EQUITY INCENTIVE PLAN

9 Months Ended

Sep. 30, 2021

9. EQUITY INCENTIVE PLAN

The Company’s 2013 Employee, Director and Consultant Equity Incentive Plan, as amended on March 12, 2021 (the “2013 Plan”), was originally adopted by its Board of Directors and stockholders in September 2013. In connection with the Closing of the Business Combination, the Company adjusted the equity awards as described in Note 3 “Business Combination”. The adjustments to the awards did not result in incremental expense as the equitable adjustments were made pursuant to a preexisting nondiscretionary antidilution provision in the 2013 Plan, and the fair-value, vesting conditions, and classification are the same immediately before and after the modification. In connection with the Business Combination, HighCape’s stockholders approved and adopted the Quantum-Si Incorporated 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2021 Plan.

Stock option activity

During the nine months ended September 30, 2021, the Company granted 3,104,585 option awards subject to service and/or performance conditions. The service condition requires the participant’s continued employment with the Company through the applicable vesting date, and the performance condition requires the consummation of a contemplated business combination defined in the option award agreement. For options with performance conditions, stock-based compensation expense is only recognized if the performance conditions become probable to be satisfied. As the performance condition is a business combination, the performance condition would only become probable once a business combination was consummated. Accordingly, the Company recorded stock-based compensation expense of $2,381 for the nine months ended September 30, 2021 including $1,343 related to these option awards during the six months ended June 30, 2021, as the Business Combination was consummated during this time period. The stock-based compensation expense for stock options for the three and nine months ended September 30, 2021 was $1,556 and $4,608, respectively.

A summary of the stock option activity under the 2013 Plan and the 2021 Plan is presented in the table below:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		7,369,541		$	2.37		6.77	$	4,094
Granted		3,104,585			9.07
Exercised		(2,163,932	)		2.03
Forfeited		(184,017	)		8.64
Outstanding at September 30, 2021		8,126,177		$	4.88		7.59	$	30,222
Options exercisable at September 30, 2021		4,371,817			2.61		6.21	$	25,100
Vested and expected to vest at September 30, 2021		7,805,361		$	4.78		7.53	$	29,784

Restricted stock unit activity

During the nine months ended September 30, 2021, the Company granted 4,861,315 restricted stock unit (“RSU”) awards subject to service, performance and/or market conditions. The RSU awards include 1,703,460 and 170,346 RSU awards to the Company’s Chief Executive Officer and General Counsel, respectively, subject to service and performance conditions, 1,800,000 RSU awards to the Executive Chairman of the Company and two members of the board of directors subject to service and/or performance conditions, and 453,777 RSU awards to the Company’s Chief Executive Officer subject to service, market and performance conditions. The service condition requires the participant’s continued employment with the Company through the applicable vesting date, and the performance condition requires the consummation of a contemplated business combination or financing transaction defined in the award agreement. The market condition requires that the Company’s Class A common stock subsequent to a business combination trades above a specified level for a defined period of time, or that a subsequent financing transaction meets defined pricing thresholds and that the Company’s common stock subsequent to a business combination trades above a specified level for a defined period of time. For RSU awards with performance conditions, stock-based compensation expense is only recognized if the performance conditions become probable to be satisfied. As the performance condition is a business combination or financing transaction, the performance condition would only become probable once a business combination or financing transaction was consummated. Accordingly, the Company recorded stock-based compensation expense of $13,089 for the nine months ended September 30, 2021 including $7,393 related to these RSU awards during the six months ended June 30, 2021, as the Business Combination was consummated during this time period. The stock-based compensation expense for RSU awards for the three and nine months ended September 30,2021 was $5,840 and $13,232, respectively.

A summary of the RSU activity under the 2013 Plan and the 2021 Plan is presented in the table below:

	Number of Shares Underlying RSUs		Weighted Average Grant- Date Fair Value
Outstanding non-vested RSUs at December 31, 2020		-	$	-
Granted		4,861,315		8.03
Repurchased		-		-
Restrictions lapsed		-		-
Outstanding non-vested RSUs at September 30, 2021		4,861,315	$	8.03

The Company’s stock-based compensation expense is allocated to the following operating expense categories as follows:

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Research and development	$	1,520	$	355	$	4,343	$	1,217
General and administrative		5,626		64		12,918		160
Sales and marketing		250		74		579		224
Total stock-based compensation expense	$	7,396	$	493	$	17,840	$	1,601