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Stock Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Note 15. Stock Based Compensation Stock-based compensation expense Stock-based compensation is recorded in the consolidated statements of operations as follows (in thousands):
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Cost of goods sold |  | $ | 181 |  |  | $ | 3 |
Research and development |  |  | 1,056 |  |  |  | 777 |
Sales and marketing |  |  | 1,195 |  |  |  | 919 |
General and administrative |  |  | 2,546 |  |  |  | 2,350 |
Total stock-based compensation expense |  | $ | 4,978 |  |  | $ | 4,049 |
Stock Options 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, 2022 and 2021, are provided in the following table:
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected volatility |  |  | 57.4 | % |  |  | 52.4 | %
Expected term (years) |  |  | 5.6 |  |  |  | 5.6 |
Risk-free interest rate |  |  | 4.6 | % |  |  | 0.7 | %
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 (years) |  | Aggregate Intrinsic Value (in thousands) |
Balance at December 31, 2021 |  |  | 2,000 |  |  | $ | 12.79 |  |  |  | 7.3 |  | $ | 2,246 |
Granted |  |  | 451 |  |  | $ | 8.58 |  |  |  |  |  |
Exercised |  |  | (9 | ) |  | $ | 2.30 |  |  |  |  | $ | 59 |
Expired/Forfeited |  |  | (377 | ) |  | $ | 13.56 |  |  |  |  |  |
Balance at December 31, 2022 |  |  | 2,065 |  |  | $ | 11.78 |  |  |  | 6.7 |  | $ | 758 |
Vested and exercisable at December 31, 2022 |  |  | 1,370 |  |  | $ | 11.42 |  |  |  | 5.6 |  | $ | 758 |
Vested and expected to vest at December 31, 2022 |  |  | 2,065 |  |  | $ | 11.78 |  |  |  | 6.7 |  | $ | 758 |
During the year ended December 31, 2022, the Company received proceeds of $21,000 from the exercise of options. During the year ended December 31, 2021, the Company received proceeds of $2.5 million from the exercise of options. The weighted average grant-date fair values of options granted during the years ended December 31, 2022 and 2021, were $4.58 and $9.86 per share, respectively. The grant date fair value of shares vested during the years ended December 31, 2022 and 2021, was $3.4 million and $1.9 million, respectively. At December 31, 2022 and 2021, there was $3.7 million and $5.5 million, respectively of unrecognized compensation cost related to unvested stock options granted under the Company’s equity plans that is expected to be recognized over the next 2.5 years. 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, 2021 |  |  | 333 |  |  | $ | 17.55 |
Grants |  |  | 294 |  |  | $ | 8.14 |
Vested and released |  |  | (89 | ) |  | $ | 17.43 |
Forfeited |  |  | (94 | ) |  | $ | 15.50 |
Balance at December 31, 2022 |  |  | 444 |  |  | $ | 11.78 |
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, 2022, 19,098 restricted stock units with an average fair value of $9.46 per share were granted to the members of the Company’s board of directors of which fully vest on the one year anniversary of the grant date. Employees were granted 274,837 restricted stock units with an average fair value of $8.05 per share, which vest equally after each of the annual anniversaries over a three to four year period. During the year ended December 31, 2021, 10,500 restricted stock units with a fair value of $22.51 per share were granted to members of the Company’s board of directors which shares vest on the first anniversary of the grant date, and 247,200 restricted stock units with a 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. As of December 31, 2022, there was $3.8 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 2.8 years. The Company currently uses authorized and unissued shares to satisfy share award exercises. Performance Stock Units The following table summarizes the Company's performance stock unit (PSU) activity during the period indicated (shares in thousands):
|  | Performance stock units |  |  | Weighted average grant date fair value |
Balance at December 31, 2021 |  |  | — |  |  | $ | — |
Grants |  |  | 137 |  |  | $ | 2.09 |
Vested and released |  |  | — |  |  | $ | — |
Forfeited |  |  | — |  |  | $ | — |
Balance at December 31, 2022 |  |  | 137 |  |  | $ | 2.09 |
Service as well as market and performance conditions determine the number of PSUs that the holder will earn from 0% to 150% of the target number of shares. The percentage received is based on the Company common stock price targets over a three-year service period. Additionally, the Company must achieve or exceed 75% of the year to date revenue target measured at the end of the quarter in which the price target is achieved. The market conditions have not currently been met. As of December 31, 2022, there was $0.3 million of total unrecognized compensation cost related to unvested PSUs having a weighted average remaining contractual term of 2.3 years. We estimate the fair value of PSUs with a market condition using a Monte Carlo simulation model as of the date of grant to forecast performance achievement of market price and revenue targets. Key inputs in the valuation include cost of equity, market price volatility and discount rate. Share-Settled Obligation Share-based compensation expense for the year ended December 31, 2022 was $0.9 million for the liability classified restricted stock unit payout obligation related to the 2022 executive bonus accrual. The bonus accrual is based on probable achievement on financial and other performance targets. Employee Stock Purchase Plan (ESPP) The Company maintains the 2016 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 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. 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. 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, 2022, the Company received $0.4 million from the issuance of 47,852 shares and during the year ended December 31, 2021, the Company received $0.3 million from the issuance of 27,300 shares under the ESPP.

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