In 2016 the Company adopted its 2016 Equity Incentive Plan (the “2016 Plan”), which replaced the Company’s 2005 Employee, Director and Consultant Stock Plan. On October 25, 2018, the Company’s Board of Directors adopted an amendment to the Company’s 2016 Equity Incentive Award Plan. The 2016 Plan allows for the grant of options, restricted stock, restricted stock unit awards and performance unit awards to employees, directors, and consultants of the Company. Upon its adoption, the 2016 Plan had 1,083,333 shares of common stock reserved for issuance. The Board of Directors determines the terms of the grants made under the 2016 Plan. Options granted under the 2016 Plan expire no later than ten years from the date of grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Options generally vest over a four-year period and may be immediately exercisable upon a change of control of the Company. The exercise price of incentive stock options may not be less than 100% of the fair value of the Company’s common stock on the date of grant. The exercise price of any option granted to a 10% stockholder may be no less than 110% of the fair value of the Company’s common stock on the date of grant. 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 December 31, 2021, 3,329,247 shares of common stock remained available for issuance under the 2016 Plan. The 2016 Plan will expire in May 2026.

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 adjustment at each reporting period. In 2020, 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 $0.9 million related to the program was recorded during the year ended December 31, 2020.

On October 4, 2016, the Company’s Board of Directors adopted the 2016 Employment Inducement Award Plan (the “Inducement Plan”). The Inducement Plan allows for the grant of options, restricted stock, restricted stock unit awards and performance unit awards to new employees of the Company by granting an award to such new employee as an inducement for the employee to begin employment with the Company. As of December 31, 2021 the Inducement Plan had 535,125 shares of common stock reserved for issuance, which may only be granted to an employee who has not previously been an employee or member of the board of directors of the Company. The terms of the Inducement Plan are substantially similar to the terms of the Company’s 2016 Plan with two principal exceptions: (i) incentive stock options may not be granted under the Inducement Plan; and (ii) the annual compensation paid by the Company to specified executives will be deductible only to the extent that it does not exceed $1.0 million.

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 December 31, 2021, 122,500 restricted shares and a warrant to purchase up to 12,500 restricted common stock shares have been granted under the 2019 Management Objective Strategic Incentive Plan.

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 December 31, 2021, 325,000 warrants and 229,900 shares of restricted common stock were granted under the 2017 Distributor Inducement Plan. As of December 31, 2021, 205,000 warrants and 146,100 shares of common stock were earned or issued.

Under the 2017 Development Services Plan, the Company is authorized to issue up to 7,000,000 shares of common stock to third-parties upon the achievement of certain revenue milestones associated with certain developed royalty-bearing products. Future royalty payments for product and/or intellectual property development work may be paid in either cash or restricted shares of the Company’s common stock at the election of the developer, depending on the terms of the agreement. Each common stock issuance is contingent on net sales-based criteria and other provisions, including the satisfaction of applicable laws and market regulations regarding the issuance of restricted shares to such developers. The Company has entered into Development Services Agreements for development of a wide variety of potential products and intellectual property, with the possibility of issuing shares of common stock. As of December 31, 2021, no shares have been issued and the majority of the agreements are not deemed probable of common stock issuance at this time. The Company recognizes stock-based compensation once the achievement of the performance criteria and vesting conditions are deemed probable.

The compensation cost that has been included in the Company’s consolidated statements of operations for all stock-based compensation arrangements is detailed as follows (in thousands):

	Year Ended December 31,
	2021		2020
Cost of sales	$	737	$	512
Research and development		4,056		2,114
Sales, general and administrative		31,657		15,033
Total	$	36,450	$	17,659

A summary of the Company’s stock option activity under the Plans and related information is as follows (in thousands, except as indicated and per share data):

	Shares			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2020		3,951		$	3.21
Granted		85			13.62
Exercised		(569	)		2.63
Forfeited		(116	)		5.28
Outstanding at December 31, 2021		3,351		$	3.50		6.03	$	27,619
Options vested and exercisable at December 31, 2021		2,973		$	3.24		5.86	$	25,162
Options vested and expected to vest at December 31, 2021		3,351		$	3.50		6.03	$	27,619

The weighted-average grant-date fair value per share of stock options granted during the years ended December 31, 2021 and 2020 was $9.88 and $4.71, respectively. The total intrinsic value of stock options exercised was $6.8 million and $2.3 million for the years ended December 31, 2021 and 2020, respectively. The aggregate intrinsic value of options at December 31, 2021 is based on the Company’s closing stock price on the last business day of 2021 of $11.43 per share.

The weighted average assumptions used to compute the stock-based compensation costs for the stock options granted during the years ended December 31, 2021 and 2020 are as follows:

	Year Ended December 31,
	2021			2020
Risk-free interest rate		0.84	%		1.03	%
Expected dividend yield		—			—
Weighted average expected life (years)		6.07			6.08
Volatility		87.38	%		84.00	%

As of December 31, 2021, there was $1.3 million of unrecognized compensation expense for stock options which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.40 years.

The following table summarizes information about the restricted stock awards, restricted stock units and performance-based restricted units activity (in thousands, except as indicated and per share data):

	Shares			Weighted average grant date fair value		Weighted average remaining recognition period (in years)
Unvested at December 31, 2020		8,216		$	3.13
Awarded		3,980			12.79
Vested		(2,824	)		3.88
Forfeited		(669	)		4.01
Unvested at December 31, 2021		8,703		$	6.34		1.66

The weighted average fair value per share of awards granted during the years ended December 31, 2021 and 2020 was $12.79 and $4.87, respectively. The total fair value of RSUs that vested during the years ended December 31, 2021 and 2020 was $43.9 million and $13.1 million, respectively.

As of December 31, 2021, there was $42.0 million of unrecognized compensation expense for restricted stock awards, restricted stock units, and performance-based restricted units which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.66 years.

In 2007 the Company adopted the Alphatec Holdings, Inc. 2007 Amended and Restated Employee Stock Purchase Plan (the “ESPP”), which was first amended in May 2017. On June 16, 2021, the Company’s shareholders approved a second amendment to the ESPP which increased the amount of shares of common stock available for purchase under the ESPP by 500,000 shares.

The ESPP provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 20% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of Company common stock on (i) the commencement date of the six-month offering period or (ii) the respective purchase date

During the years ended December 31, 2021 and 2020, there were 227,245 and 379,166 shares of common stock, respectively, purchased under the ESPP. The Company recognized $1.1 million and $1.0 million in expense related to the ESPP for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, 547,170 shares were available under the ESPP for future issuance.

The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes option-pricing model. The assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows:

	Year Ended December 31,
	2021		2020
Risk-free interest rate	0.04% - 0.12%		0.12% - 1.58%
Expected dividend yield		—		—
Expected term (years)		0.50		0.50
Volatility	49.98% - 78.37%		54.96% - 102.5%

Common stock reserved for future issuance consists of the following (in thousands):

	December 31, 2021
Stock options outstanding		3,351
Unvested restricted stock units		8,703
Employee stock purchase plan		547
Series A convertible preferred stock		29
Senior convertible notes		17,246
Warrants outstanding		20,184
Authorized for future grant under the Distributor and Development Services plans		445
Authorized for future grant under the Management Objective Strategic Incentive Plan		365
Authorized for future grant under the Company Equity plans		4,025
		54,895