Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

On July 20, 2021, the Company established the OppFi Inc. 2021 Equity Incentive Plan (the“Plan”), which provides for the grant of restricted stock unit awards, incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units awards, performance units, performance shares, cash-based awards, and other stock-based awards to employees, non-employee directors, officers, and consultants. As of September 30, 2021, the maximum aggregate number of shares of Class A Common Stock that may be issued under the Plan shall be equal to 11,500,000 shares. As of September 30, 2021, the Company had only granted awards in the form of options.

Stock options: Under the terms of the Plan, incentive stock options must have an exercise price at or above the fair market value of the stock on the date of the grant. Stock options granted have service-based vesting conditions only. Stock

options generally vest over four years with 25% of stock options vesting on the first anniversary of the grant and the remaining

75% vesting quarterly over the remaining 36 months. Option holders have a 10-year period to exercise the options

before they expire. Forfeitures are recognized in the period they occur.

A summary of the Company’s stock option activity for the three and nine months ended September 30, 2021 is as follows:


	Number of Common Stock Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2020	—	$	—	—	$	—
Granted	5,600,000	15.23		—	—
Exercised	—	—		—	—
Forfeited	—	—		—	—
Outstanding as of September 30, 2021	5,600,000	$	15.23	6.10	$	—

Compensation expense is recorded on a straight-line basis over the vesting period, which is the requisite service period, beginning on the grant date. The compensation expense is based on the fair value of each option grant using the Black-Scholes option pricing model and is recognized as salaries and employee benefits expense in the consolidated statements of operations

and increase additional paid-in capital. For the three and nine months ended September 30, 2021, the Company recognized stock-based compensation of $673 thousand. As of September 30, 2021, the Company had stock-based compensation of $13,046 thousand related to unvested stock options not yet recognized that are expected to be recognized over an estimated weighted average period of approximately four years.

The fair value of each option grant was estimated on the grant date using the Black-Scholes option pricing model based on the following assumptions:


Volatility	32.50	%
Risk-free rate	0.91	%
Years to expiration	6.10
Dividend yield	0.00	%

Volatility is the measure by which the Company’s stock price is expected to fluctuate during the expected life of the stock options. Due to the lack of company-specific market data, volatility is based on an estimate of expected volatilities of a representative group of publicly traded companies.

Risk-free rate is based on U.S. Treasury Note yields.

Years to expiration represents the weighted-average period over which the granted stock options are expected to remain outstanding.

Dividend yield is based on the Company’s history and expectation of dividend payments.

Profit unit interests: Prior to the Business Combination, OppFi-LLC issued profit unit interests, which were recapitalized as OppFi Units in connection with the adoption by the Members of the OppFi A&R LLCA immediately prior to the Closing.

Total profit interest compensation expense for the three and nine months ended September 30, 2021 was $270 thousand and $499 thousand, respectively. There was no profit interest compensation expense for the three and nine months ended September 30, 2020.

The compensation expense accounted for all vested units based on the following assumptions:


Expected term	3 years
Volatility	68.0	%
Discount for lack of marketability	45.0	%
Risk free rate	0.2	%

The following table summarizes data concerning the profit unit interest (units in thousands):


		Avg Fair Value
	Units	at Grant Date
Outstanding at December 31, 2019	9,799	$	0.05
Granted	2,414	0.17
Forfeited	(11)	0.03
Outstanding at December 31, 2020	12,202	0.08
Granted	—	—
Forfeited	(55)	0.08
Outstanding at March 31, 2021	12,147	0.08
Granted	—	—
Forfeited	—	—
Outstanding at June 30, 2021	12,147	0.08
Granted	—	—
Forfeited	(536)	0.10
Exchanged in reverse recapitalization	(11,611)	0.08
Outstanding at September 30, 2021	—	$	—

The following table provides information pertaining to non-vested units (units in thousands):


		Avg Fair Value
	Units	at Grant Date
Non-vested units at December 31, 2019	3,467	$	0.10
Granted	2,414	0.17
Vested	(1,132)	0.13
Forfeited	(11)	0.03
Non-vested units at December 31, 2020	4,738	0.12
Granted	—	—
Vested	(326)	0.15
Forfeited	(55)	0.08
Non-vested units at March 31, 2021	4,357	0.12
Granted	—	—
Vested	(2,522)	0.07
Forfeited	—	—
Non-vested units at June 30, 2021	1,835	0.20
Granted	—	—
Vested	(85)	0.20
Forfeited	(536)	0.10
Exchanged in reverse recapitalization	(1,214)	0.22
Non-vested units at September 30, 2021	—	$	—

As of September 30, 2021, there was no unrecognized compensation expense. As of December 31, 2020, unrecognized compensation expense was $386 thousand,.