NOTE 12. STOCK-BASED COMPENSATION

Equity Compensation Plans 

In January 2026, the Company adopted the 2026 Equity Incentive Plan (the “2026 Plan”), which was approved by stockholders on March 12, 2026. The 2026 Plan provides for the grant of equity awards, including stock options, restricted stock, performance awards, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other share-based awards to employees, directors, consultants and advisors, as determined by the Compensation Committee of the Board (the “Committee”). Upon stockholder approval of the 2026 Plan, no further awards may be granted under the Company's 2017 Omnibus Incentive Plan (the “2017 Plan”) or its 2007 Omnibus Incentive Plan (the “2007 Plan”); however, awards previously granted under the 2017 Plan and 2007 Plan remain outstanding and continue to be governed by the terms of those plans until exercised, settled, forfeited or otherwise canceled in accordance with their terms.

Upon adoption, the 2026 Plan allowed for awards of up to 22,223,927 shares of the Company's common stock, plus an automatic annual increase in the number of shares authorized for awards on the first day of each of the Company's fiscal years beginning January 1, 2027 through January 1, 2036, equal to the lesser of (i) 4% of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or (ii) such lesser number of shares of common stock as determined by the Board. Under the terms of the 2026 Plan, the exercise price of stock options and SARs may not be less than 100% of the fair market value of the Company's common stock on the date of grant (or 110% in the case of incentive stock options (“ISOs”) granted to a holder of more than 10% of the Company's common stock) or such higher amount as the Committee may determine. The term of stock option awards and SARs may not exceed ten years from the date of grant (or five years from the date of grant in the case of ISOs granted to a holder of more than 10% of the Company's common stock). As of June 30, 2026, there were 539,491 shares available for future awards under the 2026 Plan.

The 2007 Plan expired on March 15, 2017. Outstanding stock options granted under the 2007 Plan continue to be governed by its terms, expire no later than ten years from the date of grant, and were fully vested as of June 30, 2026.

The 2017 Plan was adopted in March 2017 and approved by stockholders on June 2, 2017. Following stockholder approval of the 2026 Plan on March 12, 2026, no new awards may be granted under the 2017 Plan. Outstanding awards under the 2017 Plan remain subject to its terms, including that the exercise price of non-qualified stock options, ISOs and SARs may not be less than 100% of the fair market value of the Company's common stock on the date of grant (or 110% for ISOs granted to a holder of more than 10% of the Company's common stock), and that option terms may not exceed ten years (or five years for such ISOs). Stock options granted to employees under the 2017 Plan generally vest over four years; options granted to directors and consultants typically vest over a shorter period; and RSUs granted to directors typically vest over one year, in each case subject to continued service.

The Company issues new shares of common stock to satisfy exercises of options and settlement of RSUs under the 2007 Plan, the 2017 Plan and the 2026 Plan.

Restricted Stock Units

The following table summarizes information about the Company’s RSUs outstanding at December 31, 2025, and activity during the six months ended June 30, 2026:

Forfeitures are estimated at the time of grant and reduce compensation expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

For the three months ended June 30, 2026 and 2025, the Company recognized stock-based compensation expense of $3.2 million and $4 thousand, respectively, for RSUs awards to employees and directors. For the six months ended June 30, 2026 and 2025, the Company recognized stock-based compensation expense of $3.3 million and $6 thousand, respectively, for RSUs to employees and directors.

Equity Awards Granted Under the 2026 Equity Incentive Plan

On March 31, 2026, the Company granted an aggregate of 21,684,436 RSUs under the 2026 Plan, representing substantially all of the shares available for issuance under the plan as of that date. The grants included 6,238,828 time-based RSUs subject to vesting over one to three years and 15,445,608 performance-based RSUs to the Company's Chief Executive Officer (the "CEO PSUs"). The weighted-average grant-date fair value was $1.43 per share for the market-condition tranche of the CEO PSUs (the VWAP RSUs), and $1.49 per share for the performance-condition tranche of the CEO PSUs (the “NAV RSUs”), with the latter based on the closing stock price on the grant date.

The CEO PSUs are divided equally between two components. Fifty percent are eligible to vest based on the Company's common stock achieving specified 10-trading-day volume-weighted average price ("VWAP") thresholds of $1.70, $2.55, and $5.10 per share during the five-year performance period beginning October 16, 2026 (the "VWAP RSUs"). The remaining fifty percent are eligible to vest based on the Company achieving specified Digital Asset NAV thresholds of $250 million, $400 million, and $800 million, in each case sustained for two consecutive quarterly reporting periods during the same performance period (the "NAV RSUs"). Digital Asset NAV is defined in the award agreement as the fair market value of the Company's digital assets and related investments within its approved strategy, excluding cash, cash equivalents, and stablecoin holdings. Any earned tranche vests in equal quarterly installments over the eight fiscal quarters following achievement, subject to a 13-month cliff measured from the January 16, 2026 vesting start date.

The grant-date fair value of the VWAP RSUs was determined using a Monte Carlo simulation. Significant assumptions, which represent Level 3 inputs within the fair value hierarchy, were as follows: expected volatility of 157%, risk-free interest rate of 3.92%, expected dividend yield of 0%, derived service period of 3 years, and grant-date stock price of $1.49. Compensation expense for the VWAP RSUs is recognized on a graded-vesting basis over the requisite service period and will not be reversed if the market conditions are not ultimately achieved.

The NAV RSUs contain performance conditions. As of June 30, 2026, the Company concluded that achievement of the Digital Asset NAV thresholds was not probable and accordingly no compensation expense has been recognized in respect of the NAV RSUs. The Company will reassess probability at each reporting date, and if achievement becomes probable, will recognize a cumulative catch-up of compensation expense equal to the portion of the requisite service period elapsed.

Total unrecognized compensation cost related to unvested RSUs, excluding the NAV RSUs for which achievement of the performance conditions was not probable, was $17.2 million as of June 30, 2026, which is expected to be recognized over a weighted-average period of 2.06 years.

Stock-Based Awards to Non-Employees

The Company did not grant options or restricted stock to non-director non-employees during the three and six months ended June 30, 2026 and 2025. The Company did not recognize stock-based compensation expense as it relates to non-employees for the three and six months ended June 30, 2026 and 2025.