Stock Option Plan

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

In December 2012, the Company's Board of Directors adopted the 2013 Stock Option Plan (the Plan). Pursuant to the Plan, employees, consultants, and directors may be granted either incentive stock options or non-qualified stock options to purchase shares of the Company's common stock. In July 2019, the number of shares reserved for issuance under the Plan was increased from 669,806 to 1,663,681 shares.

In September 2019, the Company's Board of Directors adopted, and the Company's stockholders approved, the 2019 Incentive Award Plan (the 2019 Plan). Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. A total of (i) 2,011,832 shares of common stock plus (ii) shares subject to awards granted under the 2013 Plan on or before the effective date of the 2019 Plan became available for issuance under the 2019 Plan and will initially be reserved for issuance under the 2019 Plan. The 2019 Plan contains an "evergreen provision" that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2029 in an amount equal to the lesser of: (i) 4% of the outstanding capital stock on each December 31st, or (ii) such lesser amount determined by the Board of Directors. As of December 31, 2019, 1,283,996 shares remained available for future awards. Under the evergreen provision, on January 1, 2020, an additional 502,440 shares became available for issuance under the 2019 Plan.

The options generally expire ten years after the date of grant and are exercisable to the extent vested. Vesting is established by the Board of Directors and is generally four years from the date of grant.

Activity under the Company's stock option plans is set forth below:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2018	661,180	$	1.22	9.52	$	6,198
Granted	816,356	$	13.99
Exercised	(1,548)	$	2.41
Forfeited	(99,967)	$	7.50
Expired	(479)	$	42.08
Outstanding, December 31, 2019	1,375,542	$	8.33	9.16	$	23,654
Vested and expected to vest, December 31, 2019	1,375,542	$	8.33	9.16	$	23,654
Options exercisable, December 31, 2019	203,344	$	3.49	7.85	$	4,625

The weighted-average grant date fair value per share of employee options granted to employees during the years ended December 31, 2019 and 2018 was $7.79 and $0.17, respectively. The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options. The fair value of the Company's common stock is $25.40 and $9.92 per share at December 31, 2019 and 2018, respectively. The intrinsic value of options exercised for the years ended December 31, 2019 and 2018 was an immaterial amount and zero, respectively.

Stock-Based Compensation Expense

The fair value of employee stock options was estimated using the following assumptions to determine the fair value of stock options granted:


	Years Ended December 31,
	2019	2018
Expected volatility	46%-59%	70%
Risk-free interest rate	1.6%-2.6%	1.4% - 2.6%
Dividend yield	—	—
Expected term (in years)	5.75-6.08	6.08

Total non-cash stock-based compensation expense recorded related to options granted in the statement of operations is as follows (in thousands):


	Years Ended December 31,
	2019		2018
Cost of revenue	$	9	$	12
Selling, general and administrative	445		93
Research and development	118		9
Total	$	572	$	114

As of December 31, 2019, total unrecognized compensation cost was $5.6 million, which is expected to be recognized over a remaining weighted-average vesting period of 3.3 years.

Employee Stock Purchase Plan

In September 2019, the Board of Directors adopted the Employee Stock Purchase Plan (the ESPP). The ESPP became effective on the day the ESPP was adopted by the Company's Board of Directors. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation. A total of 120,000 shares of common stock was initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be annually increased on the first day of each fiscal year during the term of the ESPP, beginning with the 2020 calendar year through January 1, 2029 in an amount equal to the lesser of (i) 1% of the outstanding capital stock on December 31st, or (ii) such lesser amount determined by the Board of Directors. Under the evergreen provision, on January 1, 2020, an additional 125,610 shares became available for issuances under the ESPP. There has been no stock-based compensation expense incurred related to the ESPP for the year ended December 31, 2019.

Common stock reserved for future issuance consists of the following at December 31, 2019:


Warrants to purchase common stock						461,273
Common stock option grants issued and outstanding						1,375,542
Common shares available for grant under the stock option plan						1,283,996
Common shares available for future issuance under ESPP						120,000
Total						3,240,811