COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS

Common Stock Retired

On May 28, 2022, the Board of Directors authorized an increase to the Company’s previously announced Common Stock repurchase program to increase the value of the shares that could be acquired by the Company from up to $15.0 million over two years to up to $50.0 million over the next four years, subject to compliance with the Company’s Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

On February 27, 2022, the Board of Directors approved the adoption of a stock repurchase program to acquire up to $15.0 million of the Company’s Common Stock both on the open market and in privately negotiated transactions, including through Rule 10b5-1 plans, through March 4, 2024, subject to compliance with the Company's Credit Facility, which was amended effective January 14, 2022 to increase the aggregate value of the shares of Common Stock that could be acquired by the Company to no greater than $15.0 million during the term of the Credit Facility, provided that all other applicable conditions and legal requirements are satisfied.

During the three months ended June 30, 2022, the Company acquired 0.1 million shares of Common Stock on the open market at a cost of $0.5 million. For the six months ended June 30, 2022, the Company acquired an aggregate 0.7 million shares of Common Stock on the open market at a total cost of $3.7 million. Upon completion of all repurchase transactions, the associated shares of Common Stock were retired.

Common Stock Offerings

On March 11, 2021, the Company completed the March 2021 Offering of 7.8 million shares of its Common Stock at a price of $7.75 per share for total gross proceeds of $57.0 million. Underwriter discounts and commissions were $2.9 million and the underwriter expenses were $0.2 million. The Company also incurred additional professional fees and expenses of $1.3 million as part of the transaction, resulting in net proceeds from the March 2021 Offering of approximately $55.6 million. The Company used the net proceeds from the March 2021 Offering to redeem 60,000 shares of Series A Preferred Stock in April 2021.

Treasury Stock

On August 6, 2021, the Company reacquired 0.1 million shares of Common Stock for $1.1 million related to restricted stock units (“RSUs”) that vested on that date. These shares are included as Treasury Stock as of June 30, 2022.

Stock Plans

The Company’s stock plans consist of the 2007 Stock Plan (the “2007 Plan”) and the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). The 2007 Plan and the 2013 Plan are collectively referred to as the “Stock Plans”. On February 22, 2022, the Board of Directors authorized an increase of approximately 3.5 million shares available for grant under the 2013 Plan. For additional information about the Stock Plans, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2021, included in Part II, Item 8 of the 2021 Form 10-K. The information presented below provides an update for activity under the Stock Plans for both the three and six months ended June 30, 2022.

Restricted Stock Units

For the six months ended June 30, 2022, the Board of Directors granted RSUs under the 2013 Plan to employees and to non-employee members of the Board of Directors for an aggregate of approximately 0.7 million shares of Common Stock. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $5.03 per share, the aggregate fair value for the shares underlying the RSUs amounted to $3.6 million as of the grant date that will be recognized as compensation cost over the vesting period. Accordingly, compensation expense related to RSUs of approximately $2.2 million and $2.2 million was recognized for the three months ended June 30, 2022 and 2021, respectively. Compensation expense related to RSUs of approximately $4.8 million and $4.1 million was recognized for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, the unrecognized expense of $10.4 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.7 years.

Stock Options

For the six months ended June 30, 2022, the Board of Directors granted stock options for the purchase of an aggregate of approximately 1.1 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. Options granted to employees generally vest as to one-third of the shares subject to the award on each anniversary of the designated vesting commencement date, which may precede the grant date of such award, and expire ten years after the grant date.

The following table sets forth a summary of stock option activity under the Stock Plans for the six months ended June 30, 2022 (shares in thousands):


	Shares	Price (1)		Term (2)
Outstanding, December 31, 2021	6,824	$	5.92	5.6
Granted	1,096	5.62
Forfeited	(294)	5.75
Expired	(108)	5.73
Exercised	(325)	1.39
Outstanding, June 30, 2022 (3)(4)	7,193	6.09		5.8
Vested, June 30, 2022 (3)	4,676	5.97		3.9

(1)Represents the weighted average exercise price.

(2)Represents the weighted average remaining contractual term until the stock options expire.

(3)As of June 30, 2022, the aggregate intrinsic value of all stock options outstanding was $4.7 million. As of June 30, 2022, the aggregate intrinsic value of vested stock options was $3.8 million.

(4)The number of outstanding stock options that are not expected to ultimately vest due to forfeiture amounted to 0.4 million shares as of June 30, 2022.

The following table presents activity affecting the total number of shares available for grant under the Stock Plans for the six months ended June 30, 2022 (in thousands):


Available, December 31, 2021			4,324
Newly authorized by Board of Directors			3,484
Stock options granted			(1,096)
RSUs granted			(708)
Expired options under Stock Plans			108
Forfeited options under Stock Plans			294
Forfeited RSUs under Stock Plans			460
Shares issued			(60)
Shares repurchased			653
Available, June 30, 2022			7,459

The aggregate fair value of approximately 1.1 million stock options granted for the six months ended June 30, 2022 amounted to $2.9 million, or $2.61 per stock option as of the grant date utilizing the Black-Scholes-Merton (“BSM”) method. The fair valued derived under the BSM method will result in the recognition of compensation cost over the vesting period of the stock options. For the six months ended June 30, 2022, the fair value of each stock option grant under the Stock Plans was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions:


Expected life (in years)			6.0
Volatility			45%
Dividend yield			0%
Risk-free interest rate			2.58%
Fair value per share of Common Stock on date of grant			$5.62

As of June 30, 2022 and December 31, 2021, total unrecognized compensation costs related to unvested stock options, net of estimated forfeitures, was $4.8 million and $3.9 million, respectively. As of June 30, 2022, the unrecognized costs are expected to be charged to expense on a straight-line basis over a weighted-average vesting period of approximately 2.3 years.

Stock-Based Compensation Expense

Stock-based compensation expense attributable to RSUs and stock options is classified as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	573	$	375	$	1,081	$	691
Sales and marketing	853		874		1,680		1,601
General and administrative	1,733		1,229		3,449		2,419
Total	$	3,159	$	2,478	$	6,210	$	4,711

Warrants

On April 12, 2021, the SEC issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (the “SEC Staff Statement”). Upon review of the SEC Staff Statement, which addressed certain accounting and reporting considerations related to warrants similar to the Company’s warrants to purchase approximately 6.1 million shares of Common Stock at $11.50 per share (the “GP Sponsor Private Placement Warrants”), and upon review of ASC 815-40, Contracts in Entity’s Own Equity, the Company determined that its GP Sponsor Private Placement Warrants should have been classified as a liability instead of equity. On October 29, 2021, the original holder of the warrants (the “GP Sponsor”) sold the warrants for $1.04 per warrant to outside holders. As a result of the sale, the new holders of the GP Sponsor Private Placement Warrants had the same rights as the holders of the Company’s warrants to purchase approximately

8.6 million shares of the Company’s Common Stock at $11.50 per share (the “Public Warrants”). Therefore, as of October 29, 2021, the Company reclassified the liability for redeemable warrants to additional paid-in capital for $6.3 million. See Note 12 for information regarding the fair value of the GP Sponsor Private Placement Warrants.As of June 30, 2022, warrants were outstanding for an aggregate of 18.1 million shares of Common Stock, including 3.4 million shares of Common Stock exercisable at $5.64 per share, and an aggregate of 14.7 million shares of Common Stock exercisable at $11.50 per share. For additional information about these warrants, please refer to Note 8 to the Company’s Consolidated Financial Statements for the year ended December 31, 2021, included in Part II, Item 8 of the 2021 Form 10-K.