Ascent Solar Technologies, Inc.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

Ascent Solar Technologies, Inc. (the “Company") is focusing on integrating its photovoltaic ("PV") products into scalable and high value markets such as space power beaming, aerospace, satellites, near earth orbiting vehicles, fixed wing unmanned aerial vehicles (“UAV”), aquatic, terrestrial, and other weight-sensitive markets (including DoD drone and space operations). The value proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in these industries, but also overcomes many of the obstacles other solar technologies face in these unique markets. Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like satellites, spacecraft, airships and fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.

NOTE 2. BASIS OF PRESENTATION

The accompanying, unaudited, condensed financial statements have been derived from the accounting records of the Company as of June 30, 2026, and December 31, 2025, and the results of operations for the three and six months ended June 30, 2026, and 2025.

The accompanying, unaudited, condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The unaudited Condensed Balance Sheet at December 31, 2025, has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. These unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies were described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes to our accounting policies as of June 30, 2026.

Revenue Recognition:

Product revenue. The Company recognizes revenue for the sale of PV modules sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For product sales contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognize the related revenue as control of each individual product is transferred to the customer.

During the three months ended June 30, 2026 and 2025, the Company recognized product revenue of$95,203 and$16,961, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized product revenue of$124,147 and$32,585, respectively.

Milestone and engineering revenue. Each milestone and engineering arrangement is a separate performance obligation. The transaction price is estimated using the most likely amount method and revenue is recognized as the performance obligation is satisfied through achieving manufacturing, cost, or engineering targets.

No milestone and engineering revenue was recognized during the three months ended June 30, 2026 and 2025. During the six months ended June 30, 2026 and 2025, the Company recognized milestone and engineering revenue of$23,000 and $0, respectively.

Government contracts revenue. Revenue from government research and development contracts is generated under terms that are cost plus fee or firm fixed price. The Company generally recognizes this revenue over time using cost-based input methods, which recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs of the contract. In applying cost-based input methods of revenue recognition, the Company uses the actual costs incurred relative to the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Cost based input methods of revenue recognition are considered a faithful depiction of the Company’s efforts to satisfy long-term government research and development contracts and therefore reflect the performance obligations under such contracts. Costs incurred that do not contribute to satisfying the Company’s performance obligations are excluded from the input methods of revenue recognition as the amounts are not reflective of transferring control under the contract. Costs incurred towards contract completion may include direct costs plus allowable indirect costs and an allocable portion of the fixed fee. If actual and estimated costs to complete a contract indicate a loss, provision is made currently for the loss anticipated on the contract.

No government contract revenue was recognized during the three and six months ended June 30, 2026 and 2025.

Accounts Receivable. As of June 30, 2026, the Company had$32,250 in accounts receivable, net andno allowance for doubtful accounts. The Company hadno accounts receivable, net balance andno allowance for doubtful accounts as of December 31, 2025.

Deferred revenue for thesix months ended June 30, 2026 was as follows:

$58,898 of the amount recognized as revenue from deferred revenue in the current period was included in deferred revenue as of December 31, 2025.

Other Investment: The Company accounts for its investments without a readily determinable fair value that does not qualify for measurement at net asset value as a practical expedient at its cost minus impairment, if any. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company will measure the equity security at fair value as of the date that the observable transaction occurred. The Company reassesses at each reporting period whether the equity investment without a readily determinable fair value continues to qualify to be measured at cost.

As of June 30, 2026, the Company invested $275,000 in a company without a readily determinable value.

Other Assets: Other assets is comprised of the following:

Earnings per Share: Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. Basic EPS has been computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Income available to common stockholders has been computed by deducting dividends accumulated for the period on cumulative preferred stock (whether or not earned). Diluted earnings per share has been computed by dividing income available to common stockholders adjusted on an if-converted basis for the period by the weighted average number of common shares and potentially dilutive common share outstanding (which consist of warrants, options, restricted stock units and convertible securities using the if-converted or treasury stock method to the extent they are dilutive). Approximately 1,946,000 and 400,000 shares of dilutive shares were excluded from the three months period ended June 30, 2026 and 2025, respectively, EPS calculation as their impact is antidilutive. Approx imately 3,528,000 and 708,000 shares of dilutive shares were excluded from the six months period ended June 30, 2026 and 2025, respectively, EPS calculation as their impact is antidilutive.

Segment Reporting: The Company hasone reportable segment, PV. The PV segment sells PV products and engineering services and currently, is primarily selling it in North America. The Company’s chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, makes significant operating decisions and assesses the performance of the Company as a single business segment.

The CODM regularly reviews the company wide Balance Sheet and Statement of Operations to determine how to allocate resources within the Company. The CODM assesses performance and decides how to allocate resources based on Net Income that also is reported on the Statement of Operations and reviews significant expenses as outlined in the Statement of Operations. The CODM uses Net Income to evaluate how to reinvest profits into the PV segment assets, research and development, employees, and other resources. The measure of segment assets is reported on the unaudited condensed Balance Sheet as total assets.

Recently Issued Accounting Policies

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures("ASU 2024-03"). ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. ASU 2024-03 is effective for public entities for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Entities are permitted to early adopt. Management is evaluating the impact of this ASU on the Company's financial statements.

In December 2025, the FASB issued ASU 2025-11, Government Grants–Accounting for Government Grants Received by Business Entities ("ASU 2025-11"). ASU 2025-11 established accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. ASU 2025-11 is effective for public entities for annual periods beginning after December 15, 2028 and interim reporting periods within those annual reporting periods. Entities are permitted to early adopt and can elect to adopt using a modified prospective, a modified retrospective, or a retrospective approach. Management is evaluating the impact of this ASU on the Company's financial statements.

NOTE 4. LIQUIDITY, CONTINUED OPERATIONS, AND GOING CONCERN

The Company continued to enter into financing arrangements including the sale of common stock and warrants during the six months ended June 30, 2026, to fund operations.

The Company has limited industrial scale production capabilities in its Thornton facility and continues to focus on its research and development activities to improve its PV products. Management does not expect that sales, revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented our strategy of selling high value PV products and manufacturing at full industrial scale. During the six months ended June 30, 2026, the Company used$3,809,122 in cash for operations. As of June 30, 2026, the Company has$2,425,123 in current liabilities.

Additionally, projected revenues are not anticipated to result in a positive cash flow position for the next twelve months and although the Company has, as of June 30, 2026, working capital of $12,875,343, Management believes that additional financing will be required for the Company to reach a level of sufficient sales to achieve profitability.

The Company continues to accelerate sales and marketing efforts related to its specialty PV application strategies through expansion of its sales and distribution channels. The Company also continues activities to secure additional funding through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.

As a result of the Company’s recurring losses from operations and the potential need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises doubt as to the Company’s ability to continue as a going concern.

Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These unaudited condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

The following table summarizes property, plant and equipment as of June 30, 2026 and December 31, 2025:

Depreciation expense for the three months ended June 30, 2026 and 2025 was $20,608 and $17,442, respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 was $41,744 and $34,167, respectively. Depreciation expense is recorded under “Depreciation and amortization expense” in the unaudited Condensed Statements of Operations.

NOTE 6. OPERATING LEASE

The Company’s lease is primarily comprised of manufacturing and office space. This lease is classified and accounted for as an operating lease. The building lease term is for 88 months commencing on September 21, 2020 at a rent of $50,000 per month including taxes, insurance and common area maintenance until December 31, 2020. Beginning January 1, 2021, the rent adjusted to $80,000 per month on a triple net basis and shall increase at an annual rate of 3% per annum until December 31, 2027.

Effective September 1, 2023, the lease was amended to reduce the rentable square feet from approximately 100,000 to approximately 75,000 square feet and the rent and tenant share of expenses were decreased in proportion to the reduction in the rentable square feet.

As of June 30, 2026 and December 31, 2025, assets and liabilities related to the Company’s leases were as follows:

During the three months ended June 30, 2026 and 2025, the Company recorded operating lease expense included in selling, general and administrative expenses of$190,497 and $190,497, respectively. During the six months ended June 30, 2026 and

2025, the Company recorded operating lease expense included in selling, general and administrative expenses of$380,995 and $380,995, respectively.

Future maturities of the operating lease liability are as follows:

The remaining weighted average lease term and discount rate of the operating leases is 18 months and 12%, respectively.

NOTE 7. INVENTORIES

Inventories, net of reserves, consisted of the following at June 30, 2026 and December 31, 2025:

NOTE 8. SERIES A PREFERRED STOCK

Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors at its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $23.2 billion, adjusted for reverse stock splits, fortwenty consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At June 30, 2026, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time. After making adjustment for the Company’s prior reverse stock splits, all 48,100 outstanding Series A preferred shares are convertible into less thanone common share. Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of June 30, 2026, there were 48,100 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of$636,123.

NOTE 9. SERIES 1C PREFERRED STOCK

On October 17, 2024, the Company entered into a securities purchase agreement with accredited investorsfor a convertible preferred stock financing for approximately $1.9 million of gross proceeds to issue approximately 1,900 sharesof

Series 1C convertible preferred stock (“Series 1C Preferred Stock”) at a purchase price of $1,000 per share. The Company received gross proceeds ofapproximately $815,000 and cancelled the remaining subscription receivable. Approximately 66% of these securities are held by officers, directors and advisory board members of the Company.

Holders of the Series 1C Preferred Stock are entitled to dividends on the per share stated value in the amount of 10% per annum, payable quarterly. The dividend rate increases to 15% if any of the Series 1C Preferred Stock remains outstanding on or after October 17, 2027. Unless the Company elects to pay dividends on the Series 1C Preferred Stock in cash, the Company will cumulate the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series 1C Preferred Stock. The Company had accrued dividends of$121,952 and a stated value of$786,952 as of June 30, 2026.

The Series 1C Preferred Stock is convertible into common stock at the option of the holder at an initial fixed conversion price of $2.50 per share of common stock; however, the holder may not convert any portion to the extent that the holder would beneficially own more than 4.99% of the Company's outstanding shares of Common Stock outstanding immediately after giving effect to the conversion.

If at any time the closing sale price of the Company’s common stock equals at least 300% of the conversion price for the most recent 20 consecutive trading days, the Company shall have the right to redeem all, but not less than all, of the Series 1C Preferred Stock then outstanding in cash at a price equal to 110% of the stated value of the shares being redeemed.

Upon our liquidation, dissolution or winding up, holders of Series 1C Preferred Stock shall be entitled to receive in cash out of the assets of the Company, before any amount shall be paid to the holders of any of shares of common stock, an amount per share of Series 1C Preferred Stock equal to the greater of (A)110% of the stated value of such preferred share and (B) the amount per share such holder would receive if such holder converted such preferred share into common stock immediately prior to the date of such payment.

On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series 1C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of common stock into which the outstanding shares of Series 1C Preferred Stock held by such holder are convertible as of the record date (but only after giving effect to the maximum percentage conversion limitations referred to above). Except as provided by law or by the other provisions of the Series 1C Preferred Stock, holders of Series 1C Preferred Stock shall vote together with the holders of common stock as a single class and on an as-converted to common stock basis.

NOTE 10. STOCKHOLDERS’ EQUITY

Common Stock

At June 30, 2026, the Company had 200 million shares of common stock, $0.0001 par value(“Common Stock”), authorized for issuance. Each share of Common Stock has the right toone vote. As of June 30, 2026, the Company had 9,816,431 shares of Common Stock outstanding. The Company has not declared or paid any dividends related to the Common Stock during the six months ended June 30, 2026 and 2025.

At The Market Offering

On May 16, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC, as sales agent (“Wainwright”), to its Common Stock, through an “at the market offering” program under which Wainwright will act as sales agent. The sales, if any, of the Common Stock made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through the Nasdaq Capital Market or on any other existing trading market for the Company’s Common Stock. The Company will pay Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Common Stock and will also reimburse Wainwright for certain specified expenses in connection with entering into the ATM Agreement, including certain fees and out-of-pocket expenses of its legal counsel.

On June 26, 2026, the Company increased the amount available for sale under the ATM Agreement, up to an additional aggregate offering price of $15,000,000 of Shares. No sharesof common stock were sold under the ATM during the six months end June 30, 2026.

Private Offering

On January 23, 2026, the Company entered into a securities purchase agreement (the “2026 PIPE Purchase Agreement”) with certain institutional and accredited investors (the “2026 PIPE Investors”) for the issuance and sale in a private placement (the “2026 Private Placement”) of (i)454,546 shares of the Company’s Common Stock, (ii) pre-funded warrants (“2026 PIPE Pre-Funded Warrants”) to purchase up to 1,363,636 shares of Common Stock, at an exercise price of $0.0001 per share, (iii) Series A warrants (the “2026 Series A Warrants”) to purchase up to 1,818,182 shares of Common Stock at an exercise price of $5.50 per share, and (iv) Series B warrants (the “2026 Series B Warrants” and, together with the 2026 Series A Warrants, the “2026 PIPE Warrants”) to purchase up to 909,091 shares of Common Stock at an exercise price of $5.50 per share. The purchase price per share of common stock and accompanying 2026 PIPE Warrants was $5.50 and the purchase price per 2026 PIPE Pre-Funded Warrant and accompanying 2026 PIPE Warrants was $5.4999.

The 2026 PIPE Warrants have an exercise price of $5.50 per share and are exercisable immediately upon issuance. The 2026 PIPE Series A Warrants have a term of exercise equal to five (5) years following the effective date of a registration statement and the 2026 PIPE Series B Warrants have a term of exercise equal to eighteen (18) months following the effective date of a registration statement.

The 2026 PIPE Pre-Funded Warrants are exercisable immediately, may be exercised at any time until all of the 2026 PIPE Pre-Funded Warrants are exercised in full, and have an exercise price of $0.0001 per share.

A holder of the 2026 PIPE Pre-Funded Warrants and 2026 PIPE Warrants may not exercise any portion of such holder’s 2026 PIPE Pre-Funded Warrants or 2026 PIPE Warrants if, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder,9.99%) of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.

In connection with the 2026 Private Placement, the Company entered into a registration rights agreement (the “2026 Registration Rights Agreement”), dated as of January 23, 2026, with the 2026 PIPE Investors, pursuant to which the Company agreed to prepare and file a registration statement with the SEC registering the resale of the shares of common stock and the shares of common stock underlying the 2026 PIPE Pre-Funded Warrants and 2026 PIPE Warrants no later than fifteen (15) days after the date of the 2026 PIPE Registration Rights Agreement (the “2026 PIPE Registration Statement”), and to use its best efforts to have the 2026 PIPE Registration Statement declared effective as promptly as practical thereafter, and in any event no later than forty five (45) days following the date of the Registration Rights Agreement (or seventy five (75) days following the date of the 2026 PIPE Registration Rights Agreement in the event of a “full review” by the SEC). The 2026 PIPE Registration Statement was declared effective on February 11, 2026.

Additionally, pursuant to the amended engagement agreement, the Company agreed to pay the Placement Agent in connection with the 2026 Private Placement (i) a cash fee equal to 7.0% of the aggregate gross proceeds received in the Private Placement, and (ii) reimbursement of up to $85,000 for legal fees and expenses, and out of pocket expenses and non-accountable expenses. Also pursuant to the Engagement Agreement, the Company, in connection with the 2026 Private Placement, agreed to issue to the Placement Agent or its designees warrants (the “2026 Placement Agent Warrants”) to purchase up to an aggregate of 127,272 shares of Common Stock (the “2026 Placement Agent Warrant Shares”). The 2026 Placement Agent Warrants have an exercise price of $6.875 per share (which represents 125% of the combined 2026 Private Placement offering price), expire five (5) years following the effective date of a registration statement and became exercisable upon issuance.

In addition, upon the exercise for cash of any privately-placed, unregistered warrants issued to investors in an offering, which includes the 2026 Private Placement, the Company has agreed to, within five (5) business days of the Company’s receipt of the exercise price, (i) pay the Placement Agent a cash fee equal to 7.0% of the aggregate exercise price paid in cash and (ii) issue to Placement Agent (or its designees), warrants to purchase that number of shares of common stock of the Company equal to 7.0% of the aggregate number of such shares of common stock underlying such warrants that have been so exercised, and such Placement Agent warrants will be in the same form and terms as the warrants issued to the Placement Agent originally issued in the applicable Offering.

Pursuant to the Purchase Agreement, the Company agreed not to issue any shares of common stock or common stock equivalents or to file any other registration statement with the SEC (in each case, subject to certain exceptions, including an exception for the sale and issuance of shares of common stock pursuant to an at-the-market offering with the Placement Agent as sales agent at a price per share greater than or equal to $7.00, subject to adjustments (the “ATM Exception”)) until thirty (30)days after the effective date of a registration statement. The Company has also agreed not to effect or agree to effect any

Variable Rate Transaction (as defined in the Purchase Agreement) until one (1) year after the effective date of the Registration Statement (subject to certain exceptions, including the ATM Exception).

The $10.0 million was allocated between the Common Stock or Pre-Funded Warrants and Common Stock Warrants purchased based on the relative fair value of these instruments. The fair value of the Common Stocks or Pre-Funded Warrants was determined using the closing price of the stock at close of the Offering (Level 1 on the fair value hierarchy) and the fair value of the Warrants was determined using the Black Scholes model using the following inputs (Level 2 on the fair value hierarchy):

Preferred Stock

At June 30, 2026, the Company had 25 million shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors.

Warrants

The following warrants were exercised during thesix months ended June 30, 2026:

As of June 30, 2026, there were approximately 2,972,000 outstanding warrants with exercise prices between $2.000 and $74,086 per share.

Series A Preferred Stock

Refer to Note 8 for information on Series A Preferred Stock.

Series 1C Preferred Stock

Refer to Note 9 for inform ation on Series 1C Preferred Stock.

NOTE 11. SHARE-BASED COMPENSATION

In January 2024, the Company granted 4,590 shares of restricted stock units to employees and directors. One third of these shares vested on March 31, 2024 and one third vested on January 1, 2025. The final 1,522 units with a weighted average grant date fair value of $76.45 vested on January 1, 2026.

The fair values of the respective vesting dates of RSUs were approximately $6,255 and $5,096 for the six months ended June 30, 2026 and 2025, respectively.

The following table summarizes options activity as of June 30, 2026:

The Company had a total of 205,450 unvested options as of June 30, 2026 that are expected to vest in the future. Total unrecognized share based compensation expense from the remaining unvested options as of June 30, 2026 was approximately $232,600 and is expected to be recognized in earnings over a weighted average period of 0.9 years. The Company had 377,069 exercisable options as of June 30, 2026.

The weighted average remaining contractual term for all options outstanding at June, 2026, was 8.8 years and the aggregate intrinsic value (difference in exercise price and closing price at that date) was approximately $1.6 million. The weighted average remaining contractual term for options vested and exercisable at June 30, 2026, was 8.8 years and the aggregate intrinsic value was approximately $1.1 million.

The Company utilized the simplified method for estimating the stock options granted as the Company has experienced significant changes in its business and the historical data may not provide a reasonable basis upon which to estimate expected term.

NOTE 12. COMMITMENTS AND CONTINGENCIES

The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s financial position or results of operations in particular quarterly or annual periods.