NOTE 8 — SHARE-BASED COMPENSATION AND WARRANTS

Inducement Grant

In connection with the hiring of an employee of the Company in November 2024, the Board of Directors granted a stock option exercisable for the purchase of 150,000 shares of the Company’s common stock at an exercise price of $5.04 per share. This stock option is considered an inducement grant (the “Inducement Grant”) pursuant to Nasdaq Listing Rule 5635(c)(4) whereby the

underlying shares were not authorized under any of the Company’s equity incentive plans. The Inducement Grant is exercisable until November 2034 and vests for (i) one-fourth of the option shares on the one-year anniversary of the employee start date, and (ii) one thirty-sixth of the remaining option shares vest on the same day of each month thereafter until the Inducement Grant is 100% vested. The fair value of the Inducement Grant of $0.6 million was computed using the Black-Scholes-Merton (“BSM”) option pricing model.

Equity Incentive Plans

Presented below is a summary of the number of shares authorized, outstanding, and available for future grants under the Company’s equity incentive plans as of March 31, 2025:

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The Company currently has one active equity incentive plan approved by shareholders which is the 2021 Plan. On December 5, 2024, the Company’s shareholders approved an amendment to the 2021 Plan, increasing the number of shares of common stock to be issued under the plan up to 14,450,000 shares of common stock, before accounting for any reductions due to exercises. The 2021 Plan terminates on March 31, 2030. Pursuant to the 2021 Plan, no awards may be granted under the three legacy equity incentive plans shown in the table above, but all outstanding awards previously granted under those plans shall remain outstanding and subject to the terms of the respective plans. Awards outstanding under these plans expire pursuant to their contractual provisions on various dates through 2035.

In addition, inducement awards are allowed for grants of options pursuant to Nasdaq Listing Rule 5635(c)(4) whereby the underlying shares are not authorized under any of the Company’s equity incentive plans. Through March 31, 2025, the Board of Directors has granted inducement awards for a total of 425,000 shares. The Board of Directors also has discretion to issue an additional 1,075,000 shares for future inducement awards.

2022 Employee Stock Purchase Plan

On June 16, 2022, the Company’s shareholders approved the adoption of the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP provides an opportunity for employees to purchase the Company’s common stock through accumulated payroll deductions.

The 2022 ESPP has consecutive offering periods that begin approximately every 6 months commencing on the first trading day on or after July 1 and terminating on the last trading day of the offering period ending on December 31 and commencing on the first trading day on or after January 1 and terminating on the last trading day of the offering period ending on June 30. The 2022 ESPP reserves 500,000 shares for purchases. There have been no offering periods under the 2022 ESPP through March 31, 2025.

Stock Options Outstanding

For the nine months ended March 31, 2025, the following table sets forth a summary of the combined stock option activity under the Company’s equity incentive plans and inducement awards:

For the nine months ended March 31, 2025, the aggregate fair value of stock options granted for approximately 2.5 million shares of common stock amounted to $8.6 million or approximately $3.38 per share as of the grant dates. Fair value was computed using the BSM option-pricing model and will result in the recognition of compensation cost ratably over the expected vesting period of the stock options. Unrecognized share-based compensation expense related to outstanding options is approximately $14.5 million as of March 31, 2025. This amount is expected to be recognized over a weighted average period of 1.7 years.

For the nine months ended March 31, 2025, the fair value of stock options was estimated on the respective dates of grant, with the following weighted-average assumptions:

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Restricted Stock Units (“RSUs”)

For the nine months ended March 31, 2025, the following table sets forth a summary of the combined RSU activity under the Company’s 2021 Plan:

For the nine months ended March 31, 2025, the aggregate fair value of RSUs granted for approximately 0.8 million shares of common stock amounted to $3.6 million. RSUs granted vest over a period of one to three years. Fair value is based on the closing market price on the date of grant and will result in the recognition of compensation cost ratably over the vesting period of the RSUs. Unrecognized share-based compensation expense related to RSUs is approximately $3.5 million as of March 31, 2025. This amount is expected to be recognized over a weighted average period of 2.6 years.

Share-Based Compensation Expense

Share-based compensation expense for the nine months ended March 31, 2025 and 2024 is included under the following captions in the unaudited condensed consolidated statements of operations and comprehensive loss (in thousands):

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The aggregate unrecognized share-based compensation expense related to stock options and RSUs is approximately $18.0 million as of March 31, 2025. This amount is expected to be recognized over a weighted average period of 1.8 years.

Pre-Funded Warrants

PFWs are outstanding for a total of approximately 9.5 million shares as of March 31, 2025. Please refer to Note 7 for additional information about outstanding PFWs.

Legacy Warrants

In connection with an equity financing in October 2020, the Company issued warrants entitling the holders to purchase approximately 0.8 million shares of common stock. The warrants are exercisable at $19.50 per share for a period of seven years, may be exercised on a cash or cashless basis at the election of the holders, and the holders are entitled to share in any dividends or distributions payable to holders of common stock on an as-converted basis (“the Participating Warrants”). Additionally, the Company has issued warrants in conjunction with various debt and equity financings and for services. As of March 31, 2025, all of the warrants were vested. The Participating Warrants and other warrants are collectively referred to as the “Legacy Warrants.”

For the nine months ended March 31, 2025, no Legacy Warrants were granted or exercised. The following table sets forth a summary of all Legacy Warrants for the nine months ended March 31, 2025:

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