NOTE 14 – STOCK-BASED COMPENSATION

Compensation for services

In August 2025, the Company issued 20,322,930 shares of Common stock as service fees of approximately $1.2 million, as the grant date fair value of the Common Shares to Jefferson Capital, as part of the independent contractor agreement. Jefferson is due to earn certain shares out of the shares issued based on certain milestones, as described in Note 1 to this Report. The Company recognized approximately $0.1 million and $0.2 million as stock-based compensation during the three and six months ended June 30, 2026, and had approximately $0.1 million unamortized expense to be recognized in future periods as and when the milestones are achieved. The Company recognized approximately $1.0 million as stock-based expense during the year ended December 31, 2025 and had approximately $0.20 million unamortized expense to be recognized in future periods as and when the milestones are achieved.

In August 2025, the Company issued 4,064,586 shares of Common stock as service fee of approximately $0.2 million to Valor Nation as part of the independent contractor agreement, as the grant date fair value of the Common Shares to Valor Nation. Valor Nation is due to earn the shares issued based over the service period of the agreement. The Company recognized approximately $0.2 million as stock-based expense during the year ended December 31, 2025, and had approximately $0 unamortized expense to be recognized over the remainder of the period of the services.

In December 2025, the Company issued 1,818,182 shares of Common stock as service fee of approximately $0.2 million to Outside the Box Capital, Inc. as part of the service agreement, as the grant date fair value of the Common Shares to Outside the Box Capital Inc. Outside the Box Capital Inc. is due to earn the shares issued based over the service period of the Agreement. The Company recognized approximately $0.1 million as stock-based compensation during the three and six months ended June 30, 2026, and had $0 unamortized expense. The Company recognized approximately $62,000 as stock-based expense during the year ended December 31, 2025, and had approximately $0.14 million unamortized expense to be recognized over the remainder of the period of the services.

Options

Pursuant to the Merger, the Company’s Common Stock and corresponding outstanding options survived. The information below details the Company’s associated option activity pre and post-merger.

As of June 30, 2026, the Company had options to purchase Common Stock that were outstanding under three stock option plans – the 2017 Equity Incentive Plan (the “2017 Plan”), the 2015 Equity Incentive Plan (the “2015 Plan”) and the 2005 Stock Plan (the “2005 Plan”). No further awards may be granted under the 2005 Plan, although options previously granted remain outstanding in accordance with their terms. Under the 2017 Plan, up to 2,000,000 shares of the Company’s Common Stock may be issued to directors, officers, employees or consultants pursuant to awards granted in the form of non-qualified stock options, restricted and unrestricted stock awards, and other stock-based awards. Under the 2015 and 2005 Plans, taken together, up to 27,250,000 shares of the Company’s Common Stock may be issued pursuant to awards granted in the form of incentive stock options, non-qualified stock options, restricted and unrestricted stock awards, and other stock-based awards.

The Company’ stock option activity for both qualified and unqualified stock options, is summarized as follows:

 SCHEDULE OF COMPENSATION BASED STOCK OPTION ACTIVITY  

The following table summarizes information about options to purchase shares of the Company’s Common Stock outstanding and exercisable at June 30, 2026:

 SCHEDULE OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE 

The compensation expense attributed to the issuance of the options is recognized as they vest. The employee stock option plan stock options are generally exercisable for ten years from the grant date and vest over various terms from the grant date to three years.

As of June 30, 2026, there was no unamortized stock compensation cost related to the stock options granted during the year ended December 31, 2023. Of the approximately 10 million unvested stock options, the vesting criteria for 7.3 million options is still being evaluated as on the date of this Report, as those options are subject to individual milestone achievements. The Company amortized $0 stock compensation expense during the three and six months ended June 30, 2026 and 2025 on the 2021 and 2022 grants. For more information on the stock options, refer to 2025 Annual Report on Form 10-K filed with the SEC on April 15, 2026.

Warrants

The Company has issued warrants in connection with the various financings conducted by the Company. For more information on the warrant issuances, refer to our 2025 Annual Report on Form 10-K filed with the SEC on April 15, 2026.

The issuance of warrants to purchase shares of the Company’s Common Stock, including those attributed to debt issuances, as of June 30, 2026 and 2025, respectively are summarized as follows:

 SCHEDULE OF WARRANTS ACTIVITY

The following table summarizes information about warrants outstanding and exercisable at June 30, 2026:

 SCHEDULE OF WARRANTS OUTSTANDING AND EXERCISABLE