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Share-Based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
Equity Plans     
The Company grants awards to recipients through the 2017 Equity Incentive Plan, as amended (2017 Plan), which was approved by stockholders and the Board of Directors. The 2017 Plan provided for the issuance of shares that total no more than the sum of (i) 14,500,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the Second Amended and Restated 2007 Equity Incentive Plan, (iii) any returning shares such as forfeited, cancelled, or expired shares and (iv) 500,000 shares pursuant to an inducement award. The number of shares available to be issued under the 2017 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) 1.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). As of December 31, 2022, there were approximately 4.0 million remaining shares available for issuance under this plan. Options expire 10 years from the date of grant.
General Vesting Conditions
The Company’s stock options and restricted stock unit awards are generally subject to a one-year cliff vesting period after which 1/3rd of the shares vest with the remaining shares vesting ratably each month over a two-year period subject to the passage of time. Beginning in the second quarter of 2022, newly granted restricted stock units are generally subject to a three-year vesting period with 1/3rd vesting per year on the anniversary of the grant date. Certain stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee. Certain executive and board member equity awards provide for accelerated vesting if there is a change in control or termination without cause.
Stock Options
The fair value of the Company’s stock options that are not market or performance based was estimated at the date of grant using the Black-Scholes based option valuation model. The table below outlines the weighted average assumptions for options granted during the periods indicated:
Year Ended December 31,
Weighted Average:20222021
Expected term (years)5.85.8
Volatility76.4 %74.6 %
Risk-free rate2.3 %1.0 %
Dividend Yield0 %0 %
Service Period Based Stock Options
The majority of options granted by the Company are comprised of service based options. These options vest ratably over the requisite service period of the award.
The following table summarizes activity of service period-based stock options during the periods indicated:
(In thousands except per-share data and remaining contractual term)Number of OptionsWeighted AverageAggregate Intrinsic Value
Exercise PriceRemaining Contractual Term (Years)
Outstanding at December 31, 202010,833 $3.96 6.8$10,472 
Options Granted1,724 8.67 
Options Exercised(2,146)4.34 13,301 
Options Forfeited / Expired(916)4.83 
Outstanding at December 31, 20219,495 $4.65 6.5$2,452 
Options Granted2,445 2.41 
Options Exercised— — — 
Options Forfeited / Expired(2,543)4.11 
Outstanding at December 31, 20229,397 $4.21 6.2$44 *
Exercisable at December 31, 20226,540 $4.46 5.0$— *
*The aggregate intrinsic values in the table above are based on the Company’s stock price of $1.68, which is the closing price of the Company’s stock on the last day of business for the year ended December 31, 2022
Performance Based Stock Options
The Company also grants stock option awards that are performance based and vest based on the achievement of certain criteria established by the Compensation Committee. The related performance criteria has passed for these performance based stock options and no further stock options are pending performance determinations. For performance criteria met, the applicable stock options vested and expense was recognized. For performance criteria not met, the compensation expense was not recognized and the applicable stock options were forfeit.
The following table summarizes activity of performance based stock options during the periods indicated:
(In thousands except per-share data and remaining contractual term)Number of SharesWeighted AverageAggregate Intrinsic Value
Exercise PriceRemaining Contractual Term (Years)
Outstanding at December 31, 202081 $4.34 3.1$37 
Options Granted— — 
Options Exercised(40)4.34 401 
Options Forfeited— — 
Outstanding at December 31, 202141 $4.34 2.1$— 
Options Granted— — 
Options Exercised— — — 
Options Forfeited— — 
Outstanding and Exercisable at December 31, 202241 $4.34 1.1$— *
*The aggregate intrinsic values in the table above are based on the Company’s stock price of $1.68, which is the closing price of the Company’s stock on the last day of business for the year ended December 31, 2022.
Market Based Stock Options
The Company grants stock option awards that are market based which have vesting conditions associated with a service condition as well as performance of the Company’s stock price.
The following table summarizes activity of market based stock options during the periods indicated:
(In thousands except per-share data and remaining contractual term)Number of SharesWeighted AverageAggregate Intrinsic Value
Exercise PriceRemaining Contractual Term (Years)
Outstanding at December 31, 20201,000 $4.24 6.8$560 
Options Granted— — 
Options Exercised— — — 
Options Forfeited— — 
Outstanding at December 31, 20211,000 $4.24 5.8$— 
Options Granted— — 
Options Exercised— — — 
Options Forfeited— — 
Outstanding and Exercisable at December 31, 20221,000 $4.24 4.8$— *
*The aggregate intrinsic values in the table above are based on the Company’s stock price of $1.68, which is the closing price of the Company’s stock on the last day of business for the year ended December 31, 2022.
Restricted Stock Units
The following table summarizes activity of restricted stock units during the periods indicated:
(In thousands except per share fair value)Number of UnitsWeighted Average Fair Value
Unvested shares at December 31, 2020— $— 
Granted135 10.29 
Vested— — 
Forfeited(20)10.77 
Unvested shares at December 31, 2021115 $10.21 
Granted700 2.16 
Vested(144)5.05 
Forfeited(21)7.49 
Unvested shares at December 31, 2022650 $2.77 
Expected to vest as of December 31, 2022650 $2.77 
Restricted Stock Awards
The following table summarizes activity of restricted stock awards during the periods indicated:
(In thousands except per share fair value)Number of AwardsWeighted Average Fair Value
Unvested shares at December 31, 2020183 $3.25 
Granted— — 
Vested— — 
Forfeited— — 
Unvested shares at December 31, 2021183 $3.25 
Granted— — 
Vested— — 
Forfeited— — 
Unvested shares at December 31, 2022183 $3.25 
Expected to vest as of December 31, 2022183 $3.25 
Share-based Compensation
Share-based compensation expenses for the years ended December 31, 2022 and December 31, 2021 were as follows:
Year Ended December 31,
(In thousands)20222021
Share-based compensation expense
Cost of sales$276 $204 
Sales and marketing1,519 1,689 
Research and development973 877 
General and administrative2,971 3,425 
Total$5,739 $6,195 

On August 10, 2022, the Company entered into a separation agreement with Kevin Farr, the Company’s former Chief Financial Officer. Pursuant to the terms of the agreement, Mr. Farr received an equity grant of 89,189 restricted stock units vesting fully in 90 days, accelerated vesting of 88,480 stock options that would have otherwise become vested by the one-year anniversary of the termination date and a period of three years after the termination date to exercise any vested stock options, among other terms. The related expense from these awards has been included during the year ended December 31, 2022.
In future periods, the Company expects to recognize approximately $5.4 million and $1.4 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of December 31, 2022. Future share-based compensation expense will be recognized over 1.6 and 1.7 weighted average years for unvested options and restricted stock units, respectively. The Company also has total unrecognized share-based compensation expense of $1.0 million pertaining to the Joint Venture. Such expense will only be recognized if Blue Hat Registration is achieved, the timing of which is uncertain as of December 31, 2022. See Note 12, Joint Venture for further discussion.