Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

During 2015, the Company established the Long Term Incentive Plan (“Incentive Plan”), under which incentive stock options, nonqualified stock options, restricted stock or other awards may be awarded to employees, directors or consultants of the Company. The options typically vest over a four-year period. As of December 31, 2023, the maximum number of shares available for issuance under the Incentive Plan was 2,825,173 shares. Upon the effectiveness of the Company’s 2021 Incentive Award Plan (the “2021 Plan”), the Company ceased granting awards under the Incentive Plan. However, the Incentive Plan continues to govern awards outstanding thereunder.

On July 23, 2021, the Company’s Board of Directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Plan, which became effective on July 29, 2021. The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares reserved for issuance under the 2021 Plan was initially equal to 2,590,000 plus an annual increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 4% of

the aggregate number of shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the Board of Directors. No more than 15,350,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. Shares issued under the 2021 Plan may be authorized but unissued shares, shares purchased on the open market or treasury shares. If an award under the 2021 Plan expires, lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, cancelled without having been fully exercised/settled or forfeited, any unused shares subject to the award will, as applicable, become or again be available for new grants under the 2021 Plan. In addition, shares subject to stock options issued under the Incentive Plan may become available for issuance under the 2021 Plan to the extent such stock options are canceled, forfeited, exchanged, settled in cash or otherwise terminated. As of December 31, 2023, there were 1,546,979 shares available for future issuance under the 2021 Plan.

On July 23, 2021, the Company’s Board of Directors adopted, and on July 23, 2021 its stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective on July 29, 2021. A total of 250,000 shares of Class A common stock were initially reserved for issuance under this plan. The number of shares of Class A common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) 1% of the shares of Class A common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Class A common stock as determined by the Board of Directors, provided that not more than 3,340,000 shares of Class A common stock may be issued under the 2021 ESPP. As of December 31, 2023, there were 777,389 shares of common stock reserved for future issuance under the 2021 ESPP and no shares had been granted or purchased under the 2021 ESPP.

During the years ended December 31, 2023 and December 31, 2022, the Company recognized stock-based compensation expense of $5,727,135 and $4,064,446, respectively. As of December 31, 2023, compensation expense remaining to be recognized for outstanding stock options was $11,188,798 and to be recognized over a weighted-average period of 2.53 years.

The fair value of options granted is calculated on the grant date using the Black-Scholes option valuation model. Prior to the Company's IPO on August 3, 2021, the Company was a private company and thus lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own publicly traded stock price. For the year ended December 31, 2023, the Company granted 2,411,610 shares of stock options at a weighted-average grant date fair value of $5.41. For the year ended December 31, 2022, the Company granted 1,227,810 shares at a weighted-average grant date fair value of $9.83.

The Company used the following assumptions in its application of the Black-Scholes option pricing model for grants during the year ended December 31, 2023 and 2022:


	Year Ended December 31,
	2023	2022

Weighted-average risk-free interest rate	3.46% - 4.80%	1.35% - 4.15%
Expected term (in years)	5.00 - 10.00	5.00 - 10.00
Expected dividend yield	0%	0%
Expected volatility	64.86% - 70.50%	64.67% - 78.12%

The following table summarizes the stock option activity during the year ended December 31, 2023:


	Number of Options	Weighted- Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value

Outstanding as of December 31, 2022	3,559,041	$	7.36
Granted	2,411,610	5.41
Exercised	(125,624)	3.54
Cancelled	(348,630)	8.10
Outstanding as December 31, 2023	5,496,397	$	6.54	7.33	$	11,556,739

Vested and exercisable at December 31, 2023	2,874,152	$	5.99	6.16	$	7,377,923

For the years ended December 31, 2023 and 2022, the Company recognized share-based compensation expense on the accompanying consolidated statements of operations as follows:


	Year Ended December 31,
	2023		2022

Cost of revenue	$	—	$	9,703
Research and development	2,668,710		1,978,169
General and administrative	3,058,425		2,076,574
Total	$	5,727,135	$	4,064,446