STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

On October 19, 2021, the board of directors of the Company (the "Board") and the stockholders of the Company approved a new long-term incentive plan (the “New LTIP”) for employees, consultants and directors. The New LTIP provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, RSUs, dividend equivalents, other stock-based awards, and substitute awards intended to align the interests of service providers, including the Company's named executive officers, with those of its stockholders. The New LTIP reserved 4,752,000 shares of Class A common stock that may be issued or used for reference purposes or with respect to which awards may be granted. In addition, pursuant to the New LTIP, the 313,517 remaining shares of Class A common stock under the prior long-term incentive plan that was effective April 28, 2021, that were reserved and available for delivery, were assumed and reserved for issuance under the New LTIP. As of the effective date of the New LTIP, the Company now grants all equity-based awards under the New LTIP.

The Board is duly authorized to administer the New LTIP. The Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award.

Stock options issued under the Company’s New LTIP are granted with an exercise price no less than the market price of the Company’s stock at the date of grant and expire up to ten years from the date of the grant. The Company accounts for share-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the LTIP were granted with an exercise price equal to the fair market value of the Company’s stock, as determined with reference to third-party valuations as of the date of option grants, and expire up to ten years from the date of grant. Options granted under the New LTIP and the LTIP vest over various terms.

The RSUs are subject to restrictions on transferability, risk of forfeiture and other restrictions imposed by the Compensation Committee of the Board (the "Compensation Committee"). Settlement of vested RSUs will occur upon vesting or upon expiration of the deferral period specified for such RSUs by the Compensation Committee (or, if permitted by the Compensation Committee, as elected by the Participant). RSUs may be settled in cash or a number of shares of stock (or a combination of the two), as determined by the Compensation Committee at the date of grant or thereafter. As of

March 31, 2022, 80,662 RSUs were awarded to eleven employees with a weighted average grant date fair market value of $21.37 that vest over ten years.

Stock-Based Compensation

Stock compensation expense was $2,592,995 and $0 for the three months ended March 31, 2022 and 2021; respectively. There is no tax benefit related to stock compensation expense due to a full valuation allowance on net deferred tax assets at March 31, 2022. The Company recognized total stock-based compensation expense during the three months ended March 31, 2022 and 2021, from the following categories:


	March 31, 2022		March 31, 2021
Restricted stock awards under the Plan	$	338,682	$	—
Stock option awards under the Plan	2,254,313		—
Total stock-based compensation	$	2,592,995	$	—

Incentive Plan Stock Options

The following are the weighted average assumptions used in calculating the fair value of the total stock options granted in 2022 using the Black-Scholes method.


	March 31, 2022
Weighted-average fair value of options granted	$	11.40
Expected volatility	126.40		%
Expected life (in years)	5.81
Risk-free interest rate	1.59		%
Expected dividend yield	0.00		%

Expected Volatility – The Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies.

Expected Term – The expected term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Risk-Free Interest Rate – The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend – The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company elected to account for forfeited awards as they occur, as permitted by Accounting Standards Update 2016-09.

As of March 31, 2022, the total future compensation expense related to non-vested options not yet recognized in the consolidated statement of operations was approximately $20,677,113 and the weighted-average period over which these awards are expected to be recognized is 2.27 years.

There were 3,462,116 outstanding shares as of March 31, 2022. The following table summarizes the stock option activity (as adjusted) under the plans for the three months ended March 31, 2022:


	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contract Price		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021	3,379,083	$	8.91	9.61		$	30,906
Granted	83,032	$	11.77	$	—	$	—
Exercised	—	$	—	—		$	—
Cancelled/forfeited	—	$	—	—		$	—
Outstanding at March 31, 2022	3,462,116	$	8.98	9.37		$	31,428
Shares vested and expected to vest	3,462,116	$	8.98	9.37		$	31,428
Exercisable as of March 31, 2022	682,588	$	8.66	9.34		$	6,416
Exercisable as of March 31, 2021	—	$	—	—		$	—

RSU Awards

A summary of the Company's RSU activity in the three months ended March 31, 2022 is as follows:


	Number of Shares	Weighted Average Grant-Date Fair Value
Unvested at December 31, 2021	60,737	$	24.33
Vested	(4,810)	$	11.18
Granted	24,735	$	12.13
Forfeited	—	$	—
Unvested at March 31, 2022	80,662	$	21.37

The value of RSU grants are measured based on their fair market value on the date of grant and amortized over their respective vesting periods. As of March 31, 2022, there was approximately $1,266,374 of unrecognized compensation cost related to unvested RSU rights, which is expected to be recognized over a remaining weighted-average vesting period of approximately 1.89 years.

NON-EMPLOYEE DIRECTORS COMPENSATION POLICY

On October 19, 2021, non-employee members of the Board are eligible to receive cash and equity compensation as set forth in the Non-Employee Director Compensation Policy (the “Policy”). The cash and equity compensation described in the Policy shall be paid or be made, as applicable, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) and who may be eligible to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. The Policy became effective as of the date set forth above (the “Effective Date”) and shall remain in effect until it is revised or rescinded by further action of the Board.

The Company paid compensation to the non-employee directors totaling $211,473 during the three months ended March 31, 2022, but this amount was reduced to a net $136,473 after reversing the December 31, 2021 accrual.

This plan requires payment of compensation in arrears, so the Company accrued $75,000 in compensation costs as of December 31, 2021 for the periods after October 19, 2021 (the eligibility date of this plan) through December 31, 2021. In the quarter ended March 31, 2022, the Company paid the $75,000 accrued as of December 31, 2021.