NOTE 11. COMPENSATION PLANS

Amended and Restated 2019 Equity Incentive Plan

In April 2019, the Company adopted the Greenlane Holdings, Inc. 2019 Equity Incentive Plan (the “2019 Plan”). The Plan has been amended and restated several times since adoption. As of December 31, 2025, the Company’s equity incentive plan balances, including the total shares authorized for issuance, awards outstanding, and shares available for future grant, reflect all amendments approved through that date, including the plan’s evergreen feature.

In October 2025, Company included in its proxy statement a proposal to increase the share reserve under the Company’s equity incentive plan to 3,000,000 shares. The plan already includes a 15% evergreen feature. Based on shares outstanding as of the record date described in the proxy, the evergreen provision would add approximately 2.9 million incremental shares. The Company filed a registration statement on Form S-8 to register any additional shares following stockholder approval.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant based on the closing market price of its common stock as reported on The Nasdaq Global Market. The option awards include service-based vesting conditions tied to specific service dates. The requisite service period is generally shorter in duration and varies by employee based on individual award terms. The stock options expire five years after the date of grant.

During the year ended December 31, 2025, the Company granted 3,000,000 nonqualified stock options with a weighted-average exercise price of $3.84. The grant-date fair value of these awards was determined using the Black-Scholes option pricing model. Key assumptions included a stock price of $3.46, an expected term of four years, expected volatility of 120%, a risk-free rate based on U.S. Treasury yields of 4.2%, and a dividend yield of zero. The expected term reflects the contractual life of the awards (five years) and expected exercise behavior, as the options were granted out-of-the-money and are expected to be exercised upon sufficient appreciation in the Company’s stock price. The resulting aggregate grant-date fair value is recognized as compensation expense over the requisite service period in accordance with ASC 718.

The Company recorded stock-based compensation expense of approximately $4.6 million and $0.1 million for the years ended December 31, 2025 and 2024, respectively, related to stock options. The 2025 expense reflects amortization of the grant-date fair value of the awards granted in October 2025 over the applicable service periods, as well as the impact of the forfeitures recognized during the period. Gross stock-based compensation expense related to these awards was approximately $7.6 million, which was reduced by approximately $3.0 million of expense reversals associated with forfeited awards.

Because the awards were granted in October 2025, only a portion of the total grant-date fair value was recognized during the year ended December 31, 2025, with the remaining unrecognized compensation cost to be recognized over the remaining service periods. 

There were no stock options exercised during the year ended December 31, 2025. Based on the fair market value of the Company’s common stock at December 31, 2025 the total intrinsic value of all outstanding options was none.

The following table summarizes the Company’s stock option activity:

 SCHEDULE OF STOCK OPTION ACTIVITY

Options outstanding at December 31, 2025 include awards subject to ongoing service-based vesting conditions. The difference between options granted and compensation expense recognized reflects the timing of expense recognition over the requisite service periods, as well as the impact of forfeitures recorded during the period.

The intrinsic value represents the difference between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option. Based on the fair market value of the Company’s common stock at December 31, 2025 the total intrinsic value of all outstanding options was none.

Stock options outstanding, vested and expected to vest and exercisable are as follows:

 SCHEDULE OF STOCK OPTIONS OUTSTANDING VESTED

Restricted Stock Units

During the year ended December 31, 2025, the Company granted 115,000 RSUs to members of its senior management and certain other employees pursuant to the 2019 Plan. There were 115,000 RSUs that vested during the year ended December 31, 2025. The Company accounts for RSUs issued to employees at fair value, based on the market price of the Company’s common stock on the date of grant. The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2025 was $3.24. The fair values of RSUs that vested during the years ended December 31, 2025 was approximately $0.4 million. During the year ended December 31, 2025, the Company recorded $0.2 million of stock-based compensation related to RSUs.

As of December 31, 2025, there was no unrecognized compensation expense related to unvested RSUs.

Equity-Based Compensation Expense

Equity-based compensation expense is included within “salaries, benefits and payroll taxes” in our consolidated statements of operations and comprehensive loss. We recognized equity-based compensation expense as follows:

 SCHEDULE OF EQUITY BASED COMPENSATION EXPENSE

There were no stock options granted during the year ended December 31, 2024.

As of December 31, 2025, there was remaining unrecognized compensation expense of $0.5 million related to unvested stock option awards, which will be recognized over the remaining service periods.