On December 19, 2019, the Company adopted the 2019 Incentive Award Plan (the “2019 Plan”) under which eligible employees, officers, directors and consultants of the Company may be granted incentive or non-qualified stock options, restricted stock, restricted stock units ("RSUs"), or other stock-based awards, including shares of Common Stock. Pursuant to the 2019 Plan, the number of shares of Common Stock available for issuance under the 2019 Plan automatically increases on each January 1 (commencing with January 1, 2021) until and including January 1, 2029, by an amount equal to the lesser of: (a) 5% of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by our Board of Directors (the “Board”). The Compensation Committee of the Board approved increases to the share reserve as set out in the 2019 Plan in 2021 and 2022. As of September 30, 2022, 11,760,678 shares of Common Stock were reserved under the 2019 Plan, of which 2,145,118 shares of Common Stock remained available for issuance.

The following table summarizes the Company’s stock option activity under the 2019 Plan:


Description	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (1)
Options outstanding, December 31, 2021		5,093,682		$	8.34		8.4	$	24
Granted		1,135,850			5.99
Exercised		—			—
Forfeited		(189,275	)		7.56
Expired		(111,009	)		8.20
Options outstanding, September 30, 2022		5,929,248		$	7.91		7.86	$	—
Options vested and exercisable, September 30, 2022		2,866,407		$	8.42		7.30	$	—
Options vested and expected to vest, September 30, 2022		5,929,248		$	7.91		7.86	$	—

(1)

Aggregate intrinsic value (in thousands) represents the difference between the estimated fair value of the underlying Common Stock and the exercise price of outstanding in-the-money options.

The following table summarizes additional information on stock option grants and vesting (in thousands):


	2019 Plan
	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Total fair value of stock options granted	$	2,898	$	2,293
Total fair value of options vested		944		369

Time-based vesting stock options generally vest over a three-year period, are subject to graded vesting schedules, and expire 10 years from the date of grant or within 90 days of termination. The weighted-average fair value per share of time-based vesting stock options granted by us was $2.55, and $1.79, during the nine months ended September 30, 2022 and 2021, respectively.

For the three months ended September 30, 2022, and 2021 the Company recognized $1.3 million and $1.0 million of stock-based compensation expense, respectively, in connection with time-based vesting stock options. For the nine months ended September 30, 2022, and 2021 the Company recognized $3.7 million and $3.0 million of stock-based compensation expense, respectively, in connection with time-based vesting stock options. As of September 30, 2022, there was $3.9 million of unrecognized stock-based compensation expense related to unvested time-based vesting stock options that is expected to be recognized over a weighted-average period of two years.

The Company used valuation models to value both time and performance-based vesting stock options granted during the nine months ended September 30, 2022 and 2021. The following table summarizes the assumptions used in the valuation models to determine the fair value of awards granted to employees and non-employee directors under the 2019 Plan:


	Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Expected volatility	42.78% - 42.90%		44.06% - 44.61%
Expected term (in years)		6.00		6.00
Dividend yield	0.00%		0.00%
Risk-free interest rate	1.62% - 2.71%		0.70% - 1.00%

A discussion of management’s methodology for developing each of the assumptions used in the valuation model follows:

Stock-based compensation expense is included in the Company’s Condensed Consolidated Statements of Comprehensive Loss within the following line items (in thousands):


	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		Nine Months Ended September 30, 2021
Cost of revenues	$	396	$	340	$	1,158	$	1,030
General and administrative		556		394		1,475		1,200
Research and development		159		73		396		209
Sales and marketing		185		195		626		559
Total	$	1,296	$	1,002	$	3,655	$	2,998

Periodically, the Company granted RSUs to certain employees which are subject to certain vesting criteria. The RSUs granted to employees become eligible to begin vesting upon a liquidity event (as defined in the award agreements governing the RSUs). The amount and timing of the vesting of the RSUs depends on the type and timing of the liquidity event as it relates to the Closing Date. Generally, a portion of the RSUs will first vest upon the occurrence of the liquidity event and the remainder will vest in up to three annual installments thereafter, provided that if the liquidity event occurs after the third anniversary of the Closing Date, all RSUs will vest immediately upon the liquidity event.

During the second quarter of 2022, the Company granted 463,000 performance based RSUs to certain employees, 50% of which vest based on the achievement of annual consolidated revenue targets and 50% of which vest based on the achievement of certain annual Nebula revenue targets. These units will vest over three annual installments based on the achievement of the annual consolidated revenue and Nebula revenue performance conditions and are not subject to any liquidity event vesting condition. In the event that the performance conditions are not met in the first or second year, all units granted will vest in the third year if the cumulative performance conditions are met at that time. The grant of awards with performance conditions supports the Company’s goal of aligning executive incentives with long-term stockholder value and ensuring that executive officers have a continuing stake in the long-term success of the Company.

The vesting of the RSUs held by a grantee is generally subject to his or her continued employment with the Company.

The Company determined the achievement of the liquidity event was not probable in the near term and therefore no expense has been recorded related to the performance-based awards that vest solely upon a liquidity event. The Company determined the achievement of the one-year target for consolidated revenues was not probable, but achievement of the one-year Nebula revenue was probable and therefore incurred $0.1 million of expense for the three months ended September 30, 2022, and $0.2 million of expense for the nine months ended September 30, 2022 with respect to the awards granted in the second quarter of 2022.

The Company grants certain non-employee directors time-based restricted stock units in satisfaction of their annual retainer payments. These units vest over a one-year or three-year period. During the three months ended September 30, 2022 and 2021, the Company recognized the grant-date fair value of the restricted stock units of $0.2 million and $0.2 million as stock-based compensation expense, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized the grant-date fair value of the restricted stock units of $0.5 million and $0.5 million as stock-based compensation expense, respectively. During the nine months ended September 30, 2022 and 2021, the Company granted 100,000 and 90,324 new grants of time-based restricted stock units to its non-employee directors.


Description	RSUs Outstanding
Balance at December 31, 2021		1,513,892
Granted		576,889
Vested - non-employee director awards		(106,991	)
Forfeited		(56,312	)
Expired		—
Balance at September 30, 2022		1,927,478