NOTE 11 – STOCK BASED COMPENSATION

Common Stock Options and Warrants

During 2007, the Board of Directors of the Company adopted the 2007 Employee Stock Plan (“2007 Plan”) that was approved by the shareholders. Under the 2007 Plan, the Company is authorized to grant options to purchase up to 10,000,000 shares of common stock to directors, officers, employees and consultants who provide services to the Company.  The 2007 Plan is intended to permit stock options granted to employees under the 2007 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the 2007 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (“Non-Statutory Stock Options”).

Effective June 24, 2016, the 2007 Plan was terminated. As of March 31, 2026, there are no options to purchase shares of common stock outstanding under the 2007 Plan.

During 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan (“2016 Plan”) that was approved by the shareholders at the 2016 annual meeting of shareholders on May 20, 2016. Under the 2016 Plan, the Company is authorized to grant awards of incentive and non-qualified stock options and restricted stock to purchase up to 3,000,000 shares of common stock to employees, directors and consultants. Effective May 16, 2019, the number of shares of the Company’s common stock available for issuance under the 2016 Plan was increased from 3,000,000 to 8,000,000 shares. Effective May 25, 2023, the number of shares of the Company’s common stock available for issuance under the 2016 Plan was increased from 8,000,000 to 13,000,000 shares and awards of restricted stock units were authorized for issuance. Effective May 15, 2025, the 2016 Plan was terminated. As of March 31, 2026, options to purchase 6,590,023 shares of common stock have been issued and are outstanding, 498,694 restricted shares of common stock have been granted, net of forfeitures, 1,616,380 restricted stock units have been granted, and 542,566 performance stock units have been issued under the 2016 Plan.

During 2025, the Board of Directors of the Company adopted the 2025 Equity Incentive Plan (“2025 Plan”) that was approved by the shareholders at the 2025 annual meeting of shareholders on May 15, 2025. Under the 2025 Plan, the Company is authorized to grant awards of incentive and non-qualified stock options and restricted stock to purchase up to 6,000,000 shares of common stock to employees, directors and consultants. As of March 31, 2026, options to purchase 601,244 shares of common stock have been issued and are outstanding and 2,621,813 restricted stock units have been granted under the 2025 Plan, net of forfeitures. As of March 31, 2026, 2,738,812 shares of common stock remain available for grants under the 2025 Plan.

These plans are administered by the Company’s Board of Directors or its compensation committee which determines the persons to whom awards will be granted, the number of awards to be granted, and the specific terms of each grant. Options granted under the 2025 Plan are generally exercisable for a period of 10 years from the date of grant and may vest on the grant date, another specified date or over a period of time.

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for the three months ended March 31, 2026: no dividend yield, expected volatility, based on the Company’s historical volatility, 83.6%, risk-free interest rate of  4.14% and expected option life of 10 years, which is based on the legal contractual life of the options.

The Black-Scholes option pricing model assumptions for the three months ended March 31, 2025 are as follows: no dividend yield, expected volatility, based on the Company’s historical volatility, 78.7% to 79.0%, risk-free interest rate between 4.18% to 4.40% and expected option life of 10 years, which is based on the legal contractual life of the options.

As of March 31, 2026, there was $1,732,150 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through December 2028.

Share-based compensation was recognized as follows:

The following tables summarize all stock option and warrant activity of the Company during the three months ended March 31, 2026:

The aggregate intrinsic value of options and warrants outstanding and exercisable as of March 31, 2026 was $27,556,963 and $23,740,665, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and warrants and the closing stock price of $7.03 for the Company’s common stock on March 31, 2026. During the three months ended March 31, 2026, 1,367,936 options with the aggregate intrinsic value of $7,670,268 were exercised for proceeds of $1,862,119 and no warrants were exercised. Of this amount, 200,000 options were exercised via cashless settlement.

Restricted Stock Awards and Units

The Company grants restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) to employees and directors. RSUs represent the right to receive shares of common stock upon vesting, while RSAs are shares issued at the grant date that remain subject to forfeiture until vesting conditions are met. These awards are amortized on a straight-line basis over the vesting period into stock-based compensation expense. The vesting period ranges from immediate vesting to monthly or quarterly vesting.

Upon the occurrence of a Change in Control, 100% of the unvested RSAs and RSUs shall vest as of the date of the Change in Control. Upon vesting, the restrictions on the shares lapse.

The fair value of restricted stock awards and units is estimated by the market price of the Company’s common stock at the date of grant. Restricted stock activity during the three months ended March 31, 2026 is as follows:

Restricted stock awards and units are being amortized to expense over the shorter of the requisite service period or the vesting period. As of March 31, 2026 and 2025, the unamortized value of the RSAs was $160,192 and $384,927, respectively. As of March 31, 2026 and 2025, the unamortized value of the RSUs was $7,999,929 and $0, respectively.