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Equity Incentive Plan

12 Months Ended

Dec. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Note 9 – Equity incentive plan

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, 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 an increase to the share reserve as set out in the 2019 Plan in February 2021 in the amount of 2,126,451 shares. As of December 31, 2021, 9,626,451 shares of Common Stock were reserved under the 2019 Plan, of which 1,723,630 shares of Common Stock remained available for issuance.

Stock option activity

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, 2019		514,710		$	9.90		10.0
Granted		4,137,750			8.49
Forfeited		(387,186	)		8.85
Expired		(4,521	)		8.85
Options outstanding, December 31, 2020		4,260,753		$	8.46		9.0
Granted		1,415,371			7.88
Exercised		(4,676	)		8.00			$	1
Forfeited		(496,842	)		8.09
Expired		(80,924	)		8.16
Options outstanding, December 31, 2021		5,093,682		$	8.34		8.4	$	24
Options vested and exercisable, December 31, 2021		2,462,298		$	8.36		8.1	$	-
Options vested and expected to vest, December 31, 2021		5,093,682		$	8.34		8.4	$	24

(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
	Year Ended December 31, 2021		Year Ended December 31, 2020
Total fair value of stock options granted	$	2,583	$	9,241
Total fair value of options vested		2,911		2,711

Time-based vesting stock options

Time-based vesting stock options generally vest over a three-year period, are subject to graded vesting schedules, and expire ten 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 the Company was $1.83, and $2.19 during the years ended December 31, 2021 and 2020, respectively.

For the years ended December 31, 2021, and 2020 the Company recognized $4.0 million and $3.4 million of stock-based compensation expense in connection with time-based stock options, respectively. As of December 31, 2021 and 2020, there was $4.2 million and $6.4 million of unrecognized stock-based compensation expense related to unvested time-based stock options that is expected to be recognized over a weighted-average period of 1.43 and 3.0 years, respectively.

Stock Option Valuation

The Company used valuation models to value both time and performance-based vesting stock options granted during 2021 and 2020. The following table summarizes the assumptions used in the valuation models to determine the fair value of awards granted to employees and non-employees under both the 2019 Plan:

	Year Ended December 31, 2021		Year Ended December 31, 2020
Expected volatility	43.22 - 44.61%		37.63 - 41.24%
Expected term (in years)		6.0		6.0
Dividend yield	0%		0%
Risk free interest rate	0.70 - 1.16%		0.30 - 1.43%

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

•

Expected volatility – Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses an estimated volatility based on the historical and implied volatilities of comparable companies.

•

Expected term – This is the period that the options granted are expected to remain unexercised. For options granted during the years ended December 31, 2021 and 2020, the Company derived the expected life of the option based on the average midpoint between vesting and the contractual term as there is little exercise history.

•

Dividend yield – The Company has never declared or paid dividends and have no plans to do so in the foreseeable future.

•

Risk-free interest rate – This is the U.S. Treasury rate for securities with similar terms that most closely resembles the expected life of the option.

Stock-based compensation expense

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

	December 31,
	2021		2020
Cost of revenues	$	1,373	$	1,336
General and administrative		1,573		1,198
Research and development		279		268
Sales and marketing		755		633
Total	$	3,980	$	3,435

Performance-based restricted stock units

The Company granted RSUs to certain employees and non-employee directors 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. The vesting of the RSUs held by a grantee is generally subject to his or her continued employment with the Company.

Time-based restricted stock units

During the years ended December 31, 2021 and 2020, the Company granted to certain non-employee directors 90,324 and 136,956 stock awards, respectively. These stock awards were issued to non-employee directors in satisfaction of their annual retainer payments and vest over a one-year or three-year period. Accordingly, the Company recognized the grant-date fair value of the restricted stock units of $0.7 million and $0.4 million as stock-based compensation expense during the years ended December 31, 2021 and 2020, respectively.

The following table summarizes the Company’s RSU activity for performance-based RSUs awarded to employees and for time-based RSUs granted to non-employee directors under the 2019 Plan:

	RSUs
Description	Outstanding
Outstanding at December 31, 2020		1,290,432
Granted		477,263
Vested- non-employee directors awards		(103,622	)
Forfeited		(150,181	)
Expired		-
Outstanding at December 31, 2021		1,513,892

The Company determined that the achievement of the liquidity event was not probable and therefore no expense was recorded during the year ended December 31, 2021 and 2020.