Share Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

Equity Plans

The Company grants awards to recipients through the 2017 Equity Incentive Plan, as amended (the 2017 Plan), which was approved by stockholders and the Board of Directors. The 2017 Plan provided for the issuance of shares that total no more than the sum of (i) 14,500,000 new shares, (ii) approximately 384,000 unallocated shares remaining available for the grant of new awards under the Second Amended and Restated 2007 Equity Incentive Plan, (iii) any returning shares such as forfeited, cancelled, or expired shares and (iv) 500,000 shares pursuant to an inducement award. The number of shares available to be issued under the 2017 Plan will be reduced by (i) one share for each share that relates to an option or stock appreciation right award and (ii) 1.5 shares for each share which relates to an award other than a stock option or stock appreciation right award (a full-value award). As of September 30, 2021, there were approximately 5.0 million remaining shares available for issuance under this plan. Options expire 10 years from the date of grant.

General Vesting Conditions

The Company’s stock options and restricted stock unit awards are generally subject to a one-year cliff vesting period after which 1/3 of the shares vest with the remaining shares vesting ratably over a two-year period subject to the passage of time. Additionally, certain stock option awards are market or performance based and vest based on certain triggering events established by the Compensation Committee.

Stock Options

The fair value of the Company’s stock options that are not market based are estimated at the grant date using the Black-Scholes option pricing model. The Company used the following weighted average assumptions for options granted during the nine months ended September 30, 2021:


Weighted Average:	Nine Months Ended September 30, 2021
Expected term	5.8 years
Expected volatility	74.4	%
Risk-free rate	1.0	%
Expected dividends	—	%

Service Period Based Stock Options

The following table summarizes activity of service period-based stock options during the nine months ended September 30, 2021:


		Weighted Average
(In thousands except per-share data and remaining contractual term)	Number of Options	Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2020	10,833	$	3.96	6.8
Options Granted	1,527	9.08
Options Exercised	(2,114)	4.35			$	13,236
Options Forfeited	(747)	4.49
Outstanding at September 30, 2021	9,499	$	4.66	6.7	$	19,690	*

Exercisable at September 30, 2021	6,372	$	3.71	5.5	$	16,367	*

*The aggregate intrinsic values in the table above are based on the Company’s stock price of $6.27, which is the closing price of the Company’s stock on the last day of business for the period ended September 30, 2021.

Performance Based Stock Options

The Company also grants stock option awards that are performance based and vest based on the achievement of certain criteria established from time to time by the Compensation Committee. If these performance criteria are not met, the compensation expenses are not recognized and the expenses that have been recognized will be reversed.

The following table summarizes performance based stock options activity during the nine months ended September 30, 2021:


		Weighted Average
(In thousands except per share data and remaining contractual term)	Number of Options	Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2020	81	$	4.34	3.1
Options Granted	—	—
Options Exercised	(40)	4.34			$	401
Options Forfeited	—	—
Outstanding at September 30, 2021	41	$	4.34	2.3	$	79	*

Exercisable at September 30, 2021	41	$	4.34	2.3	$	79	*

Restricted Stock Units

The following table summarizes activity of restricted stock units during the nine months ended September 30, 2021:


(In thousands except per share fair value)	Number of RSUs	Weighted Average Fair Value
Unvested shares at December 31, 2020	—	$	—
Granted	123	10.94
Vested	—	—
Forfeited	(7)	11.83
Unvested shares at September 30, 2021	116	$	10.90

Expected to vest at September 30, 2021	116	$	10.90

Total Share-Based Compensation

Total share-based compensation expense was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Share-based compensation expense
Cost of sales	$	58	$	42	$	156	$	117
Sales and marketing	456		336		1,298		810
Research and development	275		133		633		405
General and administrative	1,033		1,063		2,635		3,826
Total	$	1,822	$	1,574	$	4,722	$	5,158

In future periods, the Company expects to recognize approximately $10.7 million and $1.1 million in share-based compensation expense for unvested options and unvested restricted stock units, respectively, that were outstanding as of September 30, 2021. Future share-based compensation expense will be recognized over 2.1 and 2.6 weighted average years for unvested options and restricted stock units, respectively.