The Company adopted an incentive plan (the “2020 Omnibus Incentive Plan”) on September 22, 2020, to provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards to Company employees, employees of the Company’s affiliates, non-employee directors and certain consultants and advisors. The Company is authorized to award 1,355,715 shares under the 2020 Omnibus Incentive Plan. Previously, the Company had adopted its 2018 Equity Incentive Plan and 2016 Stock Incentive Plan (together with the 2020 Omnibus Incentive Plan, the “Stock Incentive Plans”), under which the Company had issued stock options and restricted stock units. Following the effective date of the 2020 Omnibus Incentive Plan, no additional awards may be made under the 2018 Equity Incentive Plan or 2016 Stock Incentive Plan. The Stock Incentive Plans were established to provide eligible individuals with an incentive to contribute to the Company’s success and to operate and manage the Company’s business in a manner that will provide for its long-term growth and profitability and that will benefit the Company’s shareholders and other stakeholders, including employees and customers. The Stock Incentive Plans are also intended to provide a means of recruiting, rewarding, and retaining key personnel.

The Stock Incentive Plans prescribe various terms and conditions for the award of options and the total number of shares authorized for this purpose. For options, the strike price is equal to the fair market value of the Company’s stock price at the date of grant. Generally, options become exercisable based on years of service and vesting schedules, and expire after (i) a period of ten years from the date of grant, (ii) three months following the date of termination of employment from the Company, (iii) one year following the date of termination from the Company by reason of death or disability, (iv) the date of termination of employment for cause, or (v) the fifth anniversary of the date of the grant if it is held by a 10 percent or greater stockholder.

The following tables summarize the Company’s stock option activity:


	Options Activity			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at January 1, 2022		747,800		$	11.51		6.57	$	1,143,013
Granted		453,498			7.21
Exercised/released		(76,750	)		2.14
Cancelled/forfeited		(192,283	)		17.05
Balance at June 30, 2022		932,265		$	9.02		7.81	$	—
Exercisable at June 30, 2022		419,565		$	9.76		5.82	$	—


	Options Activity			Weighted Average Exercise Price (per share)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance at January 1, 2021		887,640		$	9.65		6.42	$	33,433,274
Granted		54,883			42.27
Exercised/released		(50,602	)		8.06
Cancelled/forfeited		(38,500	)		9.27
Balance at June 30, 2021		853,421		$	11.87		7.17	$	15,365,736
Exercisable at June 30, 2021		579,449		$	7.84		6.50	$	12,763,447

The Company estimates the fair value of each stock option award on the date of grant using a Black-Scholes option-pricing model. ASC 718, “Compensation- Stock Compensation” (“ASC 718”), requires the use of the fair-value-based method for measuring the value of stock-based compensation. The estimated fair value of each grant of stock options awarded during the three and six months ended June 30, 2022 and 2021 was determined using the following assumptions:

The inputs and assumptions used to estimate the fair value of share-based payment awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different inputs and assumptions, the Company’s share-based compensation expense could be materially different for future awards.

For the six months ended June 30, 2022 and 2021, the grant-date fair value of stock options was estimated at the time of grant using the following weighted-average inputs and assumptions in the Black-Scholes option pricing model:


	For the Six Months Ended June 30,
	2022			2021
Weighted-average expected volatility		52.36	%		52.08	%
Weighted-average expected term (years)		6.25			6.23
Weighted-average expected risk-free interest rate		2.27	%		0.70	%
Dividend yield		—			—
Weighted-average fair value of options granted	$	2.79		$	20.95

The following tables summarize the Company’s RSU activity during the six months ended June 30, 2022 and 2021:


	Number of RSUs			Weighted Average Grant Date Fair Value (per share)		Weighted Average Remaining Vesting Term (years)		Aggregate Fair Value
Balance at January 1, 2022		91,438		$	32.91		2.17	$	2,982,931
Granted		445,702			4.74
Exercised/released		(19,061	)		26.92
Cancelled/forfeited		(27,845	)		31.01
Balance at June 30, 2022		490,234		$	7.64		3.26	$	3,747,835


	Number of RSUs			Weighted Average Grant Date Fair Value (per share)		Weighted Average Remaining Vesting Term (years)		Aggregate Fair Value
Balance at January 1, 2021		57,187		$	33.16		2.08	$	1,896,221
Granted		45,745			39.99
Exercised/released		(3,000	)		47.99
Cancelled/forfeited		(2,742	)		25.67
Balance at June 30, 2021		97,190		$	36.13		2.30	$	3,511,288

The Company estimates the fair value of each restricted stock unit using the fair value of the Company’s stock on the date of grant.

The following tables summarize the Company’s market-based stock unit ("MSU") activity during the six months ended June 30, 2022 and 2021:


	Number of MSUs			Weighted Average Grant Date Fair Value (per share)		Weighted Average Remaining Vesting Term (years)		Aggregate Fair Value
Balance at January 1, 2022		160,301		$	43.53		1.20	$	6,977,903
Granted		—			—
Exercised/released		—			—
Cancelled/forfeited		(129,218	)		43.53
Balance at June 30, 2022		31,083		$	43.53		0.87	$	1,353,043


	Number of MSUs		Weighted Average Grant Date Fair Value (per share)		Weighted Average Remaining Vesting Term (years)		Aggregate Fair Value
Balance at January 1, 2021		—	$	—		—	$	—
Granted		189,608		43.53
Exercised/released		—		—
Cancelled/forfeited		—		—
Balance at June 30, 2021		189,608	$	43.53		1.56	$	8,253,636

These MSUs vest upon the 30-day weighted average stock price reaching or exceeding established targets, after reaching certain time targets. We estimate the grant-date fair value of the MSUs using a Monte Carlo simulation which requires assumptions for expected volatility, risk-free rate of return and dividend yield. Expected volatilities within the index are derived using historical volatilities of a selected peer group over a period equal to the length of the performance period. We base the risk-free rate of return on the yield of a zero-coupon U.S. Treasury bond with a maturity equal to the performance period and assume a 0% dividend rate. Compensation expense for these MSUs is recognized over the requisite service period regardless of whether the market conditions are satisfied. The Company estimates the fair value of MSUs on the grant date using a Monte Carlo simulation.

On September 25, 2020, the Company established an Employee Stock Purchase Plan (“ESPP”) which allows employees of the Company to purchase common stock of the Company through accumulated payroll deductions. Offerings under this plan have a duration of six months. On the exercise date, the participant may acquire shares at the lower of 85% of the market value of a share of our common stock on the enrollment date or the exercise date. Participants may terminate their interest in a given offering or a given exercise period by withdrawing all of their accumulated payroll deductions at any time prior to the end of the offering period. The fair value of the estimated number of shares to be issued under each offering is determined using a component valuation model. We estimate that 16,000 shares of common stock will be issued in accordance with the plan to those enrollees in the enrollment period commencing on May 1, 2022.

Stock-based compensation expense is recognized ratably over the requisite service period for all awards. The following tables summarize the Company’s stock-based compensation recorded as a result of applying the provisions of ASC 718 to equity awards:


	Three months ended June 30, 2022			Six months ended June 30, 2022			Unrecognized compensation cost related to non-vested awards as of June 30, 2022		Weighted-average remaining vesting period as of June 30, 2022 (years)
Stock options	$	80,408		$	186,857		$	1,375,558		3.35
RSUs		377,538			740,876			2,916,680		3.03
MSUs		(668,782	)		(1,133,244	)		151,153		1.59
ESPP		1,594			7,065			—		—
Total stock based compensation	$	(209,242	)	$	(198,446	)	$	4,443,392		3.08


	Three months ended June 30, 2021		Six months ended June 30, 2021		Unrecognized compensation cost related to non-vested awards as of December 31, 2021		Weighted-average remaining vesting period as of June 30, 2021 (years)
Stock options	$	189,967	$	463,039	$	1,638,717		2.35
RSUs		376,885		728,329		2,282,174		2.30
MSUs		508,079		893,565		1,927,898		2.59
ESPP		15,143		15,144		—		—
Total stock based compensation		1,090,074		2,100,077		5,848,789		2.41

During the three and six months ended June 30, 2022, there were forfeitures of MSU awards of certain members of executive leadership of $901,801 and $1,785,125, respectively, representing discrete reversals of stock compensation expense to the periods. There were no such forfeitures of MSUs in the three and six months ended June 30, 2021.

There were no payroll taxes withheld from stock-based compensation during the three and six months ended June 30, 2022. During the three and six months ended June 30, 2021, there were $30,363 and $219,156, respectively, of payroll taxes withheld from stock-based compensation which were remitted directly to the tax authorities on the behalf of the recipients of the awards.