NOTE 5 — STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expense recorded for the three and six months ended June 30, 2026 and 2025:

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As of June 30, 2026, the unrecognized stock-based compensation expense related to outstanding RSUs totaled $2,402,000, which may be recognized through September 2027, subject to achievement of service and performance conditions.

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The following table summarizes the stock option and RSUs activity for the six months ended June 30, 2026:

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On May 4, 2026, the Company amended and restated its employment agreements with Kelly Georgevich, in connection with her appointment as Chief Executive Officer, and with David Moradi, in connection with his appointment as Executive Chairman and Chief Product Officer. Pursuant to such agreements, all of their time-based RSUs that were outstanding on May 4, 2026 vested on a pro rata basis through and including May 4, 2026, and the remaining unvested RSUs were cancelled. In addition, all outstanding performance  shares held by Mr. Moradi were cancelled on May 4, 2026.

Concurrent with the cancellations on May 4, 2026, the executives were granted new equity awards. Ms. Georgevich was granted 50,000 time-based RSUs, which vest in five tranches through May 4, 2027, 60,000 performance stock units (“PSUs”), and 2,264 shares of common stock, which were fully vested upon grant. Mr. Moradi was granted 58,000 time-based RSUs, which vest in five tranches through May 4, 2027, and 69,600 PSUs. A portion of these PSUs granted to Ms. Georgevich and Mr. Moradi will vest upon certification of the achievement of certain performance targets set for fiscal year 2026, and the remainder of the PSUs will vest upon certification of the achievement of performance targets to be established for fiscal year 2027.

The modifications to the outstanding equity awards held by Ms. Georgevich and Mr. Moradi, as well as the new grants, were accounted for under ASC 718, Compensation — Stock Compensation. Accordingly, incremental compensation cost of $250,000 associated with Ms. Georgevich’s 31,921 net-new RSUs granted in excess of the cancelled RSUs will be recognized over the vesting period of the new RSUs on a straight-line basis ending on May 4, 2027. Compensation cost of $18,000 associated with the 2,264 shares of common stock granted to Ms. Georgevich was immediately recognized on grant. Compensation cost of $261,000 attributed to the portion of the PSUs granted to Ms. Georgevich that are deemed probable of vesting will be recognized ratably through December 31, 2026.

The Company accounted for Mr. Moradi's awards as a single combined-package modification, treating his entire pre-modification equity portfolio as one award replaced by the new combined package, consistent with the economic substance of the transaction. Since the fair value of the new awards immediately after modification was less than the fair value of the cancelled awards immediately before modification, no incremental compensation cost arose with respect to Mr. Moradi’s cancelled or new grants. As a result, the unamortized grant-date fair value of the cancelled RSUs totaling $1,234,000 will be recognized over the vesting period of the new RSUs on a straight-line basis ending on May 4, 2027.