11. Stockholders’ Equity.

Issuance of common stock. The Company conducted a rights offering that commenced in February 2026 and expired on April 1, 2026. Pursuant to the rights offering, the Company distributed non-transferable subscription rights to stockholders of record as of February 16, 2026. Each eligible stockholder was entitled to subscribe for additional shares of the Company’s common stock in proportion to their existing ownership, with the opportunity to participate in an over-subscription privilege, subject to availability and proration. The Company received gross proceeds from the rights offering of $12,100,000, of which approximately $5,000,000 was cash and $7,100,000 was conversion of outstanding related party debt. The rights offering resulted in an aggregate of approximately 3,000,000 shares of the Company’s common stock being issued to participants in the rights offering at a price of $4.05 per share.

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The Company also granted Jansen 58,408 shares of common stock on June 29, 2026, that vested upon grant. The stock was agreed to have a value of $237,000. Additionally, the Company issued stock of $10,000 through its Employee Stock Purchase Plan.

Minority owner debt conversion. In exchange for a full release of obligations that the Seller Note Borrowers had to Jansen under the Seller Note (as amended), on June 29, 2026, Tulp 24.1 recognized an in-kind capital contribution of $193,000.

Stock-Based Compensation. The Company’s stock-based compensation plans are administered by the Compensation Committee of the Board of Directors, which, subject to approval by the Board of Directors, selects persons to receive awards and determines the number of shares subject to each award and the terms, conditions, performance measures and other provisions of the award.

Stock-based compensation expense that was recognized in the continuing operations of the Company’s consolidated statements of operations for the year ended June 30, 2026, six months ended June 30, 2025, and year ended December 31, 2024 was $39,000, $39,000, and $60,000, respectively.

The Company uses the Black-Scholes option pricing model to estimate fair value of stock-based awards. There were no awards issued during the year ending June 30, 2026, six months ended June 30, 2025, and year ending December 31, 2024 that utilized the Black-Scholes option pricing model.

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The Company uses the graded attribution method to recognize expense for unvested stock-based awards. Forfeitures are recognized as incurred.

Stock Options, Restricted Stock, Restricted Stock Units, and Other Stock-Based Compensation Awards. The Company maintains a stock and incentive plan (the “Plan”).

Under the terms of the Plan, the Company may grant awards in a variety of instruments including stock options, restricted stock and restricted stock units to employees, consultants and directors generally at an exercise price at or above 100% of fair market value at the close of business on the date of grant. Stock options expire 10 years after the date of grant and generally vest over three years. The Company issues new shares of common stock upon grant of restricted stock, when stock options are exercised, and when restricted stock units are vested and/or settled.

The following table summarizes activity under the Plan:

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All stock options previously outstanding under the Plan expired in May 2024. There were no options outstanding as of June 30, 2026 and June 30, 2025. During the year ended June 30, 2026 and the six months ended June 30, 2025, the Company did not issue any stock options.

In May 2024, the Company issued a restricted stock grant totaling 27,000 shares of common stock to an employee. The shares underlying the awards were assigned a value of $5.64 per share, which was the closing price of the Company’s common stock on the date of grant, for a total grant date value of $152,000. The shares vest equally over three years.

Restricted stock and restricted stock unit transactions during the year ended June 30, 2026 and six months ended June 30, 2025 are summarized as follows:

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As of June 30, 2026 and June 30, 2025, there was $14,000 and $53,000, respectively, of unrecognized compensation costs related to outstanding restricted stock, which is expected to be recognized over the remaining average vesting period of approximately 0.9 years.

Employee Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the “ESPP”) that enables employees to contribute up to 10% of their base compensation toward the purchase of the Company’s common stock at 85% of its market value on the first or last day of the year. Participants purchased 4,000, zero, and zero shares under the ESPP during the year ended June 30, 2026, the six months ended June 30, 2025, and the year ended December 31, 2024, respectively. At June 30, 2026, 19,425 shares were reserved for future employee purchases of common stock under the ESPP. For the year ended June 30, 2026, six months ended June 30, 2025, and year ended December 31, 2024, the Company recognized $6,000, $3,000, and $-0-, respectively, of stock-based compensation expense related to the ESPP that was recognized in the continuing operations of the Company’s consolidated statements of operations.

Dividends. The Company has not historically paid dividends, other than one-time dividends declared in 2011 and 2016. The Company intends to retain earnings from operations for use in advancing the Company’s business strategy; however, the Company may consider special dividends in the future.