Note 10. Stock Incentive Plan and Employee Stock Purchase Plan

As of June 30, 2026, the Company had two outstanding stock incentive plans: the 2026 Equity Incentive Plan (“2026 Plan”) and the 2007 Incentive Award Plan (“2007 Plan”). The 2026 Plan permits the granting of stock options, stock appreciation rights, restricted stock awards, performance shares, performance units, and RSUs. The vesting of RSUs granted under the 2026 Plan are primarily service‑based (over the requisite service period) while the vesting of performance units granted under the 2026 Plan consist of PSUs. Only employees of the Company are eligible to receive incentive stock options. Non‑employees may be granted non‑qualified stock options.

Stock options granted under the 2026 Plan have an exercise price of at least 100% of the fair market value of the underlying stock on the grant date. The stock options have 10-year contractual terms and generally become exercisable for 25% of the option shares one year from the date of grant and then ratably over the following 36 months. Service‑based RSUs granted generally vest 25% of the share units covered by the grant on each of the first through fourth anniversaries of the date of the grant, subject to the continued service of the grantee through each such date. RSUs granted to the Board of Directors vest over one year. PSUs granted generally vest at the end of a three year performance period and the amount of shares that vest are based on the Company’s actual performance relative to predefined performance conditions. The Board of Directors has the discretion to use different vesting schedules. As of June 30, 2026, the 2007 Plan continued to remain in effect; however, the Company can no longer grant equity awards under such plans.

The following table summarizes the share‑based compensation charges included in the Company’s consolidated statements of operations and comprehensive loss (in thousands):

The following table summarizes the share‑based compensation charges for the Company’s equity awards (in thousands):

The above Restricted stock units and Performance stock units also include RSAs and PSAs.

Stock Options

The Company did not grant any stock options during the years ended June 30, 2026 and June 30, 2025.

The fair value of stock options grants are determined by using the Black‑Scholes option‑pricing model. This fair value is then amortized over the requisite service periods of the awards. The Company estimates the expected term of stock option by taking the average of the vesting term and the contractual term of the option. The expected volatility is derived from the Company’s historical stock volatility over a period approximately equal to the expected term of the options. The risk‑free interest rate is based on the U.S. Treasury constant maturity rate on the date of grant. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts.

A summary of option activity under the Company’s incentive plan is presented below (in thousands except per share and term amounts):

There were no options exercised during the years ended June 30, 2026 and  June 30, 2025. Tax benefits from tax deductions for exercised options and disqualifying dispositions in excess of the deferred tax asset, attributable to share compensation costs for such options was zero for the years ended June 30, 2026, and 2025. As of June 30, 2026, there were no unrecognized compensation costs related to unvested stock options.

The following table summarizes information about outstanding and exercisable options at June 30, 2026 (in thousands, except years and exercise price):

Restricted Stock and Performance Stock

The following table summarizes the activity of RSUs and PSUs (in thousands, except fair value per share):

Restricted Stock

The grant date fair value of the RSUs granted was $6.0 million and $9.2 million during the years ended June 30, 2026 and 2025, respectively. The aggregate fair market value of the RSUs that vested during the years ended June 30, 2026 and 2025, was $3.9 million and $5.5 million, respectively. As of June 30, 2026, there was $6.8 million of unrecognized compensation cost related to the RSUs, which is expected to be recognized over a weighted average period of 1.6 years. RSAs are included in the RSU amounts presented in the table above. The grant date fair value of RSAs granted during the year ended  June 30, 2026 was $1.5 million. No RSA awards were granted during the year ended  June 30, 2025. The aggregate fair market value of the RSAs that vested during the year ended June 30, 2026 was $0.4 million. There were no RSAs that vested during the year ended June 30, 2025. As of June 30, 2026, there was $0.2 million of unrecognized compensation cost related to the RSAs, which is expected to be recognized over a weighted average period of 0.4 years.

Performance Stock

The grant date fair value of PSUs granted was $2.4 million and $2.8 million during the years ended June 30, 2026 and 2025, respectively. There were no PSUs that vested during the year ended  June 30, 2026 and  June 30, 2025 because the performance conditions were not met. As of  June 30, 2026, there was $1.4 million of unrecognized compensation cost related to the PSUs, which is expected to be recognized over a weighted average period of 1.8 years. PSAs are included in the PSU amounts presented in the table above. The grant date fair value of PSAs granted during the year ended  June 30, 2026 was $1.4 million. No PSA awards were granted during the year ended  June 30, 2025. The were no PSAs that vested during the years ended  June 30, 2026 and 2025. As of June 30, 2026, there was $0.6 million of unrecognized compensation cost related to the PSAs, which is expected to be recognized over a weighted average period of 1.1 years.

Employee Stock Purchase Plan

Under the Company’s Amended and Restated 2007 Employee Stock Purchase Plan, or ESPP, qualified employees are permitted to purchase the Company’s common stock at 85% of the lower of the fair market value of the common stock on the commencement date of each six month offering period, or the fair market value on the specified purchase date. Employees’ payroll deductions may not exceed 10% of their salaries. Employees may purchase up to 2,500 shares per each six month offering period, provided that the value of the shares purchased in any calendar year may not exceed $25,000, as calculated pursuant to the purchase plan.

The Company estimates the fair value of ESPP shares at the date of grant using the Black‑Scholes option pricing model. The weighted average assumptions were as follows:

The risk‑free rate for the expected term of the ESPP option was based on the U.S. Treasury constant maturity rate for each offering period; expected volatility was based on the historical volatility of the Company’s common stock; and the expected term was based upon the offering period of the ESPP.

The Company issued 1.0 million and 1.2 million shares under the ESPP during the years ended June 30, 2026 and 2025, respectively, at a weighted average purchase price per share of $0.65 and $1.37, respectively. As of June 30, 2026, total unrecognized compensation cost related to the ESPP plan was $0.2 million, which the Company expects to recognize over a weighted average period of 0.9 years.

Common Stock Available For Issuance

In November 2025, the Company’s stockholders approved the 2026 Equity Incentive Plan (the “2026 Plan”) whereby a maximum of 3,896,000 shares of common stock were reserved for issuance, plus the shares remaining in the share reserve under the Company’s 2016 Equity Incentive Plan (the “2016 Equity Incentive Plan”) immediately before the effective date of the 2026 Plan and shares subject to outstanding awards granted under the 2016 Plan that would be added to the 2026 Plan on or after the effective date of the 2026 Plan. At June 30, 2026, the Company had 10.8 million shares of common stock reserved for issuance under the stock incentive plans and 1.6 million shares of common stock reserved for issuance under the employee stock purchase plan.