The Employee Stock Purchase Plan (“ESPP”) was adopted by the Company’s Board of Directors on October 8, 2021. The 2021 Plan was adopted by the Company’s stockholders on October 19, 2021 and became effective on the date prior to the first date of the effectiveness of the registration statement on Form S-1 filed by the Company. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 1,329,040 shares of the Company’s common stock. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by the lesser of 1% of all classes of the Company’s common stock outstanding on the immediately preceding December 31, or such smaller number of shares as determined by the Company’s Board or the committee. On January 1, 2022, the number of shares reserved and available for issuance for the ESPP was increased by 764,473 shares. As of March 31, 2022, no shares have been issued under the ESPP and 2,093,513 shares remained available for issuance.

The 2021 Incentive Award Plan (“2021 Plan”) was adopted by the Company’s Board of Directors on October 8, 2021. The 2021 Plan was adopted by the Company’s stockholders on October 19, 2021 and became effective on the date prior to the first date of the effectiveness of the registration statement on Form S-1 filed by the Company. The 2021 Plan authorizes the Company to issue an initial aggregate maximum number of shares of common stock equal to (i) 7,641,979 shares plus (ii) a number of shares that are available for issuance under the 2011 Plan plus (iii) any shares that are subject to 2011 Plan that become available for issuance (via expiration, forfeitures, etc.) plus (iv) an increase commencing on January 1, 2022 and continuing annually on the anniversary thereof through January 1, 2031, equal to the lesser of (a) 5% of the shares of all classes of the Company’s common stock outstanding on the last day of the immediately preceding calendar year or (b) such smaller number of shares as determined by the Company’s Board or the committee. On January 1, 2022, the number of shares reserved and available for issuance for the 2021 Plan was increased by 3,822,364 shares. As of March 31, 2022, the Company had reserved 10,802,073 shares of common stock for future grants.

There were 154,500 and 401,250 options granted during the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022 and 2021, the Company recognized $2,014 and $858, respectively, of compensation expense related to stock options. Stock-based compensation expenses are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The Company received cash in the amount of $12 and $98 from the exercise of stock options for the three months ended March 31, 2022 and 2021, respectively. The tax benefit from equity options exercised was $3 and $22 for the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022, the Company granted certain officers and contractors of the Company an aggregate of 154,500 time-based options at a weighted average strike price of $15.05.

During the three months ended March 31, 2021, the Company granted certain officers and contractors of the Company an aggregate of 401,250 time-based options at a weighted average strike price of $6.49.

Below are the assumptions used for the three months ended March 31, 2022 and 2021 in determining the fair value of each option award:


	Three Months Ended March 31,
	2022			2021
Expected volatility		57	%		54	%
Expected dividends		—			—
Expected term (in years)		6.25			5.75
Risk-free rate		1.69	%		0.47	%

The aggregate intrinsic value of the options outstanding as of March 31, 2022 is $60,865. The aggregate intrinsic value of vested and exercisable options as of March 31, 2022 is $45,892. The weighted average fair value of options granted during the three months ended March 31, 2022 and 2021 was $8.25 and $3.22, respectively, on the dates of grant.

As of March 31, 2022, there was approximately $25,391 total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over a weighted average period of 2.75 years.

The following summarizes the Company’s stock option plan and the activity for the three months ended March 31, 2022:


	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Outstanding, December 31, 2021		7,953,018		$	9.02		8.16
Granted		154,500			15.05
Exercised		(1,875	)		6.60
Forfeited or expired		(150,560	)		11.36
Outstanding, March 31, 2022		7,955,083		$	9.09		7.94
Exercisable, March 31, 2022		3,703,963		$	4.35		6.39
Vested and expected to vest at March 31, 2022		7,955,085		$	9.09		7.94

During the three months ended March 31, 2022, no Restricted Stock Units (“RSUs”) were granted, vested or forfeited resulting in 79,886 unvested RSUs outstanding as of March 31, 2022.

The grant date fair value for RSUs is the market price of the common stock on the date of grant. The total fair value of RSUs vested during the three months ended March 31, 2022 and 2021 was $0 for both periods.

During the three months ended March 31, 2022 and 2021, the Company recognized $108 and $0, respectively, of compensation expense related to RSUs. Stock-based compensation expenses are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

As of March 31, 2022, there was approximately $1,232 total unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted average period of 3.59 years.