Stock-based Compensation

3 Months Ended

Mar. 31, 2024

Note 9. Stock-based Compensation

Equity Incentive Plan

The Quantum-Si Incorporated 2021 Equity Incentive Plan (the “2021 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2021 Plan. As of March 31, 2024 there were 14,661,839 shares available for future grant under the 2021 Plan.

Inducement Equity Incentives

On May 8, 2023, the Company adopted the 2023 Inducement Equity Incentive Plan (the “2023 Inducement Plan”) to reserve 3,000,000 shares of its Class A common stock to be used exclusively for grants of awards to employees that were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2023 Inducement Plan are substantially similar to those of the 2021 Plan. As of March 31, 2024, there were 60,250 shares remaining available for issuance under the 2023 Inducement Plan.

Stock Options

During the three months ended March 31, 2024, the Company did not grant any stock options to participants. Stock-based compensation related to stock options for the three months ended March 31, 2024 and 2023 was $1.3 million and $2.3 million, respectively.

A summary of the stock option activity is presented in the table below:

	Number of Options			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023		22,511,900		$	2.79		8.22	$	3,194
Granted		-			-
Exercised		-			-
Forfeited		(384,573	)		3.78
Expired		(25,520	)		0.06
Outstanding at March 31, 2024		22,101,807		$	2.78		8.01	$	2,832
Exercisable at March 31, 2024		7,918,930		$	3.52		6.65	$	610
Vested and expected to vest at March 31, 2024		18,615,698		$	2.85		7.86	$	2,286

Modification of Performance Stock Options

In November 2022 and May 2023, the Company granted 2,780,000 and 1,000,000 performance-based stock option awards to its Chief Executive Officer and Chief Financial Officer, respectively. The vesting of these awards are subject to continued service to the Company and certain market conditions. The market conditions require the Company’s Class A common stock trade above specified levels for a certain periods of time. The fair values of the awards were estimated at the grant date using the Monte Carlo simulation model.

On March 15, 2024, the market conditions that trigger the vesting of these performance-based stock option awards were modified. The modified market conditions require the Company’s Class A common stock to trade above specified levels for certain defined periods of time that are different from the original awards. The Company accounted for the modifications as modifications of market conditions. The total incremental stock-based compensation expense to be recognized for these awards is $2.4 million within Selling, general and administrative operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Incremental stock-based compensation expense for the three months ended March 31, 2024 was immaterial. There were no such modifications to performance-based stock option awards for the three months ended March 31, 2023.

Restricted Stock Units

During the three months ended March 31, 2024, the Company granted 5,406,164 restricted stock unit (“RSU”) awards. Stock-based compensation related to RSU awards for the three months ended March 31, 2024 and 2023 was $0.3 million and $1.6 million, respectively.

A summary of the RSU activity is presented in the table below:

	Number of Shares Underlying RSUs			Weighted Average Grant-Date Fair Value (per share)
Nonvested RSUs at December 31, 2023		847,169		$	2.68
Granted		5,406,164			1.73
Vested		(46,572	)		6.66
Forfeited		(54,417	)		2.11
Nonvested RSUs at March 31, 2024		6,152,344			1.82

Stock-based compensation is allocated to Research and development and Selling, general and administrative operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Stock-based compensation expense for the three months ended March 31, 2024 and 2023 is as follows (in thousands):

	2024		2023
Research and development	$	490	$	967
Selling, general and administrative		1,155		2,941
Total stock-based compensation	$	1,645	$	3,908

As of March 31, 2024 total unrecognized stock-based compensation related to stock options and RSUs was $24.4 million, which is expected to be recognized over the remaining weighted average vesting period of 3.3 years.