The Company has stock-based compensation plans under which it grants stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs") to officers, directors and third parties. Total stock-based compensation for the periods presented is as follows (in thousands):


	Three Months Ended
	March 31,
	2025		2024
Cost of sales	$	3,043	$	483
Research and development		3,644		4,315
Sales, general and administrative		15,631		12,524
Total	$	22,318	$	17,322

As of March 31, 2025, there was $77.3 million of unrecognized compensation expense for RSUs and PRSUs to be recognized over a weighted average period of 2.01 years.

The Company has entered into Development Service Agreements for the development of a wide variety of potential products and intellectual property. Under these agreements, future royalty payments for product and/or intellectual property rights may be paid in either cash or restricted shares of the Company’s common stock at the election of the developer, depending on the terms of the agreement. Certain of these agreements were amended to remove the cash royalty option and require settlement in restricted shares of the Company’s common stock. During the three months ended March 31, 2025 and 2024, the vesting conditions of certain of these awards were deemed probable. Stock-based compensation associated with these awards is included in cost of sales and research and development expense on the condensed consolidated statements of operations.

The Company issued approximately 3,521,532 and 3,154,000 shares of common stock, before net share settlement, upon vesting of RSUs and PRSUs during the three months ended March 31, 2025 and 2024, respectively.

Employees are eligible to participate in the Employee Stock Purchase Plan ("ESPP") approved by its shareholders. During the three months ended March 31, 2025 and 2024, there were no shares issued under the ESPP.

The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes option-pricing model. The assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows:


	Three Months Ended
	March 31,
	2025			2024
Risk-free interest rate		4.44	%		5.41	%
Expected dividend yield		—			—
Expected term (years)		0.50			0.50
Volatility		91.91	%		58.41	%

In connection with debt financing entered into with Squadron Medical Finance Solutions, LLC ("Squadron Medical") in 2018, and amended in 2019 and 2020, the Company issued common stock warrants to Squadron Medical and a participant lender (the “Squadron Medical Warrants”). The Squadron Medical Warrants expire in May 2027 and are exercisable by cash exercise. No Squadron Medical Warrants have been exercised as of March 31, 2025.

The Company issued warrants to its Chairman and Chief Executive Officer (the “Executive Warrants”). The Executive Warrants had a five-year term and are exercisable by cash or cashless exercise. In October 2022, the term was extended to seven years and in May 2024, the term was extended to nine years. No Executive Warrants have been exercised as of March 31, 2025.

Pursuant to an order entered by the Delaware Chancery Court on September 27, 2024, the Company issued 1,133,160 common stock warrants, to L-5 Healthcare Partners, LLC, a stockholder of the Company (the "L-5 Healthcare Warrants"), at a purchase price of $1.98 per each share represented by the warrant, for a total purchase price of approximately $2.2 million. The L-5 Healthcare Warrants expire in August 2026 and are exercisable by cashless exercise. No L-5 Healthcare Warrants have been exercised as of March 31, 2025.

A summary of all outstanding warrants for common stock as of March 31, 2025, is as follows (in thousands, except for strike price data):


	Number of Warrants		Strike Price		Expiration
2018 Squadron Medical Warrants		845	$	3.15	May 2027
2019 Squadron Medical Warrants		4,839	$	2.17	May 2027
2020 Squadron Medical Warrants		1,076	$	4.88	May 2027
Executive Warrants		1,327	$	5.00	December 2026
L-5 Healthcare Warrants		1,133	$	2.17	August 2026
Other1		96	$	11.79	Various through June 2026
Total		9,316

(1)

Weighted-average strike price.

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

On March 31, 2025, the Compensation Committee of the Board of Directors of the Company adopted a salary conversion plan (the “Plan”) under which the cash payment of base salaries for certain Company executive officers was reduced by 10% to 50% and, in exchange, the Company's executive officers were granted RSUs. The RSUs granted under the Plan will vest in two equal installments on August 5, 2025 and December 5, 2025, subject to the respective executive officer's continued employment with the Company on each vesting date.