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 incentive 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 (December 31, 2021)	1,260,328	$0.56
Granted	—	—
Exercised	(50,964)	0.32
Forfeited	—	—
Balance (March 31, 2022)	1,209,364	0.57
Vested (as of March 31, 2022)	1,209,364	$0.57


	Number of Stock Options	Weighted Average Exercise Price
Balance (December 31, 2020)	1,571,205	$0.59
Granted	—	—
Exercised	(56,059)	0.24
Forfeited	—	—
Balance (March 31, 2021)	1,515,146	0.58
Vested (as of March 31, 2021)	1,515,146	$0.58

The following summarizes certain information about stock options vested and expected to vest as of March 31, 2022 related to the 2011 Stock Option Plan:

Number of

Stock Options

Weighted Average

Remaining

Contractual Life

Weighted Average

Exercise Price

Outstanding

1,209,364

0.42 years

$0.57

Exercisable

1,209,364

0.42 years

$0.57

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 March 31, 2022 was $0.80.

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 August 2030.


	Number of Units	Weighted Averaged Exercise Price
Balance (December 31, 2021)	3,936,176	$	0.92
Granted	—	—
Exercised	(6,371)	$	0.92
Forfeited	(19,111)	0.92
Balance (March 31, 2022)	3,910,694	$	0.92
Vested (as of March 31, 2022)	3,631,681	$	0.92


	Number of Units	Weighted Averaged Exercise Price
Balance (December 31, 2020)	3,961,658	$	0.92
Granted	—	—
Forfeited	—	—
Balance (March 31, 2021)	3,961,658	$	0.92

The 2017 options 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 eight 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. At the time of modification, these options resulted in $186 of cash consideration and $4,500 of share based compensation that will be recognized over the service period of four years. For the three months ended March 31, 2022, $249 of share-based compensation was recognized.

Number of

Stock Options

Weighted Average

Remaining

Contractual Life

Weighted Average

Exercise Price

Outstanding

3,910,694

7.30 years

$0.92

Exercisable

3,631,681

7.21 years

$0.92

The options associated with the 2020 Incentive Award Plan vest over a service period of three to four years. A summary of activity for the three months ended March 31, 2022 and 2021 for the options associated with the 2020 Incentive Award Plan is as follows:


	Number of Units	Weighted Averaged Exercise Price
Balance (December 31, 2021)	1,469,297	$	11.12
Granted	1,573,361	$	1.68
Forfeited	(74,626)	$	10.47
Balance (March 31, 2022)	2,968,032	$	6.13
Exercisable	388,691	$	11.34


	Number of Units	Weighted Averaged Exercise Price
Balance (December 31, 2020)	—	$	—
Granted	1,409,401	11.35
Forfeited	—	—
Balance (March 31, 2021)	1,409,401	$	11.35

The grant date fair value of the options granted in the three months ended March 31, 2022 was $1.17. For the three months ended March 31, 2022, $908 of share based compensation was recognized. As of March 31, 2022, there was approximately $8,609 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

2,968,032

9.20 years

$6.13

Exercisable

388,691

7.27 years

$11.34

The restricted shares associated with the 2020 Incentive Award Plan vest over a service period. A summary of activity for the three months ended March 31, 2022 for the restricted shares associated with the 2020 Incentive Award Plan is as follows:


	Balance (Number of Units	Weighted Average Grant Date Fair Value
Balance (December 31, 2021)	597,739	$	5.57
Granted	1,235,437	$	1.68
Forfeited	(54,208)	$	5.56
Vested (as of March 31, 2022)	(71,273)	$	5.69
Balance (March 31, 2022)	1,707,695	$	2.75

The grant date fair value of the restricted shares granted in the three months ended March 31, 2022 was $1.68. For the three months ended March 31, 2022, $527 of share based compensation cost was recognized. As of March 31, 2022, there was approximately $1,454 of unrecognized compensation cost that vests over a service period of four years, approximately $2,047 of unrecognized compensation cost that vests over a service period of three years, and $164 of unrecognized compensation cost that vests over a service period of one year related to unvested restricted shares related to 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 post-Merger period. The earnouts for the Earnout RSUs are subject to an earnout period, which is defined as the date 60 months 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:

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 the 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 the 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 the 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, 2021)	621,200	$	10.70
Granted	—	—
Forfeited	(141,350)	10.70
Balance (March 31, 2022)	479,850	$	10.70


	Number of Units	Weighted Average grant date fair value
Balance (December 31, 2020)	—	$	—
Granted	640,421	10.70
Forfeited	—	—
Balance (March 31, 2021)	640,421	$	10.70

During the three months ended March 31, 2022, the Company recognized no stock-based compensation cost related to the RSUs. As of March 31, 2022, there was no additional unrecognized compensation cost related to the Earnout RSUs.