Unvested, March 31, 2024	14,716	$	1.28

(1)Includes RSUs issued for the 2023 annual performance bonus that vested at issuance with a value of $3,304, of which $2,838 is included in “Accounts payable and accrued liabilities” on the unaudited Condensed Consolidated Balance Sheet at December 31, 2023, with the remainder reflected as a change in estimate that is included within “General and administrative expenses” on the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

(2)Includes 2,433 vested shares that were withheld to cover tax obligations and were subsequently cancelled.

As of March 31, 2024, total unrecognized compensation cost related to the RSUs was $16,616, which is expected to be recognized over a weighted-average remaining period of 3.3 years.

Performance Based Awards

In August 2023, the Company’s board of directors approved the grant of 4,000 RSUs outside of the Company’s Amended 2021 Plan (the “August 2023 Grant”). The August 2023 Grant was issued pursuant to an employment agreement and vests upon the later of the second anniversary of employment and the achievement of certain stock price targets, as set forth in the table below:


Tranche	Company Stock Price Target (per share)(1)	Number of Eligible RSUs (in thousands)
1	$2.00	1,000
2	$3.00	1,000
3	$4.00	1,000
4	$5.00	1,000

(1)The market price of the Company’s Class A common stock must exceed the target price per share for 30 days during a 60-day period.

In addition to the time-based vesting condition and market conditions, which must both be met and were not achieved as of March 31, 2024, continued service to the Company is required as of the date the conditions are satisfied. The grant date fair value of the August 2023 Grant was calculated using a Monte Carlo simulation, which inputs included a volatility rate of 107.7%, a risk-free rate of 4.0%, a market price of $0.65 per share on the grant date, and an expected term of 9 years. The total fair value of the August 2023 Grant was $2,177 and will be recognized as compensation expense over the requisite service period, which, for this award, is the longer of the explicit, implicit, and derived service period. The total fair value of the August 2023 Grant will be recognized regardless of whether the market conditions are satisfied, provided that the requisite service period has been completed. As of March 31, 2024, the total unrecognized compensation expense related to the August 2023 Grant was $1,716, which is expected to be recognized over a weighted-average period of 2.5 years.

Compensation Expense by Type of Award

The following table details the equity-based compensation expense by type of award for the periods presented:


	Three Months Ended March 31,
(in thousands)	2024		2023
RSUs	$	9,725	$	4,328
Stock Options	991		177
Restricted Common Shares	—		50
Total equity-based compensation expense	$	10,716	$	4,555

Of the total equity-based compensation expense, $4,247 and $1,600 was capitalized to inventory during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, $4,004 and $1,968, respectively, remained capitalized in inventory. During the three months ended March 31, 2024 and 2023, we recognized $6,469 and $2,955, respectively, within “General and administrative expenses” on the unaudited Condensed Consolidated Statements of Operations and we recognized $2,211 and $50, respectively, within “Cost of goods sold.”

Employee Stock Purchase Plan

In July 2021, the Company also adopted an employee stock purchase plan (the “2021 ESPP”), pursuant to which 4,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. No shares have been issued under the 2021 ESPP as of March 31, 2024.