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 September 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 —The Company issued the following shares of common stock: Three Months Ended September 30, 2021 2020 Shares Average Price per Share Total Consideration (in thousands) Shares Average Price per Share Total Consideration (in thousands) Common stock issued in connection initial public offering — $ — $ — 11,500,000 $ 15.00 $ 172,500 Acquisitions 62,738 $ 52.18 3,274 — — — Redemption of series A-1 preferred stock — — — 1,786,739 15.00 26,801 Exercise of warrant options — — — 2,534,239 0.01 25 Exercise of options 354,918 8.30 2,946 16,850 8.92 150 Restricted shares, net — — — 8,333 24.00 — Cancellation of shares — — — (117,785 ) 17.15 — Total 417,656 $ 14.89 $ 6,220 15,728,376 $ 12.82 $ 199,476 Nine Months Ended September 30, 2021 2020 Shares Average Price per Share Total Consideration (in thousands) Shares Average Price per Share Total Consideration (in thousands) Common stock issued in connection initial public offering — $ — $ — 11,500,000 $ 15.00 $ 172,500 Acquisitions 143,800 41.86 6,020 791,139 31.60 25,000 Redemption of series A-1 preferred stock — — — 1,786,739 15.00 26,801 Exercise of warrant options 67,713 17.19 — 2,534,239 0.01 25 Exercise of options 779,068 7.74 6,032 20,350 9.27 189 Restricted shares, net 38,929 31.31 — 8,333 24.00 — Payment of earn-out liability 539,607 46.33 25,000 — — — Payment of purchase price true up 24,200 44.81 1,084 — — — Cancellation of shares — — — (117,785 ) 17.15 — Total 1,593,317 $ 25.43 $ 38,136 16,523,015 $ 13.72 $ 224,515 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 September 30, 2021, and September 30, 2020 , there was $ million and $ 10.4 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 . The following number of shares were authorized to be issued and available for grant: September 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 1,593,287 — 1,593,287 September 30, 2020 2017 Plan 2013 Plan Total Shares authorized to be issued 2,945,443 2,047,269 4,992,712 Shares available for grant 1,233,266 — 1,233,266 Total stock compensation expense for the Plans was as follows: Three Months Ended September 30, 2021 2020 2017 plan 2013 plan 2017 plan 2013 plan Options Restricted Stock Options Total Options Restricted Stock Options Total Cost of revenue $ 282 $ — $ — $ 282 $ 276 $ — $ (5 ) $ 271 Selling, general and administrative expense 1,844 237 2 2,083 592 233 53 878 Total $ 2,126 $ 237 $ 2 $ 2,365 $ 868 $ 233 $ 48 $ 1,149 Nine Months Ended September 30, 2021 2020 2017 plan 2013 plan 2017 plan 2013 plan Options Restricted Stock Options Total Options Restricted Stock Options Total Cost of revenue $ 1,178 $ — $ 10 $ 1,188 $ 973 $ — $ 126 $ 1,099 Selling, general and administrative expense 4,638 749 11 5,399 1,178 973 189 2,340 Total $ 5,816 $ 749 $ 21 $ 6,587 $ 2,151 $ 973 $ 315 $ 3,439 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 nine months ended September 30, 2021 and September 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: Nine Months Ended September 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 three and nine months ended September 30, 2021. There were zero and 1,667 forfeitures of restricted shares during the three and nine months ended September 30, 2020. There were zero and 38,929 shares of restricted stock that became fully vested and were released as unrestricted shares of common stock during the three and nine months ended September 30, 2021, respectively. There were zero and 10,000 shares of restricted stock that became fully vested and were released as unrestricted shares of common stock during the three and nine months ended September 30, 2020, respectively. There was an aggregate of 286,239 and 267,173 restricted shares outstanding as of September 30, 2021 and September 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 $ 4,693 Granted 851,877 32 12 — — Forfeited/ cancelled (14,375 ) 22 — — — Exercised (925 ) 14 — — 7,918 Outstanding at September 30, 2020 1,454,429 21 12 7.59 7,649 Outstanding at January 1, 2021 1,840,229 23 12 9.09 15,598 Granted 264,470 40 22 — — Forfeited/ cancelled (29,025 ) 28 — — — Expired (1,250 ) 18 — — — Exercised (66,875 ) 22 — — 2,078 Outstanding at September 30, 2021 2,007,549 25 14 8.53 73,724 Exercisable at September 30, 2021 320,861 28 — 7.68 10,755 Options vested and expected to vest 2,007,549 25 — 8.53 73,724 The following weighted-average assumptions were used in the Black-Sholes option-pricing model calculation: September 30, September 30, 2021 2020 Common stock value (per share) $ 39.83 $ 16.36 Expected volatility 58.34 46.14 Risk-free interest rate 0.77 0.41 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 (7,500 ) 10 — — — Expired (11,300 ) 6 — — — Exercised (19,175 ) 8 — — 354 Outstanding at September 30, 2020 1,817,494 6 1 5.63 33,772 Outstanding at January 1, 2021 1,787,869 6 1 5.40 43,867 Expired (625 ) 6 — — — Exercised (710,568 ) 6 — — 33,480 Outstanding at September 30, 2021 1,076,676 6 2 4.65 59,532 Exercisable at September 30, 2021 1,076,676 6 — 4.65 59,532 Options vested and expected to vest 1,076,676 6 — 4.65 59,532 Total shares outstanding from exercised options were 1,028,268 shares and 221,950 shares as of September 30, 2021 and September 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: September 30, 2021 2020 Warrants — 116,350 Montrose 2013 Stock Incentive Plan 2,047,269 2,047,269 Montrose 2017 Stock Incentive Plan 3,944,750 2,945,443 Common stock reserved for future issuance 5,992,019 5,109,062 |