Note 8 – Stock-based compensation

At the special meeting of UPTD stockholders related to the Business Combination held on July 31, 2023, UPTD’s shareholders approved the adoption of the Company’s 2023 Omnibus Incentive Plan (the “2023 Plan”), which became effective on the Closing Date. Upon the closing of the Business Combination, 3,520,123 shares of common stock were authorized for issuance under the 2023 Plan.   The share reserve under the 2023 Plan increases automatically on January 1 of each year pursuant to an evergreen provision. Accordingly, the share reserve increased by 1,941,293 shares on January 1, 2024, by 1,920,444 shares on January 1, 2025, and by 2,115,684 shares on January 1, 2026. As of March 31, 2026, a total of 9,497,544 shares were authorized for issuance under the 2023 Plan.

On October 30, 2024, the Company granted options under the 2023 Plan to purchase 3,600,000 shares of its Common Stock to its employees, board of directors, and other consultants. No additional stock options were granted or exercised during the three months ended March 31, 2026 or the year ended December 31, 2025.

The stock-based compensation expense was recorded in the Company’s results of operations. For the three months ended March 31, 2026 and 2025, the stock-based compensation expense was $146,714 and $159,095, respectively.

The breakdown of stock-based compensation by categories for the three months ended March 31, 2026 and 2025 is summarized below:

The aggregate grant date fair value of stock options granted under the 2023 Plan was $2,350,018, representing a weighted-average grant date fair value of $0.65 per share. As of March 31, 2026 and December 31, 2025, there were approximately $1,152,074 and $1,298,788 of unvested compensation costs, respectively, which are expected to be recognized over a weighted average remaining employment service period of approximately 2.06 and 2.29 years, respectively.

The Company estimated the fair value of the stock options using the Black-Scholes option pricing model. The fair value of stock options issued was estimated using the following assumptions:

The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was calculated from a blended volatility estimate from the implied volatility of a portfolio of comparable companies and the Company’s trading history since October 2, 2023. Due to a limited history of relevant stock option exercise activity, the expected life of the Company’s options was determined using the simplified method, which is based on the average of the time-to-vesting and the contractual life of the options.

A summary of information related to stock option activities for the three months ended March 31, 2026 is as follows: