NOTE 12 — STOCK-BASED COMPENSATION

Unrestricted Common Stock Awards

During the three months ended March 31, 2026, no unrestricted common stock awards were granted and no related compensation expense was recognized.

During the three months ended March 31, 2025, the Company granted unrestricted common shares to certain in connection with the terms of their individual employment agreements. As these awards were fully-vested, unrestricted shares, the Company recognized the full amount of $121,410 in the period. This compensation cost is included within Research and Development expenses on the Company’s condensed consolidated statements of operations. 

Restricted Stock Units and Stock Options

During the three months ended March 31, 2026, no restricted stock units (“RSUs”) were granted. During the period, 6,667 unvested RSUs were forfeited in connection with management departure, resulting in a reversal of previously recognized compensation cost. The Company recognized a net reduction in stock-based compensation expense of $522 related to RSUs for the three months ended March 31, 2026, included within operating expenses on the Company’s condensed consolidated statements of operations.

The following table summarizes RSU activity for the three months ended March 31, 2026:

As of March 31, 2026, total unrecognized compensation cost related to unvested RSUs was approximately $121,410, expected to be recognized over a weighted-average period of 0.84 years.

During the three months ended March 31, 2025, the Company granted RSUs to certain executives and management in connection with the terms of their individual employment agreements. The Company recognized the amount of $168,775 in the period. This compensation cost is included within Research and Development expenses on the Company’s condensed consolidated statements of operations. There were no stock options granted or outstanding during the period ended March 31, 2025.

Warrants

There were no warrants granted during the three months ended March 31, 2026. There were 12,000 at-the-money warrants outstanding as of March 31, 2026.

During the three months ended March 31, 2025, the Company granted 12,000 at-the-money warrants, respectively, to certain executive officers pursuant to the terms of their individual employment agreements. The warrants were fully vested upon grant and expire on February 2, 2029, however, the exercise price has not been established.

Awards with Market-Based Conditions

In connection with the aforementioned executive employment agreements, certain executives are eligible to receive unrestricted shares of common stock if certain stock price targets are met during the term of the respective employment agreements. A stock price target will be satisfied if the 120-day trailing average closing price (based on trading days) of a share of the Company’s common stock equals or exceeds the applicable stock price target, which range from $1,500 to $15,000 per share. The executives could be granted up to 120,000 shares based on attainment of all applicable stock price targets over the term of six years and an estimated fair value of approximately $4,800,000. The Company recognized $278,176 of stock-based compensation expense related to these awards for each of the three months ended March 31, 2026 and 2025. This compensation cost is included within Selling, General, and Administrative expenses on the Company’s condensed consolidated statements of operations.

The following table summarizes our awards with market-based conditions:

Awards with Performance Conditions

In connection with the aforementioned executive employment agreements, certain executives are eligible to receive cash incentive payments in connection with the Company achieving certain capital raise targets. In addition, these executives can also receive a cash bonus equal to 2.5% of the equity value of the Company (up to $10 million for each executive, totaling $20 million) in an applicable sale of the Company as defined by the terms of the employment agreements. Through March 31, 2026, it was not considered probable that either performance condition would be achieved, and therefore no expense was recorded related to these awards.

Stock-based Compensation to Consultants

The Company periodically grants equity awards to non-employee consultants and contractors in exchange for services provided to the Company. The Company accounts for these awards in accordance with ASC 718. The grant-date fair value of the awards is measured on the date the awards are approved and the terms of the award and the recipient’s service obligation are established.

Equity awards granted to non-employee consultants and contractors may vest upon the grant date or over a specified service period. The Company recognizes stock-based compensation expense based on the grant-date fair value of the awards over the applicable service period. The grant-date fair value of shares issued is generally based on the closing price of the Company’s common stock on the date of grant.

During the three months ended March 31, 2025, the Company recognized stock-based compensation expense of $671 related to equity awards granted to consultants and contractors, included within operating expenses. No such expense was recognized during the three months ended March 31, 2026.