The Employee Stock Purchase Plan (“ESPP”) was adopted by the Company’s Board of Directors on October 8, 2021. The 2021 Plan was adopted by the Company’s stockholders on October 19, 2021 and became effective on the date prior to the first date of the effectiveness of the registration statement on Form S-1 filed by the Company. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 1,329,040 shares of the Company’s common stock at 85% of the market price at the lesser of the date the purchase right is granted or exercisable. The Company currently holds offerings consisting of six month periods commencing on January 1 and July 1 of each calendar year, with a single purchase date at the end of the purchase period on June 30 and December 31 of each calendar year. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and ending on January 1, 2031, by the lesser of 1% of all classes of the Company’s common stock outstanding on the immediately preceding December 31, or such smaller number of shares as determined by the Company’s Board or the committee. As of December 31, 2022, 38,968 shares have been issued under the ESPP and as such, 2,054,545 shares remained available for issuance.

Eligible employees can contribute up to 15% of their gross base earnings for purchases under the ESPP through regular payroll deductions. Purchase of shares under the ESPP is limited for each employee at $25,000 worth of the Company’s shares of common stock (determined using the lesser of (i) the market price of a share of common stock on the first day of an applicable purchase period and (ii) the market price of a share of common stock on the purchase date) for each calendar year in which a purchase right is outstanding.

During the year ended December 31, 2022, the Company issued 38,968 shares upon exercise of purchase rights. The Company recognizes compensation expense on a straight-line basis over the service period. During the year ended December 31, 2022, the Company recognized $213 of compensation expense related to the ESPP. There were no shares issued and no compensation expense was recognized related to the ESPP during 2021 and 2020.

Below are the assumptions used for the year ended December 31, 2022 in determining the fair value of shares under the ESPP. No shares were issued during the years ended December 31, 2021 and 2020.


	Year Ended December 31,
	2022
Expected volatility		70.27	%
Expected dividends		—
Expected term (in years)		0.50
Discount rate		15.0	%
Risk-free rate		2.79	%

The 2021 Incentive Award Plan (“2021 Plan”) was adopted by the Company’s Board of Directors on October 8, 2021. The 2021 Plan was adopted by the Company’s stockholders on October 19, 2021 and became effective on the date prior to the first date of the effectiveness of the registration statement on Form S-1 filed by the Company. The 2021 Plan authorizes the Company to issue an initial aggregate maximum number of shares of common stock equal to (i) 7,641,979 shares plus (ii) a number of shares that are available for issuance under the 2011 Plan plus (iii) any shares that are subject to 2011 Plan that become available for issuance (via expiration, forfeitures, etc.) plus (iv) an increase commencing on January 1, 2022 and continuing annually on the anniversary thereof through January 1, 2031, equal to the lesser of (a) 5% of the shares of all classes of the Company’s common stock outstanding on the last day of the immediately preceding calendar year or (b) such smaller number of shares as determined by the Company’s Board or the committee. As of December 31, 2022, the Company had reserved 10,049,847 shares of common stock for future grant.

There were 359,054, 3,467,069 and 1,723,750 options granted during the years ended December 31, 2022, 2021 and 2020.

The Company received cash in the amount of $5,271, $445 and $1,780 from the exercise of stock options for the years ended December 31, 2022, 2021 and 2020, respectively. The tax benefit from equity options exercised were $1,223, $93 and $409 for the years ended December 31, 2022, 2021 and 2020, respectively.

During 2020, the Company granted certain employees and contractors of the Company an aggregate of 1,723,750 options at a weighted average strike price of $6.38. Of the options granted, there were time-based options and performance-based options, which vest upon achievement of the sales performance milestone.

During 2021, the Company granted certain employees, directors and contractors of the Company an aggregate of 3,467,069 options at a weighted average strike price of $14.63. All options granted in 2021 were time-based options.

During 2022, the Company granted certain employees, officers and contractors of the Company an aggregate of 359,054 options at a weighted average strike price of $16.08. All options granted in 2022 were time-based options.

The following summarizes the Company’s stock option plan and the activity under the 2011 and 2021 Plans for the year ended December 31, 2022:


	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Outstanding, December 31, 2021		7,953,018		$	9.02		8.16
Granted		359,054			16.08
Exercised or released		(1,250,476	)		4.25
Forfeited or expired		(523,060	)		12.89
Outstanding, December 31, 2022		6,538,536		$	10.02		7.36
Exercisable, December 31, 2022		3,870,811		$	7.18		6.46
Vested and expected to vest at December 31, 2022		6,538,536		$	10.02		7.36

The aggregate intrinsic value of options outstanding at December 31, 2022 is $59,450. The aggregate intrinsic value of vested and exercisable options at December 31, 2022 is $46,196. The aggregate intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 is $18,764, $3,743 and $1,816, respectively. The weighted average fair value of options granted in 2022, 2021 and 2020 was $9.26, $7.57 and $3.24, respectively, on the dates of grant.

As of December 31, 2022, there was approximately $18,413 total unrecognized compensation cost related to non-vested stock option compensation arrangements, which is expected to be recognized over a weighted average period of 2.83 years.

Below are the assumptions used for the years ended December 31, 2022, 2021 and 2020 in determining the fair value of each option award:


	Year Ended December 31,
	2022		2021		2020
Expected volatility	55% - 70%		52% - 55%		51% - 56%
Expected dividends		—		—		—
Expected term (in years)		6.00	5.75 - 6.25		5.75 - 6.0
Risk-free rate	1.69% - 2.79%		0.47% - 1.20%		0.35% - 1.66%

RSUs granted under the 2021 Plan have a ten-year contractual term and typically vest over a three or four-year period, contingent upon continued service with the Company. During December 31, 2022 and 2021, the Company granted certain directors, officers and employees of the Company an aggregate of 929,090 and 79,886 RSUs, respectively. No RSUs were granted in 2020. All RSUs granted in 2022 and 2021 were time-based awards. RSU activity under the 2021 Plan is as follows for the year ended December 31, 2022:


	Restricted Stock Units			Weighted-Average Fair Value
Outstanding, December 31, 2021		79,886		$	17.84
Granted		929,090			17.71
Vested		(36,004	)		17.36
Forfeited or expired		(8,918	)		16.82
Outstanding, December 31, 2022		964,054		$	17.74
Vested and expected to vest at December 31, 2022		964,054		$	17.74

There were no RSUs vested or forfeited during the years ended December 31, 2021 and 2020.

The grant date fair value for RSU is the market price of the common stock on the date of grant. The grant date total fair value of RSUs vested during 2022 was $17.36. The fair value of RSUs vested during 2021 and 2020 was $0.

As of December 31, 2022, there was approximately $15,723 total unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted average period of 3.64 years.

Stock-based compensation expenses are recorded in Selling, general and administrative expenses in the Consolidated Statements of Operations and Comprehensive (Loss) Income. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $8,500, $4,863, and $1,808 respectively, of compensation expense related to stock options. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $1,865, $85 and $0, respectively, of compensation expense related to RSUs.