Note 9 – Stock Plans and Share-Based Payments

The fair value of stock options and restricted stock is recognized as stock-based compensation expense in the Company’s condensed statement of operations. The Company calculates stock-based compensation expenses in accordance with ASC 718. The fair value of stock-based awards is amortized over the vesting period of the award.

Stock Options

The Company granted stock options to purchase 43,500 shares of common stock to employees and board members during the nine months ended September 30, 2026. The fair value of the stock options granted during the nine months ended September 30, 2026, was approximately $0.1 million.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model.

The below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were utilized for the stock options granted during nine months ended September 30, 2026.

 Schedule of Fair Value Assumptions 

The Company granted stock options to purchase 219,804 shares of common stock to employees and board members during the nine months ended September 30, 2025. Of the stock options granted in the nine months ended September 30, 2025, 160,843 are stock options with service based vesting conditions and, as such, are being expensed over the respective service period. The remaining 58,961 stock options contain a performance condition that is not probable and therefore have no expense recognized as of September 30, 2026. The fair value of the stock options granted during the nine months ended September 30, 2025, was approximately $0.2 million.

Stock-based compensation expense related to stock options was approximately $58,000 and $70,000 for the three months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026, approximately $54,000 and $4,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed statement of operations. For the three months ended September 30, 2025, approximately $67,000 and $3,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed statement of operations.

Stock-based compensation expense related to stock options was $175,000 and $207,000 for the nine months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026, approximately $166,000 and $9,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed statement of operations. For the nine months ended September 30, 2025, approximately $199,000 and $8,000 are included in selling, general and administrative expenses and research and development expenses, respectively, on the accompanying condensed statement of operations.

As of September 30, 2026, there was $289,000 of total unrecognized compensation expense related to unvested stock options granted under the equity compensation plans, which will be amortized over the weighted average remaining requisite service period of 2.0 years. This does not include approximately $60,000 of unrecognized compensation related to the vesting conditions of 58,961 options that are not probable to be achieved as of September 30, 2026.

Restricted Stock

Total stock-based compensation expense for restricted stock on the Company’s condensed statement of operations was approximately $1,000 and zero for the three months ended September 30, 2026 and 2025, respectively, which was included in selling, general and administrative expenses in the accompanying statement of operations.

Total stock-based compensation expense for restricted stock was approximately $5,000 and $10,000 for the nine months ended September 30, 2026, and 2025, respectively. During the nine months ended September 30, 2026, 9,602 shares of restricted stock were issued to board members related to services rendered during the year ended December 31, 2025 or the quarters ended March 31, 2026 and June 30, 2026. As a result of the issuance of the 9,602 shares of restricted stock, approximately $26,000 of expense previously in accrued expenses was reclassified to additional paid-in capital during the nine months ended September 30, 2026. All restricted shares issued during the nine months ended September 30, 2026 vested at issuance. During the nine months ended September 30, 2025, the Company issued 55,659 shares of restricted stock to members of its Board of Directors, subject to continued service requirements. As a result of the issuance of the 55,659 shares of restricted stock, approximately $72,000 of expense previously in accrued expenses was reclassified to additional paid-in capital during the during the nine months ended September 30, 2025. All restricted shares issued during the nine months ended September 30, 2025, vested at issuance.

As of September 30, 2026, there was no unrecognized compensation expense related to unvested restricted stock awards granted under the equity compensation plans.