NOTE 14. STOCK-BASED COMPENSATION

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $112,586 and $23,565 for the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026, the Company has adopted various stock option and restricted stock plans which are referred to as the “Plans.” The Company registers all shares of common stock that are issuable under its Plans with the SEC. A total of 4 shares remain available for awards under the various Plans as of June 30, 2026.

Stock option grants. The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. Activity in the various Plans during the six months ended June 30, 2026 and 2025 is reflected in the following table:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. The total estimated grant date fair value stock options issued during the six months ended June 30, 2026 was $236,634. Following are certain estimates and assumptions utilized as of the issuance date to determine the grant-date fair value of the stock options issued during 2026:

SCHEDULE OF STOCK BASED COMPENSATION VALUATION ASSUMPTIONS

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the six months ended June 30, 2026 and 2025.

Compensation expense totaled $103,081 and $-0- for stock options during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and 2025, no outstanding or exercisable options had intrinsic value, as all exercise prices exceeded the market price of the Company’s common stock on those dates. At June 30, 2026 and December 31, 2025, the aggregate intrinsic value of options outstanding was approximately $-0- and $-0-, respectively, and the aggregate intrinsic value of options exercisable was approximately $-0- and $-0-, respectively.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of June 30, 2026:

SCHEDULE OF SHARES AUTHORIZED UNDER STOCK OPTION PLANS BY EXERCISE PRICE RANGE

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to four years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

A summary of all restricted stock activity under the equity compensation plans for the three months ended June 30, 2026 and 2025 is as follows:

SCHEDULE OF RESTRICTED STOCK ACTIVITY

Compensation expense related to restricted stock totaled $4,619 and $9,741 for the three months ended June 30, 2026 and 2025, respectively, and $9,505 and $23,565 for the six months ended June 30, 2026 and 2025, respectively. The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of the grant. As of June 30, 2026, there was $9,407 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next nineteen months in accordance with their respective vesting scale.

The nonvested balance of restricted stock vests as follows:

SCHEDULE OF NON-VESTED BALANCE OF RESTRICTED STOCK