NOTE 9 - STOCK OPTIONS AND WARRANTS

2021 Equity Incentive Plan

In July 2021, the Board and shareholders authorized the 2021 Equity Incentive Plan (the “2021 Plan”), covering 180,000 shares of common stock. In January 2022, the number of shares authorized under the 2021 Plan was automatically increased to 228,530 shares pursuant to an escalation provision in the plan. The purpose of the 2021 Plan is to advance the interests of the Company and related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2021 Plan is administered by the Board or by the Compensation Committee. The following awards may be granted under the 2021 Plan:

Any option granted under the 2021 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100 thousand. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2021 Plan are determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

The 2021 Plan is accounted for in accordance with ASC 718, Compensation - Stock Compensation. Under this guidance, the Company recognizes compensation expense for stock options, restricted stock, RSUs, and other equity-based awards based on the grant-date fair value of the awards. That expense is recognized over the vesting period of each award.

2024 Equity Incentive Plan

On July 11, 2024, the Board and Majority Shareholders approved and ratified the 2024 Equity Incentive Plan (the “2024 Plan”), covering a minimum of 2,000,000 shares of common stock and up to 2,500,000 of common stock, if all shares of shares of common stock issuable by the Company in the 2024 Exempt Offering, as described herein, are issued on or about the Effective Date. The purpose of the 2024 Plan is to advance the interests of the Company and related corporations by enhancing the ability of the Company to attract and retain qualified employees, consultants, officers, and directors, by creating incentives and rewards for their contributions to the success of the Company and its related corporations. The 2024 Plan is administered by the Board or by the Compensation Committee. The following awards may be granted under the 2024 Plan:

Any option granted under the 2024 Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of grant and not less than $4.00 per share, but the exercise price of any ISO granted to an eligible employee owning more than 10% of outstanding common stock must not be less than 110% of fair market value on the date of the grant. The plans further provide that with respect to ISOs the aggregate fair market value of the common stock underlying the options which are exercisable by any option holder during any calendar year cannot exceed $100 thousand. The exercise price of any NSO granted under the 2021 Plan is determined by the Board at the time of grant but must be at least equal to fair market value on the date of grant. The term of each plan option and the manner in which it may be exercised is determined by the Board or the Compensation Committee, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the common stock, no more than five years after the date of the grant. The terms of any other type of award under the 2024 Plan are determined by the Board at the time of grant. Subject to the limitation on the aggregate number of shares issuable under the plans, there is no maximum or minimum number of shares as to which a stock grant or plan option may be granted to any person.

The 2024 Plan is accounted for in accordance with ASC 718, Compensation - Stock Compensation. Under this guidance, the Company recognizes compensation expense for stock options, restricted stock, RSUs, and other equity-based awards based on the grant-date fair value of the awards. That expense is recognized over the vesting period of each award.

Stock Options

There were no stock options granted during the three months ended March 31, 2026 and 2025.

During the three months ended March 31, 2026, and 2025, the Company recorded $— and $11 thousand of compensation expense, respectively, related to stock options.

All outstanding and unvested stock options were forfeit during the year ended December 31, 2025. As such, there are no unrecognized compensation costs related to non-vested stock options. There were no changes to the status of the Company’s stock options during the three months ending March 31, 2026.

Warrants

Warrants issued by the Company are evaluated under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, to determine classification as equity or liability. The Company’s outstanding warrants do not meet the equity classification criteria and are therefore recorded as liabilities. These warrants are initially measured at fair value on the grant date and remeasured to fair value at each reporting date, with changes in fair value recognized in earnings.

The fair value of the warrants was determined by an independent valuation firm using the Black-Scholes option pricing model. In developing the valuation, the independent firm considered multiple valuation approaches and concluded that an option-pricing methodology was most appropriate given the going-concern nature of the Company. Key assumptions used in the valuation included expected volatility, expected term, risk-free interest rate, and expected dividend yield, which were determined based on market data and the Company’s historical information.

2025 Activity

Warrants transferred to CognoGroup

In connection with the spin-off completed on December 30, 2025, the Company transferred 41,250 warrants related to the Montage Notes to the spun-off entity (see Note 7). These warrants were previously associated with securities assigned to the spin-off entity and as a result of the spin-off, these warrants are no longer reflected on the Company’s consolidated balance sheet as of December 31, 2025.

There was no warrant activity for the three months ended March 31, 2026.

All warrants are exercisable at March 31, 2026. The weighted average exercise price is $5.51 and the remaining life of the warrants is 0.25 years at March 31, 2026.