(5)       Stockholders’ Equity, Options, and Warrants

Employee Stock Purchase Plan

The Company has an employee stock purchase plan pursuant to which employees of the Company may participate to purchase shares of common stock at a discount. During the three months ended March 31, 2026 and 2025, the Company issued 185,208 and 152,705 shares of common stock, respectively, to employees under the employee stock purchase plan for proceeds of $9,446 and $3,894, respectively. As of  March 31, 2026, 1,314,527 shares of common stock remain available for issuance under the employee stock purchase plan.

Stock-Based Compensation Plans

2015 Incentive Plan - In April 2015, the Company’s Board of Directors approved the International Isotopes Inc. 2015 Incentive Plan (as amended, the “2015 Plan”) which was subsequently approved by the Company’s shareholders in July 2015. The 2015 Plan was amended and restated in July 2018 to increase the number of shares authorized for issuance under the 2015 plan by an additional 20,000,000 shares. The 2015 Plan provided for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock or cash-based awards. The 2015 Plan amended and restated the Company’s Amended and Restated 2006 Equity Incentive Plan (the “2006 Plan”). The 2015 Plan authorized the issuance of up to 80,000,000 shares of common stock, plus 11,089,967 shares authorized, but not issued under the 2006 Plan. The 2015 Plan terminated on July 14, 2025; at that time there were 18,875,685 shares available for grant and 48,538,185 shares available for issuance under the 2015 plan. The Company is evaluating adopting a new incentive plan, which would be required to be submitted for approval by the Company's shareholders.

Employee/Director Grants - The Company accounts for issuances of stock-based compensation to employees by recognizing, as compensation expense, the cost of employee services received in exchange for equity awards. The compensation expense is based on the grant date fair value of the award. Stock compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).

Non-Employee Grants - The Company accounts for its issuances of stock-based compensation to non-employees by recognizing compensation expense based on the grant date fair value of the award. Stock compensation expense is recognized over the vesting period for the award.

Option awards outstanding as of  March 31, 2026, and changes during the three months ended March 31, 2026, were as follows:

The intrinsic value of outstanding and exercisable shares is based on the closing price of the Company’s common stock on the OTCQB of $0.08 per share on March 31, 2026.

As of  March 31, 2026, there was $37,853 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of 1.71 years.

Total stock-based compensation expense for the three months ended March 31, 2026 and 2025 was $244,059 and $70,279, respectively.

During the three months ended March 31, 2026, the Company did not grant any additional stock options.

Restricted Stock Units outstanding as of  March 31, 2026, and changes during the three months ended March 31, 2026, were as follows:

As of  March 31, 2026, there was $902,013 of unrecognized compensation expense related to Restricted Stock Units ("RSUs") that will be recognized over a weighted-average period of 2.53 years.

On October 10, 2025, the Company granted its CEO 37,500,000 RSUs as part of his new executive employment agreement. These RSUs shall vest upon (i) the Company’s share price being at or above the following levels for 60 consecutive calendar days (“Trigger Date”) and (ii) the earlier of (x) the Company having at least three times the necessary tax withholding amount in available cash or (y) six months following the Trigger Date, vesting as follows: 2,500,000 RSUs will vest at a share price of $0.10; 5,000,000 RSUs will vest at a share price of $0.15; 7,500,000 RSUs will vest at a share price of $0.20; 10,000,000 RSUs will vest at a share price of $0.25; and 12,500,000 RSUs will vest at a share price of $0.30. In the event the CEO is terminated by the Company without cause, all unvested RSUs at such time will immediately vest as of the termination date, and if the CEO is serving in good standing and there is a “change of control” (as defined in the respective RSU award agreements), all unvested RSUs will vest immediately prior to said change of control. The RSUs have a fair value of $1,119,238 as estimated on the date of issue using the Monte Carlo simulation model, which incorporates the probability of achieving the market-based vesting conditions. Key assumptions used in the valuation included a risk-free interest rate of 3.6%, expected volatility of 80.65%, expected term of 1.58 to 2.87 years, and a dividend yield of 0%. The Company recognized stock-based compensation expense of $114,783 for these RSUs for the three months ending March 31, 2026.

Additionally, during the three months ended March 31, 2026, the Company identified an error related to the accounting for these RSUs. Specifically, compensation expense associated with these awards was not recognized in the Company’s consolidated financial statements for the year ended December 31, 2025. In accordance with ASC 250, Accounting Changes and Error Corrections, the Company evaluated the materiality of the error, both quantitatively and qualitatively, and determined that the impact was not material to the previously issued financial statements for the year ended December 31, 2025, and that correction of the error in the current period is appropriate. As a result, the Company recorded an out-of-period adjustment of approximately $102,441 of stock-based compensation expense during the three months ended March 31, 2026 related to previously unrecorded stock-based compensation expense. The recognition of this expense increased operating expenses and net loss for the current period. The Company has evaluated the impact of this adjustment on prior interim periods and determined that no restatement of previously issued financial statements is required.

Preferred Stock

At March 31, 2026, there were 4,063 total shares of the Series C Preferred Stock outstanding. The Series C Preferred Stock are convertible at the option of the investors at any time into shares of the Company's common stock at an initial conversion price equal to $0.10 per share, subject to adjustment. At any time after February 17, 2019, if the volume-weighted average closing price of the Company’s common stock over a period of 90 consecutive trading days is greater than $0.25 per share, the Company may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per share ($1,000) plus any accrued and unpaid dividends, payable in shares of common stock. All outstanding shares of Series C Preferred Stock were to be redeemed by the Company on February 17, 2022 at the original purchase price per share, payable in cash or shares of common stock, at the option of the holder. In February 2022, based on approval of a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2023. In December 2022, based on approval of a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2025. In September 2024, based on approval of a majority of the Preferred C Holders, the Company extended the redemption date of the Series C Preferred Stock to February 17, 2027. Holders of Series C Preferred Stock do not have any voting rights, except as required by law and in connection with certain events as set forth in the Statement of Designation of the Series C Preferred Stock.

During the three months ended March 31, 2026 and 2025, dividends due to holders of the Series C Preferred Stock totaled $243,780. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. For the three months ended March 31, 2026 and 2025, the Company issued an aggregate of 573,570 and 118,846 shares of common stock in lieu of dividend payments of $48,180 and $6,180, respectively, with dividend payments settled in cash of $39,300 and $37,800, respectively. The remaining dividend balance of $199,800 that was outstanding as of March 31, 2025 was settled in the second quarter of 2025. The remaining balance of $156,300 that is outstanding as of March 31, 2026 will be settled in the second quarter of 2026.