On June 17, 2020, the Company’s shareholders approved an amendment to the Company’s 2016 Equity Incentive Award Plan, which increased the shares of Common Stock available for issuance under the Equity Plan by 7,000,000 shares. At September 30, 2020, 4,285,924 shares of common stock remained available for issuance under the 2016 Equity Incentive Award Plan.

On April 5, 2020, the Company implemented a voluntary salary-to-equity conversion program for certain employees whose annual payroll costs exceed $100,000, including the Company’s executive officers. The program permitted each participant to make a voluntary election to reduce the participant’s compensation rate through July 11, 2020 from 10% to 75%. In exchange for the compensation reduction, each participant was granted a restricted stock unit from the Company’s 2016 Equity Incentive Plan, equal to the dollar amount of compensation reduction divided by the 30-day volume weighted average price of the Company’s common stock as of close of market on April 3, 2020. The restricted stock units granted under the program fully vested on July 10, 2020. The temporary reduction in compensation to the participants shall not be treated as a reduction in base annual salary rate for purposes of any other benefits plans in which the participants are enrolled or eligible to participate, including in any bonus plans of the Company. As the plan allows for a cash payment of the deferred amount in the event the employee separated from the Company prior to the completion date of the program, the amounts were recorded as a liability instrument through its settlement date with a corresponding fair value update at each reporting period. The full fair value of $0.9 million was reclassified into equity upon settlement of the program and issuance of the common stock. A stock compensation charge of $0.1 million and $0.9 million is recorded for the three and nine months ended September 30, 2020, respectively.

Total stock-based compensation for the three and nine months ended September 30, 2020 is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Cost of revenues	$	139	$	57	$	374	$	113
Research and development		379		227		1,066		543
Sales, general and administrative		4,026		3,319		11,247		6,910
Total	$	4,544	$	3,603	$	12,687	$	7,566

As of September 30, 2020, the Company had reserved shares of its common stock for future issuance as follows (in thousands):

Stock options outstanding			4,141
Unvested restricted stock award			8,072
Employee stock purchase plan			394
Series A convertible preferred stock			29
Warrants outstanding			25,358
Authorized for future grant under the Distributor and Development Services plans			6,783
Authorized for future grant under the Management Objective Strategic Incentive Plan			345
Authorized for future grant under the Company equity plans			5,190
Total			50,312

The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year life and are exercisable for cash or by cashless exercise. During the three months ended September 30, 2020, there were no 2017 PIPE Warrant exercises. During the nine months ended September 30, 2020 there were 125,000 2017 PIPE Warrant exercises for total cash proceeds of $0.3 million. During the three and nine months ended September 30, 2019, there were 300,000 and 418,864 2017 PIPE Warrant exercises, for total cash proceeds of $0.6 million and $0.8 million, respectively. As of September 30, 2020, there were 3,255,554 2017 PIPE Warrants outstanding.

The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year life and are exercisable for cash or by cashless exercise. During the three months ended September 30, 2020, there were 136,000 2018 PIPE Warrant exercises. During the nine months ended September 30, 2020, there were 1,670,524 2018 PIPE Warrant exercises for total cash proceeds of $0.9 million. During the three and nine months ended September 30, 2019, there were 81,195 and 217,195 2018 PIPE Warrant exercises for total cash proceeds of $0.0 and $0.6 million, respectively. A total of 11,527,147 2018 PIPE Warrants remained outstanding as of September 30, 2020.

As further described in Note 5, during the year ended December 31, 2018, in connection with the initial debt financing with Squadron, the Company issued warrants to purchase 845,000 shares of common stock at an exercise price of $3.15 per share. An additional 4,838,710 warrants were issued at an exercise price of $2.17 per share during the second quarter of 2019, in conjunction with the Company’s draw on the expanded credit facility. In May 2020, an additional 1,075,820 warrants were issued at an exercise price of $4.88 per share in conjunction with the Company’s second amendment to the Squadron debt for total warrants outstanding to Squadron of 6,759,530. The warrants have a seven-year term and are immediately exercisable. Further in conjunction with the second amendment, the termination dates for all existing Squadron warrants was extended to May 29, 2027 in order to align all warrant expiration dates. In accordance with authoritative accounting guidance, the warrants qualified for equity treatment upon issuance and were recorded as a debt discount to the face of the debt liability based on fair value to be amortized into interest expense over the life of the debt agreement. The fair value assigned to the warrant amendment was also allocated as a debt issuance cost and amortized into interest expense. As the warrants provide for partial price protection that allow for a reduction in the price in the event of a lower per share priced issuance, the warrants were valued utilizing a Monte Carlo simulation that considers the probabilities of future financings. The Monte Carlo model simulates the present value of the potential outcomes of future stock prices of the Company over the seven-year life of the warrants. The projection of stock prices is based on the risk-free rate of return and the volatility of the stock price of the Company and correlates future equity raises based on the probabilities provided.

	Number of Warrants		Strike Price		Expiration
2017 PIPE Warrants*		3,255,554	$	2.02	June 2022
2018 PIPE Warrants		11,527,147	$	3.50	May 2023
SafeOp Surgical Merger Warrants		2,185,099	$	3.50	May 2023
2018 Squadron Capital Warrants		845,000	$	3.15	May 2027
2019 Squadron Capital Warrants		4,838,710	$	2.17	May 2027
2020 Squadron Capital Warrants		1,075,820	$	4.88	May 2027
Executive Warrants		1,327,434	$	5.00	December 2022
Other*		302,812	$	3.85	Various through May 2023
Total		25,357,576

All outstanding warrants were deemed to qualify for equity classification under authoritative accounting guidance.

Under the 2017 Distributor Inducement Plan, the Company is authorized to grant up to 1,000,000 shares of common stock to third-party distributors whereby, upon the achievement of certain Company sales and/or distribution milestones the Company may grant to a distributor shares of common stock or warrants to purchase shares of common stock. The warrants and restricted stock units issued under the plan are subject to time based or net sales based vesting conditions. As of September 30, 2020, 370,000 warrants were granted, and 51,500 shares of common stock were earned and issued under the 2017 Distributor Inducement Plan. Warrants granted under the plan as of September 30, 2020 were not yet subject to expiration related to any time or sales based vesting conditions. Expense recorded for the plan was $0.3 million and $0.4 million for the three months and nine months ended September 30, 2020, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2019, respectively.

Under the 2017 Development Services Plan, the Company is authorized to grant up to 6,000,000 shares of common stock to third-party individuals or entities whereby, upon the achievement of certain Company financial and commercial revenue milestones, future royalty payments for product and/or intellectual property development work may be paid in either cash or restricted shares of Company common stock at the election of the developer. Each common stock issuance is subject to net sales-based and other vesting provisions and satisfaction of applicable laws and market regulations regarding the issuance of restricted shares to such developers. As of September 30, 2020, the Company has entered Development Services Agreements pursuant to which the Company may grant 5,169,000 shares of restricted common stock under the 2017 Development Services Plan, subject to achievement of the performance criteria and vesting conditions as set forth in such Development Services Agreements. None of the grants are deemed probable of equity election as of September 30, 2020. In addition, no common stock elections or cash payouts have been made under the plan as of September 30, 2020.

Under the 2019 Management Objective Strategic Incentive Plan, the Company is authorized to grant up to 500,000 shares of common stock to third-party individuals or entities that do not qualify under the Company’s other existing equity plans, with a maximum grant of 50,000 shares per participant. As of September 30, 2020, 130,000 restricted shares and a warrant to purchase up to 25,000 restricted common stock shares have been granted under the 2019 Management Objective Strategic Incentive Plan. Total expense for the plan was $0.1 for the three and nine months ended September 30, 2020.