As of September 30, 2022, the Company had three stock-based compensation plans (the “Plans”) which are described below.

In March 2015, the Board approved the 2015 Equity Incentive Plan (“2015 Plan”), which provided for the granting of stock options to employees, directors and consultants of the Company. As of the effective date of the 2021 Plan described below, the 2015 Plan was terminated and no further equity awards may be granted pursuant to the 2015 Plan. Outstanding stock options granted under the 2015 Plan will continue to be governed by the provisions of the 2015 Plan until expiration or exercise, whichever is earlier.

In July 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Plan”), which provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock unit ("RSU") awards, performance awards, and other awards to employees, directors and consultants of the Company. The 2021 Plan became effective on July 22, 2021 in connection with the IPO. Upon the 2021 Plan’s effective date, there were 18,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will increase automatically by an amount equal to 4% of the number of shares of the Company’s common stock outstanding on the preceding December 31, unless the Company’s Board of Directors elects to authorize a lesser number of shares prior to the applicable January 1. As of September 30, 2022, the total number of shares of common stock available for issuance under the 2021 Plan was 18,802,839 shares.

In July 2021, the Board approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective on July 22, 2021 in connection with the IPO. Upon the ESPP’s effective date, there were 2,000,000 shares of the Company’s common stock reserved for issuance thereunder. On January 1 of each year commencing after the effective date of the IPO and continuing through and including January 1, 2031, the number of shares of the Company’s common stock reserved for issuance under the ESPP will increase automatically by an amount equal to the lesser of (1) 1% of the number of shares of the Company’s common stock outstanding on the preceding December 31, (2) 5,000,000 shares and (3) a number of shares determined by the Board. During the nine months ended September 30, 2022, 92,638 shares were issued pursuant to purchases under the ESPP.

The Company estimates the fair value of each stock option grant on the date of grant using the Black-Scholes option pricing model. The model assumptions include expected volatility, expected term, dividend yield, and the risk-free interest rate. The expected volatility was based on the volatility of a group of similar entities. The Company derived expected term by using the “simplified” method (the expected term is determined as the average of the time-to-vesting and contractual life of the option), as the Company has limited historical information to develop expectations about future exercise patterns and post vesting employment termination behavior.

The Company based the risk-free rate on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term of the option. The Company has never paid any dividends and does not anticipate paying dividends in the foreseeable future, and therefore used an expected dividend yield of zero in the valuation model.

The following table shows stock option activity during the periods indicated (in thousands except share and per share data):


	Number of options outstanding			Weighted-average exercise price		Weighted-average remaining contractual term (in years)		Aggregate intrinsic value
Balance as of December 31, 2021		8,805,850		$	6.56		8.03	$	147,622,562
Options granted		690,751			12.32
Options exercised		(883,298	)		1.17
Options forfeited		(563,951	)		10.00
Options expired		(60,677	)		1.04
Balance as of September 30, 2022		7,988,675		$	7.44		7.49	$	63,886,008
Options exercisable as of September 30, 2022		4,160,074		$	4.18		6.60	$	45,526,814

The Company did not grant any stock options during the three months ended September 30, 2022. The weighted-average grant date fair value of options granted during the three months ended September 30, 2021 was $12.56 per share. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 and 2021 was $8.14 and $10.43 per share, respectively.

There was $31.6 million and $42.7 million of unrecognized stock-based compensation expense related to unvested stock options as of September 30, 2022 and 2021, respectively. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 2.42 years and 3.23 years as of September 30, 2022 and 2021, respectively.

The Company currently uses authorized and unissued shares to satisfy option exercises.

The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock as of September 30, 2022.

The following table shows RSU awards activity during the periods indicated:


	Shares			Weighted-average grant date fair value per share
Unvested balance at December 31, 2021		104,876		$	21.10
Granted		1,306,076		$	12.88
Vested		(135,476	)	$	13.71
Forfeited		(58,262	)	$	13.71
Unvested balance at September 30, 2022		1,217,214		$	13.45

There was $15.1 million of unrecognized stock-based compensation expense related to unvested RSU awards as of September 30, 2022. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 3.44 years as of September 30, 2022.

The following table shows the allocation of stock-based compensation expense related to the Company’s stock-based awards (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Cost of sales	$	759	$	559	$	2,214	$	791
Research and development		1,248		698		3,600		1,002
Sales and marketing		1,097		478		2,731		781
General and administrative		1,255		720		3,585		1,004
Total stock-based compensation	$	4,359	$	2,455	$	12,130	$	3,578

The following table shows the weighted-average valuation assumptions used in determining the fair value of employee stock options:


	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Expected term (in years)		—			6.08			5.91			6.05
Expected volatility		—	%		89.8	%		75	%		90.1	%
Risk-free interest rate		—	%		0.88	%		2.1	%		0.95	%
Dividend yield	—			—			—			—

The following table summarizes the weighted-average assumptions used in estimating the fair value of the ESPP for the current offering period using the Black-Scholes option-pricing model:


	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Expected term (in years)		0.5			—			0.5			—
Expected volatility		72	%		—	%		74	%		—	%
Risk-free interest rate		1.6	%		—	%		1.3	%		—	%
Dividend yield		—			—			—			—