NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT)

The Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B Convertible Preferred Stock, 1,610,000 are designated as Series A Preferred Stock and 3,385,000 shares of preferred stock remain undesignated.

The Company entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On June 7, 2024, the Company filed the 2024 Shelf. Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up to $150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement. As of September 30, 2026, the Company had $44.6 million available under the ATM Sales Agreement.

Options

During the nine months ended September 30, 2026, the Company issued an aggregate of 53,000 shares of common stock related to the exercise of options for total proceeds of approximately $81 thousand.

Common Stock

During the nine months ended September 30, 2026, the Company issued an aggregate of 1,225,516 shares of common stock for service, including vested restricted stock units (“RSUs”).

Non-controlling Interest of Discontinued Operations

Net income attributable to non-controlling interest of discontinued operations amounted to approximately $249 thousand and $1.3 million for the three and nine months ended September 30, 2025, respectively. During the three and nine months ended September 30, 2025, the Company paid distributions to non-controlling interest holders of discontinued operations of approximately $450 thousand and $762 thousand, respectively.

Dividends

The Company pays cumulative dividends on its Series A Preferred Stock, in the amount of $2.21875 per share each year, which is equivalent to 8.875% of the $25.00 liquidation preference per share. Dividends on the Series A Preferred Stock are payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. The dividends are included in the Company’s results of operations for the three and nine months ended September 30, 2026 and 2025. Dividends declared on the Series A Preferred Stock during the nine months ended September 30, 2026 and 2025 are as follows:

 SCHEDULE OF DIVIDENDS DECLARED AND PAID ON THE SERIES A PREFERRED STOCK

Stock Options

On January 8, 2021, the Company approved the Company’s 2020 Equity and Incentive Plan (the “2020 Plan”). Approval of the 2020 Plan was included as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Stockholders filed with the Securities and Exchange Commission on December 7, 2020. The 2020 Plan is administered by the Compensation Committee of the Board (the “Board”) and initially provided for the issuance of up to 1,500,000 shares of Common Stock. The number of shares of Common Stock available for issuance under the 2020 Plan automatically increases by 150,000 shares of Common Stock on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030. Awards under the 2020 Plan can be granted in the form of stock options, non-qualified and incentive options, stock appreciation rights, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”).

On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved the amendment and restatement to the 2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved the second amendment and restatement of the 2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. On June 14, 2024, at the Annual Meeting of Stockholders, the stockholders of the Company approved the third amendment and restatement to the 2020 Plan, which further amended the 2020 Plan by increasing the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 3,000,000 shares.

On June 12, 2026, at the Annual Meeting of Stockholders, the stockholders of the Company approved the fourth amendment and restatement to the 2020 Plan (as amended to date, the “Amended 2020 Plan”), which further amended the 2020 Plan by increasing the maximum number of shares of the Company’s common stock available for issuance under the Amended 2020 Plan by 3,000,000 shares but also eliminated the remaining annual, automatic increases of 150,000 shares of the Company’s common stock from January 1, 2027 through January 1, 2031.

As of September 30, 2026, the Amended 2020 Plan provided for the issuance of up to 11,400,000 shares of Common Stock. Remaining authorization under the Amended 2020 Plan was 3,309,308 shares as of September 30, 2026.

The forms of award agreements to be used in connection with awards made under the Amended 2020 Plan to the Company’s executive officers and non-employee directors are:

Previously, the Company had granted service-based stock options and performance-based stock options separate from the Amended 2020 Plan. The following is a summary of outstanding options activity under our Amended 2020 Plan for the nine months ended September 30, 2026:

 SCHEDULE OF OPTION ACTIVITY

During the nine months ended September 30, 2026, 3,000 options were exercised and total proceeds received were approximately $6 thousand. As of September 30, 2026, aggregate intrinsic value of vested service-based options outstanding was $38 thousand.

The following is a summary of outstanding service-based options activity (prior to the establishment of our Amended 2020 Plan above) for the nine months ended September 30, 2026:

 SCHEDULE OF OPTION ACTIVITY

As of September 30, 2026, aggregate intrinsic value of vested service-based options outstanding was $176 thousand.

The following is a summary of outstanding performance-based options activity for the nine months ended September 30, 2026:

 SCHEDULE OF OPTION ACTIVITY

During the nine months ended September 30, 2026, 50,000 options were exercised and total proceeds received were approximately $75 thousand. As of September 30, 2026, aggregate intrinsic value of vested performance options outstanding was $17 thousand.

RSUs and RSAs (under our Amended 2020 Plan)

The following is a summary of unvested RSUs and RSAs activity under our Amended 2020 Plan for the nine months ended September 30, 2026:

 SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY

The total fair value of the 1,655,812 RSUs and RSAs granted was approximately $6.8 million which was determined using the fair value of the market price on the date of grant. Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was approximately $1.3 million and $2.7 million for the three months ended September 30, 2026 and 2025, respectively, with unamortized expense remaining of approximately $5.8 million as of September 30, 2026, which is expected to be recognized through 2029. Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was approximately $3.6 million and $7.1 million for the nine months ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026, a total of 1,225,516 shares of common stock were issued in connection with RSUs and RSAs, including: (i) 971,825 shares issued upon vesting of awards during the current period, and (ii) 253,691 shares issued upon settlement of awards that had vested in prior periods.

RSUs and RSAs (outside of our Amended 2020 Plan)

The following is a summary of unvested RSUs and RSAs activity (outside of our Amended 2020 Plan) for the nine months ended September 30, 2026:

 SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY

The total fair value of 625,000 of the RSUs and RSAs granted above with service and performance based vesting criteria was approximately $2.7 million which was determined using the fair value of the market price on the date of grant. The total fair value of 75,000 of the RSUs and RSAs granted above with market based vesting criteria was approximately $270 thousand. This was determined using the Monte Carlo Simulation Model with the following assumptions: dividend yield of 0%, expected term of 3 years, volatility of 95.11%, and risk-free rate of 4.05%. Total compensation expense for RSUs and RSAs outside of the Amended 2020 Plan, was approximately $400 thousand and $0 for the three months ended September 30, 2026 and 2025, respectively, with unamortized expense remaining of approximately $2.3 million as of September 30, 2026, which is expected to be recognized through 2029. Total compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was approximately $288 thousand and $0 for the nine months ended September 30, 2026 and 2025, respectively.

Warrants

The following is a summary of outstanding and exercisable warrants activity during the nine months ended September 30, 2026:

 SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE

Total compensation expense on the above warrants for services was $0 for both the three and nine months ended September 30, 2026 and 2025, with no unamortized expense remaining as of September 30, 2026.

Stock-based Compensation

The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants and RSUs, and RSAs amounted to approximately $1.7 million and $3.2 million for the three months ended September 30, 2026 and 2025, respectively, and $3.9 million and $7.8 million for the nine months ended September 30, 2026 and 2025, respectively. Such amounts are included in general and administrative expenses in the unaudited consolidated statements of operations. Unamortized expense remaining related to RSUs and RSAs was $8.0 million as of September 30, 2026, which is expected to be recognized through 2029.