14. Share-Based Compensation

There has been no material change in the assumptions used to compute the fair value of our equity awards, nor in the method used to account for share-based compensation from those stated in our 2025 Annual Report.

During the six months ended June 30, 2026, the compensation committee of our Board of Directors (the "Committee") granted nonqualified share options under our 2019 Long-term Incentive Plan (the "2019 Plan") to executives and key employees for the purchase of up to 10.8 million shares of our common stock at an exercise price of $0.24 per share, including performance-based stock options awarded to the CEO, CFO, and a key employee for the purchase of up to 9.0 million shares.  The performance-based options have a five-year performance period, with quarterly measurement dates, and expire ten years from the date of grant.  The performance conditions for vesting of these options are based on cumulative net cash received by the Company from its patent enforcement actions, after deduction of all attorney contingency fees and contractual repayments of contingent payment obligations to third parties.  The aggregate grant-date fair value of the performance-based awards is approximately $2.2 million which is amortized to share-based compensation expense over the performance period based on the probability of the performance condition being met which is assessed at each interim reporting period.  Upon forfeiture of performance-based options, any previously recognized share-based compensation expense is reversed. The remaining awards are time-based options that vest in four equal biannual installments and have a grant date fair value of approximately $0.5 million that will be amortized to share-based compensation expense over the two-year vesting period.

In April 2026, the Committee also authorized the modification of an aggregate of 5.53 million fully-vested, nonqualified share options held by executives, board members, and key employees.  The options, which were awarded in August 2019, are exercisable at $0.171 per share and had an original expiration date of August 7, 2026.  The Committee extended the expiration date of the options by three years, or until August 7, 2029.  No other modifications were made to these awards.  We recognized a one-time, non-cash charge to share-based compensation expense of approximately $0.6 million, representing the incremental fair value of the options as a result of the modification, based on a Black-Scholes option pricing model.

During the six months ended June 30, 2025, the Committee authorized the modification of an aggregate of 10.65 million fully-vested, nonqualified share options held by executives and key employees.  The options, which were awarded in January 2021, are exercisable at $0.54 per share and had an original expiration date of January 11, 2026.  The Committee extended the expiration date of the options by five years, or until January 11, 2031.  No other modifications were made to these awards.  We recognized a one-time, non-cash charge to share-based compensation expense of approximately $2.5 million, representing the incremental fair value of the options as a result of the modification, based on a Black-Scholes option pricing model.

For the three months ended June 30, 2026 and 2025, we recognized share-based compensation expense, including expense related to the modification of awards, of approximately $0.7 million and $2.7 million, respectively.  For the six months ended June 30, 2026 and 2025, we recognized share-based compensation expense, including expense related to the modifications of awards, of approximately $0.9 million and $2.8 million, respectively.  Share-based compensation includes expense attributable to equity-based awards to employees, directors, and third parties and is included in selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income (loss).  As of June 30, 2026, there was $1.4 million of total unrecognized compensation cost related to all non-vested share-based compensation awards.  The cost is expected to be recognized over a weighted-average remaining life of approximately 3.5 years.