Stock-based compensation is recorded in the consolidated statements of operations as follows (in thousands):


	Three months ended September 30,					Nine months ended September 30,
	2024		2023			2024		2023
Cost of goods sold	$	97	$	29		$	220	$	73
Research and development		260		230			988		747
Sales and marketing		88		(223	)		243		53
General and administrative		636		487			1,883		1,599
Total stock-based compensation expense	$	1,081	$	523		$	3,334	$	2,472

The following table summarizes the outstanding stock option activity during the period indicated (shares in thousands):


				Weighted average
	Number of stock options			Exercise price		Remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Balance at December 31, 2023		2,104		$	10.20		6.2	$	329
Granted		407		$	5.07
Exercised		(10	)	$	3.36			$	18
Expired/Forfeited		(46	)	$	11.87
Balance at September 30, 2024		2,455		$	9.35		6.0	$	2,900

Vested and exercisable at September 30, 2024		1,677		$	11.09		4.6	$	1,026
Vested and expected to vest at September 30, 2024		2,455		$	9.35		6.0	$	2,900

The weighted average grant date fair value of options granted during the nine months ended September 30, 2024 was $2.82. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. For stock options vested and expected to vest, the aggregate intrinsic value as of September 30, 2024 was $2.9 million.

At September 30, 2024, there was $2.0 million 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 2.3 years.

The following table summarizes the Company’s restricted stock unit (RSU) activity during the period indicated (shares in thousands):


	Restricted stock units			Weighted average grant date fair value
Balance at December 31, 2023		706		$	6.97
Grants		494		$	5.19
Vested and released		(210	)	$	7.80
Forfeited		(100	)	$	6.47
Balance at September 30, 2024		890		$	5.84

As of September 30, 2024, there was $3.5 million of total unrecognized compensation cost related to unvested RSUs having a weighted average remaining contractual term of 2.5 years.

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, 2023		110	$	1.79
Grants		—	$	—
Vested and released		—	$	—
Forfeited		—	$	—
Balance at September 30, 2024		110	$	1.79

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. As of September 30, 2024, there was $5,730 of total unrecognized compensation cost related to unvested PSUs, having a weighted average remaining contractual term of 0.6 years.

We estimate the fair value of PSUs with a market condition using a Monte Carlo simulation model as of the date of grant using historical volatility.

When incurred, share-settled obligations to non-employees that will be paid in restricted stock units are recorded as accrued expense liability and stock-based compensation expense.

The following table summarizes the Company’s share-settled obligation RSU grants, which immediately vested during the period indicated:


RSU grants that settled obligations (in thousands)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Grant date fair value	$	31.7	$	—	$	227.1	$	949.2
RSU shares granted and vested		4		—		49		187

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 three months ended September 30, 2024, the Company received $0.1 million from the issuance of 22,957 shares under the ESPP. During the nine months ended September 30, 2024, the Company received $0.2 million from the issuance of 45,809 shares under the ESPP.