Note 8 – Commitments and Contingencies

Operating Leases

San Jose Lease

The Company leases office space for its corporate headquarters in San Jose, California under an operating lease.

On March 19, 2025, the Company entered into an amendment to the lease, which relocated the Company to a smaller suite within the same building and extended the lease term through December 31, 2027. The Company agreed to issue 2,500 shares of its common stock to the landlord upon signing the amendment as partial consideration for the amended lease and agreed to new monthly payments beginning October 2025 of approximately $37,000, escalating to approximately $46,000 during 2026 and $51,000 during 2027. As a result of the new lease amendment signed on March 19, 2025, the ROU asset and operating lease liability were both increased by approximately $0.9 million. The Company recorded lease expense of $0.2 million and $0.3 million for the three and six months ended June 30, 2026, respectively. The Company recorded lease expense of $0.1 million and $0.3 million for the three and six months ended June 30, 2025, respectively.

Note 8 – Commitments and Contingencies, continued

Operating Lease Commitments

The Company follows ASC 842, “Leases” (“Topic 842”) and recognizes the required ROU assets and operating lease liabilities on its balance sheets. The Company anticipates having future total lease payments of $0.9 million through the fourth quarter of 2027. As of June 30, 2026, the Company has total operating lease right-of-use assets of $0.7 million, current operating lease liabilities of $0.5 million and long-term operating lease liabilities of $0.3 million. The weighted average remaining lease term is 1.5 years as of June 30, 2026.

A reconciliation of undiscounted cash flows to lease liabilities recognized as of June 30, 2026 is as follows (in thousands):

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Litigation, Claims and Assessments

The Company is from time to time involved in various disputes, claims, liens and litigation matters arising in the normal course of business. While the outcome of these disputes, claims, liens and litigation matters cannot be predicted with certainty, after consulting with legal counsel, management does not believe that the outcome of these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Employee Bonus Plans

On January 12, 2026, the Board of Directors (the “Board”), on the recommendation of the Compensation Committee, approved the 2026 Corporate Bonus Plan (the “2026 Bonus Plan”), whereby employees’ bonuses will be based upon achievement of performance objectives set by the Compensation Committee and paid annually. Employees must be continuously employed throughout the applicable performance period and payment date and achieve the performance objectives.

Under the 2026 Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers and vice presidents and defining the annual performance metrics against which the bonus compensation will be measured. The level of achievement against pre-defined performance metrics is used to determine whether any such bonuses will be paid and whether those performance metrics have been satisfactorily achieved. The Company accrued $0.4 million and $0.6 million in bonus expense under the 2026 Bonus Plan during the three and six months ended June 30, 2026, which the Company plans to pay during the first quarter of 2027.

On February 21, 2025, the Board, on the recommendation of the Compensation Committee, approved the 2025 Corporate Bonus Plan (the “2025 Bonus Plan”), whereby employees’ bonuses will be based upon achievement of performance objectives set by the Compensation Committee and paid annually. Employees must be continuously employed throughout the applicable performance period and payment date and achieve the performance objectives.

Under the 2025 Bonus Plan, the Compensation Committee is responsible for selecting the amounts of potential bonuses for executive officers and vice presidents and defining the annual performance metrics against which the bonus compensation will be measured. The level of achievement against pre-defined performance metrics is used to determine whether any such bonuses will be paid and whether those performance metrics have been satisfactorily achieved. The Company accrued $0.5 million in bonus expense under the 2025 Bonus Plan during the three and six months ended June 30, 2025. Based upon achievement of the performance objectives, as approved by the Compensation Committee, payments due under the 2025 Bonus Plan were paid in February of 2026.