Under what accounting standard does Precision Door Service account for equity-based compensation?

According to the 2025 FDD, Precision Door Service accounts for equity-based compensation under FASB ASC Topic 718, Compensation-Stock Compensation. This accounting standard requires Precision Door Service to measure all equity-based payments to employees using a fair-value-based method. The cost associated with these payments is then recorded as an expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). Precision Door Service participates in an equity-based employee compensation plan, further details of which are available in Note 5 of the financial statements.

Specifically, the equity-based compensation plan involves profits interest award grants of Nest Holdings LP and its subsidiaries, with a total of 202,843,686 profits interests units approved under the plan in September 2021. These profits interests are exercisable only when vested and do not expire. Vesting occurs over time (50%) and upon achieving defined financial criteria during a liquidity event (50%). Time-based units vest at a rate of 20% annually over five years, contingent upon continuous employment.

Precision Door Service recognizes the fair value of these equity-based payments as compensation expense over the required service period. For time-based awards, this expense is recognized on a straight-line basis, net of forfeitures, over the vesting period. For performance-based awards, the expense is estimated based on the achievement of performance conditions and recognized over the service period for awards that actually vest. The equity-based compensation expense is recorded in the equity-based compensation line within the consolidated statements of operations. The average grant date fair value was determined using Monte-Carlo simulation and was $0.36 per unit for awards in the years ended December 31, 2024 and 2023. Equity-based compensation expense recorded for the years ended December 31, 2024 and 2023 was $3,130 and $4,194, respectively. As of December 31, 2024, unamortized stock compensation expense to be recognized in future years was $9,707.

For a prospective franchisee, this means that Precision Door Service uses a recognized accounting standard to handle its employee compensation, which can provide a level of transparency. Understanding the specifics of the equity-based compensation plan, as detailed in Note 5, can give franchisees insight into how employees are incentivized and the potential impact on the company's financial performance. Franchisees may want to further investigate Note 5 to fully understand the implications of this compensation plan.