Quarterly report pursuant to Section 13 or 15(d)

Restricted Common Stock, Stock Options, Restricted Stock Units and Warrants

v3.22.2.2
Restricted Common Stock, Stock Options, Restricted Stock Units and Warrants
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Restricted Common Stock, Stock Options, Restricted Stock Units and Warrants

Note 14. Restricted Common Stock, Stock Options, Restricted Stock Units and Warrants

Stock-Based Compensation:

 

The Company provides stock-based compensation to directors, employees and consultants under the 2019 Equity Plan, which was approved by stockholders on October 23, 2019 at the 2019 Annual Meeting of Stockholders. On November 12, 2020 at the 2020 Annual Meeting of Stockholders, the stockholders approved the First Amendment to the 2019 Equity Plan, which raised the total number of shares of the Company’s common stock by 3,500,000 shares. On October 19, 2021, at the 2021 Annual Meeting of Stockholders, the Company’s stockholders approved the Second Amendment to its 2019 Equity Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 4,400,000 shares. On July 27, 2022, at the 2022 Annual Meeting of Stockholders, the Company’s stockholders approved the Third Amendment to its 2019 Equity Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 10,000,000 shares.

 

The Company’s stock-based compensation expenses recognized during the three and nine months ended September 30, 2022 and 2021 were included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

The Company recognized stock-based compensation expense during the three and nine months ended September 30, 2022 and 2021 as follows:

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
      2022       2021       2022       2021  
Service-based restricted stock awards   $ 1,918     $ 1,518     $ 5,856     $ 3,423  
Performance-based restricted stock awards     1,643       34,505       1,448       34,505  
    Total stock-based compensation   $ 3,561     $ 36,023     $ 7,304     $ 37,928  

Restricted Common Stock:

During the three months ended September 30, 2022, the Company granted 754,536 restricted stock units (RSUs) under the 2019 Equity Plan, including: (a) 48,337 service-based RSUs with a fair value of approximately $0.3 million, which are generally eligible to vest in four quarterly tranches following the grant date, subject to the recipient’s continued employment with the Company through the vesting date; and (b) 696,999 performance-based RSUs with a fair value of approximately $3.4 million, which are eligible to vest based on the Company’s achievement of certain performance objectives, as specified under the performance-based restricted stock unit plan adopted on August 12, 2021 under the 2019 Equity Plan.

During the three months ended September 30, 2022, 486,781 shares of common stock were issued to the Company’s officers and employees in settlement of an equal number of fully vested RSUs awarded to such individuals by the Company pursuant to grants made under the 2019 Equity Plan. The Company withheld 156,502 of these shares at a fair value of approximately $1.1 million, in satisfaction of withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Plan and approved by the Compensation Committee of the Company’s Board of Directors.

During the three months ended September 30, 2022, the Company’s board of directors approved the exchange of all outstanding unvested performance and service-based RSUs for performance and service-based restricted stock awards (RSAs) on a one-for-one basis. All material terms of the award agreements remain the same, including the timing of all vesting periods and the vesting benchmarks. During the quarter ended September 30, 2022, approximately 2.1 million unvested RSUs were exchanged for RSAs (see tables below for details).

 

Performance-based RSUs

A summary of the Company’s unvested performance-based RSUs for the nine months ended September 30, 2022 is presented here:

    Number of Shares     Weighted Average Grant-Date
 Fair Value
 
Unvested at January 1, 2022     3,404,585     $ 36.68  
Granted     1,412,299     $ 10.70  
Vested     (729,209 )   $ 35.21  
Forfeited     (398,871 )   $ 35.32  
Converted to RSAs     (1,979,002 )   $ 32.27  
Unvested at September 30, 2022     1,709,802     $ 27.15  

During the nine months ended September 30, 2022, the Company awarded 1,412,299 performance-based RSUs with a fair value of $15.1 million under the 2019 Equity Plan to employees, which are eligible to vest upon the successful completion of specified milestones related to added infrastructure capacity and financial targets over the performance period ending on December 31, 2023.

The value of performance-based RSU’s is measured based on their fair value on the date of grant and amortized over their respective estimated implicit service periods.

 

During the nine months ended September 30, 2022, 1,979,002 of the outstanding and unvested performance-based RSUs were converted into an equivalent number of performance-based RSAs with substantially the same terms as the performance-based RSU agreements they replaced.

Performance-based RSAs

A summary of the Company’s unvested performance-based RSAs for the nine months ended September 30, 2022 is presented here:

    Number of Shares     Weighted Average Grant-Date
 Fair Value
 
Unvested at January 1, 2022     —       $ —    
Granted     85,998     $ 6.83  
Converted from RSUs     1,979,002     $ 32.27  
Unvested at September 30, 2022     2,065,000     $ 31.21  

 

During the nine months ended September 30, 2022, the Company awarded 85,998 performance-based RSAs under the 2019 Equity Plan to employees, which are eligible to vest upon the successful completion of specified milestones related to added infrastructure capacity and financial targets over the performance period ending on December 31, 2023.

The value of performance-based RSAs is measured based on their fair value on the date of grant and amortized over their respective estimated implicit service periods.

As of September 30, 2022, there was approximately $17.9 million of total unrecognized compensation cost related to performance-based RSUs and RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately six months.

Service-based RSUs

A summary of the Company’s unvested service-based RSUs for the nine months ended September 30, 2022 is presented here:

 

    Number of Shares     Weighted Average Grant-Date
 Fair Value
 
Unvested at January 1, 2022     610,561     $ 5.93  
Vested     (788,636 )   $ 7.48  
Granted     912,142     $ 9.08  
Forfeited     (20,705 )   $ 9.11  
Converted to RSAs     (136,463 )   $ 14.50  
Unvested at September 30, 2022     576,899     $ 8.17  

The value of service-based RSUs is measured based on their fair value on the date of grant and amortized over their respective vesting periods. During the nine months ended September 30, 2022, the fair value of RSUs granted totaled $8.3 million.

 

During the nine months ended September 30, 2022, 136,463 unvested service-based RSUs were converted into an equivalent number of service-based RSAs with substantially the same terms as the performance-based RSU agreements they replaced.

Service-based RSAs

A summary of the Company’s unvested service-based RSAs for the nine months ended September 30, 2022 is presented here:

    Number of Shares     Weighted Average Grant-Date
 Fair Value
 
Unvested at January 1, 2022     —       $ —    
Vested     (9,375 )   $ 20.09  
Granted     10,286,202     $ 6.73  
Converted from RSUs     136,463     $ 14.50  
Unvested at September 30, 2022     10,413,290     $ 6.84  

The value of service-based RSAs is measured based on their fair value on the date of grant and amortized over their respective vesting periods. During the nine months ended September 30, 2022, the fair value of awards granted totaled $69.3 million.

As of September 30, 2022, there was approximately $81.7 million of total unrecognized compensation cost related to unvested service-based RSUs and RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 1.2 years.

Other Common Stock Purchase Warrants:

As of September 30, 2022, XMS Capital Partners, LLC (“XMS”) held a warrant to purchase up to 63,000 shares of the Company’s common stock at a purchase price of $48.37 per share, issued as partial payment for advisory services provided in connection with the Company’s Whinstone Acquisition. The warrant can be exercised any time through August 12, 2026.

 

No warrants were issued during the nine months ended September 30, 2022.