AIRGAIN INC Stock Compensation Disclosure

Note 12. Stock-Based Compensation

Stock-Based Compensation Expense

Stock Options

The vesting period for stock options granted to employees is generally one to four years. All stock options granted under the 2016 Plan have a maximum contractual term of ten years.

Commencing in 2019, on the first trading day in February, each non-employee member of the board of directors will receive an annual award of stock options with a grant date fair value of $30,000 (or $45,000 for the chairperson of the board of directors), calculated as of the date of grant in accordance with the Black-Scholes-Merton option-pricing model.

During the years ended December 31, 2025 and 2024, the Company received proceeds of $0.2 million and $0.1 million respectively from the exercise of options.

The weighted average grant-date fair values of options granted during the years ended December 31, 2025 and 2024 were $2.50 and $2.90 per share, respectively. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The grant date fair value of shares vested during the years ended December 31, 2025 and 2024 was $1.2 million and $1.4 million, respectively. For stock options vested and expected to vest, the aggregate intrinsic value as of December 31, 2025 and 2024 was $0.2 million and $2.4 million, respectively.

As of December 31, 2025, there was $1.1 million of unrecognized compensation cost related to unvested stock options granted under the Company’s equity plans that is expected to be recognized over the next 1.8 years.

Restricted Stock Units

Commencing in 2019, on the first trading day in February of each year, each non-employee member of the board of directors receives a number of restricted stock unit as is determined by dividing $30,000 (or $45,000 for the chairperson of the board of directors) by the 30-trading-day trailing average closing share price of the Company's common stock preceding the date of grant.

As of December 31, 2025, there was $2.5 million of total unrecognized stock-based compensation expense related to non-vested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 2.1 years.

The Company currently uses authorized and unissued shares to satisfy share award exercises.

Performance Stock Units

Service as well as market and performance conditions determine the number of PSUs that the holder will earn from 0% to 150% of the target number of shares. The percentage received is based on the Company common stock price targets over a three-year service period. Additionally, the Company must achieve or exceed 75% of the year to date revenue target measured at the end of the quarter in which the price target is achieved. The market conditions have not currently been met. As of December 31, 2025, there were no PSU grants outstanding.

Share-Settled Obligation

Share-settled compensation to the Board of Directors and consultants were incurred and recognized as stock-based compensation expense and recorded in accrued expenses. Within ninety days after the calendar year-end, the liabilities are settled in RSU grants and vest on the grant date. The share-settled obligations were $0.1 million and $0.8 million as of December 31, 2025 and 2024, respectively.

Employee Stock Purchase Plan (ESPP)

The Company maintains the 2016 Employee Stock Purchase Plan (ESPP) that provides employees an opportunity to purchase common stock through payroll deductions. The ESPP is implemented through consecutive 6-month offering periods commencing on March 1 and September 1 of each year. The purchase price is set at 85% of the fair market value of the Company's common stock on either the first or last trading day of the offering period, whichever is lower. Annual contributions are limited to the lower of 20% of an employee's eligible compensation or such other limits as apply under Section 423 of the Internal Revenue Code. The ESPP is intended to qualify as an employee stock purchase plan for purposes of Section 423 of the Internal Revenue Code.

Based on the 15% discount and the fair value of the option feature of the ESPP, it is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. The Company currently uses authorized and unissued shares to satisfy share purchases under the ESPP.

During the year ended December 31, 2025, the Company received $0.2 million from the issuance of 43,562 shares under the ESPP, as compared to $0.2 million from the issuance of 45,809 shares during the year end December 31, 2024.