Annual report pursuant to Section 13 and 15(d)

Equity Incentive Plans

v3.22.4
Equity Incentive Plans
12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans Equity Incentive Plans
2021 Equity Incentive Plan
In connection with the Business Combination, the stockholders approved the 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan provides the Company the ability to grant incentive stock options, non-qualified stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance units, performance shares, cash-based awards and other stock-based awards. The purpose of the 2021 Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons for performing services and by motivating such persons to contribute to the growth and profitability of the Company and its subsidiaries. As of December 31, 2022, there were 17,794,239 shares reserved and 12,522,150 shares available for grant under the 2021 Plan.
Prior Lightning Systems' 2019 Equity Incentive Plan
The legacy Lightning Systems 2019 Equity Incentive Plan (“2019 Plan”) provided for the grant of incentive stock options, non-qualified stock options, and other awards. As a result of the Business Combination, the 2019 Plan was superseded by the 2021 Plan; therefore, no further awards will be granted under the 2019 Plan. In connection with the Business Combination, awards outstanding were converted into options exercisable for common stock of the Company based on the Exchange Ratio. As of December 31, 2022, there were 1,793,924 stock options previously granted and unexercised under the 2019 Plan, which remain subject to the terms and conditions of the 2019 Plan.
Compensation Expense
To date, the Company has issued stock option and restricted stock unit (“RSU”) awards. The Company recognizes stock-based compensation expense based on the fair value of the awards issued at the date of grant and amortized on a straight-line basis as the employee renders services over the requisite service period. Forfeitures are accounted for as they occur by reversing the expense previously recognized for non-vested awards that were forfeited during the period. The following table presents the stock-based compensation related to stock option and RSU awards for the periods presented:
Years ended December 31,
2022 2021
Stock options expense
Cost of revenues $ 17  $ 27 
Research and development 30  42 
Selling, general and administrative 737  731 
Total stock options expense $ 784  $ 800 
Restricted stock units expense
Cost of revenues $ 312  $ 45 
Research and development 183  13 
Selling, general and administrative 3,872  1,680 
Total restricted stock units expense $ 4,367  $ 1,738 
Total stock-based compensation $ 5,151  $ 2,538 
The estimated unrecognized expense for stock options and RSUs not vested as of December 31, 2022, which will be recognized over the remaining vesting period, is as follows:
Stock options unrecognized expense (in thousands) $ 2,120 
Stock options weighted-average remaining vesting period (in years) 2.2
Restricted stock units unrecognized expense (in thousands) $ 11,258 
Restricted stock units weighted-average remaining vesting period (in years) 2.5
Stock Option Awards
Stock option awards are issued to employees with an exercise price equal to the estimated fair market value per share at the date of grant and a term of 10 years. Stock option awards generally vest over 4 years. It is the Company’s policy to issue new shares upon option exercise. Changes in the Company’s stock options for the year ended December 31, 2022 are presented in the table below.
Number of
Options
Weighted
Average
Exercise Price
per Share
Aggregate
Intrinsic
Value
(in thousands)
Weighted
Average
Remaining Life
(in years)
Outstanding at January 1, 2022 3,209,517  $ 1.66 
Granted 520,834  $ 3.92 
Exercised (770,635) $ 0.19 
Forfeited (146,137) $ 4.31 
Expired (51,761) $ 5.98 
Outstanding at December 31, 2022 2,761,818  $ 2.28  $ 306  7.9
Vested and exercisable at December 31, 2022 1,283,032  $ 1.03  $ 216  7.4
Changes in the status of the Company’s non-vested share awards for the year ended December 31, 2022 are presented in the table below.
Non-vested
Shares Under
Option
Weighted
Average
Grant Date
Fair Value per
Share
Non-vested at January 1, 2022 2,137,050  $ 1.21 
Granted 520,834  $ 2.33 
Vested (1,032,961) $ 0.80 
Forfeited (146,137) $ 2.40 
Non-vested at December 31, 2022 1,478,786  $ 1.75 
The aggregate intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was $1,550 and $9,008, respectively. During the years ended December 31, 2022 and 2021, stock options issued were valued using a Black-Scholes option pricing model using the following assumptions:
Years ended December 31,
2022 2021
Expected volatility
61.0% to 61.0%
42.3% to 68.0%
Dividend yield 0% 0%
Risk-free interest rate
2.95% to 2.95%
0.20% to 1.04%
Expected term (in years) 6.25 6
The expected volatility was derived from the volatility of historical stock prices of similar publicly traded companies. The dividend yield represents the Company’s anticipated cash dividend over the expected term of the stock options. The risk-free interest rate is based on the U.S. Treasury yield curve rates with maturities consistent with the expected term of the related stock options. The expected term represents the period of time that the Company anticipates the stock options to be outstanding based on historical experience and future expectations.
Restricted Stock Unit Awards
The Company grants RSU awards to employees that generally vest over 3 years. RSU awards are valued based on the closing market price of the Company's common stock on the grant date.
Number of
RSUs
Weighted
Average
Grant Date
Fair Value per
Share
Outstanding at January 1, 2022 935,148  $ 7.59 
Granted 3,746,456  $ 3.13 
Released (465,648) $ 6.87 
Forfeited (451,488) $ 4.88 
Outstanding at December 31, 2022 3,764,468  $ 3.57 
Other Employee Benefits - 401(k) Savings Plan
The Company has an employee-directed 401(k) savings plan (the “401(k) Plan”) for all eligible employees over the age of 21. Under the 401(k) Plan, employees may make voluntary contributions based on a percentage of their pretax income, subject to statutory limitations. The Company matches 100% for the first 3% of each employee’s contribution and 50% for the next 2% of each employee’s contribution. The Company’s cash contributions are fully vested upon the date of match. The Company made matching cash contributions of $808 and $353 for the years ended December 31, 2022 and 2021, respectively.