Note 6. Stock-Based Compensation

Common Stock Equity Plans

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan). The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration. No new awards may be made under the Amended 2010 Plan. 

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan. The 2019 Plan authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units. Under the 2019 Plan, 4,563 shares were initially reserved for issuance. In November 2021, December 2024 and December 2025, the Company’s stockholders approved amendments increasing the number of shares reserved for issuance under the 2019 Plan by 77,674, 1,500,000, and 1,000,000 shares, respectively.

 Under the 2019 Plan, the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of the Company’s stock may not exceed five years. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant. Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant. In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In December 2021, the Company assumed the Peraso Technologies Inc. 2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms of the 2009 Plan. Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such option in accordance with its terms. No further awards will be made under the 2009 Plan.  

The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

The Company reflected compensation costs related to the vesting of stock options of approximately $0.1 million and $0.1 million during the three-month ended March 31, 2026 and 2025, respectively. At March 31, 2026, the unamortized compensation cost was approximately $1.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 1.2 years. The Company reflected compensation costs of approximately $44,000 and $17,000 related to the vesting of restricted stock units during the three-months ended March 31, 2026 and 2025, respectively. The unamortized compensation cost at March 31, 2026 was approximately $0.1 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 0.8 years. 

Valuation Assumptions and Expense Information for Stock-Based Compensation

The fair value of the Company’s option grants for the three months ended March 31, 2026 and March 31, 2025 was approximately $656,000 and $832,000, respectively. The weighted-average grant date fair value of options granted was $0.73 and $0.63 per share for the three months ended March 31, 2026 and 2025, respectively. The following assumptions were used in the fair-value method calculations:

The risk-free interest rate was derived from the U.S. Treasury Yield Curve Rates as published by the U.S. Department of the Treasury as of the grant date for terms equal to the expected terms of the options. The expected volatility was based on the historical volatility of the Company’s stock price over the expected term of the options. The expected term of options granted was derived from historical data based on employee exercises and post-vesting employment termination behavior. A dividend yield of zero is applied because the Company has never paid dividends and has no intention to pay dividends in the near future. The Company accounts for forfeitures as they occur.

Common Stock Options and Restricted Stock Units

The term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of the Company’s stock may not exceed five years. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant. Generally, options granted under the 2019 Plan will vest over a three to four-year period and have a term of 10 years from the date of grant. In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes the activity in the shares available for grant under the Plans during the three months ended March 31, 2026 and options outstanding as of March 31, 2026 (in thousands, except exercise price):

The following table summarizes significant ranges of outstanding and exercisable options as of March 31, 2026 (in thousands, except contractual life and exercise price):

The total options outstanding had an intrinsic value of $0.4 million.

A summary of RSU activity under the 2019 Plan is presented below (in thousands, except for fair value):