Stockholders' Equity | 10. Stockholders’ Equity Undesignated Preferred Stock The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 100,000,000 shares of undesignated preferred stock, par value of $ 0.01 per share, with rights and preferences, including voting rights, designated from time to time by the board of directors. No shares of preferred stock were issued or outstanding as of September 30, 2022 and December 31, 2021. Common Stock The Company’s Amended and Restated Certificate of Incorporation which authorizes capital stock of 1,000,000,000 shares of Class A common stock, par value $ 0.01 per share, 100,000,000 shares of Class B common stock, par value $ 0.01 per share, and 200,000,000 shares of Class C common stock, par value $ 0.01 per share. Except for the rights noted below, each share of Class A, Class B and Class C common stock have the same rights, are equal in all respects and are treated by us as one class of shares. Each share of Class A and Class C common stock is entitled to one vote per share on all matters presented for a vote, except that Class C common stock does not have the right to vote for elections of directors. Subject to certain conditions, Class B common stock is collectively entitled to a number of votes equal to the product of (x) 1.0408163 and (y) the total number of votes that would be cast at such time by the holders of the Class A and Class C common stock and any other preferred stock entitled to vote under the certificate of incorporation at such time (resulting in the Class B common stock collectively holding 51% of the total outstanding voting power) , and each share of Class B common stock will be entitled to a number of votes equal to the total number of votes held by all Class B common stock divided by the total number of then outstanding shares of Class B common stock. Shares of Class B and Class C common stock will be converted into shares of Class A common stock on a one-for-one basis upon the occurrence of certain events. Shares of Class B common stock will automatically convert on the first business day (i) after the date on which the outstanding shares of Class B common stock constitutes less than 5% of the aggregate number of shares of common stock then outstanding, (ii) after the date on which neither founder is serving as an executive officer or (iii) following seven years after the date the amended and restated certificate of incorporation becomes effective, provided that, such period may, to the extent permitted by law and applicable stock exchange rules, be extended for three years upon the affirmative vote of the holders of a majority of the voting power of the then-outstanding shares of Class A common stock entitled to vote thereon, voting separately as a class. Shares of Class C common stock will be convertible at the option of the holder upon determination that a Hart-Scott-Rodino Antitrust Improvements Act (“HSR”) filing is not necessary prior to the holder’s conversion of such shares or, if required, upon expiration or termination of the HSR waiting period. In the three and nine months ended September 30, 2022, no shares of Class B common stock were converted to Class A common stock. As of September 30, 2022, the par value of the Class A, Class B and Class C shares was $ 2,422 , $ 275 , and $ 56 , respectively. Shares Shares Shares Class A 1,000,000,000 242,304,366 242,304,366 Class B 100,000,000 27,390,397 27,390,397 Class C 200,000,000 5,555,555 5,555,555 1,300,000,000 275,250,318 275,250,318 As of September 30, 2022 and December 31, 2021, the Company had reserved 69,899,299 and 61,989,749 shares of common stock for the exercise of outstanding stock options, the vesting of restricted stock units, the vesting of performance-based market condition share awards, and the number of shares remaining available for future grant, respectively. Stock Plans and Stock Options The Company maintains the 2006 Employee, Director and Consultant Stock Plan as amended and restated (the “2006 Plan”) and 2020 Equity Incentive Plan (the “2020 Plan” together, the “Plans”) under which it has granted incentive stock options, non-qualified stock options, and restricted stock units to employees, officers, and directors of the Company. In connection with the adoption of the 2020 Plan, the then-remaining shares of common stock reserved for grant or issuance under the 2006 Plan became available for issuance under the 2020 Plan, and no further grants will be made under the 2006 Plan. The 2020 Plan is administered by the board of directors with respect to awards to non-employee directors and by the compensation committee, with respect to other participants, are collectively, referred to as the plan administrator. The exercise prices, vesting and other restrictions are determined at the discretion of the plan administrator. Options issued under the Plans are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the Plans, with exercise prices equal to the closing price of shares of the Company’s common stock on the New York Stock Exchange on the date of award. Activity under the Plans is as follows: Number of Weighted Weighted Average Aggregate Outstanding as of January 1, 2022 15,893,755 $ 4.81 5.9 $ 23,876 Granted — — Forfeited ( 1,779,566 ) 6.13 Expired ( 49,542 ) 5.63 Exercised ( 2,524,837 ) 2.08 Outstanding as of September 30, 2022 11,539,810 $ 4.81 5.7 $ 6,198 Vested and expected to vest as of December 31, 2021 15,395,398 $ 4.61 5.8 $ 23,752 Vested and expected to vest as of September 30, 2022 11,405,421 $ 5.00 5.7 $ 2,823 Options exercisable as of December 31, 2021 13,407,882 $ 4.38 5.5 $ 23,120 Options exercisable as of September 30, 2022 10,658,813 $ 4.92 5.6 $ 2,826 No options were granted in the nine months ended September 30, 2022 and 2021. Restricted Stock Units Activity for the restricted stock units is as follows: Shares Weighted Average Unvested as of January 1, 2022 11,718,813 $ 19.63 Granted 12,880,812 4.21 Vested ( 4,254,928 ) 12.04 Forfeited ( 2,012,379 ) 8.70 Unvested as of September 30, 2022 18,332,318 $ 7.20 The total grant date fair value of RSU’s granted for the nine months ended September 30, 2022 was $ 54,282 . Restricted stock units vest over the service period of one to four years . The aggregate intrinsic value of restricted stock units vested for the nine months ended September 30, 2022 and 2021 was $ 18,304 and $ 77,949 , respectively. Restricted Stock Units with a Market Condition In the nine months ended September 30, 2022 the Company granted performance-based market condition share awards to certain members of the Company’s management team, which entitle these employees with the right to receive shares of common stock, upon achievement of certain market capitalization milestones measured over a rolling thirty day trading-period, subject to the satisfaction of the applicable service vesting conditions. The performance-based market condition share awards for management (other than the co-CEOs) consist of six tranches with six separate specified award values that become payable upon the achievement of certain market capitalization milestones, which can result in a vesting range of up to 12,275,886 shares. Also in 2022 the Company granted performance-based market condition share awards to the co-CEOs, which entitle these employees with the right to receive shares of common stock, upon achievement of certain market capitalization milestones measured over a rolling thirty day trading-period, subject to the satisfaction of the applicable service vesting conditions. The performance-based market condition share awards for the co-CEOs consist of eight tranches with eight separate specified award values that become payable upon the achievement of certain market capitalization milestones (subject to specified vesting caps during each of the first two years of the performance period), which can result in a vesting range of up to 7,500,000 shares for each co-CEO. As of September 30, 2022 , no portion of the performance- based market condition share awards have satisfied both the applicable market capitalization milestones and the service vesting conditions and, as such, no awards have vested. These performance-based market condition share awards have a performance period of three years . Shares Weighted Average Unvested as of January 1, 2022 — $ — Granted 27,275,886 2.32 Vested — — Cancelled/Forfeited ( 1,568,889 ) 2.62 Unvested as of September 30, 2022 25,706,997 $ 2.30 The total grant-date fair value of performance-based market condition share awards granted during the nine months ended September 30, 2022 was $ 63,157 and no performance-based market condition share awards were granted during the nine months ended September 30, 2021. The weighted average estimated fair value of the performance-based market condition share awards granted during the nine months ended September 30, 2022 was determined using a Monte-Carlo valuation simulation, with the following most significant weighted-average assumptions: Nine Months Ended September 30, 2022 Risk-free rate 2.34 % Term to end of performance period (yrs) 3 years Valuation date stock price $ 3.50 Expected volatility 75 % Expected dividend yield 0 % 2020 Employee Stock Purchase Plan During the nine months ended September 30, 2021 , the Company had 178,021 issued any shares under the ESPP. During the nine months ended September 30, 2022, the Company issued 703,148 shares under the ESPP. As of September 30, 2022 4,501,960 shares remained available for issuance. Stock-Based Compensation Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cost of revenues $ 427 $ 436 $ 1,188 $ 1,346 Research and development 2,750 2,173 7,631 5,851 Selling and marketing 2,045 2,033 5,144 6,022 General and administrative 16,090 7,746 34,341 18,537 Total $ 21,312 $ 12,388 $ 48,304 $ 31,756 As of September 30, 2022, the unrecognized stock-based compensation expense related to unvested common stock-based awards was $ 112,729 , which is expected to be recognized over a weighted-average period of 2.7 years. |