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Share Based Compensation | 12 Months Ended
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Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Share Based Compensation | Note 14 – Share Based Compensation 2016 Equity Incentive Plan and Predecessor 2006 Equity Incentive Plan In February 2016, the Company adopted the 2016 Equity Incentive Plan (2016 Plan) as a successor to and continuation of the prior 2006 Equity Incentive Plan (2006 Plan). The 2016 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock awards to directors, employees, and consultants. Awards granted under the 2016 Plan or the 2006 Plan that expired or otherwise terminated, or were forfeited, cancelled, or repurchased by the Company, became available for future issuance under the 2016 Plan. In addition, shares subject to an award were withheld to satisfy a participant’s tax withholding obligations, or were reacquired by the Company as consideration for the exercise or purchase price of a stock award also became available for future issuance under the 2016 Incentive Plan. 2020 Equity Incentive Plan Effective upon the closing of our initial public offering, the Company’s Board of Directors approved the 2020 Equity Incentive Plan (2020 Plan), which replaced the 2016 Plan. The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock awards. Officers, directors, employees, consultants, agents, and independent contractors who provide services to the Company may receive awards. The terms of all awards are governed by an agreement between the Company and the recipients, as administered and approved by the Compensation Committee of the Board of Directors. Employee Stock Purchase Plan Effective with our initial public offering in October 2020, the Company’s Board of Directors and its stockholders approved the Company’s Employee Stock Purchase Plan (ESPP). A total of 338,106 shares of our common stock have been reserved for issuance under the ESPP. The maximum number of shares of our common stock available under the ESPP will automatically increase on the first trading day of each calendar year, commencing January 2021, by an amount equal to the lesser of (i) 1% of the shares of our common stock issued and outstanding on December 31 of the immediately preceding calendar year, and (ii) an amount determined by our Board of Directors. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company’s common stock on the first or last day of the offering period, whichever is lower. No employee may participate in an offering period if the employee owns 5% or more of the total combined voting power or value of the Company’s stock. The initial offering period will commence from January 1, 2021 through August 31, 2021. On a going forward basis, the ESPP provides for successive six-month offering periods beginning on September 1st and March 1st of each year. Shares Reserved Subject to All Plans The number of shares reserved for issuance under the 2020 Plan is 1,893,395, plus an annual increase added on the first day of each calendar year, beginning with the calendar year ending December 31, 2022, and continuing until, and including, the calendar year ending December 31, 2030. The annual increase will be equal to the lesser of (i) 4% of the number of shares of our common stock issued and outstanding as of December 31st of the immediately preceding calendar year and (ii) such lesser amount determined by the Board of Directors. Up to 1,893,395 shares of our common stock that may be issued under the 2020 Plan may be issued in satisfaction of incentive stock option awards. Under the 2006 Plan, the Company is authorized to grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards and restricted stock units up to 831,389 total award shares. No additional awards may be granted under the 2006 Plan. Unallocated shares under the 2006 Plan were added to the shares available for issuance under the 2016 Plan. Under the 2016 Plan, which is a successor to and continuation of the 2006 Plan, the Company is authorized to grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and stock appreciation rights up to 1,431,964 total shares, plus any shares subject to stock awards made under the 2006 Plan. Our Compensation Committee may grant other stock awards that are based on or related to shares of our common stock, such as awards of shares of common stock granted as bonus and not subject to any vesting conditions, deferred stock units, stock purchase rights, and shares of our common stock issued in lieu of our obligations to pay cash under any compensatory plan or arrangement. To date, t he Company has granted service-condition RSUs. To the extent an equity award granted under the 2020 Plan (other than any substitute award) or granted under any other equity plan maintained by us under which awards are outstanding as of the effective date of the 2020 Plan (the Prior Plans) expires or otherwise terminates without having been exercised or paid in full, or is settled in cash, the shares subject to such award will become available for future grant under the 2020 Plan. In addition, to the extent shares subject to an award are withheld to satisfy a participant’s tax withholding obligation upon the exercise or settlement of such award (other than any substitute award) or to pay the exercise price of a stock option granted under the 2020 Plan or a Prior Plan, such shares will become available for future grant under the 2020 Plan. The total number of shares available for grant under all Plans was 4,647,380 at December 31, 2020. Description of Awards Granted The Company has granted incentive stock options, non-statutory stock options, performance-based stock options, and restricted stock units. Incentive stock options, which may only be issued to employees, are granted at an exercise price per share equal to the fair market value per share of the underlying common stock on the grant date, and vest over time as determined by the Compensation Committee, provided that the term of the options may not exceed ten years from the date of grant. Accelerated vesting may occur in the event of an optionee's death, disability, or other events. Non-statutory stock options may be issued to non-employees and directors, with exercise prices, vesting conditions, option term and other conditions as determined by the Compensation Committee. Performance-based stock options are typically granted on an annual basis and consist of a performance-based and service-based component. The performance targets and vesting conditions for performance-condition options are based on achievement of recognized revenue targets. Performance-based options vest in three equal annual installments beginning one year after the grant date, pending certification of performance achievement by the Compensation Committee and continued service. The fair value of performance-condition awards is based on the closing market price of the Company’s common stock on the grant date. Compensation expense, net of forfeitures, is updated for the Company’s expected performance level against performance goals at the end of each reporting period. On January 1, 2019, the Company granted 168,466 performance-condition options, with an exercise price of $0.77 per share and a term of ten years. During the year ended December 31, 2020, the performance conditions were met and 56,155 options vested. During the year ended December 31, 2019, the performance conditions were not met and 56,155 options were forfeited. As of December 31, 2020, there were 56,156 performance condition options outstanding with a remaining life of approximately eight years. Restricted stock units and the related terms and conditions are awarded at the discretion of the Compensation Committee. RSU holders have a contractual right to receive a share of common stock when vested. RSUs generally vest over three years. RSU agreements may provide for accelerated vesting in the event of a stock unit holder's death, disability, or retirement or other events. Bonus-To-Options Program The Company also has a Bonus-to-Options Program (the “Bonus Option Program”), which is separate from predecessor Plans and was initially adopted by the Board of Directors in 2008, and subsequently amended and restated in 2010, 2011 and 2015. For fiscal year 2021, the Bonus Option Program is subject to the shares reserved under the 2020 Plan. The Bonus Option Program, which is limited to participation of the Chief Executive Officer, direct reports to the Chief Executive Officer and Vice Presidents of the Company, allows participants who so elect to convert all or a portion of their annual cash bonus into fully vested, non-qualified stock options to purchase shares of common stock (Bonus Options). The exercise price for the options under the Bonus Option Program equals the then current price for the shares of the common stock as of the grant date, as disclosed below under “Fair Value of Common Stock”. Bonus Options issued must be exercised within a ten-year term. A maximum of 1% of the fully diluted equity, as of December 31 of the year for which the bonus was awarded, may be issued in any one year to the participants. As of December 31, 2020, there were 173,229 options outstanding under the Bonus Option Program. These options are fully vested and have a weighted average exercise price of $11.11 per share and have an intrinsic value of approximately $1.6 million as of December 31, 2020. During the twelve-month period ended December 31, 2020, the Company accrued $3.4 million as stock compensation expense associated with the estimate of options to be delivered to eligible participants under the Bonus Option Program and which were granted in February 2021 by the Compensation Committee of the Board of Directors. In determining the amount of stock compensation to recognize under the Bonus Option Program, the Company estimates the bonus attainment for the year and determines the expected number of options to be delivered to eligible participants. A Black-Scholes option pricing model is used to determine the estimated fair value of the expected number of options to be delivered to eligible participants. The key elements in determining the estimated fair value include assumptions for volatility, the risk free interest rate, expected dividends and strike price, utilizing the measurement date closing stock price until the grants are authorized. Share-Based Compensation Expense Pre-tax share-based compensation expense reported in the Company’s statements of operations was (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Research and development |  | $ | 589 |  |  | $ | 33 |
Sales, marketing, general and administrative |  |  | 3,120 |  |  |  | 137 |
Total |  | $ | 3,709 |  |  | $ | 170 |
The unrecognized remaining share-based compensation expense for options and RSUs was approximately $0.6 million as of December 31, 2020, and is expected to be amortized to expense over the next 3.7 years. Stock Options Stock option activity during the year ended December 31, 2020, excluding the Bonus Option Program described above, was (in thousands, except weighted average exercise price and weighted average contractual life):
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Outstanding - December 31, 2019 |  |  | 1,916 |  |  | $ | 1.72 |  |  |  | 7.6 |  |  | $ | — |
Granted |  |  | 828 |  |  |  | 2.81 |  |  |  | — |  |  |  | — |
Forfeited/canceled |  |  | (55 | ) |  |  | 0.60 |  |  |  | — |  |  |  | — |
Exercised |  |  | (368 | ) |  |  | 3.65 |  |  |  | — |  |  |  | — |
Outstanding ‑ December 31, 2020 |  |  | 2,321 |  |  | $ | 1.82 |  |  |  | 7.4 |  |  | $ | 42,580 |
Exercisable ‑ December 31, 2020 |  |  | 1,190 |  |  | $ | 2.35 |  |  |  | 6.3 |  |  | $ | 21,194 |
Fair Value of Common Stock Prior to the Company’s initial public offering, the fair value of the Company’s common stock underlying the stock options was determined by the Board of Directors with assistance from management and, in part, on input from an independent third-party valuation firm. The Board of Directors determined the fair value of common stock by considering a number of objective and subjective factors, including valuations of comparable companies, sales of convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. Subsequent to the Company’s initial public offering, the fair value of the Company’s common stock is determined based on its closing market price. The fair value of each option grant prior was estimated on the grant date using the Black‑Scholes option pricing model with the following weighted average assumptions for the year ended December 31, 2020:
Risk‑free rate |  |  | 0.34 | %
Expected term (in years) |  |  | 5.73 |
Expected dividend yield |  | —% |
Expected volatility |  |  | 77 | %
The Company estimated volatility based on the historical volatility of its peer group and average expected life based on the review of historical exercise behavior of option grants with similar vesting periods. Restricted Stock Units and Restricted Stock Unit Activity Service-condition RSUs were granted to Board members and vest over three years, 40% over the first two years and the remaining 60% over the third year from the grant date. During the year ended December 31, 2020, the Company granted 52,736 service-condition RSUs. As of December 31, 2020, there were 79,104 RSUs outstanding, with a weighted average grant date fair value of $6.83 per share.

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