Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.23.3
Stock-Based Compensation
9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
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 September 30, 2023, there were 1,114,318 shares reserved and 659,190 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 As a result of the Business Combination, the 2019 Plan was superseded by the 2021 Plan; therefore, no further awards will be granted under the 2019 Plan.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 an option exercisable for common stock of the Company based on the Exchange Ratio. As of September 30, 2023, there were 73,099 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:

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Stock options expense    
Cost of revenues $ 5 $ 3 $ 12 $ 13
Research and development 4 5 11 24
Selling, general and administrative 323 239 842 623
Total stock options expense $ 332 $ 247 $ 865 $ 660
Restricted stock units expense    
Cost of revenues $ 99 $ 98 $ 259 $ 205
Research and development 43 44 97 123
Selling, general and administrative 1,150 1,081 3,204 2,890
Total restricted stock units expense $ 1,292 $ 1,223 $ 3,560 $ 3,218
Total stock-based compensation $ 1,624 $ 1,470 $ 4,425 $ 3,878

The estimated unrecognized expense for stock options and RSUs not vested as of September 30, 2023, which will be recognized over the remaining requisite service period, is as follows:

Stock options unrecognized expense $ 2,371 
Stock options weighted-average remaining requisite service period (in years) 2.1
Restricted stock units unrecognized expense $ 6,964 
Restricted stock units weighted-average remaining requisite service period (in years) 1.7

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 nine months ended September 30, 2023 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, 2023 138,091 $ 45.60
Granted $
Exercised (9,502) $ 1.08
Forfeited (4,189) $ 14.52
Expired (1,093) $
Outstanding at September 30, 2023
123,307 $ 50.19 $ 7.3
Vested and exercisable at September 30, 2023
73,099 $ 38.69 $ 7.0
Changes in the status of the Company’s non-vested stock option awards for the nine months ended September 30, 2023 are presented in the table below.
Non-vested
Shares Under
Option
Weighted
Average
Grant Date
Fair Value per
Share
Non-vested at January 1, 2023 73,939 $ 35.00
Granted $
Vested (18,691) $ 70.00
Forfeited (5,040) $ 36.39
Non-vested at September 30, 2023
50,208 $ 56.75

The aggregate intrinsic value of options exercised were $0 and $106 during the three months ended September 30, 2023 and 2022, respectively.

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, 2023 188,223 $ 71.40
Granted 239,189 $ 5.45
Vested (44,661) $ 86.30
Forfeited (38,219) $ 52.01
Outstanding at September 30, 2023
344,532 $ 25.78

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. 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 $224 and $213 for the three months ended September 30, 2023 and 2022, respectively, and $721 and $578 for the nine months ended September 30, 2023 and 2022, respectively