Note 7 – Equity and Stock-based compensation

Stock Options - On January 17, 2024, our stockholders approved the Aware Inc. 2023 Equity and Incentive Plan (the “2023 Plan”). Following approval of the 2023 Plan, we ceased making awards under our previous 2001 Nonqualified Stock Plan (as amended, the “2001 Plan”).

During the three and six months ended June 30, 2026, the Company granted stock options to purchase an aggregate of 0 and 10,000 shares of common stock under the 2023 Equity and Incentive Plan, respectively. The stock options granted in the six months ended June 30, 2026 were granted as incentive stock options.

During the three and six months ended June 30, 2025, the Company granted stock options to purchase an aggregate of 0 and 1,165,197 shares of common stock, respectively, under the 2023 Equity and Incentive Plan. Of the total stock options granted in the three and six months ended June 30, 2025, 327,840 options were granted as incentive stock options and 837,357 as non-qualified stock options.

No stock options were exercised in either period.

The stock options granted during the three months ended March 31, 2025 included 105,000 incentive stock options to a hired executive officer and 1,060,197 options, comprising both incentive and non-qualified options granted to Ajay Amlani, in connection with his appointment as the Company’s Chief Executive Officer. Within the grant to Mr. Amlani, 848,157 options were subject to time-based vesting, with 25 percent vested on the one-year anniversary of the grant date and the remaining 75 percent vesting in 36 equal monthly installments thereafter, subject to Mr. Amlani's continued service. The remaining 212,040 options granted to Mr. Amlani were performance-based and divided equally between two tranches. The first tranche was eligible to vest if certain minimum thresholds for bookings growth for 2025 were achieved, with incremental vesting for higher levels of growth up to a maximum threshold. The second tranche is subject to similar performance conditions based on year-over-year bookings growth in 2026. In both cases, Mr. Amlani must remain in service through December 31 of the applicable performance year for any shares to vest. Expense recognition for the option grant is based on the fair value on the grant date and reflects management’s assessment of the probability of achieving the specified performance conditions. Expense is recognized over the requisite service period and is adjusted for changes in the probability of achievement, as necessary. During 2025, the performance condition for the 2025 tranche was not achieved and the related performance-based options were cancelled. Any compensation expense previously recognized for that tranche was reversed during 2025. Compensation expense related to the 2026 tranche, will be recognized over the applicable service period in 2026 if performance conditions are met.

Restricted Stock Units - The 2023 Plan permits us to grant restricted stock units to our directors, officers, and employees. Upon vesting, each restricted stock unit entitles the recipient to receive a number of shares of common stock as set forth in the relevant restricted stock unit agreement. Stock-based compensation expense for restricted stock units is determined based on the fair market value of our stock on the date of grant, provided the number of shares in the grant is fixed on the grant date.

We granted 0 and 217,354 restricted stock units to directors, officers, and employees during the three and six months ended June 30, 2026. Of the 217,354 restricted stock units granted during the six months ended

June 30, 2026, 108,677 vested shortly after June 30, 2026 and the remaining are scheduled to vest shortly after December 31, 2026. No restricted stock units were forfeited during the three or six months ended June 30, 2026

During the three and six months ended June 30, 2025 we granted 359,317 and 771,184 restricted stock units, respectively, to directors, officers, and employees. Of these, 250,355 restricted stock units are vested in two installments of 122,818 and 127,537 shares shortly after June 30, 2025 and December 31, 2025, respectively. In addition, 166,229 restricted stock units were granted on March 13, 2025 to Mr. Amlani in connection with an amendment to his employment agreement. The amendment provided that 80% of Mr. Amlani's CEO’s base salary for the period from March 16, 2025 through December 31, 2025 will be paid in restricted stock units. The award represented the right to receive 166,229 shares and vested in nine equal monthly installments beginning on April 16, 2025 and continuing on the 16th of each month through December 16, 2025. All awards were subject to Mr. Amlani's continued service through the applicable vesting dates.

In addition, 354,600 restricted stock units were granted on June 13, 2025 to Mr. Amlani in connection with a further amendment to his employment agreement. The amendment provides that 75% of Mr. Amlani's CEO’s base salary for the period from January 1, 2026 through December 31, 2027 will be paid in restricted stock units. The award represents the right to receive 354,600 shares and will vest in twenty four equal monthly installments beginning on January 16, 2026 and continuing on the 16th of each month through December 16, 2027. All awards are subject to Mr. Amlani's continued service through the applicable vesting dates. No restricted stock units were forfeited during the three or six months ended June 30, 2025.

Share Purchases - On March 1, 2022, our Board of Directors authorized a new stock repurchase program pursuant to which we may purchase up to $10.0 million of our common stock. On November 30, 2023, our Board of Directors extended the program through December 31, 2025. As of June 30, 2025 we had repurchased $2.1 million of our common stock pursuant to this program. During the three and six months ended June 30, 2025 we purchased 41,020 and 75,457 shares of common stock, respectively. The program did not obligate us to acquire any particular amount of common stock. As of December 31, 2025 the plan expired. We did not repurchase any shares of our common stock during the three and six months ended June 30, 2026.