As of June 30, 2022, 685,266 shares of common stock remained available for issuance under the Vapotherm, Inc. 2018 Equity Incentive Plan (as amended and restated, the “2018 Equity Plan”), assuming target performance under outstanding performance stock units. To date, stock options, performance awards, restricted stock awards, restricted stock units and performance stock units have been granted under the 2018 Equity Plan.

Stock-based compensation expense was allocated based on the employees’ and non-employees’ functions as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	199	$	180	$	427	$	356
Research and development		492		273		979		614
Sales and marketing		810		900		1,888		1,821
General and administrative		997		1,080		2,650		2,327
Total	$	2,498	$	2,433	$	5,944	$	5,118

The Company granted options to purchase an aggregate of 1,223,550 shares of common stock at exercise prices ranging from $2.89 to $20.71 per share, with a weighted average exercise price of $6.68 per share, during the six months ended June 30, 2022. The Company granted options to purchase an aggregate of 368,140 shares of common stock at exercise prices ranging from $19.57 to $35.51 per share, with a weighted average exercise price of $26.90 per share, during the six months ended June 30, 2021. The weighted average fair value of stock options granted during the six months ended June 30, 2022 and 2021 was $4.72 and $19.61 per share, respectively.

The weighted average assumptions used in the Black-Scholes options pricing model are as follows:


	Six Months Ended June 30,
	2022			2021
Expected dividend yield		0.0	%		0.0	%
Risk free interest rate		2.6	%		1.0	%
Expected stock price volatility		83.4	%		86.0	%
Expected term (years)		6.3			6.1

The Company has granted both restricted stock units and restricted stock awards.

A summary of restricted stock unit activity for the six months ended June 30, 2022 is as follows:


				Weighted
				Average
				Grant Date
	Shares			Fair Value
Unvested at December 31, 2021		509,388		$	24.69
Granted		415,755			18.68
Vested		(109,821	)		24.85
Canceled		(74,011	)		23.66
Unvested at June 30, 2022		741,311		$	21.40

A summary of restricted stock award activity for the six months ended June 30, 2022 is as follows:


				Weighted
				Average
				Grant Date
	Shares			Fair Value
Unvested at December 31, 2021		7,989		$	1.68
Granted/purchased		545			20.72
Vested		(8,061	)		2.97
Canceled		(473	)		1.68
Unvested at June 30, 2022		-		$	-

The Company granted performance stock units covering 159,343 shares of common stock, assuming target level of performance, with a weighted average grant date fair value of $20.71 during six months ended June 30, 2022. The quantity of shares that will ultimately vest and be issued upon settlement of the performance stock units range from 0% to 200% of a targeted number of shares and will be determined based on, and subject to, achievement by the Company of certain revenue targets for the year ending December 31, 2024. There were no performance stock units outstanding at December 31, 2021.

As of June 30, 2022, 871,547 shares of common stock remained available for issuance under the ESPP.

The ESPP provides for successive discrete offering periods of approximately six months or as determined by the plan administrator. Effective January 1, 2022, offering periods begin on each January 1st and July 1st or the first trading day thereafter.

The ESPP permits eligible employees to elect to purchase shares of common stock through fixed whole percentage contributions from eligible compensation during each offering period, not to exceed 10% of the eligible compensation a participant receives during an offering period and not to accrue at a rate which exceeds $25,000 of the fair value of the stock (determined on the grant date(s)) for each calendar year. A participant may purchase the lower of (a) a number of shares of common stock determined by dividing such participant’s accumulated payroll deductions on the exercise date by the option price, (b) 5,000 shares, or (c) such other lesser maximum number of shares as shall have been established by the plan administrator.

Amounts deducted and accumulated by the participant will be used to purchase shares of common stock at the end of each offering period. The purchase price of the shares will be 85% of the lower of the fair value of common stock on the first trading day of each offering period or on the purchase date. Participants may end their participation during an offering period up to ten days in advance of the exercise date and will be paid their accumulated contributions that have not been used to purchase shares of common stock. Participation ends automatically upon termination of employment.

The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes pricing model with the following assumptions during 2022:


Expected dividend yield	0.0	%
Risk free interest rate	0.2	%
Expected stock price volatility	45.0	%
Expected term (years)	0.5