Total stock-based compensation is as follows:


	Year ended December 31,
	2022		2021		2020
	(in thousands)
Cost of revenue	$	126	$	738	$	60
Research and development		1,039		6,939		822
Sales and marketing		2,720		11,213		1,629
General and administrative		6,080		8,841		2,578
Total stock-based compensation	$	9,965	$	27,731	$	5,089

Stock-based compensation costs capitalized as part of capitalized software costs was $0.9 million and $0.2 million during the years ended December 31, 2021 and 2020. No stock-based compensation costs were capitalized during the year ended December 31, 2022.

In November 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”) under which the Board had the authority to issue stock options to employees, directors and consultants. In October 2020, the Company’s board of directors and stockholders adopted and approved the 2020 Incentive Award Plan, (the “2020 Plan”) and 2020 Employee Stock Purchase Plan (the “ESPP”). The Company’s 2010 Plan was terminated in connection with the IPO and no further grants will be made under the 2010 Plan from the date that the 2020 Plan became effective.

As of December 31, 2022, 231,437 shares of common stock are issuable upon the exercise of outstanding awards under the 2010 Plan. As of December 31, 2022, the Company had reserved 471,015 shares of common stock for issuance under the 2020 Plan, of which 205,926 shares were available for issuance in connection with grants of future awards.

As a result of the uncertainty created by the DOJ investigation and the claims audits, on November 9, 2021, the Company temporarily restricted its employees from selling Company common stock, ceased granting stock option awards and restricted stock units (“RSUs”) that settle solely in Company common stock, suspended its ESPP and paused the settlement of outstanding RSUs, each effective as of November 9, 2021. The Company resumed granting RSUs on March 18, 2022. RSUs that vested on November 15, 2021 were settled in cash during the first quarter of 2022. All RSUs that vested during the year ended December 31, 2022 were settled in shares during the reporting period. The Company resumed granting stock option awards on August 23, 2022. As of December 31, 2022, all outstanding equity awards continue to vest in accordance with their existing vesting schedules.

The Board of Directors also determined to suspend the non-employee director compensation program with respect to the option awards that would otherwise have been awarded to non-employee directors automatically on the date of the Company’s annual meeting of stockholders held on November 9, 2021. All equity awards that are currently outstanding continue to vest in accordance with their existing vesting schedules. During the third quarter of 2022 the Board of Directors resumed the practice of granting equity awards to non-employee directors. In November 2022, subsequent to the Change in Control, the Company recorded $0.3 million in stock-based compensation related to the accelerated vesting of the outstanding common stock options held by certain members of the Board of Directors pursuant to their original terms.

Stock option activity for the year ended December 31, 2022 is set forth below:


	Number of shares			Weighted average exercise price		Weighted average remaining contractual term		Aggregate intrinsic value
						(in years)		(in thousands)
Balance December 31, 2021		270,195		$	97.36		7.88	$	12,860
Grants		64,391			26.62
Exercises		(3,026	)		44.42
Cancelled or forfeited		(22,245	)		112.23
Balance December 31, 2022		309,315		$	82.08		5.60	$	—
Vested and exercisable as of December 31, 2022		213,131		$	70.51		5.33	$	—

The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, 2021 and 2020 were $14.65, $494.40 and $64.40 per share, respectively.

The aggregate intrinsic values of options outstanding and vested and exercisable were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock. The intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $0.1 million, $32.4 million and $5.0 million, respectively.

As of December 31, 2022, total unrecognized stock-based compensation related to outstanding unvested stock options was $6.2 million, which the Company expects to recognize over a remaining weighted-average period of 1.9 years.

The estimated grant-date fair value of the Company’s stock options was calculated using the Black-Scholes option pricing model, based on the following assumptions:


	Year ended December 31,
Valuation assumptions:	2022	2021	2020
Expected volatility	59% - 60%	53%-57%	60%-71%
Expected term	5.2 - 5.8 years	5.8-6.7 years	5.1-7.0 years
Risk-free interest rate	3.18% - 4.01%	0.62%-1.11%	0.23%-1.20%
Dividend yield	—	—	—

Restricted stock units (“RSUs”) granted under the 2020 Plan are share awards that generally entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s service to the Company terminates prior to the release of the vesting restrictions.

RSU activity for the year ended December 31, 2022 is set forth below:


	Number of shares			Weighted average grant date fair value per share

Balance December 31, 2021		17,458		$	866.76
RSUs granted		181,995			59.59
RSUs vested		(9,992	)		495.48
RSUs forfeited		(13,398	)		232.09
Balance December 31, 2022		176,063		$	101.76

As of December 31, 2022, there was $16.0 million of total unrecognized compensation cost related to the RSUs that is expected to be recognized over a weighted-average period of 3.4 years.

In June 2021, the Company granted 4,000 RSUs with performance-based vesting conditions that primarily related to the achievement of certain minimum sales of Eargo hearing aid systems and that were required to be met on or before December 31, 2022 for the awards to vest. The grant date fair value of the awards was $3.0 million. The Company previously estimated that all vesting conditions were probable of being satisfied as of March 31, 2022. Subsequently, the performance-based vesting conditions became improbable of being satisfied, and the Company recorded a reduction in cumulative compensation cost of $1.8 million during the year ended December 31, 2022. These awards remained unvested and were forfeited as of December 31, 2022.

As of December 31, 2022, the Company reserved 75,115 shares of common stock for issuance under the ESPP, of which 66,378 shares were available for future issuance. The ESPP was suspended on November 9, 2021, and there were no offering periods in effect through December 31, 2022.

The ESPP provides for consecutive, overlapping 24-month offering periods, which are generally divided into four purchase periods of approximately six months. The offering periods are scheduled to start on the first trading day on or after May 16 and November 16 of each year, with exception of the first offering period which commenced on October 16, 2020, the first trading day after the effective date of the Company’s registration statement. Contributions under the ESPP are generally limited to a maximum of 15% of an employee’s eligible compensation. Each offering period consists of four six-month purchase periods. On each purchase date, which falls on the last date of each purchase period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of (1) the fair market value per share of the common stock at the start of the offering period or (2) the fair market value of the common stock on the purchase date.

The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model, based on the following assumptions for the offering period that started in May 2021:


		Year ended December 31,
Valuation assumptions:		2021
Expected volatility		44%-57%
Expected term		0.5-2.0 years
Risk-free interest rate		0.04%-0.16%
Dividend yield		—

Subsequent to the suspension of the ESPP on November 9, 2021, all outstanding participant contribution amounts of $2.2 million were refunded to participants during the fourth quarter of 2021 and all future purchases under the current offering periods were cancelled. The Company accounted for the suspension of the ESPP as a cancellation of the ESPP and recognized $9.0 million of stock-based compensation in the fourth quarter of 2021 primarily as a result of the suspension. The Company recorded an aggregate of $17.4 million of stock-based compensation related to the ESPP for the year ended December 31, 2021, which includes the amounts recorded upon the suspension of the ESPP.