Compensation expense recognized for share-based awards was as follows:

SUMMARY OF COMPENSATION EXPENSE RECOGNIZED FOR SHARE-BASED AWARDS 

On September 17, 2015, the Board of Directors of the Company approved the establishment of 2015 Share Incentive Plan, the purpose of which is to provide an incentive for employees contributing to the Group. The 2015 Share Incentive Plan shall be valid and effective for 10 years from the grant date. The maximum number of shares that may be issued pursuant to all awards (including incentive share options) under 2015 Share Incentive Plan shall be 12,727,272 shares.

In June 2018, the Board of Directors and shareholders of the Company approved the 2018 Share Incentive Plan. As of December 31, 2025, the maximum of shares that may be issued under the 2018 Share Incentive Plan was 32,148,434.

For the year ended December 31, 2023, the Company didn’t grant share options to employees pursuant to the 2018 Share Incentive Plan.

For the year ended December 31, 2024, the Company granted 11,920,000 share options to employees pursuant to the 2018 Share Incentive Plan. Among which, with respect to the share options granted, 40% of the options will be vested after 24 months of the vesting commencement date and the remaining 60% will be vested in three equal installments over the following 36 months.

For the year ended December 31, 2025, the Company granted 4,880,000 share options to employees pursuant to the 2018 Share Incentive Plan. Among which, with respect to the share options granted, 40% of the options will be vested after 24 months of the vesting commencement date and the remaining 60% will be vested in three equal installments over the following 36 months.

VIOMI TECHNOLOGY CO., LTD

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025

(Amounts in thousands, except shares, ADS, per share and per ADS data)

The Group calculated the estimated fair value of the options on the respective grant dates using the binomial option pricing model. Assumptions used to determine the fair value of share options granted during 2024 and 2025 are summarized in the following table:

SUMMARY OF ASSUMPTIONS USED TO DETERMINE THE FAIR VALUE OF SHARE OPTIONS GRANTED 

Risk-free interest rate was estimated based on the yield to maturity of US Treasury Strip with a maturity period close to the contractual term of the options.

Expected life of option (years) represents the expected years from the measurement date to the expiration date of the option.

The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the contractual term of the options.

The dividend yield was estimated by the Group based on its expected dividend policy over the contractual term of the options.

VIOMI TECHNOLOGY CO., LTD

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025

(Amounts in thousands, except shares, ADS, per share and per ADS data)

A summary of the stock option activity under the 2015 Share Incentive Plan and 2018 Share Incentive Plan for the years ended December 31, 2023, 2024, and 2025 is included in the table below.

SUMMARY OF STOCK OPTION ACTIVITY 

The weighted average grant date fair value of options granted for the years ended December 31, 2024 and 2025 was RMB3.26 (US$0.45) per option and RMB6.56 (US$0.92) per option, respectively.

As of December 31, 2024 and 2025, there was RMB36,988 and RMB40,415 (US$5,658) of unrecognized compensation expenses related to the options, respectively.

As described in Note 1, the Group established Guangdong Lizi in July 2018 as a subsidiary of the Company. In November 2020, following the Group’s restructuring plan on its water purifiers business, the Group entered into an agreement with Sunglow to sell 1% of equity interest of Guangdong Lizi for a consideration of RMB175. Sunglow has paid up the consideration in December 2021 but is not entitled to any shareholder’s rights of Guangdong Lizi until the fulfilment of certain conditions pursuant to the supplemental agreement in November 2021.

Under the requirement of ASC 718, the Group should recognize share-based compensation if there is a difference between the fair value of Guangdong Lizi’s 1% of equity interest and the consideration paid up by Sunglow on the date of capital injection. The Group calculated the estimated fair value of the options on the respective grant dates using the discounted cash flow model.

As of December 31, 2024, there were RMB10,284 of unrecognized compensation expenses related to restricted shares granted to Sunglow for which the performance conditions had not been met and are expected to be recognized when the performance conditions are achieved under the requirement of ASC718.

During 2025, Sunglow exited the arrangement. Accordingly, there will be no more unrecognized compensation expenses associated with restricted shares granted to Sunglow to be recognized in future periods.

VIOMI TECHNOLOGY CO., LTD

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2024 AND 2025

(Amounts in thousands, except shares, ADS, per share and per ADS data)