NOTE 8 – STOCK BASED COMPENSATION

The Company accounts for awards of stock, stock options and restricted stock in accordance with ASC 718-10, “Compensation-Stock Compensation.” ASC 718-10 requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). The compensation cost for stock option grants is determined using option pricing models, intended to estimate the fair value of the awards at the grant date less estimated forfeitures. The compensation expense for restricted stock is recognized based on the fair value of the restricted stock awards less estimated forfeitures. The fair value of restricted stock awards is equal to the fair value of the Company’s stock on the grant date. Compensation costs of $1.3 million and $2.8 million, of which $301,000 and $672,000 were capitalized, have been recognized for the three and six months ended June 30, 2026, respectively. Compensation costs of $3.4 million and $6.5 million, of which $1.5 million and $2.9 million were capitalized, have been recognized for the three and six months ended June 30, 2025, respectively.

On January 21, 2026, the Company awarded a total of 28,000 shares of restricted stock to six employees under the Company’s 2023 Equity Incentive Award Plan (the “2023 Plan”). The grant date fair value of these restricted stock grants was approximately $452,000. These grants vest ratably over 5 years.

On January 21, 2026, the Company awarded a total of 10,980 shares of common stock to nine members of our Board of Directors in payment of directors fees. The grant date fair value of these awards was approximately $177,000.

On January 21, 2026, the Company granted options to purchase 108,000 shares of common stock to nine members of our Board of Directors under the Company’s 2023 Plan. The grant date fair value of these options amounted to approximately $308,000. These grants vest ratably over five years.

On January 30, 2026, the Company also awarded a total of 69,844 shares of restricted stock to four employees, pursuant to their employment agreements. The grant date fair value of these restricted stock grants was approximately $1.1 million. These grants vest ratably over three years.

On March 24, 2026, the Company awarded a total of 12,429 shares of common stock to nine members of our Board of Directors in payment of directors fees. The grant date fair value of these awards was approximately $177,000.

On June 2, 2026, the Company granted options to purchase 579,000 shares of common stock to sixty employees under the Company’s 2023 Plan. The grant date fair value of these options amounted to approximately $1.5 million. These grants vest ratably over five years.

On June 10, 2026, the Company awarded a total of 11,556 shares of common stock to nine members of our Board of Directors in payment of directors fees. The grant date fair value of these awards was approximately $177,000.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the six months ended June 30, 2026:

SCHEDULE OF FAIR VALUE OF OPTION GRANT OF WEIGHTED-AVERAGE ASSUMPTIONS 

During the six months ended June 30, 2026, one participant in the Company’s equity incentive plans exercised options to purchase a total of 10,000 shares of common stock at a exercise price of $9.70 per share for total proceeds of $97,000. The intrinsic value of options exercised was approximately $54,000.

As of June 30, 2026, there were options outstanding under the Company’s equity incentive plans to purchase 6.9 million shares, with an aggregate intrinsic value of $5.3 million. There were 1.2 million shares available for grant under the 2023 Plan.