In October 2017, the shareholders of the Company approved the 2017 Share Incentive Plan (the “2017 ESOP”) under which the Company can grant a maximum of 483,846 ordinary shares. On August 24, 2018, the Company further approved an additional 345,503 ordinary shares for issuance, and therefore, 829,349 ordinary shares were reserved for issuance under the 2017 ESOP.

No options were granted during the years ended December 31, 2020 and 2021. A summary of option activities during the year ended December 31, 2022 were presented below:


						Weighted- average					Weighted-
				Weighted-		remaining		Aggregated			average
	Number of			average		contractual		intrinsic			grant date
Share options	shares			exercise price		term(years)		value			fair value
				RMB				RMB			RMB
Outstanding, December 31, 2021		31,931			560.95		5.81		—			271.90
Granted		375,000			26.94		5.00		2,273			18.51
Exercised		(375,000	)		26.94		5.00		(2,273	)		18.51
Forfeited		(381	)		560.95		—		—			271.90
Outstanding, December 31, 2022		31,550			560.95		4.81		—			271.90

The Company granted 375,000 options in 2022, which were fully vested and exercised immediately and compensation expenses of RMB6,813 were recorded for the year ended December 31, 2022.

The Company calculated the estimated fair value of the options on the grant date using Black-Scholes option pricing model, with the following assumptions used:


	May 10,
Grant Dates	2022
Risk-free interest rate (1)	2.9%
Volatility (2)	73.2%
Expected dividend yield (3)	0%
Exercise price		26.94
Expected life (years) (4)		5.00
Fair value of underlying ordinary share		33.00

(1)

Risk-free interest rate was estimated based on the US Treasury constant maturity yield curve with a maturity that matches the expected term of the option.

(2)

The volatility was estimated based on historical volatility of the Company's share price applying the guidance provided by ASC 718 and the daily share price volatility of comparable companies for an observation period that matches the life of options.

(3)

Expected dividend yield was estimated by the Group based on its expected dividend policy over the expected term of the options.

(4)

Expected life was calculated based on the vesting period and contractual terms of the options.

On August 1, 2020, the Company granted 80,000 nonvested shares to two employees which were vested immediately and a compensation expense of RMB27,898 was recorded for the year ended December 31, 2020. No non-vested shares were granted during the years ended December 31, 2021 and 2022.

Total share-based compensation expense of share-based awards granted to employees, certain directors and management recognized for the years ended December 31, 2020, 2021 and 2022 were as follows:


	Years ended December 31,
	2020		2021			2022
	RMB		RMB			RMB
Cost of revenues		146		101			33
Sales and marketing expenses		14,278		(14	)		4,166
General and administrative expenses		15,324		681			2,982
		29,748		768			7,181