NOTE 10. STOCK-BASED COMPENSATION

As of June 30, 2026, 2,680,969 shares were reserved for issuance under the 2024 Equity Incentive Plan (the “2024 Plan”), of which 626,560 shares were available for future grant and 2,054,409 shares were subject to outstanding options and restricted stock units (“RSUs”), including shares subject to performance-based awards of 16,278. As of June 30, 2026, options to purchase 43,542 shares of common stock remained outstanding and unexercised and continue to be governed by the 2019 Equity Incentive Plan (the “2019 EIP”). As of June 30, 2026, 1,000,000 shares were reserved under the 2024 Employee Stock Purchase Plan (the “ESPP”), of which 907,844 shares were available for future issuance and 92,156 shares had been issued. As of June 30, 2026, 550,000 shares were reserved for issuance under the 2022 Inducement Equity Incentive Plan (the “2022 Inducement Plan”), of which 193,002 shares were available for future grant and 356,998 shares were subject to outstanding stock options.

Stock Option Activity

The following table summarizes the stock option activities, including performance-based stock options, under the 2024 Plan, the 2021 Equity Incentive Plan (the “2021 Plan”), the 2022 Inducement Plan and the 2019 EIP for the six months ended June 30, 2026:

The aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. No options were exercised during the three and six months ended June 30, 2026 and 2025.

The total fair value of options that vested during the six months ended June 30, 2026 and 2025 was $1.6 million and $5.2 million, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2026 and 2025 was $1.33 and $4.77 per share, respectively.

Unamortized stock-based compensation expense as of June 30, 2026 was $4.4 million, which is expected to be recognized over a weighted-average period of 2.8 years.

Performance-Based Stock Options 

The following table provides a summary of performance-based stock options activity under the 2024 Plan and the 2021 Plan during the six months ended June 30, 2026:

Restricted Stock Units (RSUs)

The following table provides a summary of RSU activity under the 2024 Plan during the six months ended June 30, 2026:

Performance Restricted Stock Units (PSUs)

In June 2024, the Company granted PSUs for 20,000 shares that would vest in full if the closing price of the Company’s common stock on the Nasdaq Capital Market reached or exceeded $35.00 per share (subject to adjustment for recapitalizations, stock splits and similar transactions) for thirty consecutive calendar days within two years from the grant date. If the vesting condition was not met within two years from the grant date, the PSUs would be forfeited. The Company concluded that issued PSUs were equity-based awards and included a market based vesting condition. The Company used a Monte Carlo simulation model to estimate the fair value of the PSUs with the following assumptions: common stock fair value of $23.95, which was the closing market price of the Company’s common stock at the grant date, volatility of 133.00%, risk free rate of 4.87%, and vesting term of 2.0 years. Total estimated fair value of $0.4 million was recognized as stock-based compensation expense over 0.4 years, the derived requisite service period from the grant date.

In January 2026, the employee holding the PSUs was terminated and the award was forfeited. No stock-based compensation expense was reversed upon forfeiture, as the award included only a market-based vesting condition and the derived requisite service period had been completed.

Employee Stock Purchase Plans

The Company issued 12,983 shares and 47,763 shares of common stock under the ESPP during the six months ended June 30, 2026 and 2025, respectively, and recognized $0.1 million and $0.3 million compensation expense related to the ESPP during the six months ended June 30, 2026 and 2025, respectively. All remaining participants in the ESPP withdrew from the offering during the six months ended June 30, 2026.

Stock-Based Compensation Expense

The following table presents stock-based compensation expenses related to options, PSUs and RSUs granted to employees and non-employees, employee stock purchase plan awards and restricted common stock shares issued to founders (in thousands):

The Company recognized less than $0.1 million stock-based compensation expense related to performance-based options, PSUs and RSUs during each of the three months ended June 30, 2026 and 2025, and $0.1 million during each of the six months ended June 30, 2026 and 2025.

Valuation of Stock Options

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following assumptions:

Valuation of ESPP Shares

The Company did not grant ESPP awards under the 2024 ESPP during the three months and six months ended June 30, 2026. The grant date fair value of ESPP awards granted under the 2024 ESPP during the three and six months ended June 30, 2025 was estimated using a Black-Scholes option-pricing model with the following assumptions: