Share-based Payment Arrangement | Note 14 — Stock-based Compensation Stock-based incentive awards are provided to employees under the terms of various Astra equity incentive plans. 2021 Omnibus Incentive Plan In June 2021, the Board of Directors approved the 2021 Omnibus Incentive Plan (the “2021 Plan”), which reserved 36.8 million shares of Class A common stock for issuance for awards in accordance with the terms of the 2021 Plan. On January 1, 2022, pursuant to the terms of the 2021 Plan, the number of shares of Class A common stock available for issuance under the 2021 Plan increased by 13.1 million. Similarly, the share reserve increases on January 1 of each year from 2023 to 2031 by the lesser of (i) 5 % of the sum of number of shares of (x) Class A common stock and (y) Class B common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares of Class A common stock as determined by the Board. On June 1, 2022, the shareholders of the Company approved the amendment of 2021 Plan to increase the Class A common stock available for issuance under the 2021 plan by 6 million. The purpose of the 2021 Plan is to advance the Company’s interests by providing for the grant to employees, directors, consultants and advisors of stock and stock-based awards. As of September 30, 2022, 16.8 million shares remain available for issuance under the plan. 2021 Employee Stock Purchase Plan In June 2021, the Board of Directors approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) to reserve 5.0 million shares of Class A common stock for issuance for awards in accordance with the terms of the ESPP. On January 1, 2022, pursuant to the terms of the 2021 ESPP, the number of shares of Class A common stock available for issuance under the 2021 ESPP increased by 2.6 million. Similarly, the number of shares of Class A common stock reserved for issuance under the 2021 ESPP will ultimately increase on January 1 of each year from 2023 to 2031 by the lesser of (i) 1 % of the sum of number of shares of Class A common stock and Class B common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares of Class A common stock as determined by the Board. The purpose of the 2021 ESPP is to enable eligible employees to use payroll deductions to purchase shares of Class A common stock and thereby acquire an interest in the company. Eligible employees are offered shares through a 24 -month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of the Company's stock at a discount of up to 15 % of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. 0.5 million shares were issued under the Employee Stock Purchase Plan during the nine months ended September 30, 2022. As of September 30, 2022, 7.2 million shares remain available for issuance under the 2021 ESPP. As of September 30, 2022, the Company had $ 1.1 million of unrecognized stock-based compensation expense related to the 2021 ESPP. This cost is expected to be recognized over a weighted-average period of 0.93 years. 2016 Equity Incentive Plan In 2016, pre-combination Astra adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Under this Plan, the Board of Directors or a committee appointed by the Board of Directors is authorized to provide stock-based compensation in the form of stock options, stock appreciation rights, restricted stock, and other performance or value-based awards within parameters set forth in the Plan to employees, directors, and non-employee consultants. In connection with the Business Combination, the Company assumed the 2016 Plan upon closing. Each outstanding and unexercised option (“Astra Option”) was converted, at the exchange ratio established in the BCA, into an option (“New Astra Option”) to acquire shares of the Company’s Class A common stock with the same terms and conditions as applicable to the Astra Option immediately prior to the Business Combination. As of September 30, 2022, there were no shares available for issuance under the plan. The following table summarizes stock-based compensation expense that the Company recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, respectively: For the Three Months For The Nine Months in thousands 2022 2021 2022 2021 Cost of revenues $ 109 $ — $ 806 $ — Research and development 5,565 1,334 17,133 4,638 Sales and marketing 1,562 15 4,559 70 General and administrative 6,512 1,339 21,082 15,757 Stock-based compensation expense $ 13,748 $ 2,688 $ 43,580 $ 20,465 On November 22, 2021, under the 2021 Plan, the Company's compensation committee issued 1,047,115 PSUs to the employees of Apollo who joined Astra. PSUs are subject to certain performance-based and service-based vesting conditions and would vest over four years with 25% of awards vesting on July 1, 2022, and the remaining 75% vesting quarterly over the remaining 12 quarters beginning on November 15, 2022, only for the portion of PSUs that is eligible to become vested which will be determined based upon timely satisfaction of performance conditions. The number of PSUs vested is determined by multiplying the total number of PSUs granted by the percentage of milestones achieved and by the percentage of PSUs that satisfy the time-based vesting condition on such time-vesting date. Certain performance conditions for PSUs are subjective and the number of PSUs related to these performance conditions did not meet the criteria for the grant date. Accordingly, 523,557 PSUs and 52,355 PSUs related to the performance conditions that are not subjective were considered granted as of November 22, 2021 and January 21, 2022, respectively. In July 2022, the PSU agreements were amended to remove the performance-based vesting conditions and only retain the time-based vesting condition. Therefore, the Company recognized $ 0.3 million and $ 1.5 million compensation costs related to PSUs for the three and nine months ended September 30, 2022, respectively, to reflect the PSUs that satisfied the time-based vesting condition on the time-vesting dates. On September 20, 2021, under the 2021 Plan, the Company’s compensation committee granted 3,972,185 restricted stock units (“RSUs”), 3,426,094 time-based stock options and 13,016,178 performance stock options ("PSOs") to its executive officers. RSUs and time-based stock options granted have service-based vesting conditions only. The service conditions vary for each executive officer and is based on their continued service to the Company. Option holders have a 10-year period to exercise their options before options expire. Forfeitures are recognized in the period of occurrence and stock-based compensation costs are recognized based on grant-date fair value as RSUs and time-based stock options vest. PSOs, only eligible to the executive officers of the Company, are subject to performance conditions as follows, and the milestones do not need to be achieved in any specific order or sequence: Milestone A: The Company has had a successful orbital delivery. Milestone B: The Company has had six orbital launches during a six consecutive month period. Milestone C: The Company has completed a prototype for a spacecraft that has achieved an orbital launch. Milestone D: The Company has conducted twenty-six orbital launches during a six consecutive month period. Milestone E: The Company has achieved an orbital launch for an aggregate of 100 spacecraft. These PSOs also require the volume weighted average share price for a period of thirty trading days meet share price thresholds of $15.00, $20.00, $30.00, $40.00 and $50.00 following the achievement of the first milestone, second milestone, third milestone, fourth milestone and fifth milestone, respectively, before a milestone will be deemed achieved. After each milestone is achieved, 20 % of the PSOs will vest on the vesting date immediately following the date at which the price thresholds are met. For this purpose, a "vesting date" is February 15, May 15, August 15 and November 15 of any applicable year. The milestones must be achieved over a period of approximately five years , with the earliest vesting date of November 15, 2022, and the last vesting date no later than November 15, 2026, if all vesting conditions are met. No unvested portion of the PSOs shall vest after November 15, 2026. As of September 30, 2022, the Company assessed the probability of success for the five milestones mentioned above and determined that it is probable that the Company will achieve Milestone A and Milestone B within the requisite period. Therefore, the Company recognized $ 5.2 million and $ 14.2 million compensation costs related to PSOs for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, we had unrecognized stock-based compensation expense of $ 32.8 million for the milestones that were not considered probable of achievement. In April 2021, the Board of Directors approved the acceleration of the vesting of 1,900,000 pre-combination Astra stock options issued to two executive officers: Kelyn Brannon and Martin Attiq, on December 27, 2020. The Company recognized the remaining stock-based compensation expense of $ 7.2 million on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. In February 2021, the Board of Directors approved the acceleration in vesting of 206,250 pre-combination Astra stock options that were issued to one employee on May 15, 2020. The remaining unvested options were fully vested upon acceleration. The Company recorded a $ 1.4 million stock-based compensation expense related to the modification for the three months ended March 31, 2021. As of September 30, 2022, the Company had $ 103.9 million of unrecognized stock-based compensation expense related to all of the Company's stock-based awards. This cost is expected to be recognized over a weighted-average period of 3 .0 years. Secondary Sales In April 2021, four executive officers, Chris Kemp, CEO, Adam London, CTO, Kelyn Brannon, Chief Financial Officer (“CFO”), and Martin Attiq, Chief Business Officer (“CBO”), entered into stock purchase agreements with new investors to sell 2,534,793 , 865,560 , 1,500,000 and 400,000 shares, respectively, of Class A common stock of pre-combination Astra, at a purchase price per share of $ 5.66 (“April 2021 Secondary Sales”). No additional stock-based compensation expense was recognized for the three and nine months ended September 30, 2021 as the purchase price was below fair market value of Class A common stock of pre-combination Astra at the time of the sales. In January 2021 , concurrent with Series C Financing, two executive officers, Chris Kemp, founder and Chief Executive Officer (“CEO”), and Adam London, founder and Chief Technology Officer (“CTO”), entered into stock purchase agreements with certain investors including ACME SPV AS, LLC to sell 3,775,879 and 2,265,529 shares, respectively, of Founders Convertible Preferred Stock at purchase prices in excess of the estimated fair value at the time of the transactions (“January 2021 Secondary Sales”) to certain investors. Upon the sale, the Founders Convertible Preferred Stock automatically converted into Series C Convertible Preferred Stock. The Company’s board member, Scott Stanford, is a member of ACME SPV AS, LLC and the Company facilitated the January 2021 Secondary Sales. As a result, for the three months ended March 31, 2021, the Company recorded a total of $ 8.2 million in stock-based compensation expense for the difference between the price paid by these investors and the estimated fair value of the Founders Convertible Preferred Stock on the date of the transaction. Stock Options Awards The following is a summary of stock option activity for the nine months ended September 30, 2022: No. of Weighted- Average Exercise Price Weighted- Average Aggregate Intrinsic Outstanding – December 31, 2021 20,326,384 $ 7.52 9.4 $ 22,782,654 Granted 1,242,027 4.85 Exercised ( 620,145 ) 0.45 Forfeited ( 267,189 ) 1.18 Expired ( 5,067 ) 6.75 Outstanding – September 30, 2022 20,676,010 $ 7.61 8.7 $ 414,014 Unvested – September 30, 2022 520,648 $ 8.37 8.86 $ 124,254 Exercisable – September 30, 2022 20,155,362 $ 3.83 7.6 $ 289,760 The Company uses the Black-Scholes option pricing-model to calculate the grant date fair value of time-based options. The following table summarizes the assumptions used in estimating the fair value of options granted in the nine months ended September 30, 2022: Time Based Stock Options Expected terms (years) (1) 5.81 Expected volatility (2) 68.9 % Risk-free interest rate (3) 1.70 % Expected dividend rate (4) - Grant-date fair value $ 3.20 ____________ (1) The expected term is the length of time the grant is expected to be outstanding before it is exercised or terminated. This number is calculated as the midpoint between the vesting term and the original contractual term (contractual period to exercise). If the option contains graded vesting, then the vesting term would be based on the vesting pattern. (2) Expected volatility, or the standard deviation of annualized returns, was calculated based on comparable companies’ reported volatilities. (3) Risk-free interest was obtained from US treasury notes for the expected terms noted as of the valuation date . (4) The Company has assumed a dividend yield of zero as it has no plans to declare dividends in the foreseeable future . Restricted Stock Units Awards The following is a summary of restricted stock units for the nine months ended September 30, 2022: Number of RSUs Outstanding Weighted- Average Grant Date Fair Value Per Share Outstanding – December 31, 2021 10,678,818 $ 9.20 Granted 13,760,707 2.51 Vested ( 2,737,757 ) 8.40 Forfeited ( 2,941,954 ) 7.18 Outstanding – September 30, 2022 18,759,814 $ 4.73 Total fair value as of the respective vesting dates of restricted stock units vested for the nine months ended September 30, 2022 was approximately $ 6.5 million. As of September 30, 2022, the aggregate intrinsic value of unvested restricted stock units was $ 11.7 million. |