NOTE 10. COMPENSATION PLANS

Amended and Restated 2019 Equity Incentive Plan

In April 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”). In August 2021, we adopted, and our shareholders approved, the Amended and Restated 2019 Equity Incentive Plan (the “Amended 2019 Plan”), which amends and restates the 2019 Plan in its entirety. At our 2022 Annual Meeting of Stockholders on August 4, 2022, stockholders approved the Second Amended and Restated 2019 Equity Incentive Plan (the “Second Amended 2019 Plan”) which, among other things, increased the number of shares of Class A common stock authorized for issuance under the Amended 2019 Plan. Following the effect of the Reverse Stock Splits, the total number of shares of Class A common stock authorized for issuance is 110,000 shares as of December 31, 2023.

The Second Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards. The Second Amended 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

On June 2, 2023, the Company’s stockholders approved a third amendment and restatement of the 2019 Plan (the “Third Amended Plan”). The Third Amended Plan, among other things, increases the number of shares of Class A common stock authorized for issuance under the Second Amended 2019 Plan by 209,862 shares to an aggregate of 319,862 shares. As of the date of this Annual Report on Form 10-K, we have not filed a Registration Statement on Form S-8 with the Securities and Exchange Commission to register the additional shares authorized under the Third Amended Plan.

Equity-Based Compensation Expense

Equity-based compensation expense is included within “salaries, benefits and payroll taxes” in our consolidated statements of operations and comprehensive loss. We recognized equity-based compensation expense as follows:

 SCHEDULE OF EQUITY BASED COMPENSATION EXPENSE

During the year ended December 31, 2022, we granted an aggregate of 129,106 options to our directors and certain employees. The stock options were granted with exercise prices ranging from $2.52 per share to $20.00 per share, and vesting periods ranging from three months to four years. There were no options granted during the year ended December 31, 2023.

Total remaining unrecognized compensation expense as of December 31, 2023 was as follows:

SCHEDULE OF EQUITY BASED UNRECOGNIZED COMPENSATION EXPENSE

The fair value of the stock option awards granted during the year ended December 31, 2022 was determined on the grant date using the Black-Scholes valuation model based on the following ranges of weighted-average assumptions:

 SCHEDULE OF STOCK OPTION AWARD GRANT DATE VALUATION MODEL

A summary of stock option activity for the years ended December 31, 2023 and 2022 is as follows:

SUMMARY OF STOCK OPTION ACTIVITY

The weighted-average grant date fair value of options granted for the year ended December 31, 2022 was $9.34. The total fair value of stock options vested during the years ended December 31, 2023 and 2022 was approximately $0.1 million and $2.1 million, respectively.

401(k) Plan

Our 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the U.S. Internal Revenue Service annual contribution limit ($23,000 for calendar year 2023). Participants are eligible to receive a matching contribution from us of 100% of the first 3% and 50% of the next 2% of contributions. Matching contributions, other than safe-harbor contributions, vest 33% per year and are 100% vested after three years of service. Safe-harbor matching contributions are 100% vested as of the date of the contribution.