Stockholders' Equity (Deficit) | 18. STOCKHOLDERS’ EQUITY (DEFICIT) Authorized Capital Stock— The Company was authorized to issue 190,000,000 shares of common stock, with a par value of $0.000004 per share as of June 30, 2021 and December 31, 2020. Warrants— In May 2015, the Company issued warrants to acquire 116,350 shares of Common Stock at a price of approximately $17.19 per share to the placement agent as consideration for backstopping the financing completed in May 2015. These warrants were exercised in full as a cashless transaction during the first quarter of 2021. As a result of this cashless transaction, the resulting number of shares issued was 67,713 shares. Common Stock Issuances — T he Company issued the following shares of common stock: Three Months Ended June 30, 2021 2020 Shares Average Price per Share Total Consideration (in thousands) Shares Average Price per Share Total Consideration (in thousands) Acquisitions 9,322 $ 50.95 $ 475 791,139 $ 31.60 $ 25,000 Exercise of options 94,090 9.58 901 3,500 6.03 21 Restricted shares, net 2,112 56.31 — — — — Payment of earn-out liability 539,607 46.33 25,000 — — — Payment of purchase price true up 24,200 44.81 1,084 — — — Total 669,331 $ 41.20 $ 27,460 794,639 $ 31.49 $ 25,021 Six Months Ended June 30, 2021 2020 Shares Average Price per Share Total Consideration (in thousands) Shares Average Price per Share Total Consideration (in thousands) Acquisitions 81,062 $ 33.88 $ 2,746 791,139 $ 31.60 $ 25,000 Exercise of warrants 67,713 17.19 — — — — Exercise of options 424,150 7.28 3,086 3,500 6.03 21 Restricted shares, net 38,929 31.31 — — — — Payment of earn-out liability 539,607 46.33 25,000 — — — Payment of purchase price true up 24,200 44.81 1,084 — — — Total 1,175,661 $ 29.17 $ 31,916 794,639 $ 31.49 $ 25,021 Employee Equity Incentive Plans —The Company has two plans under which stock-based awards have been issued: (i) the Montrose Amended & Restated 2017 Stock Incentive Plan (“2017 Plan”) and (ii) the Montrose Amended & Restated 2013 Stock Option Plan (“2013 Plan”) (collectively the “Plans”). As of June 30, 2021 and June 30, 2020, there was $16.4 million and $6.5 million, respectively, of total unrecognized stock compensation expense related to unvested options and restricted stock granted under the Plans. Such unrecognized expense is expected to be recognized over a weighted-average three year period June 30, 2021 2017 Plan 2013 Plan Total Shares authorized to be issued 3,944,750 2,047,269 5,992,019 Shares available for grant 1,609,687 — 1,609,687 June 30, 2020 2017 Plan 2013 Plan Total Shares authorized to be issued 1,066,160 2,050,244 3,116,404 Shares available for grant 20,817 — 20,817 Total stock compensation expense for the Plans was as follows: Three Months Ended June 30, 2021 2020 2017 plan 2013 plan 2017 plan 2013 plan Options Restricted Stock Options Total Options Restricted Stock Options Total Cost of revenue $ 290 $ — $ — $ 290 $ 342 $ — $ 61 $ 403 Selling, general and administrative expense 1,790 330 6 2,126 299 370 68 737 Total $ 2,080 $ 330 $ 6 $ 2,416 $ 641 $ 370 $ 129 $ 1,140 Six Months Ended June 30, 2021 2020 2017 plan 2013 plan 2017 plan 2013 plan Options Restricted Stock Options Total Options Restricted Stock Options Total Cost of revenue $ 896 $ — $ 10 $ 906 $ 697 $ — $ 131 $ 828 Selling, general and administrative expense 2,794 512 9 3,315 586 740 136 1,462 Total $ 3,690 $ 512 $ 19 $ 4,221 $ 1,283 $ 740 $ 267 $ 2,290 Montrose Amended & Restated 2017 Stock Incentive Plan Restricted Stock— The Company issues restricted stock to certain 2017 Plan participants as Director’s compensation. These shares of restricted stock granted in the three and six months ended June 30, 2021 and June 30, 2020 vest one year from the date of grant, or, in each case, in full upon a change in control, subject to the participant’s continued service as a Director throughout such date, or upon retirement. Members of the Board of Directors that receive stock-based compensation are treated as employees for accounting purposes. Restricted stock activity was as follows: Three Months Ended June 30, 2021 2020 Shares Average Price per Share Total (in thousands) Shares Average Price per Share Total (in thousands) Shares granted 4,534 $ 56.31 $ 255 — $ — $ — Six Months Ended June 30, 2021 2020 Shares Average Price per Share Total (in thousands) Shares Average Price per Share Total (in thousands) Shares granted 19,066 $ 36.99 $ 705 33,229 $ 31.60 $ 1,050 There were no forfeitures of restricted shares during the six months ended June 30, 2021 and June 30, 2020. There were 2,112 and 38,929 shares of restricted stock that became fully vested and were released as unrestricted shares of common stock during the three and six months ended June 30, 2021, respectively. No restricted shares vested and were released as unrestricted shares of common stock during the three or six months ended June 30, 2020. There was an aggregate of 286,239 and 273,122 restricted shares outstanding as of June 30, 2021 and June 30, 2020, respectively. Options —Options issued to all optionees under the 2017 Plan vest over four years from the date of issuance (or earlier vesting start date, as determined by the Board of Directors) as follows: one half half Options to Purchase Common Stock Weighted- Average Exercise Price per Share Weighted Average Grant Date Fair Value per Share Weighted Average Remaining Contract Life (in Years) Aggregate Intrinsic Value of In-The- Money Options (in Thousands) Outstanding at January 1, 2020 617,852 $ 24 $ 12 7.82 $ 4,696 Granted 160,712 32 12 — — Forfeited/ cancelled (5,500 ) 20 — — — Outstanding at June 30, 2020 773,064 26 12 8.03 4,651 Outstanding at January 1, 2021 1,840,229 23 12 9.09 15,598 Granted 232,470 38 21 — — Forfeited/ cancelled (13,425 ) 27 — — — Expired (1,250 ) 18 — — — Exercised (33,918 ) 20 — — 1,014 Outstanding at June 30, 2021 2,024,106 25 13 8.74 58,785 Exercisable at June 30, 2021 293,299 25 — 7.65 8,396 Options vested and expected to vest 2,024,106 25 — 8.74 58,785 The following weighted-average assumptions were used in the Black-Sholes option-pricing model calculation: June 30, June 30, 2021 2020 Common stock value (per share) $ 38.23 $ 31.60 Expected volatility 58.22 % 45.26 % Risk-free interest rate 0.73 % 0.49 % Expected life (years) 5.5-7.0 7.0 Forfeiture rate None None Dividend rate None None Montrose Amended & Restated 2013 Stock Option Plan —The following summarizes the activity of the 2013 Plan: Options to Purchase Common Stock Weighted- Average Exercise Price per Share Weighted Average Grant Date Fair Value per Share Weighted Average Remaining Contract Life (in Years) Aggregate Intrinsic Value of In-The- Money Options (in Thousands) Outstanding at January 1, 2020 1,855,469 $ 6 $ 1 6.40 46,617 Forfeited/ cancelled (1,250 ) 6 Expired (8,550 ) 6 — — — Exercised (3,500 ) 6 Outstanding at June 30, 2020 1,842,169 6 1 5.91 46,276 Outstanding at January 1, 2021 1,787,869 6 1 5.40 43,867 Exercised (389,232 ) 6 — — 15,922 Outstanding at June 30, 2021 1,398,637 6 1 4.88 65,982 Exercisable at June 30, 2021 1,390,812 6 — 4.88 65,651 Options vested and expected to vest 1,398,637 6 — 4.88 65,982 Total shares outstanding from exercised options were 673,350 shares and 205,100 shares as of June 30, 2021 and June 30, 2020, respectively. Common Stock Reserved for Future Issuances —The Company has reserved certain stock of its authorized but unissued common stock for possible future issuance in connection with the following: June 30, 2021 2020 Warrants — 2,002,550 Montrose 2013 Stock Incentive Plan 2,047,269 2,050,244 Montrose 2017 Stock Incentive Plan 3,944,750 1,066,160 Common stock reserved for future issuance 5,992,019 5,118,954 |