NOTE 10 – STOCK BASED COMPENSATION

In August 2009, the Board approved the adoption of the 2009 Equity Incentive Plan (the 2009 Plan). No shares are available for grant under the 2009 Plan.

In September 2018, the Board approved the adoption of the 2019 Equity Incentive Plan (the 2019 Plan). No shares are available for grant under the 2019 Plan.

In June 2022, the Board approved the adoption of the 2022 Equity Incentive Plan (the 2022 Plan). The 2022 Plan provides for the grant of incentive stock options (ISOs) to employees, including employees of any parent or subsidiary, and for the grant of non-qualified stock options (NSOs), stock appreciation rights, restricted stock awards, restricted stock units (RSUs), performance awards (PSUs) and other forms of stock awards to employees, directors, and consultants, including employees and consultants of its affiliates. The 2022 Plan is a successor to the 2019 Plan. The aggregate number of shares of the Company’s common stock initially reserved for issuance under the 2022 Plan is 2,800,000 shares. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2024 and continuing through and including January 1, 2032, in an amount equal to 5% of the total number of shares of its common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Board. In January 2026, the number of shares available to be issued under the 2022 Plan automatically increased by 1,906,957 shares, as determined by the 2022 Plan. As of June 30, 2026, the total number of shares reserved for issuance was 10,089 which has taken into account 938,069 shares subject to service and performance conditions under PSUs disclosed below.

In September 2023, the Board approved the adoption of the Company’s 2023 Inducement Plan (the Inducement Plan) to reserve 1,000,000 shares of the Company’s common stock to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company as an inducement material to the individual’s entry into employment with the Company. The Inducement Plan provides for the grant of NSOs, stock appreciation rights, restricted stock awards, RSUs, performance-based cash and stock awards, and other stock-based awards. The terms and conditions of the Inducement Plan are substantially similar to the Company’s stockholder-approved 2022 Plan. In June 2025, the Board approved an increase to the number of shares of the Company’s common stock available for issuance under the Inducement Plan by 1,000,000 shares. As of June 30, 2026, the total number of shares reserved for issuance under the Inducement Plan was 847,101.

The following table presents a summary of awards outstanding:

SCHEDULE OF AWARDS OUTSTANDING 

The following table summarizes stock-based compensation expenses included in operating expenses:

SCHEDULE OF STOCK-BASED COMPENSATION EXPENSES 

Restricted Stock Units and Performance Awards

Each RSU granted entitles the holder to receive one share of Company common stock upon the occurrence of certain performance and service conditions. The grant date fair value for RSUs is determined based on the market price of the Company’s common stock on the grant date and expense is recognized on a straight-line basis over the requisite service period for the entire award. RSUs granted typically vest over a period not exceeding four-years. During the six months ended June 30, 2026, the Company granted 2,136,112 RSUs. During the three and six months ended June 30, 2026, the Company recorded amortization expense of $0.6 and $1.0 million related to the fair value of RSUs.

In June 2026, the Board approved the award of PSUs under the 2022 Plan as part of the Company’s equity incentive program for employees. Each PSU entitles the holder to receive one share of Company common stock upon the satisfaction of non-market performance and service conditions. The grant date fair value for the PSUs is determined based on the market price of the Company’s common stock on the grant date and expense is recognized over the requisite service period if and when the achievement of such performance condition is determined to be probable by the Company. The Company reassesses the probability of achieving the performance condition at each reporting period, and cumulative expense is adjusted (including reversal of previously recognized expense) if achievement is no longer considered probable. The Company granted to employees 938,069 PSUs. As of June 30, 2026, the Company determined that achievement of the performance condition is probable and expects to recognize total expense of $2.8 million over the requisite service period through June 2027. During the three and six months ended June 30, 2026, the Company recorded amortization expense of nil and $0.1 million related to the fair value of PSUs.

The following table summarizes the activity of the Company’s RSUs and PSUs:

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY 

As of June 30, 2026, $6.1 million of unamortized stock compensation expense remains, which the Company expects to recognize over a weighted-average period of four years.

Stock Options Awards

Option exercise prices are set forth in the grant notice, without commission or other charge, provided however, that the price per share of the shares subject to the option shall not be less than the greater of (i) 100% of the fair market value of a share of stock on the grant date, or (ii) with respect to awards under the 2019 Plan or 2022 Plan, 110% of the fair market value of a share of stock on the grant date in the case of a Participant then owning more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company. Options to employees, directors and consultants generally vest and become exercisable over a period not exceeding four years. Options typically expire ten years after the date of grant.

The Company’s policy is to recognize compensation cost for awards with only service conditions on a straight-line basis over the requisite service period for the entire award. Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises. The Company applied fair value accounting for all share-based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model.

In September 2025, the Board approved a reduction in the exercise prices of certain stock options held by employees to purchase shares of the Company’s common stock under the Company’s 2022 Plan, 2019 Plan and 2009 Plan that had exercise prices greater than $5.00 per share. The exercise price for such options was reduced to $3.33 per share, which was the closing price of the common stock on September 1, 2025, the effective date of the reduction. The total cost of the repricing was $1.3 million, of which $0.7 million was recorded as of December 31, 2025. During the three and six months ended June 30, 2026, the Company recorded amortization expense of $0.07 million and $0.1 million related to the cost of the repricing, respectively. The remainder of the cost will be recorded over the future vesting periods of the options.

In September 2022, the Board approved a stock option repricing whereby the exercise price of previously granted and unexercised options held by certain employees, directors and key advisers with exercise prices between $9.00 and $10.50 per share, was adjusted to $6.00 per share, the closing price of the Company’s initial public offering. The total cost of the repricing was $2.73 million, of which $2.72 million was recorded as of December 31, 2024, and the remaining cost was recorded during the year ended December 31, 2025.

The assumptions used for the options granted during the period are as follows:

SCHEDULE OF ASSUMPTIONS USED FOR OPTIONS GRANTED 

The table below summarizes the Company’s stock option activities for the six months ended June 30, 2026:

SCHEDULE OF STOCK OPTION ACTIVITY 

As of June 30, 2026, unvested stock option expense of $10.2 million remained and will be amortized over the remaining vesting period, through January 2030.

Stock Warrants

The table below summarizes the Company’s warrants activities for the six months ended June 30, 2026:

SCHEDULE OF WARRANTS ACTIVITIES 

There is no intrinsic value for warrant shares outstanding at June 30, 2026.

Employee Stock Purchase Plan

The Company’s 2022 Employee Stock Purchase Plan (ESPP) permits eligible employees to purchase Company shares on an after-tax basis in an amount between 1% and 15% of their earnings: (i) on May 16th of each year at a 15% discount of the fair market value of the Company’s common stock on November 17th of the previous year or May 16th of the then-current year, whichever is lower, and (ii) on November 15th of each year at a 15% discount of the fair market value of the Company’s common stock on May 17th or November 15th of the then-current year, whichever is lower. The ESPP includes an “evergreen” feature, which provides that an additional number of shares of common stock will automatically be added to the shares authorized for issuance under the ESPP on January 1st of each year, beginning on January 1, 2024 and ending on (and including) January 1, 2032. The number of shares added each calendar year will equal the lesser of 1% of the Company’s common stock outstanding on December 31st of the preceding calendar year or 2,100,000 or a lesser number as determined by the Board. In January 2026, the number of shares available to be issued under the ESPP automatically increased by 381,391 shares, as determined by the Plan. During the six months ended June 30, 2026, 18,993 shares were purchased under the ESPP and as of June 30, 2026, 1,571,939 shares remain authorized and available for issuance.