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Equity Compensation Plans
 9 Months Ended
Sep. 30, 2024
Equity Compensation Plans [Abstract]  
Equity Compensation Plans

19. Equity Compensation Plans

 

2017 Equity Incentive Plan

 

The Purple Innovation, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock units and other stock-based awards. Directors, officers and other employees, as well as others performing consulting or advisory services for the Company and its subsidiaries, are eligible for grants under the 2017 Plan. As of September 30, 2024, an aggregate of 2.3 million shares remain available for issuance or use under the 2017 Plan.

 

Employee Stock Options

 

The following table summarizes the Company’s total stock option activity for the nine months ended September 30, 2024:

 

   Options
(in thousands)		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Term in
Years		   Intrinsic
Value
(in thousands)		 
Options outstanding as of January 1, 2024   863   $8.13    2.2   $
—
 
Granted   
—
    
—
    
—
    
—
 
Exercised   
—
    
—
    
—
    
—
 
Forfeited   (309)   9.69    
—
    
—
 
Options outstanding as of September 30, 2024   554   $7.27    2.3   $
—
 

 

Outstanding and exercisable stock options as of September 30, 2024 are as follows:

 

    Options Outstanding   Options Exercisable 
Exercise Prices   Number of
Options
Outstanding
(in thousands)		   Weighted
Average
Remaining Life
(Years)		   Number of
Options
Exercisable
(in thousands)		   Weighted
Average
Remaining Life
(Years)		   Intrinsic
Value
(in thousands)		 
$6.82    500    2.5    333    2.5   $
—
 
 7.99    19    0.1    19    0.1    
—
 
 13.12    35    0.6    35    0.6    
—
 

 

The following table summarizes the Company’s unvested stock option activity for the nine months ended September 30, 2024:

 

   Options
(in thousands)		   Weighted
Average
Grant Date
Fair Value		 
Nonvested options as of January 1, 2024   337   $0.41 
Granted   
—
    
—
 
Vested   (170)   0.59 
Forfeited   
—
    
—
 
Nonvested options as of September 30, 2024   167   $0.22 

 

The estimated fair value of Company stock options is amortized over the options vesting period on a straight-line basis. For the three and nine months ended September 30, 2023, the Company recognized stock option expense of $0.1 million and $0.5 million, respectively. Stock option expense was de minimis for the three and nine months ended September 30, 2024.

 

As of September 30, 2024, outstanding stock options had a de minimis amount of unrecognized stock compensation cost with a remaining recognition period of 0.6 years. The fair value of stock options vested during the nine months ended September 30, 2024 totaled $0.1 million.

 

Employee Restricted Stock Units

 

During the nine months ended September 30, 2024, the Company granted 1.8 million restricted stock units under the 2017 Equity Incentive Plan to certain members of the Company’s management team. Of the restricted stock units granted, 0.4 million included a market vesting condition. The restricted stock awards that did not have a market vesting condition had a weighted average grant date fair value of $1.00 per share. The estimated fair value of these awards is recognized on a straight-line basis over the vesting period. For those awards that include a market vesting condition, the estimated fair value of the restricted stock was measured on the grant date and incorporated the probability of vesting occurring. The estimated fair value is recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. The Company determined the weighted average grant date fair value of the awards with the market vesting condition to be $1.13 per share using a Monte Carlo Simulation model with the following weighted average assumptions:

 

Trading price of common stock on measurement date  $1.50 
Risk free interest rate   4.46%
Expected life in years   3.0 
Expected volatility   97.1%
Expected dividend yield   
—
 

 

The following table summarizes the Company’s restricted stock unit activity for the nine months ended September 30, 2024:

 

   Number
Outstanding
(in thousands)		   Weighted
Average
Grant Date
Fair Value		 
Nonvested restricted stock units as of January 1, 2024   3,057   $2.97 
Granted   1,828    1.03 
Vested   (582)   3.87 
Forfeited   (332)   3.19 
Nonvested restricted stock units as of September 30, 2024   3,971   $1.93 

 

The Company recorded restricted stock unit expense of $0.8 million and $2.1 million during the three and nine months ended September 30, 2024, respectively, and $0.9 million and $2.7 million during the three and nine months ended September 30, 2023, respectively.

 

As of September 30, 2024, outstanding restricted stock units had $4.5 million of unrecognized stock compensation cost with a remaining recognition period of 1.4 years.

 

Aggregate Non-Cash Stock-Based Compensation

 

The Company has accounted for all stock-based compensation under the provisions of ASC 718 Compensation—Stock Compensation. This standard requires the Company to record a non-cash expense associated with the fair value of stock-based compensation over the requisite service period.

 

The following table summarizes the aggregate non-cash stock-based compensation recognized in the statement of operations for stock awards, employee stock options and employee restricted stock units (in thousands):

 

   Three Months Ended
September 30,		   Nine Months Ended
September 30,		 
   2024   2023   2024   2023 
Cost of revenues  $104   $100   $294   $198 
Marketing and sales   167    246    391    461 
General and administrative   440    517    1,195    2,969 
Research and development   80    76    228    164 
Total non-cash stock-based compensation  $791   $939   $2,108   $3,792