Note 12. Stock-Based Compensation

In November 2025, the Company adopted the Elauwit Connection, Inc. 2025 Stock Incentive Plan (the “Plan”), which permits the grant of stock options, restricted stock units (“RSUs”), performance-vesting restricted stock units (“PSUs”) and other stock-based awards. The Plan initially authorized 700,000 shares of common stock for issuance, subject to an annual evergreen increase.

On January 28, 2026, the Compensation Committee of the Board of Directors approved RSU awards to certain employees of the Company totaling 16,552 RSUs. The RSUs vest in full on the one-year anniversary of the grant date, subject to continued service. The grant-date fair value of the RSUs was determined based on the closing price of the Company’s common stock on the Nasdaq Capital Market on January 28, 2026. Compensation cost is recognized on a straight-line basis over the one-year requisite service period.

Additionally, on January 28, 2026, the Compensation Committee authorized the Company’s 2026 employee bonus program, which provides for cash and equity-based incentive compensation. The cash component consists of an annual incentive opportunity representing 25% of the program, together with quarterly cash incentives, and is accrued ratably over fiscal 2026 in accordance with ASC 710, Compensation—General.

The remaining 75% of the annual incentive opportunity is equity-based in the form of performance stock units (“PSUs”) which were granted on April 2, 2026. Compensation expense associated with the PSUs is recognized in accordance with ASC 718, Compensation—Stock Compensation, on a straight-line basis over the 36-month requisite service period ending on the April 2, 2029 vesting date, subject to the applicable performance and service conditions. The number of PSUs to be issued may range from 0% to a maximum of 200% of targeted amounts, as defined in the individual PSU grant awards, depending on the achievement of performance measures at the end of the performance period. The expected cost of the shares is based on the date of grant fair value and the Company’s assessment of the probability that the performance condition will be achieved at target (100%). Any related compensation expense is recognized when the probability is likely that the performance criteria will be achieved. Forfeitures are recognized as they occur.

During the second quarter of 2026, the Compensation Committee of the Board of Directors approved RSU awards to certain employees and non-employee directors of the Company totaling 19,972 RSUs and stock option awards to purchase 11,788 shares of the Company’s common stock. Additionally, the Company granted 9,764 RSU’s to other individuals as part of their employment agreements.

RSU and PSU activity for the six months ended June 30, 2026 was as follows:

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During the second quarter of 2026, the Compensation Committee of the Board of Directors approved performance stock unit awards under the Company’s 2026 bonus plan totaling 91,766 PSUs at target.

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Stock-based compensation expense was approximately $95 thousand and $120 thousand for the three and six months ended June 30, 2026, respectively, and was included within general and administrative expense. Stock-based compensation expense was zero for the three and six months ended June 30, 2025. As of June 30, 2026, the Company had unrecognized compensation cost of approximately $0.2 million related to outstanding service stock-based awards that is expected to be recognized over the remaining requisite service periods. The maximum potential stock-based compensation expense for the outstanding performance-based share awards is approximately $1.1 million.