On December 19, 2019, the Company adopted the 2019 Incentive Award Plan (the “2019 Plan”) under which eligible employees, officers, directors and consultants of the Company may be granted incentive or non-qualified stock options, restricted stock, restricted stock units (“RSUs”), or other stock-based awards, including shares of Common Stock. Pursuant to the 2019 Plan, the number of shares of Common Stock available for issuance under the 2019 Plan automatically increases on each January 1 (commencing with January 1, 2021) until and including January 1, 2029, by an amount equal to the lesser of: (a) 5% of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by our Board of Directors (the “Board”). The Compensation Committee of the Board approved an increase to the share reserve as set out in the 2019 Plan in the amount of 2,146,006 shares in April 2023. As of September 30, 2023, 13,906,684 shares of Common Stock were reserved under the 2019 Plan, of which 2,512,708 shares of Common Stock remained available for issuance.

The following table summarizes the Company’s stock option activity under the 2019 Plan:


Description	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (1)
Options outstanding, December 31, 2022		5,757,779		$	7.92		7.60
Granted		990,296			1.05			$	1,330,150
Exercised		—			—
Forfeited		(25,190	)		5.58
Expired		(160,942	)		8.08
Options outstanding, September 30, 2023		6,561,943		$	9.88		7.33	$	1,330,150
Options vested and exercisable, September 30, 2023		4,509,168		$	8.22		6.67	$	—
Options vested and expected to vest, September 30, 2023		6,561,943		$	9.88		7.33	$	1,330,150

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(1)

Aggregate intrinsic value (in thousands) represents the difference between the estimated fair value of the underlying Common Stock and the exercise price of outstanding in-the-money options.

The following table summarizes additional information on stock option grants and vesting (in thousands):


	2019 Plan
	Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
Total fair value of stock options granted	$	941	$	2,898
Total fair value of options vested		1,784		944

Time-based vesting stock options generally vest over a three-year period, are subject to graded vesting schedules, and expire ten years from the date of grant or within 90 days of termination of employment. The weighted-average fair value per share of time-based vesting stock options granted by the Company was $0.95 and $2.55, during the nine months ended September 30, 2023 and 2022, respectively.

For the three months ended September 30, 2023 and 2022, the Company recognized $0.8 million and $1.3 million of stock-based compensation expense, respectively, in connection with time-based vesting stock options. For the nine months ended September 30, 2023 and 2022, the Company recognized $2.6 million and $3.7 million of stock-based compensation expense, respectively, in connection with time-based vesting stock options. As of September 30, 2023 and 2022, there was $2.3 million and $3.9 million of unrecognized stock-based compensation expense, respectively, related to unvested time-based vesting stock options that is expected to be recognized over a weighted-average period of 1.7 and 2.0 years, respectively.

The Company used valuation models to value the time based vesting stock options granted during the nine months ended September 30, 2023 and 2022. The following table summarizes the assumptions used in the valuation models to determine the fair value of awards granted to employees and non-employee directors under the 2019 Plan:


	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Expected volatility		41.2	%	42.78% - 42.90	%
Expected term (in years)		6.00		6.00
Dividend yield		0.00	%	0.00	%
Risk-free interest rate		3.61	%	1.62% - 2.71	%

A discussion of management’s methodology for developing each of the assumptions used in the valuation model follows:

Stock-based compensation expense is included in the Company’s Condensed Consolidated Statements of Comprehensive Loss within the following line items (in thousands):


	Three Months Ended September 30, 2023		Three Months Ended September 30, 2022		Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
Cost of revenues	$	228	$	396	$	699	$	1,158
General and administrative		422		556		1,319		1,475
Research and development		103		159		273		396
Sales and marketing		88		185		260		626
Total	$	841	$	1,296	$	2,551	$	3,655

Periodically, the Company granted RSUs to certain employees which are subject to certain vesting criteria. These RSUs become eligible to begin vesting upon a liquidity event (as defined in the award agreements governing the RSUs). The amount and timing of the vesting of the RSUs depends on the type and timing of the liquidity event as it relates to the Closing Date. Generally, a portion of the RSUs were scheduled to first vest upon the occurrence of the liquidity event and the remainder were scheduled to vest in up to three annual installments thereafter. Because no liquidity event occurred before the third anniversary of the Closing Date, all RSUs are scheduled to vest immediately upon a future liquidity event.

The Company determined the achievement of a liquidity event was not probable and therefore no expense has been recorded related to the RSU awards that vest solely upon a liquidity event.

During the first nine months of 2023 and 2022, the Company granted 369,056 and 463,000 performance-based RSUs, respectively, to certain employees, 50% of which vest based on the achievement of annual consolidated revenue targets and 50% of which vest based on the achievement of certain annual Nebula revenue targets. These units will vest over three annual installments based on the achievement of the annual consolidated revenue and Nebula revenue performance conditions and are not subject to any liquidity event vesting condition. In the event that the performance conditions are not met in the first or second year, all units granted will vest in the third year if the cumulative performance conditions are met at that time. The grant of awards with performance conditions supports the Company’s goal of aligning executive incentives with long-term stockholder value and ensuring that executive officers have a continuing stake in the long-term success of the Company.

The Company determined the three-year achievement of the overall Company revenue and Nebula revenue targets was probable and incurred $0.2 million and $0.1 million of stock-based compensation expense for the three months ended September 30, 2023 and 2022, respectively, with respect to the performance-based RSUs granted in the second quarter of 2023 and 2022.

The vesting of the RSUs held by a grantee is generally subject to his or her continued employment with the Company.

During the second quarter of 2023, the Company’s Board of Directors approved the vesting of 73,726 performance-based RSUs previously granted to certain employees. The shares issued upon the vesting of the RSUs were distributed to the employees during the second quarter.

The Company grants certain non-employee directors time-based RSUs in satisfaction of their annual retainer payments. These RSUs vest over a one-year or three-year period. During the three months ended September 30, 2023 and 2022, the Company recognized the grant-date fair value of the RSUs granted to non-employee directors of $0.2 million and $0.2 million as stock-based compensation expense, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized as stock-based compensation expense the grant-date fair value of the RSUs granted to non-employee directors of $0.6 million and $0.5 million, respectively.


Description	RSUs Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
RSUs non-vested, December 31, 2022		1,876,669		$	6.45		6.10
Granted		788,120			2.03		—
Vested		(190,059	)		6.52		—
Forfeited		(27,642	)		6.44		—
Expired		—			—		—
RSUs non-vested, September 30, 2023		2,447,088		$	5.99		5.78