On August 3, 2021, the Company’s Board of Directors authorized the Company to repurchase an aggregate of up to $25.0 million of shares of the Company’s common stock. On August 10, 2021 the Company repurchased 1,806,358 shares of its common stock for approximately $25.0 million in privately negotiated transactions.

On June 17, 2020, the Company’s shareholders approved an amendment to the Company’s 2016 Equity Incentive Award Plan (the “2016 Equity Plan”), which increased the amount of shares of common stock available for issuance under the 2016 Equity Plan by 7,000,000 shares. At September 30, 2021, 4,058,165 shares of common stock were available for issuance under the 2016 Equity Incentive Award Plan.

In 2007, the Company adopted the Alphatec Holdings, Inc. 2007 Amended and Restated Employee Stock Purchase Plan (the “ESPP”), which was first amended in May 2017. On June 16, 2021, the Company’s shareholders approved a second amendment to the ESPP which increased the amount of shares of common stock available for purchase under the ESPP by 500,000 shares.

The ESPP provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 20% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of Company common stock on (i) the commencement date of the six-month offering period or (ii) the respective purchase date. At September 30, 2021, 662,036 shares of common stock were available for purchase under the ESPP.

Total stock-based compensation for the periods presented were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Cost of revenue	$	310	$	139	$	489	$	374
Research and development		1,440		528		2,602		1,482
Sales, general and administrative		9,004		3,877		23,633		10,831
Total	$	10,754	$	4,544	$	26,724	$	12,687

As of September 30, 2021, the Company’s shares of common stock reserved for future issuance were as follows (in thousands):

Stock options outstanding			3,457
Unvested restricted stock award			8,733
Employee stock purchase plan			662
Series A convertible preferred stock			29
Convertible notes			17,246
Warrants outstanding			20,214
Authorized for future grant under the Distributor and Development Services plans			735
Authorized for future grant under the Management Objective Strategic Incentive Plan			365
Authorized for future grant under the Company equity plans			4,058
Total			55,499

The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year life and are exercisable by cash exercise only. During the three and nine months ended September 30, 2021, there were 275,000 and 795,000 2017 PIPE Warrant exercises for total cash proceeds of $0.6 million and $1.6 million, respectively. During the three months ended September 30, 2020, there were no 2017 PIPE Warrant exercises and during the nine months ended September 30, 2020 there were 125,000 2017 PIPE Warrant exercises for total cash proceeds of $0.3 million. As of September 30, 2021, 2,312,000 2017 PIPE Warrants remained outstanding.

The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year life and are exercisable by cash or cashless exercise. During the three and nine months ended September 30, 2021, there were 40,000 and 2,881,116 2018 PIPE Warrant exercises, respectively, for total cash proceeds of $0.1 million and $1.5 million, respectively. During the three months ended September 30, 2020, there were 136,000 2018 PIPE warrant cashless exercises. During the nine months September 30, 2020 there were 1,670,524 2018 PIPE warrant exercises for total cash proceeds of $0.9 million. As of September 30, 2021, 8,498,569 2018 PIPE Warrants remained outstanding.

In conjunction with the Company’s 2018 acquisition of SafeOp, the Company issued warrants to purchase 2,200,000 shares of common stock at an exercise price of $3.50 per share, which have a five-year life and are exercisable by cash or cashless exercise. There were no exercises during the three months ended September 30, 2021. During the nine months ended September 30, 2021 there were 969,932 SafeOp Surgical Merger Warrant exercises for total cash proceeds of $0.1 million. During the three and nine months ended September 30, 2020, there were 14,583 SafeOp Surgical Merger Warrant cashless exercises. As of September 30, 2021, 1,194,943 SafeOp Surgical Merger Warrants remained outstanding.

During the year ended December 31, 2018, in connection with the initial debt financing with Squadron Medical and a participant lender, the Company issued warrants to purchase 845,000 shares of common stock at an exercise price of $3.15 per share. An additional 4,838,710 warrants were issued at an exercise price of $2.17 per share during the second quarter of 2019, in conjunction with the Company’s draw on the expanded credit facility. In May 2020, an additional 1,075,820 warrants were issued at an exercise price of $4.88 per share in conjunction with the Company’s second amendment to the Squadron Medical debt for total warrants outstanding to Squadron Medical and the participant lender of 6,759,530. In conjunction with the second amendment, the expiration dates for all existing warrants were extended to May 29, 2027 to align all outstanding warrant expiration dates. In accordance with authoritative accounting guidance, the warrants qualified for equity treatment upon issuance and were recorded as a debt discount to the face of the debt liability based on fair value to be amortized into interest expense over the life of the debt agreement. The fair value assigned to the warrant amendment was also allocated as a debt issuance cost and amortized into interest expense. As the warrants provide for partial price protection that allow for a reduction in the price in the event of a lower per share priced issuance, the warrants were valued utilizing a Monte Carlo simulation that considers the probabilities of future financings. The Monte Carlo model simulates the present value of the potential outcomes of future stock prices of the Company over the seven-year life of the warrants. The projection of stock prices is based on the risk-free rate of return and the volatility of the stock price of the Company and correlates future equity raises based on the probabilities provided. No Squadron Medical Warrants have been exercised as of September 30, 2021.

In December 2017 the Company issued warrants to Mr. Patrick S. Miles, the Company’s Chairman and Chief Executive Officer, to purchase 1,327,434 shares of the Company’s common stock for $5.00 per share (the “Executive Warrants”). The warrants have a five-year term and are exercisable by cash or cashless exercise. The warrants issued to Mr. Miles were accounted for as share based compensation, and the fair value of the warrants of approximately $1.4 million were recognized in full in the statement of operations for the year ended December 31, 2017 as the warrants were immediately vested upon issuance. No Executive Warrants have been exercised as of September 30, 2021.

A summary of all outstanding warrants for common stock as of September 30, 2021 were as follows:

	Number of Warrants		Strike Price		Expiration
2017 PIPE Warrants		2,312,000	$	2.00	June 2022
2018 PIPE Warrants		8,498,569	$	3.50	May 2023
SafeOp Surgical Merger Warrants		1,194,943	$	3.50	May 2023
2018 Squadron Medical Warrants		845,000	$	3.15	May 2027
2019 Squadron Medical Warrants		4,838,710	$	2.17	May 2027
2020 Squadron Medical Warrants		1,075,820	$	4.88	May 2027
Executive Warrants		1,327,434	$	5.00	December 2022
Other⁽¹⁾		121,562	$	2.87	Various through May 2023
Total		20,214,038

All outstanding warrants were deemed to qualify for equity classification under authoritative accounting guidance.

Under the 2017 Distributor Inducement Plan, the Company is authorized to grant up to 1,000,000 shares of common stock to third-party distributors whereby, upon the achievement of certain Company sales and/or distribution milestones the Company may grant to a distributor shares of common stock or warrants to purchase shares of common stock. The warrants and restricted stock units issued under the plan are subject to time based or net sales-based vesting conditions. As of September 30, 2021, 575,000 warrants and 380,500 shares of restricted common stock have been granted under the 2017 Distributor Inducement Plan. As of September 30, 2021, 195,000 warrants and 136,100 restricted stock units have been earned or issued under the plan. Warrants granted under the plan as of September 30, 2021 were not yet subject to expiration related to any time or sales-based vesting conditions.

Under the 2017 Development Services Plan, the Company is authorized to grant up to 7,000,000 shares of common stock to third-party individuals or entities whereby, upon the achievement of certain Company financial and commercial revenue milestones, future royalty payments for product and/or intellectual property development work may be paid in either cash or restricted shares of Company common stock at the election of the developer. Each common stock issuance is subject to net sales-based and other vesting provisions and satisfaction of applicable laws and market regulations regarding the issuance of restricted shares to such developers. The Company has entered into Development Services Agreements pursuant to which the Company has granted 6,934,000 shares of restricted common stock under the 2017 Development Services Plan, subject to achievement of the performance criteria and vesting conditions set forth in such Development Services Agreements. The Company recognizes stock-based compensation once the achievement of the performance criteria and vesting conditions are deemed probable.

Under the 2019 Management Objective Strategic Incentive Plan, the Company is authorized to grant up to 500,000 shares of common stock to third-party individuals or entities that do not qualify under the Company’s other existing equity plans, with a maximum grant of 50,000 shares per participant. As of September 30, 2021, 122,500 restricted shares and a warrant to purchase up to 12,500 restricted common stock shares have been granted under the 2019 Management Objective Strategic Incentive Plan.