4. Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. ASC 718 requires that all share-based payment awards granted to employees, directors, and non-employees be measured at fair value on the grant date and recognized as compensation expense over the requisite service period.

The Company grants stock options and restricted stock units (“RSUs”). The fair value of RSUs is measured based on the market price of the Company’s common stock on the grant date, while the fair value of stock options is estimated using the Black-Scholes option-pricing model. The Company recognizes compensation expense related to such awards on a straight-line basis over the requisite service period (generally the vesting period) of the equity awards, based on the award’s fair value at the grant date. The Company accounts for forfeitures as they occur. Stock-based compensation expense is recorded within research and development or general and administrative expenses based on the function of the award recipient.

eXoZymes’ 2020 Equity Incentive Plan (the “2020 Plan”), which was approved by the eXoZymes shareholders, permits grants to its officers, directors, and employees for up to 938,832 shares of eXoZymes’ Common Stock. On May 1, 2023 the board and shareholders approved an increase of 1,558,175 shares under the plan. The 2020 Plan authorizes the issuance of stock options, shares of restricted stock, and restricted stock units, among other forms of equity-based awards. On July 25, 2025 the Company’s shareholders approved the “2025 equity incentive plan”. The new plan allows for an additional 1,250,000 shares to be added to the equity incentive pool.

On February 1, 2024, stock options to purchase 155,818 shares of Common Stock were granted at an exercise price of $3.32 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $3.32, option exercise price of $3.32, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 4.20%, expected annual volatility of 95.85%, and annual rate of dividends of 0%.

On April 1, 2024, stock options to purchase 125,975 shares of Common Stock were granted at an exercise price of $8.00 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $8.00, option exercise price of $8.00, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 4.34%, expected annual volatility of 95.38%, and annual rate of dividends of 0%.

On May 19, 2024, 2,347 stock options were exercised using a cashless exercise option. The individual received a stock option grant of 5,194 shares of which 3,376 shares were vested and exercisable. 1,029 shares were sold using a cashless exercise option to acquire the remaining 2,347 shares. The remaining unvested options totaling 1,818 shares were forfeited.

On June 1, 2024, stock options to purchase 444,076 shares of Common Stock were granted at an exercise price of $8.00 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 5 years. The inputs used to determine the fair value was Common Stock price of $8.00, option exercise price of $8.00, expected life in years of 5 years, with a contract life of 7 years, risk-free rate of 4.52%, expected annual volatility of 94.78%, and annual rate of dividends of 0%.

On December 20, 2024, two individuals exercised their options agreements. Both agreements had identical terms and were exercised on the same date. Each agreement exercised 2,597 stock options using a cashless exercise option. 1,200 shares were sold using a cashless exercise option to acquire the remaining 1,397 shares. There were no remaining unvested options to be forfeited.

On July 1, 2025, the eXoZymes board approved an issuance of stock options to purchase 235,817 shares of common stock and were granted at an exercise price of $12.40 per share, which was equal to the fair value of the common stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 4 years. The inputs used to determine the fair value was Common Stock price of $12.40, option exercise price of $12.40, expected life in years of 4 years, with a contract life of 7 years, risk-free rate of 3.99%, expected annual volatility of 88.47%, and annual rate of dividends of 0%.

On July 30, 2025, the eXoZymes board approved an issuance of stock options to purchase 20,000 shares of common stock and were granted at an exercise price of $9.48 per share, which was equal to the fair value of the common stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 12 months. The inputs used to determine the fair value was Common Stock price of $9.48, option exercise price of $9.48, expected life in years of one years, with a contract life of 7 years, risk-free rate of 3.874%, expected annual volatility of 88.08%, and annual rate of dividends of 0%.

On October 30, 2025, the eXoZymes board approved an issuance of stock options to purchase 40,000 shares of common stock and were granted at an exercise price of $12.65 per share, which was equal to the fair value of the common stock on the date of grant and are exercisable for a period of 7 years. The stock options vest ratably over a period of 4 years. The inputs used to determine the fair value was Common Stock price of $12.65, option exercise price of $12.65, expected life in years of 4 years, with a contract life of 7 years, risk-free rate of 3.71%, expected annual volatility of 87.12%, and annual rate of dividends of 0%.

As of December 31, 2025, stock options to purchase 999,106 shares of Common Stock were vested, the weighted average exercise price is $5.67, the aggregate intrinsic value was $3,266,537, and the weighted average remaining contractual term is 4.76 years. The stock options were issued in 2021, 2023, 2024 and 2025 and had a vesting term of four4 or five years with an expiry of seven years. eXoZymes stock-based compensation were $1,744,324 and $1,125,639 for the years ended December 31, 2025, and 2024. As of December 31, 2025, the unrecognized stock-based compensation is $2,730,530.

A summary of stock option activity during the years ended December 31, 2025 and 2024 is presented below:

 Schedule of Stock Options Activity

On March 28, 2022, and May 1, 2023, eXoZymes granted 241,718 and 100,820 restricted stock units (“RSUs”), respectively, at values of $2.44 and $3.32 per share. These RSUs were issued in lieu of cash bonuses. The RSUs vested upon the expiration of the lockup period following the Company’s initial public offering on November 11, 2025, or earlier upon a change of control of eXoZymes. Because vesting was contingent on events outside of the Company’s control, no compensation expense was recorded prior to vesting. Upon vesting, the Company began recording stock-based compensation related to these RSUs. The total unrecognized stock-based compensation associated with these RSUs was $589,792 and $334,722, respectively.

On July 30, 2025, eXoZymes granted 20,000 restricted stock units (“RSUs”) at a value of $9.48 per share, which was equal to the fair value of the Common Stock on the date of grant and are exercisable for a period of 7 years. The RSUs vest monthly over a 12-month period. As of December 31, 2025, 10,677 RSUs had vested, representing $101,120 of stock-based compensation.

On November 10, 2025, eXoZymes extended the lock up period for current employees that had unvested RSU’s. The Lock Up Agreement extends the lock up period to April 1, 2026, as to all of the Common Shares (the “RSU Shares”), and thereafter one-twelfth (1/12) of the RSU shares will be permanently released from the provisions of the Lock Up Agreement on the first of each month, starting as of Thursday, April 1, 2026 and continuing until the last release date of March 1, 2027. The extension of the Lock Up Agreement was voluntary and of the 424,656 restricted stock units individuals holding 7,870 chose to exercise their Restricted Stock Units and converted to common stock on November 14, 2025.

 Schedule of Restricted Stock Units Activity