NOTE 3 — STOCK-BASED COMPENSATION

The Company maintains three equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), and the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”). All equity awards issued to employees, consultants, and non-employee directors on or after May 9, 2024, are issued from the 2024 Plan. The Company has also issued restricted stock and stock options as employment inducement awards outside of these plans to certain executive officers.

The 2015 Plan provides for the grant of incentive stock options and nonqualified stock options. As of June 30, 2026, there were 1,903,000 shares reserved for outstanding awards under the 2015 Plan.

The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units, performance share units, stock appreciation rights, and/or other equity-based awards to employees, consultants and directors. As of June 30, 2026, there were 100,000 shares reserved for outstanding awards under the 2021 Plan.

The 2024 Plan provides for the grant of incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units, performance share units, stock appreciation rights and/or other equity-based awards to employees, consultants and directors. Awards previously made under the 2015 Plan and the 2021 Plan that are forfeited or cancelled after May 9, 2024 will be available for issuance under the 2024 Plan. As of June 30, 2026, there were 2,134,545 shares reserved for outstanding awards and 3,028,956 shares available for issuance under the 2024 Plan.

Each non-employee director of the Company (other than the Chairman of the Board) is eligible to receive $110,000 annually, to be paid quarterly in arrears of $12,500 in cash and $15,000 in common stock. The Chairman of the Board is eligible to receive $140,000 annually, to be paid quarterly in arrears of $12,500 in cash and $22,500 in common stock. All payments were and are pro-rated for partial service.

Restricted stock units (“RSUs”) and performance share units (“PSUs”) are equity classified and measured at the fair value of the underlying stock at the grant date.

Shares of stock granted for non-employee director fees are recorded at the fair value of the shares at the grant date.

On March 12, 2026 the Company announced the retirement of our CEO, Linda Tharby, with both parties entering into a separation and transition agreement, and general release. Ms. Tharby continued to serve as CEO through June 30, 2026, at which time she transitioned to a non-executive advisory employee, and will continue to serve as a member of the Board of Directors through December 31, 2026. As part of the separation and transition agreement, 580,000 unvested restricted stock awards from Ms. Tharby’s new hire inducement plan were forfeited during the six months ended June 30, 2026. All forfeited restricted stock awards were transferred to Treasury, and forfeited RSUs, PSUs, and stock options were remitted back to the 2024 Plan.

Time-Vesting Stock Options

The following table summarizes the status of the time-vested stock options outstanding at June 30, 2026:

Schedule of status of time based stock options

Total stock-based compensation expense for time-vested stock options included in operating expense in the accompanying statement of operations was $308,252 and $562,305 for the three and six months ended June 30, 2026, respectively.  As of June 30, 2026, the intrinsic value of all time-based stock options was $3,014,639.

The following table presents information pertaining to time-vested stock options outstanding at June 30, 2026:

Schedule of information pertaining to options outstanding

As of June 30, 2026, there was $3,368,702 of total unrecognized compensation cost related to unvested share-based stock compensation awards granted under the Plans.  That cost is expected to be recognized over a weighted-average period of 25 months.

Restricted Stock Awards, RSUs, and PSUs

The following table summarizes the activities for our unvested restricted stock awards, RSUs, and PSUs for the six months ended June 30, 2026.

Schedule of Unvested Restricted Stock Awards, Restricted Stock Units, and Performance Stock Units Activity Table

During the six months ended June 30, 2026, 580,000 shares of restricted stock originally issued to our former CEO as part of her new hire inducement award were forfeited and returned to treasury.

Total stock-based compensation expense for restricted stock awards, RSUs, and PSUs, included in operating expense in the accompanying statement of operations was $52,021 and $381,978 for the three and six months ended June 30, 2026, respectively.

As of June 30, 2026, there was $4,919,605 of unrecognized compensation cost related to unvested employee restricted stock awards, RSUs, and PSUs. This amount is expected to be recognized over a weighted-average period of 25 months.