NOTE 7 – EMPLOYEE STOCK PLANS

The Company reserved 2.0 million shares of common stock for issuance to employees and directors pursuant to the Company’s 2024 Equity Incentive Plan (the “2024 Equity Plan”). As of February 28, 2026, there were 1,911,425 shares available for grant under the 2024 Equity Plan. Prior to the effective date of the 2024 Equity Plan, the Company granted options and stock awards to eligible participants under its 2014 Equity Plan (the “2014 Equity Plan”), which expired on April 12, 2024.

The following table summarizes the combined stock option activity for the 2014 Equity Plan and 2024 Equity Plan for the periods noted:

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During the three months ended February 28, 2026, the Company issued 5,832 shares pursuant to the exercise of stock options, whereby the optionee did not pay cash for the options exercised but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise, with 44,168 options being cancelled as a result of those net settlements.  During the six months ended February 28, 2026, the Company issued 10,000 shares pursuant to the exercise of stock options for cash. During the three and six months ended February 28, 2025, the Company issued 13,815 shares pursuant to the net settlement of stock options, whereby the optionee did not pay cash for the options exercised but instead received the number of shares equal to the difference between the exercise price and the market price on the date of exercise, with 21,185 options being cancelled as a result of those net settlements.

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The following table summarizes the activity and value of non-vested options under the 2014 Equity Plan and 2024 Equity Plan for the periods presented:

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All non-vested options are expected to vest.

On January 14, 2026, the Company’s seven non-employee Board members were each granted 2,653 shares of unrestricted common stock. The fair market value of the unrestricted shares for share-based compensation expense is equal to the closing price of the Company’s common stock on the date of grant at $11.31. There is no vesting requirement for the unrestricted common stock grants.

On September 17, 2025, the Company issued certain employees 5,000 shares of restricted stock. These shares vested 20% at the September 17, 2025 grant date, and 20% will vest on each anniversary of the grant date for four years subject to continued employment. On September 17, 2025, the Company also issued an employee 10,000 unrestricted shares of common stock. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company.  On November 20, 2025, the Company issued an employee stock options to purchase 30,000 shares of common stock with a grant-date fair value of $4.59 per share and a three-year vesting term which expires ten years from the grant date.

On September 18, 2024, the Company issued certain employees 8,000 shares of restricted stock. These shares vested 20% at the September 18, 2024 grant date, and 20% will vest on each anniversary of the grant date for four years subject to continued employment. On September 18, 2024, the Company also issued an employee 1,200 shares of restricted stock.  One third of these shares vested at the September 18, 2024 grant date, and the remaining shares will vest in one-third increments on each anniversary of the grant date for two years subject to continued employment. The shares are eligible to vote and participate in any dividend or stock splits approved by the Company.

For the three and six months ended February 28, 2026, the Company recognized $0.2 million and $0.3 million of stock-based compensation expense. For the three and six months ended February 28, 2025, the Company recognized $0.2 million and $0.3 million of stock-based compensation expense.

At February 28, 2026, the Company had unrecognized compensation expenses totaling $0.2 million relating to non-vested options and restricted stock that are expected to vest. The weighted-average period over which these options and shares of restricted stock are expected to vest is approximately two years.