Note 9. Stock-based Compensation

2016 and 2021 Stock Plans

In November 2016, the Company’s Board of Directors adopted the 2016 Stock Option and Grant Plan (the “2016 Plan”) under which officers, employees, directors, consultants and other key persons of the Company or its affiliates may be granted incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock units. Immediately prior to the Closing Date on August 10, 2021, the Company's Board of Directors amended the 2016 Plan provide that no new awards could be granted under the 2016 Plan.

On August 10, 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”). Under the 2021 Plan, the Company can grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to employees, directors and consultants. The number of shares available for issuance under the 2021 Plan will be increased on the first day of each fiscal year, beginning on January 1, 2022, in an amount equal to the lesser of (i) a number of shares equal to four percent (4%) of the total number of shares of all classes of common stock of the Company outstanding on the last day of the immediately preceding fiscal year, or (ii) such number of shares determined by the Company's Board of Directors. On January 1, 2022, the number of shares available for issuance under 2021 plan increased by 24,167,201 shares.

On August 10, 2021, the Company adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”). Under the 2021 ESPP, participating employees may be offered the option to purchase shares of the Company’s Common Stock at a purchase price which equals 85% of the fair market value of the Company’s common stock on the enrollment date or on the exercise date, whichever is lower. The number of shares of common stock available for issuance under the 2021 ESPP will be increased on the first day of each fiscal year beginning on January 1, 2022, in an amount equal to the lesser of (i) a number of shares of common stock equal to half percent (0.5%) of the total number of shares of all classes of common stock of the Company on the last day of the immediately preceding fiscal year, or (ii) such number of shares determined by the Company's Board of Directors. On January 1, 2022, the number

of shares available for issuance under 2021 ESPP increased by 3,020,900 shares. As of March 31, 2022, the Company has not yet implemented the 2021 ESPP and no shares had been issued under the 2021 ESPP.

Restricted Stock Units

On December 16th, 2021, the Company's Board of Directors approved a performance-based bonus program with payout based on five goals with sub-milestones to achieve in year 2022 ("2022 Bonus Plan"). Each milestone goal achievement will result in RSU grants, when grants are approved by the Company's Board of Directors, with the vesting period from the grant dates to January 1, 2023. Total opportunity for the bonus is to earn RSU with fair value of 30% of employees' base salary as of the date of the grants, with stretch bonus goals achievement increasing it to 40%.

The Company recorded stock-based compensation expense of $7.3 million during the three months ended March 31, 2022 in relation to 2022 Bonus Plan. The Company will consider probability of achieving of each of the performance goals at the end of each reporting period and will recognize expense over the requisite period when the goal achievement is probable, reversing or re-accruing expense if goal achievement becomes not probable or probable again. Accordingly, this expense will be classified as a liability until such time that the respective milestones have been met, at which point the liability will be reclassified to equity. If it is determined that the milestone cannot be met, the liability will be reversed.

Shares subject to repurchase

The Company allows certain option holders to exercise unvested options and stock purchase rights to purchase shares of common stock. Common shares received from such early exercises are subject to a right of repurchase at the original issuance price. The Company’s repurchase right with respect to these shares typically lapse over six years as the shares become vested. As of March 31, 2022 and December 31, 2021, 6,266,063 and 6,918,483 shares, respectively, were subject to repurchase at a weighted average price of $0.09 per share and $0.10 per share, respectively, and $0.6 million and $0.7 million, respectively, was recorded within the stock repurchase liability in early exercised stock option liabilities on the condensed consolidated balance sheets.

In addition, upon completion of the Reverse Recapitalization 2,677,200 Series C Preferred shares which were subject to time-based vesting conditions were converted to restricted common shares. As of March 31, 2022, the number of such shares that were subject to repurchase was 2,342,552.

Stock-based Compensation Expense