Note 6. Stock-Based Compensation

2017 Equity Incentive Plan

In May 2017, the Company’s Board of Directors (the “Board”) adopted, and the Company’s stockholders approved, the Company’s 2017 Equity Incentive Plan (the “2017 Plan”).

The 2017 Plan has a 10-year term, and provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, performance units, and performance shares to employees, directors and consultants of the Company and any parent or subsidiary of the Company.

Subject to an annual evergreen increase and adjustment in the case of certain capitalization events, the Company initially reserved 1,500,000 shares of the Company’s common stock for issuance pursuant to awards under the 2017 Plan. In addition, shares remaining available under the Company’s 2015 Equity Incentive Plan, as amended (the “2015 Plan”), and shares reserved but not issued pursuant to outstanding equity awards that expire or terminate without being exercised or that are forfeited or repurchased by the Company will be added to the shares of common stock available for issuance under the 2017 Plan. The 2017 Plan is administered by the Compensation Committee of the Board. The number of shares of the Company’s common stock available for issuance under the 2017 Plan also include an annual increase on the first day of each fiscal year, equal to the least of (i) 1,200,000 shares, (ii) 4% of the Company’s common stock outstanding at December 31 of the immediately preceding year, or (iii) such number of shares as determined by the Board. As a result of this provision, an additional 1,200,000 shares became available for issuance under the 2017 Plan on January 1, 2026. As of June 30, 2026, 3,031,072 shares of common stock remained available for issuance under the 2017 Plan.

2017 Inducement Equity Incentive Plan

In November 2017, the Board adopted the 2017 Inducement Equity Incentive Plan (the “Inducement Plan”) without stockholder approval and initially reserved 1,000,000 shares of the Company’s common stock for insurance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan has a 10-year term and provides for the grant of equity-based awards, including non-statutory stock options, RSUs, restricted stock, stock appreciation rights, performance shares and performance units, and its terms are substantially similar to the 2017 Plan, including with respect to treatment of equity awards in the event of a “merger” or “change in control” as defined under the Inducement Plan. Options issued under the Inducement Plan may have a term up to ten years and have variable vesting provisions. New hire grants generally vest 25% per year starting upon the first anniversary of the grant. Equity-based awards issued under the Inducement Plan are only issuable to individuals not previously engaged as employees or non-employee directors of the Company prior to the Inducement Plan’s adoption date. As of June 30, 2026, 1,602,359 shares of common stock were available for issuance under the Inducement Plan.

2017 Employee Stock Purchase Plan

In May 2017, the Board adopted, and the Company’s stockholders approved, the Company’s 2017 Employee Stock Purchase Plan (the “2017 ESPP”).

The 2017 ESPP is a broad-based plan that provides employees of the Company and its designated affiliates with the opportunity to become stockholders through periodic payroll deductions that are applied towards the purchase of Company common shares at a discount from the then-current market price. Subject to adjustment in the case of certain capitalization events, a total of 250,000 common shares of the Company were available for purchase at adoption of the 2017 ESPP. Pursuant to the 2017 ESPP, the annual share increase pursuant to the evergreen provision is determined based on the least of (i) 450,000 shares, (ii) 1.5% of the Company’s common stock outstanding as of December 31 of the immediately preceding year, or (iii) such number of shares as determined by the Board. As a result of this provision, an additional 450,000 shares became available for issuance under the 2017 ESPP on January 1, 2026. As of June 30, 2026, 1,265,365 shares of common stock were available for issuance under the 2017 ESPP.

Equity Awards

The Company has granted stock options with service-based, performance-based, market-based, and both market-based and performance-based vesting conditions and has granted RSUs with service-based and performance-based vesting conditions. The Company grants service-based options and RSUs which vest and become exercisable, subject to the individual’s continued employment or service through the applicable vesting date. Service-based options and RSUs can have various vesting schedules, the most common vest schedules are for new hire stock option grants, which generally vest 25% per year starting upon the first anniversary of the grant.

Performance-based stock options and RSUs granted to certain Company executives, employees and non-employees contain performance conditions related to financial measures and achievements of strategic and operational milestones. The options and RSUs will vest and become exercisable once the specific performance condition is fulfilled.

Market-based stock options granted to certain Company executives and other employees contain market conditions related to achievement of market capitalization targets. The options will vest and become exercisable once the specific market capitalization target is fulfilled.

Both market-based and performance-based stock options granted to certain Company executives contain market conditions related to the achievement of market capitalization targets as well as the achievement of revenue and/or margin metrics. The options will vest and become exercisable once both the specific market capitalization targets as well as the specific revenue and/or margin targets are fulfilled.

Stock Options

A summary of stock option activity for the six months ended  June 30, 2026 is as follows:

The aggregate intrinsic value of stock options exercised was $14.6 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively. Intrinsic values of options exercised are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock on the date of exercise. Intrinsic values of options outstanding are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock as of the reporting date.

The weighted-average grant date fair value of options granted was $16.03 and $15.46 per share for the six months ended June 30, 2026 and 2025, respectively.

Restricted Stock Units (RSUs)

A summary of restricted stock unit activity for the six months ended  June 30, 2026 is as follows:

Stock-Based Compensation Expense

Total stock-based compensation expense in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):

As of June 30, 2026, not all of the performance conditions of the performance-based stock awards and the market-based and performance-based stock awards are probable to be achieved. Stock-based compensation expense has only been recognized for those conditions that are assumed to be probable.

Total stock-based compensation expense by award type was as follows (in thousands):

As of June 30, 2026, the total unrecognized stock-based compensation expense and the weighted-average period in which the expense is expected to be recognized were as follows:

The fair value of service-based stock options granted and the shares available for purchase under the ESPP were determined using the Black-Scholes option pricing model on the grant date and modification date. The Company estimated the fair value of market-based stock options and both market and performance-based stock options using a Monte Carlo simulation model on the grant date.

The following summarizes the range of assumptions used in calculating the fair value of the awards with stock options grouped by valuation methodology: