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 March 31, 2021, 3,101,477 shares of common stock were available for issuance under the 2016 Equity Incentive Award Plan.

In 2007, the Company adopted the Alphatec Holdings, Inc. 2007 Employee Stock Purchase Plan (the “ESPP”), which was amended in May 2017. At March 31, 2021, 216,131 shares of common stock were available for purchase under the ESPP.

Total stock-based compensation for the three months ended March 31, 2021 were as follows (in thousands):

	Three Months Ended
	March 31,
	2021		2020
Cost of revenues	$	95	$	107
Research and development		498		390
Sales, general and administrative		3,881		3,071
Total	$	4,474	$	3,568

As of March 31, 2021, the Company’s shares of common stock reserved for future issuance were as follows (in thousands):

Stock options outstanding			3,898
Unvested restricted stock award			8,866
Employee stock purchase plan			216
Series A convertible preferred stock			29
Warrants outstanding			21,594
Authorized for future grant under the Distributor and Development Services plans			7,751
Authorized for future grant under the Management Objective Strategic Incentive Plan			345
Authorized for future grant under the Company equity plans			3,963
Total			46,662

In connection with the Offer, on December 16, 2020, the Company entered into a Securities Purchase Agreement with certain purchasers, providing for the sale by the Company of 12,421,242 shares of the Company’s common stock at a purchase price of $11.11 per share for aggregate gross proceeds of $138.0 million. The private placement closed on March 1, 2021, and generated net proceeds of approximately $131.8 million, net of fees related to the private placement. If the Tender Offer Agreement is terminated or the closing of the Offer has not occurred by July 31, 2021, then the Company is required repurchase the shares sold in the private placement for an amount per share equal to the purchase price paid for such shares plus interest at a rate equal to 9.0% per year computed from the date of the closing of the private placement to the date of the repurchase. Since the shares of common stock issued in the private placement are contingently redeemable if the Offer is not successful, the Company will present the shares of common stock subject to repurchase outside of stockholders’ equity in the condensed consolidated balance sheet until the close of the Offer. The Company determined that meeting the contingency is not probable; therefore, the contingently redeemable common stock was not remeasured to fair value at March 31, 2021. When the Offer closes, the shares of common stock issued in the private placement will be reclassified to stockholders’ equity.

The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year life and are exercisable by cash exercise only. During the three months ended March 31, 2021 and 2020, there were 145,000 and 125,000 2017 PIPE Warrant exercises, respectively, for total cash proceeds of $0.3 million in each period. As of March 31, 2021, 2,962,000 2017 PIPE Warrants remained outstanding.

The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year life and are exercisable by cash or cashless exercise. During the three months ended March 31, 2021 and 2020, there were 2,147,782 and 2,059,524 2018 PIPE Warrant exercises, respectively, for total cash proceeds of $0.3 million and $0.9 million, respectively. As of March 31, 2021, 9,231,903 2018 PIPE Warrants remained outstanding.

In conjunction with the Company’s 2018 acquisition of SafeOp, the Company issued warrants to purchase 2,200,000 shares of common stock at an exercise price of $3.50 per share, which have a five-year life and are exercisable by cash or cashless exercise. During the three months ended March 31, 2021 and 2020, there were 969,932 and 0 SafeOp Surgical Merger Warrant exercises for cash proceeds of $0.1 million and $0.0 million, respectively. As of March 31, 2021, 1,194,943 SafeOp Surgical Merger Warrants remained outstanding.

As further described in Note 5, during the year ended December 31, 2018, in connection with the initial debt financing with Squadron Medical and a participant lender, 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 Medical debt for total warrants outstanding to Squadron Medical and the participant lender of 6,759,530. In conjunction with the second amendment, the expiration dates for all existing warrants were extended to May 29, 2027 in order to align all outstanding 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. No Squadron Medical Warrants have been exercised as of March 31, 2021.

In December 2017 the Company issued warrants to Mr. Patrick S. Miles, the Company’s Chairman and Chief Executive Officer, to purchase 1,327,434 shares of the Company’s common stock for $5 per share (the “Executive Warrants”). The warrants have a five-year term. The warrants issued to Mr. Miles were accounted for as share based compensation, and the fair value of the warrants of approximately $1.4 million were recognized in full in the statement of operations for the year ended December 31, 2017 as the warrants were immediately vested upon issuance. No Executive Warrants have been exercised as of March 31, 2021.

A summary of all outstanding warrants for common stock as of March 31, 2021 were as follows:

	Number of Warrants		Strike Price		Expiration
2017 PIPE Warrants		2,962,000	$	2.00	June 2022
2018 PIPE Warrants		9,231,903	$	3.50	May 2023
SafeOp Surgical Merger Warrants		1,194,943	$	3.50	May 2023
2018 Squadron Medical Warrants		845,000	$	3.15	May 2027
2019 Squadron Medical Warrants		4,838,710	$	2.17	May 2027
2020 Squadron Medical Warrants		1,075,820	$	4.88	May 2027
Executive Warrants		1,327,434	$	5.00	December 2022
Other*		117,812	$	3.85	Various through May 2023
Total		21,593,622

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 March 31, 2021, 525,000 warrants and 284,500 shares of restricted common stock have been granted under the 2017 Distributor Inducement Plan. As of March 31, 2021, 185,000 warrants and 64,500 shares of common stock have been earned or issued under the plan. Warrants granted under the plan as of March 31, 2021 were not yet subject to expiration related to any time or sales-based vesting conditions. Expense recorded for the plan was $0.1 million for the three months ended March 31, 2021 and 2020.

Under the 2017 Development Services Plan, the Company is authorized to grant up to 7,000,000 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 March 31, 2021, the Company has entered into Development Services Agreements pursuant to which the Company has allocated 6,649,000 shares and granted 3,340,000 shares of restricted common stock under the 2017 Development Services Plan, subject to achievement of the performance criteria and vesting conditions set forth in such Development Services Agreements. As of March 31, 2021, none of the grants were deemed probable of equity election and no common stock elections or cash payouts were made under the Development Services Plan. The Company will recognize a non-cash charges to cost of sales associated with each of the Development Services Agreements when it is probable respective performance targets will be achieved.

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 March 31, 2021, 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 million and a negligible amount for three months ended March 31, 2021 and 2020, respectively.