Note L – Share-based Compensation Plans

In June 2026, our stockholders approved an amendment to our Amended and Restated 2019 Equity Incentive Plan (the "2019 EIP") that increased the maximum number of shares of our common stock available for issuance under our 2019 EIP by 5.0 million shares.

We primarily use the Black-Scholes option pricing model to value stock options granted to employees and non-employees, including stock options granted to members of our Board of Directors. However, the fair value of stock option market-based awards is calculated based on a Monte Carlo simulation as of the date of issuance. All stock options have 10-year terms and generally vest ratably over a 3 or 4-year period.

The weighted average grant-date fair values of stock options granted during the six months ended June 30, 2026 and 2025 were $3.01 and $2.90, respectively.

On June 16, 2026, our stockholders approved a one-time exchange of options to purchase shares of the our common stock issued under our 2019 EIP, the Amended and Restated 2009 Equity Incentive Plan (the “2009 EIP”), and the Company’s 2015 Inducement Equity Plan (the “2015 Plan” and, together with the 2019 EIP and 2009 EIP, the “Equity Plans”) that were held by our executive officers, other employees, consultants, and non-employee directors, for new options to purchase shares of the our common stock (the “Option Exchange”). Pursuant to the Option Exchange, eligible options were cancelled in exchange for an equal number of new options to purchase shares of common stock with an exercise price greater than or equal to the fair market value of the Company’s common stock at the time of the Option Exchange and a term of the option that extends ten years from the date of grant. An eligible stock option generally included any outstanding stock option that had an exercise price equal to or greater than $2.50 per share and greater than the closing price of the Company’s common stock on the date of the Option Exchange, that vested based on continued service with the Company or based on the achievement of performance milestones and that was granted under the Equity Plans. The Option Exchange resulted in the re-pricing of 2,054,413 options. Of these, 1,498,024 awards were repriced to an exercise price of $4.47 and the remaining 556,389 awards were repriced to an exercise price of $2.98. The vesting conditions of the modified options remained the same and the modified awards have a 10-year term. Total expected incremental share-based compensation expense resulting from the modification is approximately $1.9 million, of which $1.8 million relates to vested awards and was recognized immediately with $0.1 million being recognized over the remaining vesting period.

During the six months ended June 30, 2026, all options were granted with exercise prices equal to the market value of the underlying shares of common stock on the grant date.

As of June 30, 2026, there was approximately $9.7 million of total unrecognized share-based compensation expense related to these stock options and stock options granted under a subsidiary plan which, if all milestones are achieved, will be recognized over a weighted average period of 2.3 years.

Certain employees and consultants have been granted non-vested stock. The fair value of non-vested market-based awards is calculated based on a Monte Carlo simulation as of the date of issuance. The fair value of other non-vested stock is calculated based on the closing sale price of our common stock on the date of issuance.

As of June 30, 2026, there was approximately $37,000 of unrecognized share-based compensation expense related to these non-vested shares and non-vested shares granted under a subsidiary plan which will be recognized over a period of 0.6 years.

During the six months ended June 30, 2026, 225,102 shares were issued as a result of stock option exercises, 20,528 shares were issued under the 2019 Employee Stock Purchase Plan, and 469,850 shares were issued as a result of the vesting of non-vested stock.