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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | 12. Stock-Based Compensation The Company adopted the 2008 Stock Plan (“2008 Plan”) under which it may issue stock options to purchase shares of common stock, and award restricted stock and stock appreciation rights to employees, Directors and consultants. The 2008 Plan expired in March 2018 and all award issuance therefore ceased. Options generally vest over a four-year period with a one-year cliff. The option term is no longer than five years for incentive stock options for which the grantee owns greater than 10% of the Company’s capital stock and no longer than 10 years for all other options. The Company has a repurchase option on unvested restricted stock exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason. The Company’s repurchase right lapses in accordance with the vesting terms. Options outstanding under the 2008 Plan will remain outstanding until they are exercised, canceled or expire. In May 2018, the Company adopted the 2018 Stock Plan (“2018 Plan”) under which the Company may issue stock options to purchase shares of common stock, and award restricted stock and stock appreciation rights to employees, Directors and consultants. Under the 2018 Plan, the Board of Directors may grant incentive stock options or nonqualified stock options. Incentive stock options may only be granted to Company employees. The 2018 Plan expired in May 2023 and all award issuance therefore ceased. The exercise price of incentive stock options and non-qualified stock options cannot be less than 100% of the fair value per share of the Company’s common stock on the grant date. If an individual owns more than 10% of the Company’s outstanding capital stock, the price of each share incentive stock option will be at least 110% of the fair value. Fair value was determined by the Board of Directors. Options generally vest over a four-year period with a one-year cliff. The option term is no longer than five years for incentive stock options for which the grantee owns greater than 10% of the Company’s capital stock and no longer than 10 years for all other options. The Company has a repurchase option on unvested restricted stock exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason. The Company’s repurchase right lapses in accordance with the vesting terms. Options outstanding under the 2018 Plan will remain outstanding until they are exercised, canceled or expire. In May 2023, the Company adopted the 2023 Equity Incentive Plan (“2023 Plan”) under which the Company may issue stock options to purchase shares of common stock, award restricted stock, restricted stock units (“RSU”), performance stock units (“PSUs”), dividend equivalents, stock appreciation rights, and other stock-based or cash-based awards to employees, Directors and consultants. Stock options granted to newly hired employees generally vest over a four-year period, following the date of grant, with 25% vesting on the first anniversary of the grant date and the remaining vesting in equal monthly installments thereafter, and grants of additional stock options to employees generally vest in equal monthly installments over a four-year period with no cliff vesting. As of December 31, 2024, 557,959 stock options granted under the 2023 Plan had vested and were exercisable. There have been no stock options exercised under the 2023 Plan. The RSUs generally vest over a three-year period, following the date of grant, with a third of the award vesting on each year on the annual anniversary of the grant date. Collectively, the 2008 Stock Plan, 2018 Stock Plan and the 2023 Equity Incentive Plan are referred to as “the Plans”. The Company measures stock-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company also measures the PSU awards at their grant-date fair value. If the performance goals are not met, no compensation expense is recognized and any recognized compensation expense is reversed. The Company recorded stock-based compensation expense in the following expense categories in its accompanying condensed consolidated statements of operations and comprehensive loss:
|  | Year Ended December 31, |
(in thousands) |  | 2024 |  |  | 2023 |
Cost of sales |  | $ | 141 |  |  | $ | 125 |
Research and development |  |  | 1,231 |  |  |  | 648 |
Sales and marketing |  |  | 2,104 |  |  |  | 1,387 |
General and administrative |  |  | 4,245 |  |  |  | 1,648 |
Total stock-based compensation(1) |  | $ | 7,721 |  |  | $ | 3,808 |
(1) A portion of the stock-based compensation in the table above pertains to Incentive Stock Options, which are nondeductible and the balance that is related to stock-based compensation is offset by valuation allowance. Therefore, we have excluded the income tax effect associated with the stock-based compensation in the calculation above. Option Exchange Program On November 12, 2024, the Company commenced an offer to certain eligible employees and directors the opportunity to exchange certain outstanding options to purchase shares of common stock, for new options (“Replacement Options”) to purchase a number of shares of our common stock (the “Option Exchange”). The Option Exchange expired at 11:59 P.M. Eastern Time on December 10, 2024. Pursuant to the terms and conditions of the Option Exchange, the Company accepted for exchange eligible options to purchase an aggregate of 725,028 shares of common stock, representing approximately 96.6% of the total shares of common stock underlying such eligible options. All surrendered options were cancelled effective as of the expiration of the Option Exchange. Effective promptly following the expiration of the Option Exchange, the Company granted Replacement Options to purchase an aggregate of 181,107 shares of common stock under the 2023 Equity Incentive Plan. The Company will not incur additional stock-based compensation expense as a result of the Option Exchange. Stock Options The following table summarizes stock option activity for the Plans for the year ended December 31, 2024:
|  | Number of shares |  |  | Weighted average exercise price per share |  |  | Weighted average remaining contractual term (years) |  |  | Aggregate intrinsic value (in 000’s) |
Outstanding at December 31, 2023 |  |  | 4,872,527 |  |  | $ | 3.64 |  |  |  | 6.10 |  |  |  |
Granted |  |  | 2,786,951 |  |  | $ | 1.49 |  |  |  |  |  |  |
Exercised |  |  | (789,097 | ) |  | $ | 0.34 |  |  |  |  |  |  |
Forfeited/expired |  |  | (1,467,291 | ) |  | $ | 8.31 |  |  |  |  |  |  |
Outstanding at December 31, 2024 |  |  | 5,403,090 |  |  | $ | 1.74 |  |  |  | 7.18 |  |  | $ | 581 |
Exercisable at December 31, 2024 |  |  | 2,630,187 |  |  | $ | 1.63 |  |  |  | 4.83 |  |  | $ | 568 |
As of December 31, 2024, the total unrecognized compensation expense related to unvested stock option awards was $6.9 million, which the Company expects to recognize over a weighted-average period of 2.9 years. The fair value of options is estimated using the Black-Scholes option pricing model, which takes into account inputs such as the exercise price, the value of the underlying common stock at the grant date, expected term, expected volatility, risk-free interest rate and dividend yield. The fair value of each grant of options was determined using the methods and assumptions discussed below. • The expected term of employee options with service-based vesting is determined using the “simplified” method, as prescribed in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of non-employee options is equal to the contractual term. • The expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the expected term assumption as described in SAB No. 107. • The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term. • The expected dividend yield is 0% because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its common stock. • As the Company’s common stock has not historically been publicly traded, its Board of Directors periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The fair value of each stock option was estimated on the date of grant using the weighted-average assumptions in the table below:
|  | December 31, 2024 |  |  | December 31, 2023 |
Expected volatility |  |  | 72.4 | % |  |  | 68.1 | %
Risk-free interest rate |  |  | 3.5 | % |  |  | 4.1 | %
Expected term (in years) |  |  | 6.0 |  |  |  | 6.0 |
Expected dividend yield |  |  | — | % |  |  | — | %
Restricted Stock Units The following table summarizes RSU activity for the 2023 Plan for the year ended December 31, 2024:
|  | Number of shares |  |  | Weighted average grant date fair value per share |
Outstanding at December 31, 2023 |  |  | 872,037 |  |  | $ | 11.27 |
Granted |  |  | 2,557,692 |  |  | $ | 1.40 |
Vested |  |  | (1,088,384 | ) |  | $ | 4.18 |
Forfeited/expired |  |  | (237,399 | ) |  | $ | 6.26 |
Outstanding at December 31, 2024 |  |  | 2,103,946 |  |  | $ | 3.50 |
As of December 31, 2024, the total unrecognized compensation expense related to unvested RSUs was $5.7 million, which the Company expects to recognize over a weighted-average period of 1.8 years. Performance Stock Units The PSUs vest over a three-year period beginning on January 1, 2025, with one-third of the award eligible to vest at the end of each fiscal year through December 31, 2027, based on the Company’s level of achievement of certain performance-based criteria tied to annual net revenue and adjusted EBITDA targets. The PSUs were valued using the market value of the Company’s common stock at the closing market price on the grant date. The following table summarizes the PSU activity for the 2023 Plan for the year ended December 31, 2024:
|  | Number of shares |  |  | Weighted average grant date fair value per share |
Outstanding at December 31, 2023 |  |  | — |  |  | $ | — |
Granted |  |  | 1,940,602 |  |  | $ | 1.58 |
Vested |  |  | — |  |  | $ | — |
Forfeited |  |  | (180,554 | ) |  | $ | 1.60 |
Outstanding at December 31, 2024 |  |  | 1,760,048 |  |  | $ | 1.58 |
As of December 31, 2024, the Company did not believe it was probable that the performance criteria associated with the PSUs would be achieved. Accordingly, no compensation expense has been recognized for these awards, and there is no unrecognized compensation cost associated with these awards. The Company will reassess the probability of achieving the performance conditions at each reporting date.

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