(8) Stock‑Based Compensation

The Company has two equity incentive plans: the 2012 Stock Incentive Plan and the 2019 Equity Incentive Plan. New awards can only be granted under the 2019 Equity Incentive Plan (the “Plan”). At December 31, 2019, 323,715 shares were available for future issuances. The Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreements and generally vest over four years and have a term of 10 years. The Company estimates forfeitures that it expects will occur and adjusts expense for actual forfeitures in the periods they occur.

The Company measures employee and nonemployee stock‑based awards at grant‑date fair value and records compensation expense on a straight‑line basis over the vesting period of the award. The Company recorded stock‑based compensation expense in the following expense categories of its accompanying consolidated statements of operations (in thousands):


	Year ended December 31,
	2019		2018		2017
Sales and marketing	$	164	$	68	$	44
General and administrative		225		115		116
Research and development		68		33		37
Total stock‑based compensation	$	457	$	216	$	197

The following table summarizes stock option activity for the Plan:


				Weighted
				average
		Weighted		remaining
	Number of	average exercise		contractual term
	shares	price per share		(years)
Outstanding at January 1, 2017	282,331	$	5.77
Granted	84,587		5.93
Exercised	(404)		5.19
Early exercised	(830)		5.93
Canceled/forfeited	(14,770)		5.87
Outstanding at December 31, 2017	350,914		5.81
Granted	152,016		5.93
Exercised	(1,377)		5.57
Early exercised	(427)		5.93
Canceled/forfeited	(11,904)		5.93
Outstanding at December 31, 2018	489,222		5.84
Granted	978,415		12.51
Exercised	(2,527)		5.93
Early exercised	(471)		5.93
Canceled/forfeited	(43,697)		8.58
Outstanding at December 31, 2019	1,420,942	$	10.35	8.75
Vested and expected to vest at December 31, 2019	1,317,047	$	10.23	8.68
Exercisable at December 31, 2019	345,881	$	5.87	6.18

The 2012 Stock Incentive Plan and the 2019 Equity Incentive Plan provide the holders of stock options an election to early exercise prior to vesting. The Company had the right, but not the obligation, to repurchase early exercised options without transferring any appreciation to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the common stock. At December 31, 2019, $4,000 of proceeds from early exercised options are recognized as a current liability in other current liabilities in the accompanying consolidated balance sheet.

The following table summarizes activity relating to early exercise of stock options:


		Number of
		shares
Unvested balance at January 1, 2017		7,159
Early exercised		830
Vested		(6,955)
Unvested balance at December 31, 2018		1,034
Early exercised		427
Vested		(549)
Unvested balance at December 31, 2018		912
Early exercised		471
Vested		(628)
Unvested balance at December 31, 2019		755

The weighted average grant‑date fair value per share of options granted was $6.81, $1.08 and $0.54 for the years ended December 31, 2019, 2018 and 2017, respectively. The aggregate intrinsic value of options exercised was nominal for the year ended December 31, 2019. As of December 31, 2019, the total unrecognized compensation expense related to unvested employee and nonemployee stock option awards was $5.7 million, which is expected to be recognized in expense over a weighted‑average period of approximately 3.4 years.

Estimating Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.

Expected term – The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time to vesting and the contractual life of the options.

Expected volatility – Due to the Company’s limited operating history and lack of company‑specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Risk‑free interest rate – The risk‑free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected dividend – The Company has not paid and does not intend to pay dividends.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:


	Year ended December 31,
	2019		2018		2017
Expected dividend yield	—		—		—
Expected volatility	55.9	%	56.5	%	50.0	%
Risk‑free interest rate	1.82	%	2.77	%	2.07	%
Expected term	6.24	Years	6.25	Years	6.25	Years