The Company has three stock incentive plans, the “2011 Stock Option Plan,” the “2017 Stock Option Plan” and the “2020 Incentive Award Plan,” to promote the long-term growth and profitability of the Company. The plans do this by providing senior management and other employees with incentives to improve shareholder value and contribute to the growth and financial success of the Company by granting equity instruments to these stakeholders.

The Company estimates the fair value of stock options using the Black-Scholes pricing model. The Black-Scholes pricing model requires the use of subjective inputs such as stock price volatility. Changes in the inputs can materially affect the fair value estimates and ultimately the amount of stock-based compensation expense that is recognized.


	Number of Stock Options	Weighted Average Exercise Price
Balance (Balance January 1, 2019)	1,647,650	$0.60
Granted	—	—
Forfeited	(76,445)	0.67
Balance (December 31, 2019)	1,571,205	0.59
Granted	—	—
Forfeited	—	—
Balance (December 31, 2020)	1,571,205	0.59
Granted	—	—
Exercised	(310,877)	0.57
Forfeited	—	—
Balance (December 31, 2021)	1,260,328	0.56
Vested (as of December 31, 2021)	1,260,328	$0.56

The following summarizes certain information about stock options vested and expected to vest as of December 31, 2021 related to the 2011 Stock Option Plan:

Number of

Stock Options

Weighted Average

Remaining

Contractual Life

Weighted Average

Exercise Price

Outstanding

1,260,328

0.67 years

$0.56

Exercisable

1,260,328

0.67 years

$0.56

Aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the option exercise price and the estimated fair value of the Company’s common stock at the time such option exercises. This intrinsic value changes based on changes in the fair value of the Company’s underlying common stock. The aggregate intrinsic value for options outstanding and options exercisable as of December 31, 2021 was $1.71.

The terms of the 2017 Stock Option Plan provide for vesting upon certain market and performance conditions, including achieving certain triggering events, including specified levels of return on investment upon a sale of the Company. Because the 2017 Stock Option Plan has a market-based vesting condition, an open-form valuation model was used to value the options. All stock options related to the 2017 Stock Option Plan have an exercise price of $0.92 per share. All stock options related to the 2017 Stock Option Plan expire 10 years after the grant date, which ranges from March 2028 to October 2029.


	Number of Stock Options	Weighted Averaged Exercise Price
Balance (Balance January 1, 2019)	2,599,669	$0.92
Granted	1,569,676	0.92
Forfeited	(1,323,787)	0.92
Balance (December 31, 2019)	2,845,557	0.92
Granted	1,116,101	0.92
Forfeited	—	—
Balance (December 31, 2020)	3,961,658	0.92
Granted	—	—
Forfeited	(25,482)	0.92
Balance (December 31, 2021)	3,936,176	0.92
Vested (as of December 31, 2021)	3,538,672	$0.92

The options granted under the 2017 Stock Option Plan were eligible to vest upon a change of control. Although the Merger did not meet the definition of a change of control, the Company modified the awards in connection with the Merger such that all vesting conditions were waived for 3,538,672 of the options. This modification impacted 8 employees and resulted in $38,800 of share-based compensation on the modification date. The remaining options were also modified but will vest over a service period of four years and impacted 16 employees. These options resulted in $186 of cash consideration and $4,193 of share based compensation that will be recognized over the service period of four years. For the year ended December 31, 2021, $987 of share-based compensation was recognized.

Number of

Stock Options

Weighted Average

Remaining

Contractual Life

Weighted Average

Exercise Price

Outstanding

3,936,176

7.55 years

$0.92

Exercisable

3,538,672

7.43 years

$0.92

The options granted under the 2020 Incentive Award Plan vest over a service period of four years. A summary of activity for the year ended December 31, 2021 for the options associated with the 2020 Incentive Award Plan is as follows:


	Balance (Number of Units	Weighted Averaged Exercise Price
Balance (December 31, 2020)	—	$	—
Granted	1,490,519	11.02
Forfeited	(21,222)	4.31
Balance (December 31, 2021)	1,469,297	$	11.12
Exercisable	—	$	—

The grant date fair value of the options was between $2.60 to $7.77. For the year ended December 31, 2021, $2,948 of share based compensation was recognized. As of December 31, 2021, there was approximately $8,233 of total unrecognized compensation cost related to unvested options related to the 2020 Stock Incentive Award Plan.


	Number of Stock Options	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
Outstanding	1,469,297	8.96 years	$11.12
Exercisable	—	—	$—

The service-based restricted stock units associated with the 2020 Incentive Award Plan vest over a service period. A summary of activity for the year ended December 31, 2021 for the service-based restricted stock units associated with the 2020 Incentive Award Plan is as follows:


	Number of Units	Weighted Average Grant Date Fair Value
Balance (December 31, 2020)	—	$	—
Granted	710,993	5.58
Forfeited	(18,884)	4.32
Vested (as of December 31, 2021)	(94,370)	5.87
Balance (December 31, 2021)	597,739	$	5.57

The grant date fair value of the service-based restricted stock units was between $3.73 and $6.15. For the year ended December 31, 2021, $1,460 of share based compensation cost was recognized. As of December 31, 2021, there was approximately $2,035 of unrecognized compensation cost that vests over a service period of four years and $411 of unrecognized compensation cost that vests over a service period of one year related to unvested restricted stock units granted under the 2020 Stock Incentive Award Plan.

Former CarLotz option holders as of the effective time of the Merger received 640,421 earnout restricted stock units (“Earnout RSUs”). The Earnout RSUs vest if certain targets are met in the 60 month period following the consummation of the Merger. The Merger closed on January 21, 2021, and the earnout period expires January 21, 2026. Earnout RSUs will vest if any of the following conditions are achieved following January 21, 2021, in each case, subject to the applicable award recipient’s continued service through the date such conditions are met:

i.If at any time during the 60 months following the Closing Date (the first business day following the end of such period, the “Forfeiture Date”), the closing trading price of Company common stock is greater than $12.50 over any 20 trading days within any 30 trading day period (the “First Threshold”), 50% of the Earnout RSUs will vest.

ii.If at any time prior to the Forfeiture Date, the closing trading price of Company common stock is greater than $15.00 over any 20 trading days within any 30 trading day period (the “Second Threshold”), 50% of the Earnout RSUs will vest.

iii.If either the First Threshold or the Second Threshold is not met on or before the Forfeiture Date, any unvested Earnout RSUs are forfeited. All unvested Earnout RSUs will vest if there is a change of control of the Company that will result in the holders of Company common stock receiving a per share price equal to or in excess of $10.00 (as equitably adjusted for stock splits, stock dividends, special cash dividends, reorganizations, combinations, recapitalizations and similar transactions affecting the common stock) prior to the Forfeiture Date.

The estimated fair value of the liability is determined by using a Monte-Carlo simulation model, which incorporates various assumptions, including expected stock price volatility, contractual term, dividend yield and stock price at grant date. The Company estimates the volatility of common stock on the date of grant based on the weighted-average historical stock price volatility of comparable publicly-traded companies.


	Number of Units	Weighted Average Grant Date Fair Value
Balance (December 31, 2020)	—	$	—
Granted	640,421	10.70
Forfeited	(19,221)	10.70
Balance (December 31, 2021)	621,200	$	10.70

During the year ended December 31, 2021, the Company recognized $6,748 of stock-based compensation cost. As of December 31, 2021, there was no additional unrecognized compensation cost related to the Earnout RSUs.