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Stock-based compensation

9 Months Ended

Sep. 30, 2021

13. Stock-based compensation

2010 Stock Option and Grant Plan

The Company’s 2010 Stock Option and Grant Plan (the “2010 Plan”) provided for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to employees, officers, directors and consultants of the Company.

At December 31, 2020, a total of 4,945,783 shares of common stock were reserved for issuance under the 2010 Plan. In March 2021, the Board of Directors approved an increase to the 2010 Plan shares by 382,889 shares. Upon the effectiveness of the IPO, no additional awards will be granted under the 2010 Plan and shares of existing outstanding options that are returned will be returned and can be granted under the 2021 Incentive Award Plan (described below).

2021 Incentive Award Plan

In July 2021, the Board of Directors adopted, and the Company’s stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective in connection with the IPO of Class A common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based and cash-based awards. The 2021 Plan has a term of ten years. The aggregate number of shares of Class A common stock available for issuance under the 2021 Plan is equal to (i) 4,200,000 shares; (ii) any shares which are subject to the 2010 Plan awards that become available for issuance under the 2021 Plan; and (iii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 5% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the Board of Directors. No more than 33,900,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. As of September 30, 2021, there are 4,187,990 shares available for issuance under the 2021 Plan.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees and directors:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Risk-free interest rate	0.96	%	0.34	%	0.90	%	0.36	%
Expected term (in years)	5.8		6.0		6.0		6.0
Expected volatility	43.7	%	90.4	%	51.5	%	90.3	%
Expected dividend yield	0	%	0	%	0	%	0	%

Stock options

The following table summarizes the Company’s stock option activity since December 31, 2020 (in thousands, except for share and per share data):


				Weighted
		Weighted		average
	Number of	average		remaining	Aggregate
	shares	exercise price		contractual term	intrinsic value
				(in years)
Outstanding as of December 31, 2020	3,604,584	$	0.92	8.12	$	4,272
Granted	1,732,182		9.15
Exercised	(111,149)		2.67
Expired	(34,447)		1.00
Forfeited	(667,866)		2.12
Outstanding as of September 30, 2021	4,523,304	$	3.88	7.68	$	66,231
Options vested and expected to vest as of September 30, 2021	4,523,304	$	3.88	7.68	$	66,231
Options exercisable as of September 30, 2021	2,134,381	$	1.25	6.17	$	36,777

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock (or Class A common stock as of September 30, 2021) for those options that had exercise prices lower than such fair value.

The intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $0.4 million and zero, respectively.

The weighted average grant-date fair value per share of stock options granted during the three months ended September 30, 2021 and 2020 was $8.33 and $0.55, respectively, and during the nine months ended September 30, 2021 and 2020 was $4.05 and $0.55, respectively.

Restricted stock

In February 2021, the Company granted 248,903 shares of restricted stock to an employee under the 2010 Plan with a four-year vesting term. In connection with the grant, the employee paid $0.5 million, which represents the $2.10 per share fair value of the common stock on the date of the restricted stock grant. The restricted common stock includes a repurchase right, whereas upon the occurrence of the employee’s resignation or termination for cause or good reason the Company shall have the right to repurchase unvested restricted common stock shares. At September 30, 2021 and December 31, 2020, the Company has $0.7 million and zero in unvested restricted common stock liability included in other long-term liabilities, respectively.

The following table summarizes the Company’s restricted stock activity since December 31, 2020 (in thousands except for share and per share data):


		Weighted
	Number of	average
	shares	fair value
		(in years)
Unvested as of December 31, 2020	-
Granted	248,903	$	2.10
Vested	-
Forfeited	-
Unvested as of September 30, 2021	248,903	$	2.10

2021 Employee Stock Purchase Plan

In July 2021, the Board of Directors adopted, and the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective in connection with the IPO of Class A common stock. The aggregate number of shares of Class A common stock available for issuance under the 2021 ESPP is equal to (i) 400,000 shares and (ii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 1% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the Board of Directors. No more than 6,300,000 shares of Class A common stock may be issued under the 2021 ESPP. As of September 30, 2021, no offering periods have been initiated.

Stock-based compensation expense

Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenue	$	106	$	20	$	221	$	62
General and administrative		345		72		680		223
Sales and marketing		76		11		158		42
Research and development		57		12		106		34
Total stock-based compensation expense	$	584	$	115	$	1,165	$	361

As of September 30, 2021, total unrecognized compensation expense related to unvested stock options held by employees and directors was $6.2 million, which is expected to be recognized over a weighted average period of 1.4 years.