7. Stock-based Compensation

2023 Equity Incentive Plan

The Company adopted 2023 Equity Incentive Plan (the “2023 Plan”), which became effective at the closing of the Merger and replaced our 2020 Equity Incentive Plan (“2020 Plan”) on the effective date of the Merger. As of the effective date of the Merger, there were 1,000,000 shares of the Company’s common stock available for grant under the 2023 Plan. In addition, the share reserve is subject to annual increases each January 1 for the first ten years following approval of the 2023 Plan of up to 5% of shares of the Company’s common stock outstanding (or a lesser number determined by the Company’s board of directors). As of December 31, 2025, 55,937 options have been returned of which all (granted under the 2023 Plan) are available for future grant. Effective January 1, 2024, the shares reserved for issuance under the 2023 Plan was increased by 287,725 shares. Effective March 28, 2024, the Board approved an increase of 1,500,000 shares of the Company’s common stock reserved under the 2023 Plan, which was subsequently approved by the stockholders of the Company on August 27, 2024. Effective on January 1, 2025, the shares reserved for issuance under the 2023 Plan was increased by 674,095 shares. On April 23, 2025 the Board approved an increase of 600,000 shares of the Company’s common stock reserved for issuance under the 2023 Plan, which was subsequently approved by the stockholders of the Company on June 24, 2025. As of December 31, 2025, 35,022 shares of the Company’s common stock were available for grant under the 2023 Plan.

 

2023 Employee Stock Purchase Plan

The Company adopted the 2023 Employee Stock Purchase Plan (the “2023 ESPP”) which became effective at the closing of the Merger. As of the effective time of the Merger, there were 65,000 shares of the Company’s common stock reserved for issuance under the 2023 ESPP. In addition, the share reserve is subject to annual increases each January 1 for the first ten years following approval of the 2023 ESPP of the lesser of (i) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 195,000 shares of the Company’s common stock, or (iii) such lesser number of shares of the Company’s common stock as determined by the Company’s board of directors. Annual increases of 57,545 and 134,819 shares of the Company’s common stock were automatically added to the share reserve under the 2023 ESPP on January 1, 2024 and 2025, respectively. As of December 31, 2025, 257,364 shares of the Company’s common stock were available for grant under the 2023 ESPP.

.

As of December 31, 2025, no shares have been issued under the 2023 ESPP.

The following table summarizes the stock option transactions for the 2023 Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Options

 

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Term (years)

 

 

 

Aggregate Intrinsic Value (in thousands)

 

Outstanding at December 31, 2024

 

 

2,824,443

 

 

$

 

5.51

 

 

 

8.15

 

 

$

 

316

 

Granted

 

 

2,100,089

 

 

 

 

1.52

 

 

 

9.38

 

 

 

 

10,413

 

Exercised

 

 

(15,187

)

 

 

 

1.55

 

 

 

 

 

 

 

 

Forfeited/Cancelled

 

 

(55,937

)

 

 

 

2.16

 

 

 

 

 

 

 

 

Outstanding at December 31, 2025

 

 

4,853,408

 

 

$

 

3.87

 

 

 

8.10

 

 

$

 

15,936

 

Vested and exercisable at December 31, 2025

 

 

2,704,266

 

 

$

 

4.65

 

 

 

7.50

 

 

$

 

7,548

 

There were 15,187 options exercised and 2,100,089 options granted during the year ended December 31, 2025. The weighted-average fair value of options granted during the years ended December 31, 2025 and 2024 was $1.28 and $4.14 per share, respectively. The total fair value of shares vested was $2.8 million and $5.0 million for the year ended December 31, 2025 and December 31, 2024, respectively.

As of December 31, 2025, stock-based compensation not yet recognized is $4.6 million, which the Company expects to recognize over an estimated weighted-average term of 2.4 years.

The following is the range of underlying assumptions in Black-Scholes to determine the fair value of the stock option grants for the years ended December 31, 2025 and 2024:

 

 

 

Year Ended December 31,

 

 

2025

 

2024

Risk free interest rate

 

3.50%

 

3.15%

Expected volatility

 

102%

 

97%

Expected term (years)

 

5.87

 

6.01

Expected dividend yield

 

0%

 

0%

Restricted Stock Units (“RSU”)

The fair value of RSUs is determined on the date of grant based on the market price of the Company’s common stock on that date. The aggregate grant date fair value of RSUs vested during the year ended December 31, 2025 was $35,000.

The following table summarizes restricted stock unit activity for the 2023 Plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Restricted Stock Units

 

 

 

Weighted Average Grant Date Fair Value

 

Weighted Average Remaining Contractual Term (years)

 

 

Aggregate Intrinsic Value (in thousands)

 

Nonvested at December 31, 2024

 

 

40,000

 

 

$

 

3.50

 

 

3.75

 

$

 

264

 

Vested

 

 

(10,000

)

 

 

 

 

 

 

 

 

 

Nonvested at December 31, 2025

 

 

30,000

 

 

$

 

3.50

 

 

2.75

 

$

 

198

 

Expected to vest at December 31, 2025

 

 

30,000

 

 

$

 

3.50

 

 

2.75

 

$

 

198

 

 

Stock-based Compensation Expense

Stock-based compensation expense recognized for options and restricted stock units granted was as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

Research and development

 

$

998

 

 

$

840

 

General and administrative

 

 

1,973

 

 

 

1,473

 

Total stock-based compensation expense

 

$

2,971

 

 

$

2,313

 

 

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance consists of the following at December 31, 2025:

 

 

 

December 31,

 

 

 

2025

 

Common stock warrants

 

 

3,993,784

 

Stock options issued and outstanding

 

 

4,853,408

 

Restricted stock units outstanding

 

 

30,000

 

Shares available for issuance under the 2023 Plan

 

 

35,022

 

Shares available under the 2023 ESPP

 

 

257,364

 

Total

 

 

9,169,578

 

Historical Timeline

Fiscal YearFiled
2025Mar 3, 2026Showing above
2024Mar 27, 2025
2023Mar 28, 2024
2022Mar 9, 2023
2021Mar 11, 2022
2020Mar 5, 2021

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.