Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Stock-Based Compensation

Stock-Based Compensation

(7) Stock-Based Compensation

The Company has two equity incentive plans: the 2012 Stock Incentive Plan and the Amended and Restated 2019 Equity Incentive Plan. New awards can only be granted under the Amended and Restated 2019 Equity Incentive Plan (the “Plan”). At September 30, 2021, 886,606 shares of common stock were available for future issuances under the Plan. The Plan is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the lesser of (i) 432,442 shares, (ii) 4% of the shares outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares as determined by the board of directors. 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 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 ratably over the vesting period of the award. The Company recorded stock-based compensation expense in the following expense categories of the accompanying consolidated statements of operations and comprehensive loss (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Sales and marketing	$	257	$	179	$	694	$	512
General and administrative		359		279		1,110		728
Research and development		117		85		1,035		246
Total stock‑based compensation	$	733	$	543	$	2,839	$	1,486

Stock Options

The Company’s stock options vest based on the terms in each award agreement and generally vest over four years and have a term of 10 years.

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, 2021	1,498,208		10.87
Granted	440,600		14.96
Exercised	(54,293)		7.55
Canceled/forfeited	(175,978)		13.05
Outstanding at September 30, 2021	1,708,537	$	11.81	7.48
Vested and expected to vest at September 30, 2021	1,652,079	$	11.74	7.43
Exercisable at September 30, 2021	883,728	$	10.00	6.18

At September 30, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $4.1 million and $3.5 million, respectively.

The 2012 Stock Incentive Plan provided the holders of stock options an election to early exercise prior to vesting. The Company has 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 September 30, 2021, an immaterial amount of proceeds from early exercised options were 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, 2021	182
Vested	(118)
Unvested balance at September 30, 2021	64

The weighted average grant-date fair value per share of options granted was $8.74 during the nine months ended September 30, 2021. The aggregate intrinsic value of options exercised was $0.2 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. At September 30, 2021, the total unrecognized compensation expense related to unvested employee and nonemployee stock option awards was $5.5 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.6 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 sufficient 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 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 Black-Scholes option pricing model and the weighted average assumptions in the table below:

	Nine months ended
	September 30, 2021
Expected dividend yield	—
Expected volatility	63.8	%
Risk‑free interest rate	0.97	%
Expected term (in years)	6.15

Restricted Stock Units

The Company’s restricted stock units (“RSUs”) vest based on the terms in each award agreement and generally vest over four years. The following table summarizes restricted stock units for the Plan:

	Number of
	shares
Outstanding at January 1, 2021	—
Granted	194,232
Vested	(12,000)
Canceled/forfeited	(18,254)
Outstanding at September 30, 2021	163,978

The weighted average grant-date fair value per RSU granted was $16.57 during the nine months ended September 30, 2021. The aggregate intrinsic value of RSUs outstanding was $2.2 million at September 30, 2021. The total unrecognized compensation expense at September 30, 2021 related to RSUs was $1.8 million, which is expected to be recognized in expense over a weighted-average period of approximately 3.4 years.