On April 12, 2018, EVO’s board of directors approved the EVO Transportation and Energy Services, Inc. 2018 Stock Incentive Plan (the “2018 Plan”) pursuant to which a total of 4,250,000 shares of EVO's common stock have been reserved for issuance to eligible employees, consultants, and directors of the Company. Further, on August 13, 2018, EVO's Board approved the Company’s Amended and Restated 2018 Stock Incentive Plan (the “Amended 2018 Plan”), which amends and restates the Company’s 2018 Stock Incentive Plan. The Amended 2018 Plan increased options available for grant to 6,250,000. During February 2020, EVO's Board approved an increase of the number of available options in the Stock Incentive Plan to a total of 9,250,000 options. During April 2020, EVO's Board approved an additional increase in the number of available options under the Stock Incentive Plan to a total of 12,000,000 options.

The Amended 2018 Plan provides for awards of non-statutory stock options, incentive stock options, and restricted stock awards within the meaning of Section 422 of the Internal Revenue Code and stock purchase rights to purchase shares of EVO’s common stock.

The Amended 2018 Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to select the individuals to whom awards will be granted and to determine whether and to what extent stock options and stock purchase rights are to be granted, the number of shares of EVO's common stock to be covered by each award, the vesting schedule of stock options and all other terms and conditions of each award. Stock options have a maximum term of ten years, and it is the Company’s practice to grant options to employees with exercise prices equal to or greater than the estimated fair market value of its common stock.

The fair value of each award is estimated on the date of grant. Stock option values are estimated using the Black-Scholes option-pricing model, which requires the input of subjective assumptions, including the expected term of the option award, expected stock price volatility, and expected dividends. These estimates involve inherent uncertainties and the application of management’s judgment. The expected option terms are calculated based on the “simplified” method for “plain vanilla” options due to our limited exercise information. The “simplified method” calculates the expected term as the average of the vesting term and the original contractual term of the options. Expected volatilities used in the valuation model are based on the selected comparable companies. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve in effect at the time of grant. The valuation model assumes no dividends. There is no estimated forfeiture rate.

As described in Note 1, Description of Business and Summary of Significant Accounting Policies, some of EVO’s stock options contain a provision that provides for the acceleration of vesting upon the Company completing an aggregate of at least $30 million of any combination of debt and/or equity financing transactions after the date of grant. During the years ended December 31, 2022 and 2021, the number of stock options for which vesting accelerated as a result of this provision were 0 and 0, respectively.

From February 2020 through December 2020, EVO's Board approved the grant of 3,394,999 stock options with an exercise price of $2.50 per share and a 10-year life. For 1,450,000 of the stock options granted, one-quarter (1/4) vested and became exercisable on the grant date, with the remainder vesting and becoming exercisable ratably on the first, second, and third anniversaries of the date of grant. The remaining 1,944,999 stock options granted were fully vested and exercisable on the grant date. During February 2020, EVO's Board also granted 70,000 stock options as compensation to board members with an exercise price of $2.50 per share and a 10-year life. The options vest ratably over three years. One-quarter (1/4) of the options

During the third quarter of 2021, EVO reduced the exercise price of certain stock options previously granted to certain named executive officers of the Company and other key employees from an original exercise price of $2.50 per share to an exercise price of $1.50 per share, which the board of directors determined was equal to or greater than the fair market value of EVO’s common stock. A total of 4,394,999 options were subject to the exercise price reduction. The repricing was accounted for as a stock option modification whereby the incremental fair value of each option was determined using the Black-Scholes option pricing model at the date of the modification, and $0.2 million was recognized related to vested options as incremental compensation expense during the three months ended September 30, 2021. The Company will recognize the remaining $0.1 million of incremental compensation expense resulting from the modification on a straight-line basis over the remaining requisite service periods.

During the third quarter of 2021, EVO's Board approved the grant to an employee of 750,000 stock options with an exercise price of $1.50 per share and a 10-year life. One-third (1/3) of the options vested and became exercisable on the grant date, one-third (1/3) vest and become exercisable approximately 11 months after the date of grant, and one-third (1/3) vest and become exercisable approximately 23 months after the date of grant. During the third quarter of 2021, EVO's Board also granted 211,000 stock options as compensation to board members with an exercise price of $1.50 and a 10-year life. 111,000 of the options vested and became exercisable on the grant date. The remaining 100,000 stock options vest and become exercisable on the first anniversary of the date of grant. During the fourth quarter of 2021, EVO's Board approved the grant to an employee of 500,000 stock options with an exercise price of $1.50 per share and a 10-year life. One-quarter (1/4) of the options vested and became exercisable on the grant date. The remaining 375,000 stock option vest and become exercisable ratably on the first, second and third anniversaries of the date of grant.

During the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expense of $0.1 million and $0.3 million, respectively, related to stock options. As of December 31, 2022, the Company had $0.2 million of unrecognized stock-based compensation expense related to the unvested portions of outstanding stock options.

The following table presents the stock option activity for the year ended December 31, 2022:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2021		10,920,249		$	1.96		7.6	$	—
Granted		80,000			1.50
Exercised		—			—				—
Expired		(1,372,307	)		1.50				—
Outstanding - December 31, 2022		9,627,942		$	2.03		6.7	$	—
Exercisable - December 31, 2022		9,928,211		$	2.01		6.4	$	—

The following table summarizes the assumptions used to estimate the fair value of stock options granted during the years ended December 31:


	2022			2021
Approximate risk-free rate	2.8% - 2.9%			0.7% - 1.3%
Expected life (in years)	5.75 - 5.75			5.0 - 5.75
Dividend yield		0	%		0	%
Volatility	47.9% - 48.0%			47.1% - 47.5%

The weighted-average grant-date fair value of options granted was $0.13 and $0.15 per share during the years ended December 31, 2022 and 2021, respectively. The total fair value of options vested during the years ended December 31, 2022 and 2021 was $0.1 million.

During the first quarter of 2021, EVO issued to an employee warrants to purchase 750,000 shares of EVO’s common stock. The warrants were issued with a 10-year life and an exercise price equal to the lesser of $2.50 per share and the price at which stock options were to be granted to the Company's officers in 2021. One-third (1/3) of the warrants vested and became

exercisable on the grant date, one-third (1/3) vested and became exercisable on March 31, 2021, and one-third (1/3) vested and became exercisable on June 30, 2021. During the third quarter of 2021, the exercise price of the warrants was set at $1.50 per share pursuant to the terms of the warrant agreement. Except for the reduction in exercise price, all terms and conditions of the warrants remain the same. During the year ended December 31, 2021, the Company recorded stock-based compensation expense of $0.2 million related to these warrants.

During the third quarter of 2022, in connection with the Recapitalization Transaction, EVO issued warrants to purchase 5,983,825 shares of EVO's common stock to compensate certain key members of management. The warrants were issued with a 5-year life and an exercise price of $0.63 per share. During the year ended December 31, 2022, the Company recorded stock-based compensation expense of less than $0.1 million related to these warrants.

The following table presents information related to stock-based compensation warrants outstanding and exercisable as of December 31, 2022 and 2021:


	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Outstanding - December 31, 2021		1,911,099	$	3.42		5.9	$	—
Outstanding - December 31, 2022		7,894,924	$	1.30		4.7	$	—
Exercisable - December 31, 2022		7,894,924	$	1.30		4.7	$	—