Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

8. Stock-Based Compensation

2016 Employee Incentive Plan

The Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The 2016 Plan became effective on October 7, 2016, the date the Company’s S-8 registration statement relating to the 2016 Plan was declared effective by the SEC.

The Company’s 2016 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation to employees, directors, and consultants. In addition, the Company’s 2016 Plan provides for the grant of performance cash awards to employees, directors, and consultants.

The maximum number of shares of common stock that may be issued under the Company’s 2016 Plan was initially 500,000 subject to an automatic increase on January 1 of each year, beginning on January 1, 2017, and continuing through and including January 1, 2026, by 3% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors. On May 20, 2021, the Company’s stockholders approved an amendment to the 2016 Plan to increase the total number of authorized shares of common stock available for grant thereunder by an additional 550,000 shares. At December 31, 2022, of the 3,261,836 shares of common stock reserved and available for grant under the 2016 Plan, 689,472 shares of common stock remain available for grant under the 2016 Plan.

2008 Employee Incentive Plan

The 2008 Equity Incentive Plan (the 2008 Plan) provided for the issuance of incentive stock options (ISO), nonqualified stock options, and other stock compensation awards.

Due to the adoption of the 2016 Plan, no further grants will be made under the Company’s 2008 Plan. However, any outstanding stock awards granted under the 2008 Plan will remain outstanding, subject to the terms of the Company’s 2008 Plan and the applicable stock award agreements, until such outstanding stock awards that are stock options are exercised or until they terminate or expire by their terms, or until such stock awards are fully settled, terminated, or forfeited. At December 31, 2022, 51,695 options under the 2008 Plan remained outstanding.

Summary of Stock Option Activity

The following table summarizes the stock option and award activity for all grants under the 2008 Plan and 2016 Plan:

		Options Outstanding
			Weighted-		Weighted-
	Options and		Average		Average	Aggregate
	Awards		Exercise		Remaining	Intrinsic
	Available for	Number of	Price Per		Contractual	Value
	Grant	Options	Share		Life (years)	(In thousands)
Balance—December 31, 2021	1,038,956	1,783,298	$	5.21	8.0	$	10,891
Authorized	595,753
RSUs granted	(620,218)
RSUs cancelled/forfeited	25,312
Options granted	(489,244)	489,244	$	8.17
Options exercised		(116,040)	$	4.71		$	333
Options cancelled/forfeited	138,913	(161,776)	$	6.18
Balance—December 31, 2022	689,472	1,994,726	$	5.88	7.8	$	1,275
Options exercisable—December 31, 2022		919,508	$	5.38	6.9	$	809

During the years ended December 31, 2022 and 2021, the Company granted options with a weighted-average grant date fair value of $5.40 and $3.60 per share, respectively.

The total fair value of options vested during the year was $1.3 million and $0.9 million, for the years ended December 31, 2022, and 2021, respectively.

As of December 31, 2022, there was $3.8 million of total unrecognized compensation expense related to unvested options which is expected to be recognized over a weighted-average period of 2.4 years. Compensation cost capitalized within inventory at December 31, 2022 and 2021 was not material.

The Company estimated the fair value of each option grant using the Black-Scholes option-pricing model. The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of employee stock options was estimated using the assumptions below.

	Year Ended
	December 31,
	2022		2021
Expected volatility	73.7 - 74.1	%	72.6 - 74.1	%
Risk-free interest rate	2.13 - 2.93	%	0.62 - 1.30	%
Expected term (in years)	6.05 - 6.08		5.89 - 6.08
Dividend yield	—	%	—	%

2016 Employee Stock Purchase Plan

The Company’s board of directors adopted the 2016 Employee Stock Purchase Plan (the ESPP) on April 25, 2016, which was subsequently approved on September 20, 2016 by the Company’s stockholders. The Company had 774,137 shares available for issuance under the Company’s ESPP as of December 31, 2022. Employees purchased 77,221 shares for $342,000 during the year ended December 31, 2022 and 64,407 shares for $236,000 during the year ended December 31, 2021.

The following table summarizes the assumptions used in the Black-Scholes option-pricing model to determine fair value of the Company’s common shares issued under the ESPP:

	Year Ended
	December 31,
	2022		2021
Expected volatility	40.7 - 95.6	%	40.7 - 100.7	%
Risk-free interest rate	0.06 - 4.46	%	0.05 - 0.13	%
Expected term (in years)	0.5 - 1.0		0.5 - 1.0
Dividend yield	—	%	—	%

Restricted Stock Units

In September 2017, the Company’s board of directors authorized the issuance of restricted stock units (RSUs), under the 2016 Plan and adopted a form of Restricted Stock Unit Award Agreement, which is intended to serve as a standard form agreement for RSU grants issued to employees, executive officers, directors, and consultants. The fair value of the RSUs is recognized as expense ratably over the vesting period, as determined by the board of directors on the date of grant.

The following table summarizes RSU activity for the year ended December 31, 2022:

	RSUs Outstanding
		Weighted-
		Average
	Number of	Grant Date
	Restricted Stock	Fair Value Per
	Units	Share
Balance—December 31, 2021	384,307	$	5.00
Granted	620,218	$	7.11
Vested	(322,567)	$	6.04
Cancelled/forfeited	(25,312)	$	5.92
Balance—December 31, 2022	656,646	$	6.45

The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. As of December 31, 2022, there was $3.2 million of unrecognized stock-based compensation expense related to RSUs to be recognized over a weighted-average period of 2.4 years. Compensation cost capitalized within inventory at December 31, 2022 and 2021 was not material.