In connection with the transaction with MWIG described in Note 1—Nature of the business and basis of presentation, on March 15, 2019, the Company entered into a promotional agreement with Mark Wahlberg (“Mr. Wahlberg”), a member of the Company’s Board of Directors and an investor in MWIG, pursuant to which Mr. Wahlberg agreed to provide promotional services to the Company. In exchange for the agreed upon services provided in the promotional agreement, the Company issued 2,738,648 restricted stock units (RSUs) to Mr. Wahlberg.

The RSUs were to vest based on the Company attaining certain valuation thresholds upon a vesting event, defined as: (i) a deemed liquidation event or change in control; (ii) the closing of a financing transaction including the sale, issuance or redemption of the Company’s (or one of its subsidiaries) equity securities, and any initial public offering; or (iii) at any time that the Company’s common stock is publicly traded, with the Company’s equity value exceeding the following thresholds:

The Company determined that the RSUs are equity classified awards that contained both performance (deemed liquidation event, closing of a financing transaction or the public trading of the Company’s common stock) and market conditions (achievement of prescribed Company equity values) in order for the units to vest.

On July 5, 2021, the Company approved the acceleration of Mr. Wahlberg’s RSUs such that 100% of the RSUs granted to Mr. Wahlberg are fully vested concurrent with and subject to the consummation of the IPO, effectively eliminating the market condition based on the achievement of prescribed Company equity values. The RSUs shall be settled in shares of common stock on a date determined by the Company during 2022 but no later than March 15, 2022. All remaining terms and conditions in the original promotional agreement are still applicable. The Company determined the modification of the RSUs as a Type IV modification in accordance with ASC 718, Compensation - Stock Compensation, because at the modification date, both the original and modified awards were considered improbable of vesting as the performance condition has not been met on the modification date of July 5, 2021. The Company utilized the assumed initial public offering price of $16.00 per share as the modification date fair value.

In connection with the Company becoming publicly traded on July 15, 2021, the fair value of the RSUs of 2,738,648 fully vested and was recognized as compensation expense in the amount of $43.8 million for the year ended December 31, 2021, which was included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. The Company issued the fully vested RSUs during the three months ended March 31, 2022.

The Company’s stock-based compensation plan, which became effective at the IPO date, includes equity incentive compensation plans under which three types of share-based compensation plans are granted to the employees, directors and consultants of the Company, which are stock options (SOs), RSUs and restricted stock awards (RSAs). The purpose of the plan is to assist the Company in securing and retaining the service of eligible award recipients to provide incentives to employees, directors and consultants and promote the long-term financial success of the Company and thereby increase stockholder value. In accordance with the 2021 Incentive Plan, subject to adjustment for certain dilutive or related events, the maximum aggregate number of shares that may be subject to stock awards and sold under this plan is 5,000,000 shares, or the share reserve (“Share Reserve”). Beginning on January 1, 2022 and ending on January 1, 2031, the Share Reserve will automatically increase on January 1 of each year during the term of the 2021 Incentive Plan in an amount equal to 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, that the Company’s board of directors may provide that there will not be a January 1 increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of common stock outstanding on the preceding December 31.

Stock options (“SOs”) granted under the incentive equity plans are generally non-statutory stock options, but the incentive equity plans permit some options granted to qualify as incentive stock options under the U.S. Internal Revenue Code. Stock options generally vest over one to three years from the date of grant. The exercise price of a stock option is equal to the closing price of the Company’s stock on the option grant date. The majority of stock options issued by the Company are subject to only service vesting conditions. As of December 31, 2021, the total number of shares subject to outstanding SOs was 252,737. As of September 30, 2022, the total number of shares subject to outstanding SOs was 2,370,251.

The Company utilizes the Black-Scholes option pricing formula to estimate the fair value of stock options subject to service-based vesting conditions. The weighted-average fair value and the assumptions used to measure fair value were for SOs granted during the nine months ended September 30, 2022 as follows:


(1)			The weighted-average fair value based on stock options granted during the period.
(2)			Selected volatility is relevered equity volatility based on median asset volatility.
(3)			The risk-free interest rate was estimated based on the yield on U.S. Treasury scrips.
(4)			The expected dividend yield represents a constant dividend yield applied for the duration of the expected term of the award.


	Shares (in thousands)	Weighted - Average Exercise Price		Weighted - Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)




Outstanding as of January 1, 2022	252	$	15.92		$	—


Granted	441	12.47
Exercised	—
Forfeited or expired	(29)	15.94
Outstanding as of June 30, 2022	664	$	13.40	8.62	$	—
Granted	1,813	$	2.52
Exercised	—	—
Forfeited or expired	(107)	5.41
Outstanding as of September 30, 2022	2,370	$	5.72		$	—
Vested and exercisable	822	$	4.29		$	574
Expected to vest	1548	$	6.48	9.53	$	1,043

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have realized had all option holders exercised their options on the last trading day of the quarter ended September 30, 2022. The aggregate intrinsic value of vested and unvested options as of September 30, 2022 was $1.6 million. The aggregate intrinsic value is the difference between the Company’s closing stock price of $3.09 on the last trading day of the quarter ended September 30, 2022 and the exercise price multiplied by the number of in-the-money options. During the three and nine months ended September 30, 2022, no options were exercised.

As of September 30, 2022, the total unrecognized pre-tax stock-based compensation expense related to non-vested stock options was $1.9 million, which is expected to be recognized over a weighted-average vesting period of 2.20 years. The maximum contractual term of the SO is approximately ten years.

RSUs may be granted at any time and from time to time as determined by the Company. The Company will set vesting criteria at its discretion, which, depending on the extent to which the criteria are met, will determine the number of RSUs that will be paid out to the participant. The Company may set vesting criteria based upon the passage of time, the achievement of target levels of performance, or the occurrence of other events or any combination thereof as determined by the Company at its discretion. Dividend equivalents shall not be paid on a RSU during the period it is unvested. The RSUs granted by the Company are subject to service vesting conditions. RSUs also provide for accelerated vesting in certain circumstances as defined in the plans and related grant agreements. As of September 30, 2022, the total number of shares subject to outstanding RSUs was 3,128,000. During the nine months ended September 30, 2022, the Company withheld 1,045,661 shares of common stock related to net share settlement of restricted stock units vested during the prior year.


	Shares (in thousands)	Weighted - Average Grant Date Fair Value Per Share
Outstanding as of January 1, 2022	997	$	15.74
Granted	901	8.92
Vested	(128)	5.93
Forfeited	—	—
Outstanding as of June 30, 2022	1,770	$	12.54
Granted	1,592	2.18
Vested	(222)	13.20
Forfeited	(12)	$	9.10
Outstanding as of September 30, 2022	3,128	$	7.23

The total grant date fair value of RSU vested during the three and nine months ended September 30, 2022, was $2.9 million and $3.7 million, respectively. During the three and nine months ended September 30, 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSUs was $2.5 million, which was included in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. As of September 30, 2022, total unrecognized pre-tax stock-based compensation expense related to non-vested RSUs was $15.9 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.17 years. The maximum contractual term of RSUs is approximately 3.38 years.

Subject to the terms and provisions of the plan, the Company, at any time and from time to time, may grant shares of restricted stock to service providers in such amounts as the Company, in its sole discretion, will determine. During the period of restriction, service providers holding shares of restricted stock may exercise full voting rights and will be entitled to receive all dividends and other distributions paid with respect to such shares, unless the Company determines otherwise. If any such dividends or distributions are paid in shares; the shares will be subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid. The RSAs granted by the Company are subject to service vesting conditions. As of September 30, 2022, the total number of shares subject to outstanding RSAs was 341,880.


	Shares (in thousands)	Weighted - Average Grant Date Fair Value Per Share
Outstanding as of January 1, 2022	117	$	14.60
Granted	342
Vested	(112)	15.09
Forfeited	(5)	15.15
Outstanding as of June 30, 2022	342	$	4.68
Granted	—	—
Vested	—	—
Forfeited	—	—
Outstanding as of September 30, 2022	342	$	4.68

For the three and nine months ended September 30, 2022, total recognized pre-tax stock-based compensation expense related to non-vested RSAs was than $0.4 million and $0.5 million, respectively, which was included in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. As of September 30, 2022, total unrecognized pre-tax stock-based compensation expense related to non-vested restricted stock awards was $1.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.70 years. The maximum contractual term of the RSAs is one year.

The Company determined that the RSUs are liability-classified awards that contain both performance (deemed liquidation event, closing of a financing transaction or the public trading of the Company’s common stock) and market conditions (achievement of prescribed Company equity values) in order for the units to vest. As of September 30, 2022, the market conditions have not been met on any of the non-employee promotional agreements other than those listed in Note 16 under the promotional agreement with DB Ventures. The Company began recognizing stock-based compensation expense ratably over the requisite service period when the performance condition was met through the achievement of the IPO on July 15, 2021.

The promotional agreement with TK included RSAs that contain equity-based payment, which has a service condition. The Company determined that the RSAs granted to TK are equity based awards that contains a service condition to vest. The stock-based compensation expense related to the RSAs are recognized ratably over the requisite service period in selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.