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Stock Based Compensation | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation |
(10) | Stock Based Compensation
(a) Stock Options In August 2016, the Company’s board of directors adopted the 2016 Equity Incentive Plan (the 2016 Plan) for employees, directors, and consultants. As of December 31, 2020 , 357,000 shares are available for issuance under the 2016 Plan. The service period for stock options granted to employees is generally one to four years. All stock options granted under the 2016 Plan have a maximum contractual term of ten years. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The weighted average assumptions for grants during the years ended December 31, 2020 and 2019, are provided in the following table. Commencing in 2019 each non-employee member of the board of directors will receive an annual award on the first trading day in February of each year of (1) a number of stock options having a value of $30,000 (with the award to the chairperson of the board of directors having a value of $45,000), (calculated as of the date of grant in accordance with the Black-Scholes option pricing model) and (2) the restricted stock units described below.
|  | As of December 31, |
|  | 2020 |  |  | 2019 |
Valuation assumptions: |  |  |  |  |  |  |  |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 44.1 | % |  |  | 40.8 | %
Expected term (years) |  |  | 5.8 |  |  |  | 6.0 |
Risk-free interest rate |  |  | 1.5 | % |  |  | 2.1 | %
A summary of the Company’s stock option activity is as follows (shares in thousands):
|  | Number of shares |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual term (years) |
Balance at December 31, 2019 |  |  | 1,600 |  |  | $ | 9.98 |  |  |  |  |
Granted |  |  | 402 |  |  |  | 10.05 |  |  |  |  |
Exercised |  |  | (120 | ) |  |  | 8.49 |  |  |  |  |
Expired/Forfeited |  |  | (122 | ) |  |  | 10.38 |  |  |  |  |
Balance at December 31, 2020 |  |  | 1,760 |  |  |  | 10.07 |  |  |  | 7.6 |
Vested and exercisable at December 31, 2020 |  |  | 984 |  |  | $ | 9.40 |  |  |  | 6.7 |
Vested and expected to vest at December 31, 2020 |  |  | 1,760 |  |  | $ | 10.07 |  |  |  | 7.6 |
During the year ended December 31, 2020, the Company received proceeds of $1.0 million from the exercise of options with an intrinsic value of $0.6 million. During the year ended December 31, 2019, the Company received proceed s of $0.7 million from the exercise of options with an intrinsic value of $1.5 million. The weighted average grant-date fair values of options granted during the years ended December 31, 2020 and 2019, were $4.30 and $4.93, respectively. For fully vested stock options the aggregate intrinsic values were $8.2 million and $2.3 million as of December 31, 2020 and 2019, respectively. For stock options expected to vest the aggregate intrinsic values were $5.3 million and $0.3 million as of December 31, 2020 and 2019, respectively. The grant date fair value of shares vested during the years ended December 31, 2020 and 2019, was $2.0 million and $2.1 million, respectively. At December 31, 2020 and 2019, there was $3.0 million and $3.2 million, respectively, of total unrecognized compensation cost related to unvested stock options granted under the plans. That cost is expected to be recognized over the next 2.4 years. (b) Restricted Stock Units The following table summarizes the Company’s restricted stock unit activity (shares in thousands):
|  | Restricted stock units |  |  | Weighted average grant date fair value |
Balance at December 31, 2019 |  |  | 80 |  |  | $ | 11.43 |
Grants |  |  | 151 |  |  |  | 10.17 |
Vested |  |  | (29 | ) |  |  | 11.28 |
Balance at December 31, 2020 |  |  | 202 |  |  |  | 10.51 |
Each non-employee member of the board of directors receives, on the first trading day in February of each year, such number of restricted stock units as is determined by dividing (a) $30,000 (with the award to the chairperson of the board of directors having a value of $45,000) by (b) the 30-day trailing average share price. During the year ended December 31, 2020, 16,165 restricted stock units with a fair value of $9.35 per share were issued to the members of the Company’s board of directors which shares vest on the first anniversary of the grant date, and 135,000 restricted stock units with a fair value of $10.26 per share were issued to employees which shares vest equally after each of the annual anniversaries, on March 1 of the respective year, over a four-year period . During the year ended December 31, 2019, 14,175 restricted stock units with a fair value of $10.75 per share were issued to members of the Company’s board of directors which shares vest on the first anniversary of the grant date , and 81,303 restricted stock units with a fair value of $11.46 per share were issued to employees which shares vest equally after each of the annual anniversaries, on March 1 of the respective year, over a four-year period. As of December 31, 2020, there was $1.5 million of total unrecognized stock-based compensation expense related to non-vested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 2.6. The Company currently uses authorized and unissued shares to satisfy share award exercises.
| (c) | Employee Stock Purchase Plan (ESPP)
The Company maintains the Employee Stock Purchase Plan (ESPP) that provides employees an opportunity to purchase common stock through payroll deductions. The ESPP is implemented through consecutive 6-month offering periods commencing on March 1 and September 1 of each year. The first offering period under the ESPP commenced on March 1, 2019. The purchase price is set at 85% of the fair market value of the Company’s common stock on either the first or last trading day of the offering period, whichever is lower, and annual contributions are limited to the lower of 20% of an employee’s eligible compensation or such other limits as apply under Section 423 of the Internal Revenue Code for such plans such as the ESPP. The ESPP is intended to qualify as an employee stock purchase plan for purposes of Section 423 of the Internal Revenue Code. Based on the 15% discount and the fair value of the option feature of the ESPP, it is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. The Company currently uses authorized and unissued shares to satisfy share award exercises. During the year ended December 31, 2020, the Company received proceeds of $0.2 million from the issuance of 27,002 shares and during the year ended December 31, 2019, proceeds of $0.1 million from the issuance of 10,114 shares under the ESPP.
| (d) | Stock-based compensation expense
Stock-based compensation expense was $2.6 million and $2.2 million for the years ended December 31, 2020 and 2019, respectively. The stock-based compensation is reflected in the statements of operations as follows (in thousands):
|  | For the year ended December 31, |
|  | 2020 |  |  | 2019 |
Cost of goods sold |  | $ | 2 |  |  | $ | — |
Research and development |  |  | 548 |  |  |  | 474 |
Sales and marketing |  |  | 390 |  |  |  | 174 |
General and administrative |  |  | 1,624 |  |  |  | 1,556 |
Total |  |  | 2,564 |  |  |  | 2,204 |

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