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, 2021, 332,000 shares are available for issuance under the 2016 Plan.

The vesting 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.

Commencing in 2019, each non-employee member of the board of directors will receive an annual award on the first trading day in February 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).

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, 2021 and 2020, are provided in the following table:


	December 31,			December 31,
	2021			2020
Expected dividend yield		0	%		0	%
Expected volatility		52.4	%		44.1	%
Expected term (years)		5.6			5.8
Risk-free interest rate		0.7	%		1.5	%

A summary of the Company’s stock option activity is as follows (shares in thousands):


				Weighted average
	Number of stock options			Exercise price		Remaining contractual term (in years)
Balance at December 31, 2020		1,760		$	10.07		7.6
Granted		601			20.67
Exercised		(226	)		11.11
Expired/Forfeited		(135	)		15.09
Balance at December 31, 2021		2,000			12.79		7.3

Vested and exercisable at December 31, 2021		1,139			9.56		6.3
Vested and expected to vest at December 31, 2021		2,000			12.79		7.3

During the year ended December 31, 2021, the Company received proceeds of $2.5 million from the exercise of options with an intrinsic value of $2.4 million. 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.

The weighted average grant-date fair values of options granted during the years ended December 31, 2021 and 2020, were $9.86 and $4.30, respectively. For stock options vested and expected to vest, the aggregate intrinsic value as of December 31, 2021 and December 31, 2020 was $2.2 million and $13.6 million respectively. The grant date fair value of shares vested during the years ended December 31, 2021 and 2020, was $1.9 million and $2.0 million, respectively.

At December 31, 2021 and 2020, there was $5.5 million and $3.0 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 2.5 years.

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, 2020		202		$	10.51
Grants		258			20.64
Vested and released		(62	)		10.50
Forfeited		(65	)		14.63
Balance at December 31, 2021		333			17.55

Commencing in 2019, 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, 2021, 10,500 restricted stock units with an average fair value of $22.51 per share were issued to the members of the Company’s board of directors of which 2,500 shares vest equally after each anniversary over a three-year period and the remaining options vesting on the first anniversary of the grant date. 247,200 restricted stock units with an average fair value of $20.56 per share were issued to employees which vest equally after each of the annual anniversaries over a four-year period. During the year ended December 31, 2020, 16,200 restricted stock units with a fair value of $9.35 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 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.

As of December 31, 2021, there was $4.4 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 2.9 years.

The Company currently uses authorized and unissued shares to satisfy share award exercises.

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, 2021, the Company received proceeds of $0.3 million from the issuance of 27,300 shares and during the year ended December 31, 2020, proceeds of $0.2 million from the issuance of 27,000 shares under the ESPP.

The stock-based compensation is reflected in the statements of operations as follows (in thousands):


	For the Years Ended December 31,
	2021		2020
Cost of goods sold	$	3	$	2
Research and development		777		548
Sales and marketing		919		390
General and administrative		2,350		1,624
Total stock-based compensation expense	$	4,049	$	2,564