8. Stock-Based Compensation

The Company periodically issues common stock, stock options and Restricted Stock Units (RSU) as incentive compensation to directors and as compensation for the services of employees, contractors, and consultants of the Company.

A summary of stock-based compensation costs for the three months and six months ended June 30, 2026 and 2025 is as follows:

 Schedule of Stock-based Compensation Costs

Restricted Stock Units

On April 15, 2026, the Board of Directors of the Company approved the cancellation of 500,000 stock options granted between July 1, 2025, and December 31, 2025 to certain officers and directors of the Company, and the grant of fully-vested restricted share units (“RSUs”) in replacement thereof. The RSUs were awarded under the Company’s 2020 Stock Incentive Plan. Each RSU represents the right to receive one share of the Company’s common stock upon vesting. The RSUs vested upon issuance and are subject to the terms and conditions of the Plan and the applicable award agreement.

On April 15, 2026, in connection with the grant of the 500,000 fully-vested RSUs and the cancellation of the 500,000 stock options, the Company measured the fair value of the RSUs of $1,550,000, and the fair value of the cancelled options immediately prior to cancellation of $1,166,814, and recorded the difference of $383,186 as incremental compensation expense during the three months ended June 30, 2026.

Also during the six month ended June 30, 2026, the Company issued 50,000 RSUs to two employees of the Company, including 31,250 RSUs that vested upon grant. Each RSU granted entitles the holder to receive one share of Company common stock. 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. The unvested RSUs granted vest over a period one year. 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 $207,059 related to the fair value of RSUs.

The following table summarizes the activity of the Company’s RSUs at June 30, 2026:

 Schedule of Restricted Stock Units

As of June 30, 2026, approximately $118,000 of unamortized stock compensation expense remains related to the unvested RSUs, which the Company expects to recognize through June 2027.

Stock Options

The Company periodically issues stock options as incentive compensation to directors and as compensation for the services of employees, contractors, and consultants of the Company.

As of June 30, 2026, unexpired stock options for 564,309 shares were issued and outstanding under the 2020 Plan and 2,935,691 shares were available for issuance under the 2020 Plan.

During the six months ended June 30, 2026, the Company did not grant any stock options.

During the six months ended June 30, 2025, the Company granted 131,383 stock options to four non-officer directors of the Company to purchase shares of the Company’s common stock, exercisable for a period of five years at an exercise prices ranging from $0.905 to $2.33 per share. The grant date fair value of the stock options determined pursuant to the Black-Scholes option-pricing model was determined to be $111,200, including $27,500 accrued at December 31, 2024 and charged to operations in 2024.

During the three months and six months ended June 30, 2026, the Company recorded stock compensation expense of $82,176 and $31,986, respectively, with respect to the amortization of the fair value of vested options.

The fair value  of a stock option award is calculated on the grant date using the Black-Scholes option-pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect as of the grant date. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts and is assumed to be zero. The estimated volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. Unless sufficient historical exercise data is available, the expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The fair market value of the common stock is determined by reference to the quoted market price of the common stock on the grant date.

A summary of stock option activity during the six months ended June 30, 2026 is as follows:

 Schedule of Stock Option Activity Including Options Form of Warrants

As of June 30, 2026, 578,059 stock options were vested and exercisable. Outstanding stock options to acquire 15,000 shares of the Company’s common stock had not vested at June 30, 2026. Total deferred compensation expense for the outstanding value of unvested stock options was approximately $11,000 at June 30, 2026, which will be recognized subsequent to June 30, 2026 over a weighted-average period of approximately 13 months.

At June 30, 2026, the outstanding common stock options, including options issued in the form of warrants, are exercisable at the following prices per common share:

 Schedule of Exercise Prices of Common Stock Options Outstanding and Exercisable Including Options Form of Warrants

Based on the closing fair market value of $7.42 per common share on June 30, 2026, the intrinsic value attributed to exercisable but unexercised common stock options was approximately $2,514,900 at June 30, 2026.