Stock Based Compensation

3 Months Ended

Mar. 31, 2022

Stok Based Compensation

Equity Incentive Plans

Note 11 – Stock-Based Compensation

2021 Equity Incentive Plan

In connection with the Business Combination, the stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides the Company the ability to grant incentive stock options, nonqualified stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance units, performance shares, cash-based awards and other stock-based awards. The purpose of the 2021 Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons for performing services and by motivating such persons to contribute to the growth and profitability of the Company and its subsidiaries. As of March 31, 2022, there were 17,794,239 shares reserved and 16,146,703 shares available for grant under the 2021 Plan.

2019 Equity Incentive Plan

The 2019 Equity Incentive Plan (“2019 Plan”) provided for the grant of incentive stock options, non-qualified stock options, and other awards. As a result of the Business Combination, the 2019 Plan was superseded by the 2021 Plan; therefore, no further awards will be granted under the 2019 Plan. As of March 31, 2022, there were 2,698,627 stock options previously granted and unexercised under the 2019 Plan, which remain subject to the terms and conditions of the 2019 Plan.  

Compensation Expense

To date, the Company has issued stock option and restricted stock unit (“RSU”) awards. The Company recognizes stock-based compensation expense based on the fair value of the awards issued at the date of grant and amortized on a straight-line basis as the employee renders services over the requisite service period. Forfeitures are accounted for as they occur by reversing the expense previously recognized for non-vested awards that were forfeited during the period. The following table presents the stock-based compensation related to stock option and RSU awards for the periods presented (in thousands):

	Three Months Ended March 31,
	2022		2021
Stock options expense
Cost of revenues	$	5	$	5
Selling, general and administrative		192		57
Research and development		9		6
Total stock options expense	$	206	$	68
Restricted stock units expense
Cost of revenues	$	54	$	—
Selling, general and administrative		666		—
Research and development		46		—
Total restricted stock units expense	$	766	$	—
Total stock-based compensation	$	972	$	68

The estimated unrecognized expense for stock options and RSUs not vested as of March 31, 2022, which will be recognized over the remaining requisite service period, is as follows:

Stock options unrecognized expense (in thousands)	$	1,826
Stock options weighted-average remaining requisite service period (in years)		2.2
Restricted stock units unrecognized expense (in thousands)	$	6,123
Restricted stock units weighted-average remaining requisite service period (in years)		2.6

Stock Option Awards

Stock option awards are issued with an exercise price equal to the estimated fair market value per share at the date of grant and a term of 10 years. Stock option awards generally vest over 4 years. It is the Company’s policy to issue new shares upon option exercise. Changes in the Company’s stock options for the three months ended March 31, 2022 are presented in the table below.

		Weighted		Aggregate		Weighted
		Average		Intrinsic		Average
	Number of	Exercise Price		Value		Remaining Life
	Options	per Share		(in thousands)		(in years)
Outstanding at January 1, 2022	3,209,517	$	1.66
Granted	—	$	—
Exercised	(24,434)	$	0.23
Forfeited	(37,920)	$	0.22
Expired	(1,469)	$	0.58
Outstanding at March 31, 2022	3,145,694	$	1.69	$	13,394	7.1
Vested and exercisable at March 31, 2022	1,516,647	$	0.56	$	7,859	5.6

Changes in the status of the Company’s non-vested share awards for the three months ended March 31, 2022 are presented in the table below.

		Weighted
		Average
	Non-vested	Grant Date
	Shares Under	Fair Value per
	Option	Share
Non-vested at January 1, 2022	2,137,050	$	1.21
Granted	—	$	—
Vested	(470,083)	$	0.77
Forfeited	(37,920)	$	0.17
Non-vested at March 31, 2022	1,629,047	$	1.32

The aggregate intrinsic value of options exercised during the three months ended March 31, 2022 and 2021 was $106 and $517, respectively.

No stock options were granted during the three months ended March 31, 2022. The weighted average grant date fair value of stock options granted during the three months ended March 31, 2021, after changes in connection with the Company’s conversion from a partnership to a corporation and the Business Combination, was $3.59 per share. A Black-Scholes option pricing model with the following assumptions was utilized to determine the fair value.

	Three months ended March 31,
	2021
Expected volatility	68.0 %
Dividend yield	0 %
Risk-free interest rate	0.82 %
Expected term (in years)	6.00	to	6.25

The expected volatility was derived from the volatility of historical stock prices of similar publicly traded companies. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. The risk-free interest rate is based on the U.S. Treasury yield curve rates with maturities consistent with the expected term of the related stock options. The expected term represents the period of time that the Company anticipates the stock options to be outstanding based on historical experience and future expectations.

Restricted Stock Unit Awards

The Company started granting RSU awards in July 2021 that generally vest over 3 years. RSU awards are valued based on the closing market price of our common stock on the grant date.  

		Weighted
		Average
		Grant Date
	Number of	Fair Value per
	RSUs	Share
Outstanding at January 1, 2022	935,148	$	7.59
Granted	171,567	$	5.17
Released	(66,417)	$	6.93
Forfeited	(12,026)	$	8.32
Outstanding at March 31, 2022	1,028,272	$	7.22

Other Employee Benefits - 401(k) Savings Plan

The Company has an employee-directed 401(k) savings plan (the “401(k) Plan”) for all eligible employees over the age of 21. Under the 401(k) Plan, employees may make voluntary contributions based on a percentage of their pretax income, subject to statutory limitations. The Company matches 100% for the first 3% of each employee’s contribution and 50% for the next 2% of each employee’s contribution. The Company’s cash contributions are fully vested upon the date of match. The Company made matching cash contributions of $165 and $60 for the three months ended March 31, 2022 and 2021, respectively.