Note 9. Equity Incentive Plan and Stock-Based Compensation

2022 Equity Incentive Plan

The Company adopted the 2022 Equity Incentive Plan (the “2022 Plan”) effective upon the closing of the IPO, which provides for the granting of incentive stock options (“ISOs”) to the Company's employees, and for the grant of nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards (“RSAs”), RSUs, performance awards, and other forms of awards to employees, directors, and consultants. As of March 31, 2026, no stock appreciation rights or performance awards were issued.

The Company initially reserved for issuance 1,870,000 new shares of common stock pursuant to the 2022 Plan. The Company’s Amended and Restated 2017 Equity Incentive Plan (the “2017 Plan”) was terminated in 2022; however, shares underlying outstanding stock awards granted under the 2017 Plan will continue to be governed by the 2017 Plan. Shares available under the 2017 Plan were added to the available shares in the 2022 Plan. Shares underlying outstanding stock awards granted under the 2017 Plan that expire or are repurchased by, forfeited to, cancelled or withheld by the Company will also be reserved for issuance under the 2022 Plan.

The initial number of shares of the Company’s common stock that may be issued under the 2022 Plan will not exceed 4,423,920 shares of the Company's common stock, which is the sum of (i) 1,870,000 new shares, plus (ii) 2,553,920 shares related to the 2017 Plan. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each year for a period of ten years, beginning on January 1, 2023 and continuing through January 1, 2032, in an amount equal to (1) 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Company's board of directors no later than December 31 of the immediately preceding year. Accordingly, effective January 1, 2026, the number of shares in the 2022 Plan increased by 1,096,526 shares, representing 4% of the prior year end’s common stock outstanding. The maximum number of shares of the Company's common stock that may be issued on the exercise of stock options or vesting of RSUs under the 2022 Plan is 13,271,760 shares.

Since the date of incorporation and through March 31, 2026, the Company has issued stock options, RSUs and RSAs to its employees, directors, and consultants. As of March 31, 2026, 192,676 shares of common stock remained available for future issuance under the 2022 Plan.

ISOs granted to newly hired employees under the 2022 Plan generally vest 25% after the completion of 12 months of service, and the balance vests in equal monthly installments over the next 36 months of service and expire ten years from the grant date, unless subject to provisions regarding 10% stockholders. ISOs granted to existing employees generally vest ratably over a 48-month period of service and expire ten years from the grant date. NSOs vest in accordance with the terms of the specific agreement under which the options were provided and expire ten years from the date of grant. RSUs granted to employees generally vest annually over a two to four year period of service and expire ten years from the grant date. RSAs and RSUs granted to non-employees generally vest at the time of grant and expire ten years from the grant date.

Stock-Based Compensation Expense

Stock Option Activity

As of March 31, 2026, there was unrecognized stock-based compensation expense of $3.8 million related to unvested stock options which the Company expects to recognize over a weighted-average period of 2.2 years.

Weighted-average grant-date fair value of the options granted during the three months ended March 31, 2026 was $0.88 per share.

Option Repricing

On March 19, 2026 (the “Repricing Date”), in accordance with the 2017 Plan and the 2022 Plan (together, the “Plans”), the Board approved a stock option repricing (the “Option Repricing”), effective as of the Repricing Date, of all outstanding stock options with an exercise price greater than $3.91 granted under the Plans prior to the Repricing Date (the “Eligible Options”), including stock options held by the Company’s named executive officers and non-employee members of the Board. The Board believes that the Option Repricing with the Premium End Date (as defined below) is in the best interests of the Company, as the amended stock options will provide added incentives to retain and motivate Plan participants without incurring the stock dilution resulting from significant additional equity grants to the eligible participants or significant additional cash expenditures resulting from additional cash compensation.

Pursuant to the Option Repricing, the exercise price of each Eligible Option was reduced to $3.91 per share, the closing price of the Company’s common stock on the Repricing Date. To the extent an Eligible Option is exercised prior to the Premium End Date, or the eligible holder’s services with the Company terminates prior to the Premium End Date, the holder will be required to pay the original exercise price per share of the Eligible Options. The “Premium End Date” is the earliest of (i) September 19, 2027 (the “Retention Period”), (ii) the date of a change in control, or (iii) the eligible holder’s death or disability. Except for the reduction in the exercise prices of the Eligible Options as described above, the Eligible Options retain their existing terms and conditions as set forth in the Plans and the applicable award agreements.

The Option Repricing resulted in $0.4 million of incremental stock compensation expense for both vested and unvested options, which was calculated using the Black-Scholes option-pricing model, and will be recognized on a straight-line basis over the remaining Retention Period of the repriced options.

Of the incremental compensation cost, an immaterial amount was recognized during the three months ended March 31, 2026.

RSU Activity

RSUs entitle the holder to receive shares of the Company’s common stock upon vesting. The fair value of RSUs is based upon the closing sales price of the Company’s common stock on the grant date.

As of March 31, 2026, there was unrecognized stock-based compensation expense of $1.3 million related to unvested RSUs which the Company expects to recognize over a weighted-average period of 3.1 years.

2022 Employee Stock Purchase Plan

The ESPP has two components: a component that is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423 Component”) and a component that is not intended to qualify (the “Non-423 Component”). The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation. At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period.

Subject to adjustment in the case of certain capitalization events, 187,000 shares of the Company’s common stock were available for purchase at the adoption of the ESPP. Pursuant to the ESPP, the annual share increase pursuant to the evergreen provision is determined based on the least of (i) 1% of the Company’s common stock outstanding as of December 31 of the immediately preceding year, (ii) 561,000 shares, or (iii) such number of shares as determined by the Board. Accordingly, effective January 1, 2026, the number of shares in the ESPP increased by 274,131 shares, representing 1% of the prior year end’s common stock outstanding. As of March 31, 2026, 1,013,728 shares of common stock remained available for issuance under the ESPP.

During the three months ended March 31, 2026 and 2025, the Company recognized an insignificant amount of stock-based compensation expense related to the ESPP.