6. Stock-based Compensation

The Company currently has one equity incentive plan (the “2010 Plan”), which provides for awards in the form of restricted shares, stock units, stock options or stock appreciation rights to the Company’s employees, officers, directors and consultants. In April 2014, SemiLEDs’ stockholders approved an amendment to the 2010 Plan that increases the number of shares authorized for issuance under the plan by an additional 250 thousand shares. On July 31, 2019, the stockholders approved an increase in the authorized share reserve under the 2010 plan by an additional 500 thousand shares, to extend expiration of the 2010 Plan to November 3, 2023, to remove the IRS Code section 162(m) provisions, and to modify the maximum grant limit to 35 thousand shares to one person in a one year period. On September 25, 2020, the stockholders approved an amendment to the 2010 Equity Incentive Plan to increase the authorized shares reserve by an additional 400 thousand shares. On March 17, 2023, the Board approved the amendment of the 2010 Plan to extend the term to March 17, 2033, which was approved by the Company's stockholders at the annual meeting held on May 18, 2023.

A total of 1,421 thousand and 1,421 thousand shares was reserved for issuance under the 2010 Plan as of February 28, 2026 and 2025, respectively. As of February 28, 2026 and 2025, there were 429 thousand and 530 thousand shares of common stock available for future issuance under the equity incentive plans, respectively.

In November 2025, SemiLEDs granted 15 thousand restricted stock units to its directors, which vest 25% every three months from the vesting commencement date of November 27, 2025 and will become fully vested upon a change in control. The grant-date fair value of the restricted stock units was $2.406 per unit.

In July 2025, SemiLEDs granted 96 thousand restricted stock units to its employees, which vest 12.5% every three months from the vesting commencement date of July 10, 2025 and will become fully vested upon a change in control. The grant-date fair value of the restricted stock units was $2.81 per unit.

In November 2024, SemiLEDs granted 15 thousand restricted stock units to its directors, which vest 25% every three months from the vesting commencement date of November 27, 2024 and will become fully vested upon a change in control. The grant-date fair value of the restricted stock units was $1.28 per unit.

The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs including the market price of SemiLEDs’ common stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several of the Company’s publicly-traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of stock units is based upon the market price of SemiLEDs’ common stock on the date of the grant. This fair value is amortized to compensation expense over the vesting term. During the three and six months ended February 28, 2026 and 2025, the Company had no options granted, forfeited, or exercised. As of February 28, 2026 and 2025, the Company had no unvested stock options and the unrecognized compensation costs related to unvested stock options were nil.

Stock-based compensation expense is recorded net of estimated forfeitures such that expense is recorded only for those stock-based awards that are expected to vest. A forfeiture rate is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. A forfeiture rate of zero is estimated for stock-based awards with vesting term that is less than or equal to one year from the date of grant.