18. STOCK OPTION PLAN

12 Months Ended

Dec. 31, 2025

18.STOCK OPTION PLAN

On March 27, 2020, the Company adopted an incentive stock option plan (the “Plan”). The Plan allows the Board of Directors of the Company to grant restricted shares and options to acquire shares of common stock of the Company to directors, officers, key employees and consultants. The option price, term and vesting periods are determined at the discretion of the Board of Directors, subject to certain restrictions as required by the policies of Section 422 of the Internal Revenue Code. The Plan is a fixed number plan with a maximum of 208,334 shares of common stock reserved for issuance under the Plan.

On September 7, 2024, the Company amended the 2020 Stock Plan to increase the number of shares of common stock of the Corporation available for grant under the plan from 208,334 (as adjusted for the 1 for 3 reverse split) to 500,000. On November 4, 2025, the Company’s shareholders approved the amendment to the 2020 Stock Plan.

The table below sets forth details of the 69,449 share options outstanding as of December 31, 2025.

Grant Date	Options Outstanding	Exercise Price	Expiration	Vesting
September 1, 2022	4,896	$21.60	August 31, 2027	Equally over 3 years commencing on first anniversary of grant date
October 15, 2023	45,803	38.40	October 14, 2028	Equally over 3 years commencing on first anniversary of grant date
November 1, 2023	10,417	38.40	October 31, 2028	3,334 vest immediately, remaining vest equally over 3 years commencing on first anniversary of grant date
November 22, 2024	8,333	11.76	November 23, 2027	Equally over 3 years commencing on first anniversary of grant date

During the years ended December 31, 2025 and 2024, the Company recorded share-based compensation expense of $659,134 and $632,205, respectively, as part of general and administrative expenses.

As of December 31, 2025, the Company had $94,091 of unrecognized share-based compensation costs related to non-vested awards that will be recognized over a weighted average period of 3 years. As of December 31, 2025, 91,484 options have vested, and are exercisable. The options issued during 2022 vest equally over 3 years commencing on the first anniversary of the grant date. Of the options issued during 2023, 417 vested immediately on grant date, with the remaining options vesting equally over 3 years commencing on the first anniversary of the grant date. The options issued during 2024 vest equally over 3 years commencing on the first anniversary of the grant date.

The following sets forth the outstanding common share options and related activity for the year ended December 31, 2025:

	Number of	Weighted Average	Number of	Weighted Average
	Options	Exercise Price	Options	Exercise Price
	2025	Per Share 2025	2024	Per Share 2024
Beginning Balance	116,557	$30.40	158,708	$30.96
Granted	-	-	8,333	11.76
Exercised	-	-	-	-
Forfeited	(47,108)	26.48	(50,484)	30.88
Ending Balance	69,449	$12.00	116,557	$30.40

The table below sets forth details of the restricted shares issued as of December 31, 2025.

Grant Date	Restricted Shares	Exercise Price	Expiration	Vesting
December 31, 2024	10,417	$8.24	January 2, 2026	Vested on August 8, 2025, by board resolution
January 10, 2025	10,417	$11.12	January 12, 2026	Vested on August 8, 2025, by board resolution
February 28, 2025	10,417	$5.76	March 2, 2026	Vested on August 8, 2025, by board resolution
May 27, 2025	56,250	$6.64	May 29, 2026	Vested on August 8, 2025, by board resolution
November 4, 2025	87,500	$3.35	September 4, 2026	Vesting over 10 months
November 5, 2025	56,250	$3.19	November 5, 2025	Vested at issuance

As of the year ended December 31, 2025, the Company recorded restricted share-based compensation expense of $844,049, as part of general and administrative expenses. As of December 31, 2025, the Company had $263,970 of unrecognized restricted share-based compensation costs related to non-vested awards that will be recognized over a weighted average period of 10 months. As of December 31, 2025, 152,501 restricted shares have vested. The shares issued during 2024, and on January 10, 2025, February 28, 2025, and May 27,2025, vested on August 8, 2025, by a board resolution. The shares issued November 4, 2025, vest equally over ten months. The shares issued November 5, 2025, vested at issuance.

Sky Quarry Inc. 10-K