Legacy SmartRent’s board of directors adopted, and its stockholders approved, the SmartRent.com, Inc. 2018 Stock Plan (the “2018 Stock Plan”), effective March 2018. The purpose of the 2018 Stock Plan was to advance the interests of Legacy SmartRent and its stockholders by providing an incentive to attract, retain and reward persons performing services for Legacy SmartRent and by motivating such persons to contribute to the growth and profitability of Legacy SmartRent. The 2018 Stock Plan seeks to achieve this purpose by providing for awards in the form of options, restricted stock purchase rights or restricted stock bonuses. Awards granted under the 2018 Stock Plan generally expire ten years from the date of grant and become vested and exercisable over a four-year period. All options are subject to certain provisions that may impact these vesting schedules. As part of the Business Combination on August 24, 2021, all awards issued under the 2018 Stock Plan were assumed by the Company and converted to options to purchase Common Stock and RSUs for Common Stock using the Exchange Ratio.

Summaries of the Company’s 2018 Stock Plan activity for the year ended December 31, 2022 is presented below.


	Options Outstanding
	Number of Options			Weighted- Average Exercise Price ($ per share)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
December 31, 2020		10,457		$	0.51		8.96	$	-
Granted		-		$	-
Forfeited		-		$	-
December 31, 2021		10,457		$	0.51		7.96	$	95,935
Granted		175		$	9.58
Exercised		(465	)	$	0.47
Forfeited		(496	)	$	0.47
December 31, 2022		9,671		$	0.67		6.99	$	18,234
Exercisable options as of December 31, 2022		8,276		$	0.49		6.83	$	16,024

In April 2021, the board of directors of Legacy SmartRent executed a unanimous written consent to provide an additional incentive to certain employees of Legacy SmartRent by amending the 2018 Stock Plan to allow for the issuance of RSUs and granted a total of 1,533 RSUs to certain employees which vest over four years. The estimated fair value for each RSU issued was approximately $21.55 per share and the total stock-based compensation expense to be amortized over the vesting period is $33,033. As part of the Business Combination on August 24, 2021 these RSUs were assumed by the Company and converted to 7,489 RSUs at a per share fair value of $4.41 pursuant to the Exchange Ratio. The outstanding RSUs also contain a liquidity event vesting condition which was satisfied upon closing of the Business Combination. Accordingly, the Company recognized an additional one-time stock-based compensation expense of $2,827 in August 2021 as a retroactive catch-up of cumulative stock-based compensation expense for such awards from their original grant dates. During the years ended December 31, 2022 and 2021, stock-based compensation expense of $662 and $906, respectively, was recognized in connection with the outstanding options. During the year ended December 31, 2020, there was no stock-based compensation expense related to the options.

In connection with the Business Combination, the board of directors approved and implemented the SmartRent, Inc. 2021 Equity Incentive Plan. The purpose of the 2021 Plan is to enhance the Company's ability to attract, retain and motivate persons who make, or are expected to make, important contributions to the Company by providing these individuals with equity ownership opportunities and equity-linked compensation opportunities.

The 2021 Plan authorizes the compensation committee to provide incentive compensation in the form of stock options, restricted stock and stock units, performance shares and units, other stock-based awards and cash-based awards. Under the 2021 Plan, the Company is authorized to issue up to 15,500 shares of common stock. As part of the Business Combination on August 24, 2021, the RSUs granted in the 2018 Stock Plan were assumed by the Company and converted to 7,489 restricted stock units pursuant to the Exchange Ratio. Non-employee board member RSUs will vest either over one year or three years. The RSUs granted to employees are generally subject to a four-year vesting schedule and all vesting shall be subject to the recipient’s continued employment with the Company or its subsidiaries through the applicable vesting dates. In November 2021, the Company granted 72 RSUs to certain executives pursuant to the 2021 Equity Incentive Plan. These RSUs had a fair value of $12.10 at the time of the grant and will vest over four years. The table below summarizes the activity related to the RSUs.


	Restricted Stock Units
	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value (per share)
December 31, 2020		-		$	-
Granted - pre-merger, retroactive application of exchange ratio		7,489		$	4.41
Granted - post-merger		426		$	12.10
Forfeited		(244	)	$	4.41
December 31, 2021		7,671		$	4.98
Granted		2,047		$	6.63
Vested or distributed		(3,026	)	$	4.88
Forfeited		(1,199	)	$	5.06
December 31, 2022		5,493		$	5.43

No right to any Common Stock is earned or accrued until such time that vesting occurs, nor does the grant of the RSU award confer any right to continue vesting or employment. Compensation expense associated with the unvested RSUs is recognized on a straight-line basis over the vesting period.

During the years ended December 31, 2022 and 2021 respectively, stock-based compensation expense of $11,955 and $6,413 was recognized in connection with the vesting of all RSUs. During the year ended December 31, 2020, there was no stock-based compensation expense related to the RSUs. At December 31, 2022, $26,373 of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 1.2 years.

The Company has the ability to initially issue up to 2,000 shares of Common Stock under the Employee Stock Purchase Plan ("ESPP"), subject to annual increases effective as of January 1, 2022 and each subsequent January 1 through and including January 1, 2030 in an amount equal to the smallest of (i) 1% of the number of shares of the Common Stock outstanding as of the immediately preceding December 31, (ii) 2,000 shares or (iii) such amount, if any, as the Board may determine. During the year ended December 31, 2022, stock-based compensation expense of $288 was recognized in connection with the ESPP. No expense related to the ESPP was recognized during the years ended December 31, 2021 or 2020.

The fair value of stock option grants is estimated by the Company on the date of grant using the Black Scholes-Merton option pricing model with the following weighted-average assumptions for the year ended December 31, 2022 and 2020. There were no options granted during the year ended December 31, 2021.


	December 31, 2022			December 31, 2020
Risk free interest		1.47	%		0.99	%
Dividend yield		0.00	%		0.00	%
Expected volatility		58.80	%		103.59	%
Expected life (years)		6.08			6.11

The Company recorded stock-based compensation expense as follows.


	Years Ended December 31,
	2022		2021		2020
Research and development	$	3,668	$	2,340	$	256
Sales and marketing		1,396		1,379		86
General and administrative		8,652		4,412		1,417
Total	$	13,716	$	8,131	$	1,759

During the years ended December 31, 2022, 2021 and 2020, respectively, stock-based compensation expense of $811, $812 and $707 was recognized for 844 shares granted in connection with the Company's February 2020 acquisition of a foreign supplier and are recorded as a component of general and administrative expense. As part of the Business Combination on August 24, 2021, these 844 shares converted into 4,123 shares pursuant to the Exchange Ratio.