Quarterly report pursuant to Section 13 or 15(d)

Equity Incentive Plans

Equity Incentive Plans

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Note 12. Equity Incentive Plans

Stock options:

A summary of option activities under the 2005 Stock Plan, as amended in January 2010 and November 2012 (the "2005 Plan") and 2017 Equity Incentive Plan (the “2017 Plan") during the nine months ended September 30, 2022 is as follows:


	Number of Options Outstanding			Weighted Average Exercise Price
Outstanding as of December 31, 2021		783,928		$	28.00
Granted		530,122		$	27.01
Exercised		(22,689	)	$	10.16
Canceled		(33,190	)	$	34.02
Outstanding as of September 30, 2022		1,258,171		$	27.73

Under an “evergreen” provision, the number of shares of common stock reserved for issuance under the 2017 Plan will automatically increase on January 1 of each year, beginning on January 1, 2018 and ending on and including January 1, 2027, by 5% of the total number of shares of the Company's capital stock outstanding on December 31 of the preceding calendar year or a lesser number of shares determined by the Board. In accordance with the evergreen provision, the number of shares of common stock reserved for issuance under the 2017 Plan was increased on January 1, 2022 by 585,172 shares, which was equal to 5% of the total number of shares of common stock outstanding on December 31, 2021.

Restricted stock units:

A summary of restricted stock unit ("RSU") activities under the 2017 Plan during the nine months ended September 30, 2022 is as follows:


	Number of Restricted Stock Units			Weighted Average Grant Date Fair Value per RSU
Unvested awards outstanding as of December 31, 2021		128,810		$	35.09
Granted		198,192		$	26.58
Vested		(87,460	)	$	31.83
Canceled		(2,830	)	$	26.50
Unvested awards outstanding as of September 30, 2022		236,712		$	29.27

During the three and nine months ended September 30, 2022, the Company modified RSUs to accelerate vesting for two individuals in respect of 5,849 RSUs and cancelled the award of another individual in respect of 1,887 RSUs. The Company accounted for these as modifications of those awards and recognized net incremental compensation expense of $0.01 million.

The incremental compensation cost is measured as the excess of the fair value of the modified award over the fair value of the original award immediately before its terms were modified and recognized as compensation expense on the date of modification for vested awards.

2017 Employee Stock Purchase Plan

There were 20,630 shares issued under the 2017 Employee Stock Purchase Plan ("2017 ESPP") during nine months ended September 30, 2022. No shares were issued during the three months ended September 30, 2022. The 2017 ESPP contains an “evergreen” provision that provides for an automatic annual share increase on January 1 of each year, in an amount equal to the lesser of (1) 2% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, (2) 150,000 shares or (3) such number of shares as determined by the Board. In accordance with the evergreen provision, the number of shares of common stock reserved for issuance under the 2017 ESPP was increased on January 1, 2022 by 150,000 shares. The number of shares available for grant under the 2017 ESPP was 528,698 as of September 30, 2022.

Total stock-based compensation expense associated with the 2005 Plan, 2017 Plan and 2017 ESPP is recorded in the condensed consolidated statements of operations and was allocated as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of revenues	$	499	$	372	$	1,482	$	1,179
Sales and marketing		427		399		1,336		1,182
Research and development		305		181		823		543
General and administrative		926		501		2,504		1,418
Total	$	2,157	$	1,453	$	6,145	$	4,322