Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v3.22.2.2
STOCK-BASED COMPENSATION
 9 Months Ended
Sep. 30, 2022
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
Stock-based compensation expense is principally related to awards issued to employees pursuant to the Legacy Innovid Stock Option Plan (“Legacy Plan”) and 2021 Innovid Corp. Incentive Plan (“2021 Plan”) and is summarized as follows:
Three months ended September 30,
Nine months ended September 30,

2022 2021 2022 2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost of goods sold
 $ 307  $ 14  $ 795  $ 34 
Research and development
 1,039  90  2,438  319 
Sales and marketing
 1,391  128  3,500  400 
General and administrative
 1,546  145  3,095  1,285 
Total
$ 4,283  $ 377  $ 9,828  $ 2,038 
In connection with the awards granted to service providers and non-employee consultants, the Company recorded stock compensation expenses in the amount of $40 and $214 during the three months ended September 30, 2022 (unaudited) and 2021 (unaudited), respectively, and in the amount of $225 and $273, during the nine months ended September 30, 2022 (unaudited) and 2021 (unaudited), respectively. The majority of these expenses in 2022 were recorded in research and development and sales and marketing. The majority of these expenses in 2021 were recorded in general and administrative expenses. During the three and nine-month period ended September 30, 2022 (unaudited), the Company capitalized stock-based compensation expense of $290 and $780, respectively, in internal-use software cost. The Company stock-based compensation expense related to internal-use software cost for the same period in 2021 were immaterial.
Stock Options
Stock options may be granted to officers, directors, employees, and non-employee consultants of the Company. Each option granted under the Plan expires no later than 10 years from the date of grant. The options vest usually over four years from commencement of employment or services. Any options, which are forfeited or not exercised before expiration, become available for future grants.
In connection with the TVS acquisition, Innovid issued 949,893 stock options to holders of TVS options for replacement options. These options were fully vested upon issuance due to acceleration upon acquisition and therefore do not require future service for vesting. The Company attributed a total amount of $152 to post acquisition service and recorded it as stock compensation expenses immediately after the acquisition closed. See Note 3 for further details.
A summary of the employees’ stock option activity under the Legacy Plan and 2021 Plan for the nine months ended September 30, 2022 (unaudited) is as follows:
Amount
of
options
Weighted
average
exercise
price
Weighted
average
remaining contractual term
(in years)
 Aggregate intrinsic value (in thousands)
Outstanding at beginning of period
11,122,648  $ 0.82  6.87 $ 64,818 
Transfer between employee and consultant 40,118  0.64 
Granted 2,041,956  2.09 
Granted in acquisition 949,893  0.31 
Forfeited (118,837) 1.10 
Expired (18,653) 0.90 
Exercised (2,845,702) 0.28 
Outstanding at end of period
11,171,423  $ 1.14  7.62 $ 17,515 
Exercisable options at end of period
6,587,903  $ 0.71  6.76 $ 13,202 
A summary of the consultants’ stock option activity under the Legacy Plan for the nine months ended September 30, 2022 (unaudited) is as follows:
Amount
of
options
Weighted
average
exercise
price
Weighted
average
remaining contractual term
(in years)
 Aggregate intrinsic value (in thousands)
Outstanding at beginning of period
179,627  $ 0.31  2.34 $ 1,139 
Transfer between employee and consultant (40,118) 0.64 
Forfeited (460) 2.81 
Exercised (69,298) 0.30 
Outstanding at end of period
69,751  $ 0.48  4.45 $ 156 
Exercisable options at end of period
62,227  $ 0.46  4.12 $ 144 
As of September 30, 2022 (unaudited), the Company had approximately $5,401 of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted-average period of 2.02 years.
Restricted Stock Units
In connection with the Company’s transition to its next life-cycle stage post Transaction, Restricted Stock Units (“RSUs”) may be granted to officers, directors, employees, and non-employee consultants of the Company, and generally vest over a three- or four-year period.
A summary of the employees’ RSU activity under the 2021 Plan for the nine months ended September 30, 2022 (unaudited) is as follows:
Number of share units
Weighted
average
grant date
fair value
Outstanding at beginning of period
—  — 
Granted 8,446,838  5.98 
Released (10,669) 6.60 
Forfeited (778,388) 6.46 
Outstanding at end of period
7,657,781  $ 5.93 
A summary of the consultants’ RSU activity under the 2021 Plan for the nine months ended September 30, 2022 (unaudited) is as follows:
Number of share units
Weighted
average
grant date
fair value
Outstanding at beginning of period
—  — 
Granted 176,151  6.52 
Forfeited (5,387) 6.60 
Outstanding at end of period
170,764  $ 6.51 
The weighted-average grant-date fair value of RSUs generally is determined based on the number of units granted and the quoted price of Innovid’s common stock on the date of grant.
As of September 30, 2022 (unaudited), $37,341 of unrecognized compensation cost related to RSUs is expected to be recognized as expense over the weighted average period of 2.20 years.