10. Stockholders’ Deficit

Common Stock

The common stock confers upon its holders the right to receive dividends out of any assets legally available, when and as declared by the Board of Directors, but subject to the prior right of the holders of the Series Preferred as described above.

Common stock reserved for future issuance consisted of the following:


	September 30,	December 31,
	2019	2018

Convertible preferred stock	65,428,088	65,428,088
Warrants in Series B convertible preferred stock issued and outstanding	2,019,245	2,019,245
Common stock warrants	140,394	140,394
Shares available for grants under stock option plan	645,399	143,710
Options issued and outstanding under stock plan	17,409,666	15,932,040
Total common stock reserved for future issuance	85,642,792	83,663,477

In September 2018, the Company repurchased 589,320 shares of common stock, held by former employees, at a price per share of $2.04, for total consideration of $1.2 million. The difference of $321,000 between the fair value on the date of repurchase (at $1.49 per share) and the cash consideration paid has been recorded as a dividend as of December 31, 2018 as there were no ongoing services being delivered by the ex-employees since the date of termination. The Company has not retired the shares repurchased and as such, have recorded the shares repurchased at cost $884,000 and treated them as treasury shares.

In August 2019, the Company repurchased 26,659 shares of common stock at an average price per share of $6.91 pursuant to its contractual right of first refusal for offers made by third parties to acquire outstanding shares from existing stockholders. The repurchased shares were recorded as treasury shares.

As of September 30, 2019 and December 31, 2018, the Company had 615,980 and 589,320 shares respectively of treasury stock.

Stock Incentive Plan

As of September 30, 2019 and December 31, 2018, the Company maintains two stock-based compensation plans: (i) the 2008 Stock Plan and (ii) the 2017 Equity Incentive Stock Plan. All awards issued in 2018 were issued pursuant to the 2017 Equity Incentive Stock Plan.

Under the Company’s 2017 Equity Incentive Stock Plan and consistent with the 2008 Stock Plan, options and other stock awards to purchase shares of common stock may be granted to employees, directors, and consultants. Incentive stock options are granted to employees and non-statutory stock options are granted to consultants and directors at an exercise price not less than 100% of the fair value (as determined by the Company’s Board of Directors) of the Company’s common stock on the date of grant. The exercise price of options granted to stockholders who hold 10% or more of the Company’s common stock on the option grant date shall not be less than 110% of the fair value of the Company’s common stock on the date of grant for both incentive and non-qualified stock option grants. These options generally vest over four years and expire ten years from the date of grant. Stock option grants may be exercisable upon grant, and any unvested shares purchased are subject to repurchase. There were no unvested shares subject to repurchase as of September 30, 2019 and December 31, 2018.

Stock Option Activity

During the first nine months of 2019, 6,705,417 stock options were granted to our officers, employees, and outside directors at a weighted average exercise price of $3.92. In addition, during the first nine months of 2019, 4,917,057 stock options were exercised at a weighted average exercise price of $1.02.

The fair value of options to purchase common stock vested was $649,000 and $2.0 million in the three and nine months ended September 30, 2019, respectively. The fair value of options to purchase common stock vested was $571,000 and $3.1 million in the three and nine months ended September 30, 2018, respectively.

Certain weighted-average information and assumptions used in the option-pricing model for options granted to employees, directors, and non-employees are as follows:


	Three Months Ended September 30		Nine Months Ended September 30
	2019	2018	2019	2018

Expected term (in years)	5.63 - 6.08	5.38 - 6.10	5.63 - 6.08	5.38 - 6.10
Risk-free interest rate	1.6% - 1.9%	2.7% - 2.8%	1.6% - 2.5%	2.6% - 2.8%
Expected volatility	48.6% - 49.0%	48.2% - 48.4%	48.6% - 49.0%	48.2% - 48.9%
Expected dividend rate	—	—	—	—

The following table summarizes stock-based compensation expense for employees, which was included in the statements of operations and comprehensive income (loss) as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30				September 30
	2019		2018		2019		2018
Cost of services	$	192	$	22	$	317	$	60
Selling and marketing		355		90		617		266
General and administrative		1,133		684		2,275		1,978
Total stock-based compensation expense	$	1,680	$	796	$	3,209	$	2,304

At September 30, 2019, the total compensation cost related to unvested stock-based awards granted to employees under the Company’s stock option plan but not yet recognized was approximately $19.5 million. This cost will be amortized on a straight-line basis over the remaining vesting period and will be adjusted for subsequent changes in estimated forfeitures. The weighted-average remaining recognition period is approximately 3.2 years.