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Stockholders' Equity and Stock-Based Compensation
 6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
Stockholders' Equity and Stock-Based Compensation
Note 7 - Stockholders' Equity and Stock-Based Compensation
Warrants
In connection with the Business Combination (refer to Note 3 - Business Combination & Acquisitions), Billtrust assumed the Warrants that had previously been issued by South Mountain. Following the closing of the Business Combination, the Company filed a registration statement with the SEC that was declared effective in February 2021 covering the issuance of the shares of Common Stock issuable upon exercise of the Warrants and to maintain a current prospectus until the Warrants expired or were redeemed.
The Company determined the Public Warrants met the definition of a derivative as they were indexed to the Company’s Common Stock pursuant to ASC 815-40-15-7 and met all other criteria for equity classification pursuant to ASC 815-40. Therefore, as of the BCA Closing Date, the Public Warrants were accounted for within stockholders' equity as a component of additional paid-in capital on the Condensed Consolidated Balance Sheets. As part of this assessment, it was concluded only events that would constitute a fundamental change of ownership could require the Company to settle the warrants for cash.
Warrant Exchange Offer
On November 18, 2021, the Company commenced a tender offer (the “Warrant Exchange Offer”) to each holder of its outstanding Warrants the opportunity to exchange their warrants for shares of the Company’s Common Stock, par value $0.0001 per share. Each holder was set to receive 0.30 shares of Common Stock in exchange for each outstanding Warrant tendered by the holder and exchanged pursuant to the terms of the Warrant Exchange Offer. Concurrently with the Warrant Exchange Offer, the Company solicited consents from holders of the Warrants to amend the Warrant Agreement (“Warrant Amendment”) dated June 19, 2019, to permit the Company to require that each Warrant outstanding upon the closing of the Warrant Exchange Offer be converted into 0.27 shares of Common Stock, which is a ratio 10% less than the exchange ratio applicable to the
Warrant Exchange Offer. Pursuant to the terms of the Warrant Agreement, an amendment required the written consent of at least 50% of the holders of the Warrants.
On December 17, 2021, the Company concluded the Warrant Exchange Offer with approximately 99.2% of the outstanding Warrants validly tendered and not withdrawn in the Warrant Exchange Offer. Additionally, the Company received the approval of approximately 99.2% of the outstanding Warrants for the Warrant Amendment. Accordingly, the Company exchanged all outstanding Warrants and issued 3.7 million shares of its Common Stock. All Warrants were exchanged as of December 31, 2021 and as a result, Nasdaq halted trading in the Warrants and subsequently agreed with the Company to delist them as none remained outstanding.
Equity Incentive Plans
As part of the Business Combination (refer to Note 3 - Business Combination & Acquisitions), the Company adopted the 2020 Equity Incentive Plan (the "2020 Plan") and 2020 Employee Stock Purchase Plan (the "2020 ESPP"). These plans are administered by the Board of Directors, which has the authority to designate participants and determine the number and type of awards to be granted and any other terms or conditions of the awards.
During the six months ended June 30, 2022, the Board of Directors authorized an increase of 2.0 million shares for the 2020 Plan and 1.6 million shares for the 2020 ESPP. As of June 30, 2022, 5.2 million shares of Common Stock remain available for issuance pursuant to the 2020 Plan and 2.8 million shares of Common Stock remain available for issuance pursuant to the 2020 ESPP.
In connection with adopting the 2020 Plan and 2020 ESPP, the 2003 Stock Incentive Plan and the 2014 Incentive Compensation Plan (together, the "Prior Plans") were frozen and no further grants can be made pursuant to the Prior Plans. All outstanding options under the Prior Plans were converted to options of the Company using the Conversion Rate applied to the number of options and original exercise price. The converted options continue to vest based upon their original terms.
Stock Options
Stock option activity for the six months ended June 30, 2022 is presented below (in thousands, except per share and contractual life amounts):
Number of SharesWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (in Years)Aggregate Intrinsic Value
Outstanding at December 31, 202120,025 $8.51 7.8$60,223 
Exercised(765)1.67 
Forfeited(629)13.02 
Outstanding at June 30, 202218,631 $8.64 7.1$26,199 
Vested and expected to vest at June 30, 202216,982 $8.21 7.0$25,346 
Exercisable at June 30, 20229,974 $5.81 6.2$20,231 
No stock options were granted during the six months ended June 30, 2022.
Restricted Stock Units
Restricted stock unit ("RSUs") activity for the six months ended June 30, 2022 is presented below (in thousands, except per share amounts):
Number of SharesWeighted-Average Grant Date Fair Value
Unvested at December 31, 2021613 $15.08 
Granted 4,154 6.91 
Released(166)15.51 
Vested(253)8.23 
Unvested at June 30, 20224,348 $7.73 
Employee Stock Purchase Plan ("ESPP")
Under the terms of the 2020 ESPP, on May 26, 2021, the Board of Directors approved the Company's ESPP offering program. With certain limitations, all Billtrust employees whose customary employment is more than 20 hours per week are eligible to participate in the ESPP.
The initial offering period, which consisted of one purchase period, commenced on July 1, 2021 and ran through November 30, 2021. Thereafter, each offering period runs for approximately six months, consisting of a single six month purchase period commencing on each successive June 1 and December 1. At the end of each purchase period, employee payroll contributions are used to purchase shares of the Company's Common Stock. The purchase price for each share of Common Stock purchased is the lower of: (1) 85% of the closing price of the Common Stock on the first day of the purchase period, or (2) 85% of the closing price of the Common Stock on the last day of the purchase period.
During the six months ended June 30, 2022, employees purchased 190,706 shares pursuant to the 2020 ESPP.
Stock-Based Compensation Expense
Stock-based compensation expense was recorded in the following categories on the Condensed Consolidated Statements of Operations (in thousands):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Cost of subscription, transaction, and services$621 $405 $1,059 $848 
Research and development1,493 1,091 2,718 2,314 
Sales and marketing971 961 1,725 2,292 
General and administrative4,190 3,249 7,851 9,078 
Total$7,275 $5,706 $13,353 $14,532 
The fair value of the Company's stock options granted and purchase rights to the ESPP were estimated using the Black-Scholes valuation model with the following assumptions:
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Stock Options:
Risk-free interest rate— %
1.3% - 1.4%
— %
0.6% - 1.4%
Expected dividend yield— %— %— %— %
Expected volatility— %
41%
— %
41% - 42%
Expected life (in years)— 5.5— 5.5
Weighted average grant date fair value$— $5.81 $— $6.51 
Employee Stock Purchase Plan:
Risk-free interest rate
0.1% - 1.6%
— %
0.1% - 1.6%
— %
Expected dividend yield— %— %— %— %
Expected volatility
40% - 43%
— %
40% - 43%
— %
Expected life (in years)0.5— 0.5— 
Weighted average grant date fair value$1.67$— $1.75$— 
As of June 30, 2022, the total unrecognized stock-based compensation expense related to stock options and RSU's was $34.8 million and $30.2 million, respectively. These costs are expected to be recognized over a weighted-average period of 2.3 years for stock options and 4.2 years for RSUs.