Note 3 - Stock-based Compensation

On June 19, 2019, our stockholders approved, and we adopted, the Processa Pharmaceuticals Inc. 2019 Omnibus Equity Incentive Plan (the “2019 Plan”). The 2019 Plan allows us, under the direction of our Board or a committee thereof, to make grants of stock options, restricted and unrestricted stock and other stock-based awards to employees, including our executive officers, consultants and directors. The 2019 Plan provides for the aggregate issuance of 432,000 shares of our common stock. At June 30, 2026, we had 232,721 shares available for future grants, which were all granted to employees and directors on July 26, 2026.

Stock Compensation Expense

We recorded stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 as follows:

 Schedule of Stock-Based Compensation Expense

Stock Options

The following table summarizes our stock option activity during the six months ended June 30, 2026:

 Schedule of Stock Option Activity

No forfeiture rate was applied to these stock options. The aggregate intrinsic value of outstanding options was $0 at both June 30, 2026 and 2025. No stock options were exercised during the six months ended June 30, 2026 or 2025. At June 30, 2026, unrecognized stock-based compensation expense for stock options of $514,000 is expected to be fully recognized over a weighted average period of 2.3 years.

Restricted Stock Units

Activity with respect to our Restricted Stock Units (“RSUs”) during the six months ended June 30, 2026 was as follows:

 Schedule of Restricted Stock Units (“RSUs”) Activity

At June 30, 2026, unrecognized stock-based compensation expense of approximately $182,000 for RSUs is expected to be fully recognized over a weighted average period of 2.3 years. The unrecognized expense excludes approximately $12,000 of expense related to certain grants of RSUs with performance milestones that are not probable of occurring at this time. On July 26, 2026, we granted RSUs that represent 232,721 shares of common stock to our employees and directors with a grant date fair value of $2.60. The RSUs vested immediately and the shares of common stock will be distributed within six months of the grant date.

Holders of our vested RSUs will be issued shares of our common stock upon meeting the distribution restrictions contained in their Restricted Stock Unit Award Agreement. The distribution restrictions are different (longer) than the vesting schedule, imposing an additional restriction on the holder. While certain employees may hold fully vested RSUs, the individual does not hold any shares or have any rights of a stockholder until the distribution restrictions are met. Upon distribution to the employee, each RSU converts into one share of our common stock. The RSUs contain dividend equivalent rights.

Warrants

During the six months ended June 30, 2026, 6,324 warrants expired and we did not grant any warrants and no warrants were exercised. We did not have any unrecognized stock-based compensation expense related to the 1,430,807 outstanding stock purchase warrants at June 30, 2026. The outstanding stock purchase warrants have a weighted average exercise price of $14.53 and expire between January 18, 2027 and July 18, 2030.