Stock-based compensation expense is related to the grant of restricted units under the 2022 Equity Incentive Plan (“2022 Plan”), the grant of unit options and restricted units granted under the 2020 Equity Incentive Plan (“2020 Plan”) and the grant of San Vicente Equity Joint Venture LLC’s (“SVE”) Series P profit units (“Series P Units”) to Catapult Goliath LLC (“Catapult Goliath”), a related party wherein certain members of Catapult Goliath were executives of the Company.

The stock-based compensation expense for SVE’s Series P Units was pushed down to the operating entity and thus recorded in the Company’s condensed consolidated financial statements with a corresponding credit to equity as a capital contribution. Upon the consummation of the Business Combination, all vested Series P Units were exchanged for common stock of the Company determined pursuant to the distribution provision of the limited liability agreement of SVE and the Merger Agreement. As a result, the vested Series P Units were exchanged for 6,497,593 shares of common stock of the Company.

The Company entered into employment agreements with the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). The employment agreements include cash compensation and incentive awards in the form of restricted stock units. Certain awards are subject to market conditions. The CEO market condition awards and the CFO market condition awards (together, the “Market Condition Awards”) are liability-classified and will require fair value remeasurement at the end of each reporting period. No new Market Condition Awards were granted or forfeited during the six months ended June 30, 2023.

The Company used the Monte Carlo simulation model to value the liability-classified award. The key inputs into the Monte Carlo simulation as of June 30, 2023 and December 31, 2022 were as follows:


	June 30, 2023		December 31, 2022
Expected term (in years)	9.4 years		9.9 years
Volatility	70.0	%	65.0	%
Risk-free interest rate	3.8	%	3.8	%
Dividend yield	—	%	—	%

A summary of the unvested time-based restricted stock unit (“RSU”) activity for director RSUs, employee RSUs, and the time-based awards granted to the CEO and CFO during the six months ended June 30, 2023 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	4,555,256	$	10.10
Granted	1,253,550	$	6.07
Vested	(43,750)	$	10.18
Forfeited	(116,155)	$	6.34
Unvested at June 30, 2023	5,648,901	$	9.28


	Number of Options	Weighted Average Exercise Price
Outstanding at December 31, 2022	4,705,765	$	5.15

Exercised	(485,549)	$	3.54
Forfeited	(1,221,244)	$	5.48
Outstanding at June 30, 2023	2,998,972	$	5.27

The following table summarizes the key input assumptions used in the Black-Scholes option-pricing model to estimate the fair value of stock options granted for the six months ended June 30, 2022. No options were granted under the 2020 Plan for the six months ended June 30, 2023:


	Six Months Ended June 30, 2022
Expected life of options (in years)(1)	4.61
Expected stock price volatility(2)	56		%
Risk free interest rate(3)	1.37		%
Expected dividend yield(4)	—		%
Weighted average grant-date fair value per share of stock options granted	$	2.75
Fair value per common stock of Legacy Grindr (adjusted by the Exchange Ratio)	$	4.20

(1)The expected term for award is determined using the simplified method, which estimates the expected term using the contractual life of the option and the vesting period.

(2)Expected volatility is based on historical volatilities of a publicly traded peer group over a period equivalent to the expected term of the awards.

(3)The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that approximates the expected term of the awards.

(4)Prior to the date of the Business Combination, Legacy Grindr did not historically pay any cash dividends on its common stock. On June 10, 2022 and November 14, 2022, Legacy Grindr’s Board of Managers approved a special distribution, and the Company does not expect to pay any normal course cash dividends on its common stock in the foreseeable future.

The following table summarizes stock-based compensation expenses for the three and six months ended June 30, 2023 and 2022, respectively:


	Three Months Ended June 30,						Six Months Ended June 30,
	2023				2022		2023		2022
Selling, general and administrative expenses	$	3,109			$	12,823	$	6,170	$	13,435
Product development expenses	496				110		776		232
	$	3,605	$	—	$	12,933	$	6,946	$	13,667